Afe Babalola Wins $2 Billion Arbitration Claim Against Federal Government

…..FG Gets 660,000 Dollars as costs

In a landmark decision, the International Centre for Settlement of Investment Disputes, World Bank, on 6th October 2020 dismissed the arbitration commenced by Interocean Oil Development Company and Interocean Oil Exploration Company, two foreign companies which were incorporated under the laws of Delaware, USA against the Federal Republic of Nigeria.

The Claimants, Interocean Oil Development Company and Interocean Oil Exploration Company had initiated an investment arbitration against the Federal Republic of Nigeria before the ICSID Tribunal, Washington, USA chaired by Professor William W. Park.

This case actually relates to the ownership and control of a limited liability company named Pan Ocean Oil Corporation. Pan Ocean was the beneficial owner of participating interests in OML 98 and OPL 275. The Claimants and their owners (foreign Nationals) had initiated several litigations against the Nigerian directors of Pan Ocean at the Federal High Court and Court of Appeal in Nigeria alleging that they (Claimants) were the legitimate owners of Pan Ocean. When the Claimants lost all these cases at the Nigerian Courts, they decided to change the nature of their case and initiate this arbitration before the ICSID Tribunal whereat they alleged that the Federal Government of Nigeria colluded with the Nigerian directors of Pan Ocean to deprive them (Claimants) of their interests in Pan Ocean.

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In the arbitral reference, the Claimants had sought for a declaration that the Federal Republic of Nigeria had breached its obligations to the Claimants under Nigerian law and/or international law.

The Claimants also prayed for an award directing Nigeria to restore only the nominees of the Claimants as representatives in the 40% participating interest under the operation of all Joint Venture Agreements and OML 98 and OPL 275.

For its alleged breaches of Nigerian and International laws, the Claimants sought for damages of US$ 2 Billion against Nigeria.

The Claimants were represented in the arbitration by Mr. Olasupo Shasore, SAN, Professor Oba Nsugbe QC, SAN, Mrs. Bimpe Nkontchou, Mr. Bello Salihu and Ms. Fadesike Salu. Mr. Patrizio Di Guevara Fabri and Mr. Riccardo Di Guevara Fabri were the party representatives for the Claimant.

The Federal Government of Nigeria was represented pro bono by Aare Afe Babalola, OFR, CON, SAN, Mr. Adebayo Adenipekun, SAN, Mr. Olu Daramola, SAN, Mr. Kehinde Ogunwumiju, SAN, Ms. Ann Babalola, Mr. Oluwasina Ogungbade and Mr. Ola Faro.

The party representatives for Nigeria were Mr. Taiwo Abidogun, the former Solicitor General and Permanent Secretary, Ministry of Justice, Mr. Dayo Apata, the current Solicitor General and Permanent Secretary, Ministry of Justice.

During hearing of the arbitration, Mr. Jacques Jones, Patricio Fabri etc testified for the Claimants. The Claimants also called Professor Yinka Omorogbe, Professor Fidelis Oditah QC, SAN, and Mr. Geoffrey J. Barker as expert witnesses for the Claimants.

Mr. Ahmed Rufai Khalid of NNPC and Mr. Bala Muhammed Yusuf of Ministry of Petroleum Resources testified as factual witnesses for Nigeria. Hon. Justice Emmanuel Olayinka Ayoola JSC (Rtd.), Professor Lawrence Atsegbua, SAN, Engr. Bello Mustapha FNSE (former Executive Secretary of the NIPC) and Dan Harris testified as expert witnesses for the Respondent.

In its final award, the ICSID Tribunal overruled the preliminary objection filed by the Respondent. It then found that the Respondent, Federal Republic of Nigeria did not breach any of its obligations to the Claimants under Nigerian law or International law.

The Tribunal also dismissed all the Claimants’ claims including their claims for damages and restitution.

Consequently, the Tribunal ordered the Claimants to pay USD 660, 129.87 to the Respondent as arbitration costs incurred in the proceedings.

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