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US court freed NNPC from $2.7b arbitration award

The NNPC provided details on how the US Southern District Court of New York expelled him from responsibility in the event of a $ 2.7 billion arbitration request by ITO Exploration and Production Nigeria Limited and Shell Nigerian Exploration and Production Company Limited.

The hearing was held on February 1, 2019 in the protracted dispute arising from the disputes between NNPC and ESSO regarding the implementation of the shared production contract dated May 21, 1993 relating to OPL 209 / OML 133.

ESSO presented its requests for arbitration in the United States and obtained an arbitration award of US $ 1.799 billion on October 24, 2011, with an annual interest of LIBOR plus 4%.

NNPC immediately contested the Award at the Abuja Federal High Court, which in May 2012 ordered the cancellation of the Arbitration Award.

Despite the decision of the Court of Nigeria, the ITA has asked the United States District Court, in the southern district of New York, for recognition and execution of the Arbitration Award.

NNPC challenged ESSO’s request that there was no award, which the United States Court. UU. He could assert, as a competent court in Nigeria had set aside the prize.

NNPC also claimed that there was no legal basis for the United States Court. UU. He exercised his jurisdiction over him, as he had no presence in the United States, owned no property and did not conduct business there.

IT stated that NNPC is the alter ego of the federal government of Nigeria, which has operations in the United States. UU., Including bank accounts, and also conducts business in the United States. UU.

This has obtained the court’s permission to make a jurisdictional discovery to determine whether the US court can enforce personal jurisdiction over NNPC.

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At the end of the investigation procedure, the Court ordered the NNPC and IT to appear for the hearing, which was held before the Honorable Judge W.H. Pauley on 1 February 2019, for the parties to examine their respective positions.

On September 4, 2019, the United States UU Court. He issued his sentence in which he confirmed the Corporation’s request to reject the ESSO request for compliance because he believed that a competent Nigerian court had canceled the underlying Award and ordered the Registrar to close and suspend all motions and proceedings presented by IT in this subject.

Thanks to this development, NNPC has successfully assured the refusal of ESSO’s request to guarantee the recognition and execution of its Arbitration Award worth more than USD 2,699,405,616 in addition to interest.

The effect is that ESSO, who had requested the Order of the United States Court to enforce this sentence, lost the right. While ESSO is free to appeal against this decision, NNPC is optimistic that its appeal is very strong.

According to Ndu Ughamadu, NNPC general manager public affairs, “This is a significant decision in the history of this case as the US Court has not only discharged NNPC from any indebtedness to ESSO but also set the stage for NNPC’s pursuit of the challenge of three other outstanding Enforcement Applications filed in the US Court by other PSC Contractors.

“Additionally, this decision of the US Court would lend weight to the effort of NNPC and the PSC Contractors to explore amicable resolution of the underlying PSC disputes”.

NNPC was represented by the US law firm of Messrs. Chaffetz Lindsey LLP, and Nigerian law firm of Messrs. Streamsowers & Kohn