Stephenson Harwood beats Weightmans in Nigerian oil battle

Stephenson Harwood has triumphed against Weightmans in batting a $152m fight between two Nigerian energy giants over an arbitration award out of the British legal system.

The judgment handed down on Friday (14 March) in the High Court ruled that the English court system was not the right place to determine the 10-year battle between Nigerian National Petroleum Company (NNPC) and IPCO Nigeria, an oil and gas facility construction company.

Mr Justice Field said: “It is in Nigeria where the enforceability of the award must be decided and I call upon the Nigerian courts to use their powers of case management to expedite not only the hearing of NNPC’s challenge to the award, but also any resulting appeals.”

It was a win for 3 Verulam Buildings’ Jonathan Nash QC, representing NNPC, who was instructed by Stephenson Harwood’s head of Africa and India groups Kamal Shah.

Weightmans partner Tim Mould was brought in for IPCO, instructing XXIV Old Buildings’ Michael Black QC.

The judgment follows 10 years of ongoing fights between the parties which kicked off when a contract between the two companies turned sour in 2004.

IPCO had agreed to design and construct a petroleum export terminal in the Port Harcourt area of Nigeria for NNPC but an argument broke out between the parties over delays in the project. IPCO launched claims for non-payment of invoices, variations, phase II prolongation, escalation of contract price and financing charges.

A  arbitral award was granted to IPCO on 28 October 2004 but NNPC countered with a claim in the Lagos Federal Court, arguing that the arbitral tribunal lacked jurisdiction and had misconducted itself.

IPCO followed that with an injunction to seize the award the same year, which was heard by Mr Justice Gross. Gross J adjourned the enforcement of the award on the condition that NNPC pay pay US$13,102,361.72 to IPCO and provide security in the sum of US$50 million.

The October hearing marked the third application by IPCO to enforce the award. Field J said IPCO’s first task was “to satisfy the court that there has been a sufficient change in circumstances since the court ordered (by consent) on 13 May 2008 to adjourn enforcement”.

He ruled that “NNPC has a good prima facie case that IPCO fraudulently procured a substantial part of the award, rendering it arguable that the award as a whole is vitiated” and said because of that, among other reasons, it was important that the case be heard in Nigeria.

In concluding, Field J said: “The award was issued on 28 October 2004; NNPC’s notice of motion to set it aside was filed on 15 November 2004; NNPC’s motion for leave to plead its fraud case was filed on 27 March 2009; and still there has been no substantive determination as to the validity of the award. For the sake of the parties and the reputation of the Nigerian legal system, this Gordian Knot must surely be cut as quickly as possible.”

The legal line up:

For the claimant, IPCO (Nigeria) Ltd

XXIV Old Buildings’ Michael Black QC and Edward Knight instructed by Weightmans partner Tim Mould

For the defendant, Nigerian National Petroleum Corporation

3 Verulam Buildings’ Jonathan Nash QC, Essex Court Chambers’ James Willan and Catherine Jung instructed by Stephenson Harwood partner Kamal Shah