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Nigerian National Petroleum Corporation & Anor. v. Famfa Oil Limited (2008) - SC


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icon CASE SUMMARY OF:

Nigerian National Petroleum Corporation & Anor. v. Famfa Oil Limited (2008) - SC

by PaulPipAr
icon TAG(S)

- OML license;
- Procedures;
- Back-in-Right Regulation;
- Petroleum;
icon PARTIES

APPELLANT
1. Nigerian National Petroleum Corporation (NNPC);
2. Hon. Attorney General Of The Federation
v.

RESPONDENT
1. Famfa Oil Limited
icon CITATION


icon COURT

Supreme Court
icon LEAD JUDGEMENT DELIVERED BY:

BODE RHODES-VIVOUR, J.S.C.
icon LAWYERS WHO ADVOCATED

* FOR THE APPELLANT
- Alhaji Ibrahim, SAN. (For the 1st Appellant);
- Mr. T. Abe. (For the 2nd Appellant);

* FOR THE RESPONDENT
- Mr. B.A.M. Fashanu, SAN;
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Bank: Zenith Bank.
Name: Branham Paul Chima.
Account No.: 2178756839.


icon FACT (as relating to the issues)

The respondent as plaintiff took out an originating summons against the appellants, (the defendants) claiming the following reliefs:
1. A declaration that the President, Vice President or Officers in the Public Service at the Federation cannot grant any Oil Prospecting License (OPL) or any Oil Mining Lease (OML) or any interest whatsoever in respect of any Minerals, Minerals oils and natural gas in, under or upon the territorial waters and Exclusive Economic Zone of Nigeria to any person or persons except under and in accordance with the provisions of the Petroleum Act Cap. P.10 or the Laws of the Federal Republic of Nigeria, more particularly Section 2(1)(a)(b) and (c) as well as Section 2(3).
2. A declaration that by virtue of paragraph 8 of the first Schedule to the Petroleum Act, the first respondent cannot grant an Oil Mining Lease to any other person or persons except the holder of an Oil Prospecting Licence.
3. A declaration that the President, Vice President or Officers in the Public Service of the Federation cannot acquire any interest in an Oil Prospecting Licence (OPL) or Oil Mining Lease (OML) except under and in accordance with the provisions of:
(a) Paragraph 35 of the First Schedule;
(b) Section 44(1) of the Constitution of the Federal Republic of Nigeria.
4. A declaration that the purported acquisition of 50% of the applicants interest or any interest whatsoever in OML-127 in as much as it was not done in compliance with the provisions of the law and the Constitution as stated above is illegal, unconstitutional, null and void and cannot confer any interest whosoever in OML-127 in the second respondent (that is due process of the law must be followed).
5. A perpetual injunction restraining the second respondent, its assign, servants, privies, subsidiaries, whatsoever, howsoever, whomsoever from exercising any right in the said OML-127 or any party or portion thereof.

Adah, J of the Federal High Court, Abuja Division presided. At the end of the trial which was on affidavits and documentary evidence the learned trial judge held that the acquisition of 50% of the plaintiff's interest in OML-127 was done in compliance with the provisions of the law and the Constitution.
Dissatisfied with this judgment, the respondent filed an appeal. The appeal was heard in the Court of Appeal Abuja Division. That court allowed the appeal, and set aside the judgment of the trial court.
This appeal is against that judgment.
icon ISSUE(S)

1. Whether the acquisition of 50% interest in OML-127 by the Federal Government of Nigeria was done in compliance with the provisions of the Law and the Constitution?
icon HOLDING & RATIO DECIDENDI

[PRELIMINARY-OBJECTION]

A. IN RELATION TO GROUNDS RAISED BY THE 1st Appellant.
i. Applying the pronouncements of this court in the two cases earlier alluded to, ground 1 complains about the wrongful application of the Law. It is a ground of Law. Ground 2 complains of a misconception by the court of the case of the appellant. It is a ground of mixed law and fact. Ground 3 complains of a misunderstanding by the court of the Bank-in-Rights Regulations 2003 and paragraph 35 of the First Schedule to the Petroleum Act. It is a ground of Law. Ground 4 complains of a decision based on a complaint that was raised for the first time without leave of court. It is a ground of mixed law and fact. Ground 6 complains about misunderstanding of the court of paragraph 35 of the first schedule to the Petroleum Act. It is a ground of law. Ground 7 complains that the court did not take into account undisputed facts before reaching its decision. It is a ground of mixed law and facts. Grounds 1, 3, 5, 6 are grounds of law, while grounds 2, 4 and 7 are grounds of mixed of law and fact. They are caught by section 233(3) of the constitution and are hereby struck out. Grounds 1, 3, 5 and 6 are grounds of law and they sustain the appeal.

B. IN RELATION TO GROUNDS RAISED BY THE 2nd Appellant.
i. Ground 1 complains about a misunderstanding of the law. It is a ground of law. Grounds 2 and 3 complain about misconception of the Back-in-Right Regulations 2003 and paragraph 35 of the first schedule of the Petroleum Act. Both grounds are grounds of law. Ground 4 complains of no evidence before the court upon which it could have validly reached its decision. It is a ground of law. The 2nd appellants' grounds of appeal are grounds of law. They are not caught by the provisions of section 233(3) of the Constitution.

[MAIN APPEAL: DISMISSED WITH N50,000 COST EACH]

1. ISSUE 1 WAS RESOLVED AGAINST THE APPELLANTS AND IN FAVOUR OF THE RESPONDENT.

RATIO:
i. The question to be answered is did the Minister for Petroleum negotiate with the applicant. Addressing this court on the 14th February, 2012 learned counsel for the 1st appellant said that Oil, Minerals are vested in the Federal Government and so negotiation is not necessary. Both counsel for the appellants also relied on Exhibit EE2, an agreement signed on 11/7/03. Letters written to the respondent dated 27/1/05 and 19/4/05 are instructive.

The letter dated 27/1/05 reads in part: "Pursuant to the court judgment and in accordance with the provisions of the Back-in-Right Regulation of 2003, we wish to notify you that five-sixth of your equity has been taken over by Government..."
And the letter dated 19/4/05 reads: "I am hereby directed to inform you that in exercise of the right, the Federal Government of Nigeria hereby takes a 50% participating interest in the block. This interest is vested in the Nigeria National Petroleum Corporation (NNPC).

On both letters the Court of Appeal said: "The language of these two letters is clear, they all conveyed a message of the exercise of naked power exercised in a most arbitrary manner; all under the guise of exercising rights conferred by the so called Back-in-Rights Regulation."

I agree with the Court of Appeal. There was no negotiation before the Federal Government took 50% participating interest in OML-127. It was taken by the Federal Government in accordance with the provisions of the Back-in-Right Regulation of 2003.

ii. Under the Back-in-Right Regulations 2003 there is no provision for negotiation, while section 35 of the first schedule to the Petroleum Act makes it mandatory that before the Federal Government of Nigeria acquires its 50% interest in an OML it must negotiate with the recipient of the OML Licence. I am satisfied that the appellants acted under the Back-in-Right Regulation of 2003 to acquire interest in OML 127 in clear violation of the provisions of paragraph 35 of the 1st schedule of the Petroleum Act. The provisions of the Regulations can never be read in derogation to the provisions of the Petroleum Act. The acquisition by the Federal government of Nigeria was wrong.
iii. Exhibit EE2, the agreement executed by the parties was done in clear violation of the provisions of paragraph 35 of the first schedule to the Petroleum Act. It remains for all time a worthless piece of paper in the light of the long settled position of the law that parties even by consent cannot alter the provision of a statute. The fact that the Minister for Petroleum did not execute exhibit EE2 is conclusive evidence that there was non compliance with paragraph 35 of the first schedule to the Petroleum Act. Furthermore, Exhibit EE2 was executed on 11/7/2003 over one year, before letters arbitrarily acquiring 50% interest in OML 127 were sent out on 27/1/05 and 19/4/05. Negotiation by the Minister with recipient of on OML should be done at the time of consideration of the application for the licence and not years before oil is found or in anticipation of oil being found.
iv. The Federal Government of Nigeria has a right to a participating interest of 50% in OML 127 (and indeed in any OML). In the light of the fact that there was non-compliance by the Minister of Petroleum with the clear provisions of Paragraph 35 of the First Schedule of the Petroleum Act, the acquisition by the Federal Government of Nigeria in OML-127 was illegal and unconstitutional. It offends section 44(1) of the Constitution.
icon REFERENCED

S. 44(1) of the CFRN 1999;
icon SOME PROVISIONS

Paragraph 35 of the first schedule to the Petroleum Act states that: "35. If he considers it to be in the public interest, the Minister may impose on a licence or lease to which this statute applies special terms and conditions not inconsistent with this Act including (without prejudice to the generality of the foregoing) terms and conditions as to - (a) Participation by the Federal Government in the venture to which the licence or lease relates on terms to be negotiated between the Minister and the applicant for the licence or lease; and...''

Section 22 of the Supreme Court Act reads in part: "The Supreme Court may from time to time make any order necessary for determining the real question in controversy in the appeal, and may amend any defect or error in the record of appeal..."

Order 8 Rule 12(1) of the Supreme Court Rules states that: "(1) In relation to an appeal the Court shall have all the powers and duties as to amendment and otherwise of the court of first instance, and, where that court is not the court of trial, the court of trial".


icon RELEVANT CASES

A. WHEN A GROUND IS A GROUND OF LAW
In Nwadike v. Ibekwe (supra) this court explained further that: (a) it is an error in law if the adjudicating tribunal took into account some wrong criteria in reaching its conclusion. O'Kelly v. Trust House Foile PLC 1983 3 ALL ER p. 468 (b) Several issues that can be raised on legal interpretation of deeds, documents, term of arts and inference drawn therefrom are grounds of law Ogbechie v. Onochie (supra) at p.491. (c) Where a ground deals merely with a matter of inference, even if it be inference of fact, a ground formed from such is a ground of law Benmax v. Austin Motor C. Ltd. 1945 ALL ER p. 326 (d) Where a tribunal states the law in point wrongly, it commits an error in law. (e) Where the complaint is that there was no evidence or no admissible evidence upon which a finding or decision was based, same is regarded as a ground of law. (f) If a judge considers matters which are not before him and relies on them for the exercise of his discretion, he will be exercising same on wrong principles and this will be a question of law.

In Ogbechie & Ors. v. Onochie & Ors. (supra) this court adopted the explanation given by the authors of the Law Quarterly Review vol. 100 of October, 1984. The authors explained thus: 1. If the tribunal purports to find that particular events occurred although it is seised of no admissible evidence that the events did in fact occur, it is a question of law. But where admissible evidence has been led its assessment is entirely for the tribunal; in other words it is a question of fact. 2. If the tribunal approached the construction of a legal term of art in a statute on the erroneous basis that the statutory wording bears its ordinary meaning it is a question of law. 3. If the tribunal approaches the construction of a statutory word or phrase bearing an ordinary meaning on the erroneous basis that it is a legal term of art, it is question of law. 4. If the tribunal though correctly treating a statutory word or phrase as a legal term of art errs in elucidation of the word or phrase it is a question of law. 5. If the tribunal errs on its conclusion (that is, in applying the law to the facts) in a case where this process requires true skill of a trained lawyer, it is error of law. 6. If, in a case where a conclusion can as well be drawn by a layman (properly instructed on the law) as by a lawyer, the tribunal reaches a conclusion which cannot reasonably be drawn from the facts as found. In that event the superior court has no option but to assume that there has been some misconception of the law.

Menakaya v. Menakaya (2001) 9 -10 SC p.1 Ogundare, JSC said: "Suffice is to say that parties cannot by conduct or consent alter the constitution or a statute."
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icon NOTABLE DICTA

* PROCEDURAL
It is the duty of an Appeal Court when hearing appeals to examine very carefully the issues formulated by the parties to identify the real grievance of the appellant. In such an exercise the court can adopt issues formulated by either side or formulate issue that would determine the real grievance of the appellant. - Rhodes-Vivour, JSC. NNPC v. Famfa

When the Originating process (as in this case) is an Originating Summons, the affidavits filed in support serve as the statement of claim, while the counter-affidavits serve as statement of defence. The affidavits are the pleadings for the case. - Rhodes-Vivour, JSC. NNPC v. Famfa

* SUBSTANTIVE
Facts have no views. - Rhodes-Vivour, JSC. NNPC v. Famfa (2012)

Bare denials amount to no denial in Law. - Rhodes-Vivour, JSC. NNPC v. Famfa (2012)

The clear intention of the legislature is that negotiations should take place between the Minister for petroleum and the applicant for an OML Licence. The reasoning of the legislature is that the Minister while negotiating must take into account the huge sums of money spent by the applicant drilling for oil, and ensure that the 50% stake of the Federal Government of Nigeria in the OML is well taken care of on terms acceptable to the Government. - Rhodes-Vivour, JSC. NNPC v. Famfa (2012)

It is the principal law that provides subsidiary legislation the source of its existence. Without Principal Law there can be no subsidiary legislation, and so subsidiary legislation must conform with the principal law. The petroleum Act is principal law, a statute. Where it prescribes a particular method of exercising statutory power the procedure so laid down must be followed without any deviation whatsoever. - Rhodes-Vivour, JSC. NNPC v. Famfa (2012)

If any provision of the Regulations are inconsistent with the provisions of the Act/Statute the provisions of the Regulation shall to the extent of inconsistency be declared void. - Rhodes-Vivour, JSC. NNPC v. Famfa (2012)

I must observe that the schedule of an Act/Statute is part of the Act and it is as potent as any part of the Act. It is the duty of the court to ensure that it is bound by rules made under the law of the land. - Rhodes-Vivour, JSC. NNPC v. Famfa (2012)

Negotiation by the Minister with recipient of on OML should be done at the time of consideration of the application for the licence and not years before oil is found or in anticipation of oil being found. - Rhodes-Vivour, JSC. NNPC v. Famfa (2012)

The courts in the interpretation of Statutes must not encourage the government to violate its own laws. - Oyelola Adekeye, JSC. NNPC v. Famfa (2012)

It is imperative that negotiation by the Minister with the recipient of an OML should be done at the time of consideration of the application for the licence and not in anticipation of discovery of oil. - Oyelola Adekeye, JSC. NNPC v. Famfa (2012)

The ultimate touchstone of constitutionality of any action is the Constitution itself. - Ngwuta, JSC. NNPC v. Famfa (2012)
The end of this brief.


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