A High Court of Justice in London, the United Kingdom, has awarded $110.5million to Energy Venture Partners Limited (EVP) against Malabu Oil and Gas Limited.
The court also dismissed counterclaim by Malabu on the grounds that the claim was a breach of agreement and unmeritorious.
EVP, a firm registered under the laws of the British Virgin Islands, had dragged Malabu Oil before the court, seeking payment of fees allegedly due to it from Malabu Oil in relation to the sale of Malabu's 100% ownership interest in an Oil Prospecting Licence (OPL) 245.
EVP had claimed that there was a written agreement between it and Malabu in January 2010, saying that Malabu agreed to pay $200 million to it in respect of its fees for services provided in connection with the sale of the OPL assets.
But Malabu has denied that it ever agreed to pay the alleged fees, insisting that EVP's claim was a forgery and a sham. Malabu also contends that the transaction or transactions by which Malabu ultimately disposed of the OPL Assets in April 2011 did not entitle EVP to commission under the terms of the EVP Exclusivity Agreement.
In a certified true copy of judgment delivered on July 17, 2013 and obtained by LEADERSHIP last night, Lady Justice Gloster held that the reasonable fee for EVP's services is $110.5 million, based on a fee of 8.5% of the total disposal consideration of $1.3 billion as against the EVP's claim of $200million.
But the judge had also in a case No: 2011 FOLIO 792 dismissed EVP's claim for a contractually agreed fee of $200 million.
In her judgment, Justice Gloster held that, "I find that, either under an implied agreement, or under an implied term, EVP had a contractual right to a reasonable fee. In the alternative, if I am wrong to apply any uplift to the figure of 7⅔% proposed by EVP in December 2010, then the appropriate fee is $100 million. I dismiss Malabu's counterclaim.
"Taking into account all the above factors, I conclude that a reasonable amount for Malabu to pay EVP for the services which the latter provided pursuant to the EVP Exclusivity Agreement contract is 8.5% of the disposal consideration of $1.3 billion, which amounts to a sum of $110.5 million."
The judge also doubted the credibility of Malabu's witness and a former minister of petroleum, Chief Dan Etete, when she held that "the reputation of Malabu, and the reputation of Etete, not merely historically as someone who had been convicted of money laundering, linked to the Halliburton bribe scandal and regarded as connected to former President Abacha, but also as someone who had a personality which made him difficult to negotiate with".
She stressed that her reasons for arriving at the figure are: "One aspect of the difficulty in determining what would be a reasonable amount "as contemplated by the parties to the contract" is that, in this case, each of Mr Obi and Chief Etete had very different ideas as to what was a reasonable fee for EVP to be paid.
"I do not accept that a figure in the region of $200 million was ever a figure that could be said to have been in the contemplation of both parties as a reasonable fee for EVP to be paid for its services."
"In my judgment it was the figure that Mr Obi put forward from the beginning of negotiations in 2009, as an aggressive starting point, in the hope that he could ultimately arrive at a substantial (albeit considerably reduced) agreed figure with Chief Etete, after the conclusion of negotiations."
"I accept Mr Howard's submission that, on the true construction of this clause, EVP was fully entitled to obtain and retain fees or remuneration from any third party, including Mr Agaev/ILC. The 'or' makes it clear that the 'third parties' in question are not 'potential investors or buyers'; they are other third parties. The use of the word 'any' has the result that the provision is of wide application.
"Accordingly none of the consequences for which Malabu contended arose, even if, contrary to my conclusion, the Secret Commission Agreement had indeed been concluded. Accordingly I dismiss Malabu's counterclaim."