Nigerian National Petroleum Corporation V.clifco Nigeria Limited (2011)

LAWGLOBAL HUB Lead Judgment Report

BODE RHODES-VIVOUR, J.S.C

The Appellant/cross respondent and the respondent/cross appellant executed a contract on the 7th day of October 1994.

In that contract it was agreed that the appellant/cross respondent would sell to the respondent/cross appellant twenty four cargoes of Vacuum Gas oil (VGO) at the rate of one cargo per month. The contract was for two years certain and it commenced on 7th of October 1994. As at 1999 the appellant/cross respondent had only made available to the respondent/cross appellant five cargoes of VGO. Rather than sue for breach of contract the respondent/cross appellant preferred Novation. The parties had a meeting on the 27th of October 1999, and at that meeting a Novation emerged. The old contract had been novated into a new contract. New terms were agreed in substitution for some of the-terms of the term contract. The new terms were that in substitution for VGO, Nineteen cargoes of Low Pour Fuel Oil (LPFO) at the same rate would be supplied to the respondent/cross appellant commencing from November, 1999.

The parties went to arbitration because the appellant/cross respondent failed to deliver to the respondent/cross appellant the nineteen cargoes of LPFO as agreed in the novation, in place of the same amount of VGO.

On the 12th of December, 2000 the arbitrators published their award, which was in favour of the respondent/cross appellant. The award by the Arbitral Panel runs as follows:

“We award and determine that the respondent (i.e. the appellant in this appeal) jointly and severally shall pay to the claimant sum the of $4,500,000 (four million, five hundred thousand US Dollar) OR in the alternative, we order the delivery by the respondent to the claimant a total of 18 cargoes of LPFO of 25,000 metric tons each month for every consecutive month commencing from the month of January, 2001 for the next eighteen months.

It was further ordered that if the respondents should default in any months delivery, the balance of the cargoes will become due and exigible in cash at the rate of US $250,000.00 (two hundred and fifty thousand US Dollars) each, at the prevailing price in the oil market. It was further ordered that the respondent shall bear and pay the whole costs of the arbitration which includes fees and expenses assessed at N4, 000,000.00 (four million Naira). Finally the respondent were ordered to pay the claimant interest at the rate of 10% per annum from the day after the award was made until the date of payment of the sums awarded, both dates inclusive”.

Before the arbitral panel the Pipelines and Products marketing Company was the 2nd respondent. The Court of Appeal struck them out.

The appellant, as applicant in suit No: FHC/ABJ/CS/433/2000 took out an originating summons. The applicant prayed the Federal High Court for the following reliefs:

1. An order setting aside the arbitral award dated, the 12th of December, 2000 by Chief, The Hon. Dr. Nnaemeka-Agu, Alhaji, The Hon. Abdullahi Ibrahim SAN, and Chief, The Hon. Bayo Ojo, SAN in the matter of the arbitration between CLIFCO Nig Limited v. Nigeria National Petroleum Corporation.
2. An order refusing recognition or enforcement of the arbitral award dated the 12th December, 2000 by Chief,The Hon. Abdullahi Ibrahim SAN, and Chief, The Hon. Bayo Ojo SAN in the matter of the arbitration between CLIFCO Nigerian Ltd. v. Nigerian National Petroleum Corporation.

In support of the originating summons was a 30 paragraph affidavit deposed to by Olayinka Bolanta, a Legal Practitioner in Chambers of applicant’s Counsel. Several documents were annexed to the affidavit in support.

Arguments commenced on 13/3/01 and were concluded on 10/5/01.

The learned trial Judge Okeke J. delivered judgment on the 31st day of October, 2001. The Judge set aside the award and further held that the award could not be enforced. The respondent/cross appellant filed an appeal before the Lagos Division of the Court of Appeal. The appellant/cross respondent as respondent filed preliminary objection and cross-appealed.

In a well considered judgment delivered on the 30th day of June 2003, the Court of Appeal concluded as follows:

1. The order by the arbitral panel that the 1st respondent pay US $4,500.000.00 damages as loss of profit is set aside as the order constitutes an error on the face of the record.
2. The alternative award by the arbitration panel that the 1st respondent should supply to appellant 18 Cargoes of LPFO monthly as affirmed.
3. The award is remitted to the arbitrators who shall within 60 days from the date of this judgment set a new time frame for the performance of order (2) made above.
4. The award of 10% interest on the monetary compensation made by the arbitrators is set aside as one without jurisdiction.
5. The name of Pipelines and Products Marketing Company Ltd. in the proceedings before the arbitration Panel is struck out and consequently the award made against it jointly with the 1st respondent is set aside. The award against the 1st respondent however subsists as stated in order 2 above.
6. There is no basis to sustain the judgment of the lower court on the other ground other than those stated in the judgment as canvassed on Respondent’s Notice.
7. I award N7,500 costs in favour of the appellant against 1st respondent. I also award N5, 000 damages against the appellant in favour of the 2nd respondent.

This appeal is against that judgment. The Respondent before the Court of Appeal (i.e. the Nigerian National Petroleum Corporation) filed an appeal, while the appellant before the Court of Appeal (KLIFCO Nigeria Limited) filed a cross appeal.