Oil Spillages: After 31 Years of Legal Battles Shell Agrees to Pay Ogoni N46bn

By Alex Enumah

Shell Petroleum Development Company of Nigeria (SPDC), has finally agreed to pay compensation for oil spillages in the Ogoni community of Rivers State, to the tune of N45.9 billion, after over 31 years of legal battles.

The legal battle, which commenced in 1991, saw judgment in favour of the Ogoni community in 2010 by Justice Ibrahim Buba of the Lagos division of the Federal High Court.

But the oil giant declined payment and proceeded up to the Supreme Court twice; first in 2017 to appeal the judgment of the Court of Appeal, which had upheld the judgment of the trial court and in 2019, seeking a review of the apex court judgment dismissing its appeal.

However, after several back and forth, Shell Petroleum Development Company announced that it has reached an agreement with the plaintiffs/respondents to pay the sum of N45.9 billion.

When the matter was called on Wednesday, counsel to Shell, Chief Aham Ejelamo, SAN, who informed the court of the decision to pay up the money, sought permission of the trial judge, Justice Ahmed Mohammed, to make payment through the Chief Registrar of the court in a bank account to be opened for the purpose.

This request was, however, opposed by counsel to the Ogoni community, Chief Lucius Nwosu, SAN.

In a short ruling, Justice Mohammed, who endorsed the agreement by parties, ordered shell to make payment to the clients through their lawyer.

The substantive suit commenced in 1991 before a Rivers State High Court sitting at Nchia Division, when the Ejama community represented by Isaac Osaro Ogbara, Victor Obari, John Oguru, Joseph Ogusu, G. O. Nnah, George Osaro, and Adanta Obelle, sued Royal Dutch Shell Plc, Netherlands, Royal Dutch Shell Plc, United Kingdom, and SPDC over alleged oil spills, which occurred, when Shell operated in the community in the 1970s.

Judgment was entered for the sum of N6 billion in favour of the community by the Nchia High Court. That judgment was conceded on appeal, because the Supreme Court had in a sister case decided that states’ High Courts had no jurisdiction in oil related-matters.

The plaintiffs in 2001 refiled the suit at the Federal High Court in Port Harcourt.

After listening to the submissions of the parties in the suit, the trial judge, Justice Ibrahim Buba, in his judgment in 2010, awarded N17 billion to the representatives of the Ogoni people. The court equally granted the Ogoni chiefs 25 per cent interest charge on the principal sum.

SPDC then appealed against the judgment and applied for a stay of execution of the judgment pending the appeal.

As a condition for granting the stay of execution, the court required Shell’s bankers, FirstBank, to provide a guarantee of the judgment sum plus interest. This condition was complied with.

But Shell’s appeal failed on merit because it failed to file a brief of argument in support of its appeal, claiming that it was granted leave to file an amended brief of argument, which the Court of Appeal found not to be correct.

Against the agreement reached, Shell proceeded to the Supreme Court, where its new lawyers filed a fresh application asking for leave to amend the original notice of the appeal filed by Olawale Akoni (SAN) at the Port Harcourt Division of the Court of Appeal registry in order for them to argue fresh points not raised at the court below and in order for them to argue 36 additional grounds of appeal.

In its judgment, the apex court held that the notice of appeal filed by the oil giant was incompetent, adding that the motion filed on July 16, 2018, had no leg to stand on and should not have been filed. The apex court consequently dismissed the suit in its entirety.

Justice Kumai Akaahs, who read the judgment of the apex court cited a plethora of authorities to back up the Supreme Court’s position, adding that since the notice of appeal filed by Shell sought to be amended was incompetent, no valid amendment could be effected, because issues of fact or mix law and fact were raised in the original notice of appeal with leave of court.

The Supreme Court justice agreed with the submission of Shell’s lawyer that an appellant, who has a valid and subsisting appeal can seek the leave of court to do so, adding that in the instant case, there was no such valid notice of appeal that could be amended.

While the case was still pending at the apex court, sensing that Shell was using delay tactics to prevent FirstBank from paying the judgment creditors the N17 Billion judgment debt, in December 2017, the plaintiffs commenced garnishee proceedings at the Federal High Court in Owerri presided over by Justice Lewis Allagoa.

They urged the CBN to pay them N122.53 billion out of FirstBank’s account in its custody, and also calculated the principal sum of N17 billion and the accrued 25 per cent interest charge per annum to arrive at the sum of N122,533,403,392.

In January 2018, Justice Allagoa granted them a temporary order (garnishee nisi) ordering the CBN to pay them the sum from FirstBank’s account with it.

But the CBN asked the court not to make the order absolute. The apex bank’s counsel argued that compelling the CBN to pay the N122.53 billion from FirstBank’s funds domiciled with it could have far-reaching consequences for Nigeria’s oldest and biggest lender by assets and deposits, and a systemic impact on the rest of the financial system and wider economy.

Justice Inyang Ekwo of the Federal High Court in Abuja on March 2, 2020, issued an order absolute, and by the order made by Justice Ekwo, the CBN governor was to order the release of the judgment sum from the account of First Bank.

Reacting to the latest judgment of the Supreme Court, the respondents’ lawyer, Nwosu hailed the court for protecting the dignity and integrity of the nation’s judiciary by its decision, despite alleged moves by Shell to ridicule it.

Nwosu noted that the judgment sum, “as at today, with the interest running, is in the neighbourhood of N182 billion.”

He expressed displeasure with the alleged plot by the CBN to frustrate the execution of the garnishee order absolute got against the account of First Bank by the victims/judgment creditors in their bid to execute the judgment.

Shell, in its reaction, disputed the amount, saying the ruling of the Supreme Court did not decide liability or the size of the award. It also denied responsibility for the oil spill in the community, insisting that it was caused by ‘third parties’ during the Nigerian Civil War.

“This spill was caused by third parties during the Nigerian Civil War, a challenging period, which resulted in significant damage to oil and gas infrastructure in the region. While SPDC does not accept responsibility for these spills, the affected sites in the Ebubu community were fully remediated.

“The claimants have, at their own admission in court, materially miscalculated and overstated the value of the award previously sought in this case. The ruling of the Supreme Court did not decide liability or the size of the award, which remains in dispute in other ongoing court proceedings.

“It is our position that any attempt to enforce payment should not be permitted. It is regrettable that the legal process in this case has focused for so long on procedural issues and not the merits of the case. We have always maintained that we are ready to defend this case based on the available facts,” it said.

However, with the endorsement of the agreement by Justice Mohammed on Wednesday, an end seemed to have come to the litigation in the Ogoni oil spillages.

The Ogonis, however, waived the interest on the judgment sum as concession agreed upon during reconciliation.