20 June 2018

Nigeria: Court Orders Shell to Pay $3.6 Billion Fine Over Oil Spill

Lagos — Justice Mojisola Olatoregun, sitting at a Federal High Court in Lagos has dismissed a suit by Shell Nigeria Exploration and Production Company Ltd challenging the imposition of $3.6billion fine on it by the Federal Government.

The court resolved all the issues in the defendant's favour and dismissed the suit.

Shell sued the National Oil Spill Detection and Response Agency (NOSDRA), challenging its powers to impose levies or fines over oil spills.

The plaintiff prayed the court to declare that NOSDRA cannot, in the light of Section 1, 3, 4, 5 and 6 of the 1999 Constitution, validly exercise any powers under Section 5, 6, 7 and 19 of the NOSDRA Act.

Shell, through its lawyer Chief Wole Olanipekun (SAN), said the sections' provisions encroach on judicial powers vested exclusively in the courts.

The oil giant argued that it is the Federal High Court that is vested with the jurisdiction to determine liability and to assess, impose and direct the payment of any sum as penalty, damages or compensation in connection with an incidence of oil spillage, particularly the Bonga Oil Spill of December 20, 2011.

Shell urged the court to declare that the decision leading to the imposition of $3,600,191,206.00 on by NOSDRA was in breach of its right as enshrined in Section 36, 43 and 44 of the 1999 Constitution.

It also urged the court to nullify NOSDRA's powers to impose such levies over oil spills.

But NOSDRA, through its counsel Mr D. A. Awosika, argued that the cause of action arose on March 25, 2015 when it served Shell with notice of sanction over the Bonga Oil Spill.

Awosika contended that Shell was enjoined to exercise its right of litigation if it felt aggrieved by the letters within three months from March 25, 2015 and not beyond.

"The plaintiff waited for more than 13 months to institute this action against the defendant," NOSDRA said, adding that Shell's action was caught by the statute of limitation.

Besides, NOSDRA said it did not act outside its powers in imposing the fine on Shell.

In her May 24 judgement, a copy of which was obtained on Wednesday, Justice Olatoregun held that NOSDRA acted in line with its powers and did not violate Shell's rights in any manner.

The judge also found that Sections 5, 6 and 7 of the NOSDRA Act which empower it to impose penalties do not violate the Constitution.

"I found no conflict with the duties conferred on NOSDRA by law and the power of the court to adjudicate in this matter... I find no violation of the 1999 Constitution within these sections," the judge held.

Justice Olatoregun further held that NOSDRA's demand letters to Shell were not in conflict with Section 44 of the 1999 Constitution.

The judge said: "The plaintiff had notice and opportunity to fair hearing. The plaintiff ought to have had recourse to the court for the determination of its civil rights and a proper adjudication on the issues if it felt its rights were infringed or about to be infringed.

"I do not find the two letters ultra vires the duties and functions of the defendant.

"I have no reason to set both letters aside as well as the sums ordered, as parties did not make evaluation of the assessed damage an issue for consideration in the questions raised for determination. No evidence upon which an evaluation could be made was also proffered.

"In the final analysis, all the questions raised by the plaintiff are resolved in favour of the defendant. The only thing left to do is make an order dismissing the suit. Same is dismissed."

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