Exxon Mobil, Shell lose $1.8bn suit against Nigeria in US – Independent Observers

Exxon Mobil, Shell lose $1.8bn suit against Nigeria in US

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By Kunle Adedoyin

A court in the United States has declined to start an arbitration suit that could cost the Nigerian government at least $1.8 billion in case N0. 14-08445, instituted by Esso Exploration and Production Nigeria Ltd and Shell Nigeria Exploration and Production Co Ltd against Nigerian National Petroleum Corp (NNPC) in the US District Court, Southern District of New York.

In a 50-paged judgement document, Justice William Pauley, who presided over the case, said the case was side aside because of public policy and due process consideration.

The case is a dispute concerning a 1993 contract between both companies and NNPC, which stipulated that affiliates of Exxon Mobil and Shell would invest money to extract crude oil from the Erha field and share profits with NNPC.

However, Esso Exploration and Production Nigeria Ltd and Shell Nigeria Exploration and Production Co Ltd accused NNPC of singlehandedly lifting more crude oil than was stipulated in the contract hence depriving them of billions of dollars of oil.

“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,” Pauley said.

Pauley said Exxon and Shell still have “multiple appeals pending” in Nigeria, and rejected their argument that it might be difficult to collect there.

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,” Pauley wrote.

“[They] cannot now reasonably complain that [their] efforts to collect will be frustrated in Nigeria.”

Reacting to the judgement, Cecilia Moss, Nigeria’s legal representative, said: “NNPC is very pleased with the decision, and was always confident that there was no basis for a U.S. court to confirm the award.”

Todd Spitler, Exxon spokesman said the company is evaluating its next steps as it disagrees with the decision.

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