Respite for Nigeria as Exxon Mobil, Shell lose $1.8b arbitration award
Exxon Mobil Corporation and Royal Dutch Shell Plc have both lost their bids to revive a $1.8 billion arbitration award against Nigeria.
According to Reuters, a U.S District Judge, William Pauley, rejected Exxon Mobil andShell’s move to revive the dispute, citingpublic policy and due process considerations in deciding not to enforce the October 2011 award against Nigerian National Petroleum Corporation (NNPC), which was subsequently set aside by courts in Nigeria.
The details: Essentially, the case stemmed from a dispute over a 1993 contract to extract oil near Nigeria’s coastline.
Also, Exxon Mobil and Shell claimed that the award had grown to $2.67 billion (interest inclusive) since November 2018.
According to the judgement delivered by Pauley in a 50-page document, though thecourt has the inherent authority to deliver judgement in appropriate fashion, the case filed by Exxon and Shell lacked merit.
Pauley wrote, “While this court may have inherent authority to fashion appropriate relief in certain circumstances, exercising that authority to create a $1.8 billion judgment is a bridge too far.
“Exxon and Shell executed a contract in Nigeria with another Nigerian corporation containing an arbitration clause requiring any arbitration to be held in Nigeria under Nigerian law, and it then sought to confirm the award in Nigeria.”
Details in the court papers show that the 1993 contract anticipated that Exxon and Shell affiliates would invest billions of dollars to extract oil from the Erha field, about 60 miles (97 km) off Nigeria’s coast, and share profits with NNPC.
Meanwhile, the affiliates, Esso Exploration and Production Nigeria Ltd and Shell Nigeria Exploration and Production Co. Ltd, accused NNPC of unilaterally “lifting” more oil than was contractually allowed, at the request of the Nigerian Government, depriving them of billions of dollars of oil.
Exxon Mobil kicks: Following the judgement, Exxon spokesman Todd Spitlersaid the Irving, Texas-based company disagreed with the decision and was evaluating its next steps. On the other hand,Shell and its lawyers did not respond immediately to requests for comment.
Meanwhile, NNPC’s legal representative,Cecilia Moss, stated that NNPC was very pleased with the decision, and was always confident that there was no basis for a U.S. court to confirm the award.
In the meantime, this constitutes a relief for Nigeria as the country is still battling the over $9 billion (N3.5 trillion) judgment involving the country and a British Firm – Process and Industrial Developments Ltd (P&ID).
SOURCE: nairametrics
