Dispute Over OPL 310 and  Doctrine of Res Judicata

The ongoing legal dispute over Oil Prospecting Licence (OPL) 310 awarded to Optimum Petroleum Development Company Limited has raised the question of whether a trial court can review its own judgment or sit on appeal over its own decision, Wale Igbintade writes

The right to review a judgment is one of the two exceptions of a Latin term ‘Res Judicata’ which means, once the court lawfully hears all the contentions made by both parties in a suit and delivers a final judgment, then after such delivery of judgment, the case cannot be reopened for further hearing and the verdict is binding on both parties.

The recent suit filed by Afren Investment Oil and Gas Nigeria Limited and Lekoil 310 Limited has again highlighted the legal principle, which prevents a party from re-litigating a claim, defence or issue already litigated. This principle is intended to ensure the finality of judgments and protect litigants from multiple litigations involving the same or similar claims or issues.

Court documents sighted by us revealed that the federal government on July 27, 1993, awarded OPL 310 to Optimum Petroleum Development Company Limited from February 3, 1992 to prospect for petroleum on a 100 per cent sole risk basis as the operator with a proviso allowing Optimum to choose to give up at most 40 per cent of the interest to a technical and/or financial partner.

In the court documents, the company stated that by some agreements entered into in 2009 between Optimum and Afren Investment Oil and Gas Nigeria Limited (a company incorporated in Nigeria), Optimum agreed to assign and transfer 40 per cent of its participating interest in OPL 310 to Afren. By a letter dated  May 26, 2009, the ministry conveyed the approval of the Minister for Optimum to assign the 40 per cent participating interest in OPL 310 to Afren and that the consent is subject to strict compliance with the agreements executed between Optimum and Afren.

Sometime in 2013, Afren assigned 17.14 per cent of its 40 percent interest in OPL 310 to Mayfair Assets & Trusts Limited (Mayfair), a sister company of Lekoil 310 Ltd which is registered in Cayman Islands. Optimum gave its consent to the assignment of the 17.14 per cent interest from Afren to Mayfair on the condition that the agreements between Afren and Optimum are amended to take account of Mayfair becoming a party to the agreements.

However, Afren allegedly failed to secure the consent of the minister to the assignment. Instead, Afren secured the consent of the Minister of State for Petroleum Resources.

Subsequently in 2015, the Chancery Court in London granted an administrative order in respect of Afren Nigeria Holdings Ltd (a company incorporated in the UK and the majority shareholder of Afren Investment Oil and Gas Nigeria Limited), and three administrators were appointed for the company.

By a letter dated December 12, 2016, the ministry rejected Lekoil’s application for consent of the minister to transfer the entire issued and outstanding share capital of Afren to Lekoil on the ground that the application should originate from Afren being the assignor and the application should be supported by evidence of written consent of Optimum and amended agreements to accommodate all the interests acquired by Mayfair and Lekoil.

Also, Afren Nigeria Holdings Ltd (which was already under administration in the UK), not  Afren Investment Oil and Gas Nigeria Limited, applied to the Department of Petroleum Resources (DPR) for the consent of the minister for the acquisition of 100 per cent of the shares of Afren by Lekoil.

In response to the ministry, Optimum informed DPR that it was not supporting Lekoil’s application for consent based on the fact that it had terminated all its agreements with Afren which had been communicated to DPR and that Optimum has been unable to reach an agreement with Lekoil even with respect to the 17.14 per cent interest in OPL 310 due to its technical and financial incompetence such as Lekoil’s inability to show Optimum proof of funds and to agree on commercial terms which have resulted in the prolonged delay in optimally developing OPL 310.

Subsequently, Lekoil and Afren commenced an action by originating summons in 2018 (Suit No. FHC/L/CS/482/2018) at the Federal High Court, Lagos Division against the Minister of Petroleum Resources seeking declaratory and injunctive reliefs that Lekoil had validly acquired the issued share capital of Afren and indirectly Afren’s 22.86 per cent participating interest in OPL 310. With the prior leave of court, Optimum was joined in the suit as the 2nd defendant.

At the end of that suit, the court dismissed the suit in its judgment delivered on March 28, 2019 having found the suit unmeritorious.

 In dismissing the suit, the court held that Lekoil has not acquired the shares of Afren and by that, the interest in OPL 310 as its purported acquisition is inchoate and invalid.

It held that consent cannot be obtained in default and that both Afren and Lekoil failed to obtain the prior consent of both Optimum and the minister.

Dissatisfied with the judgment, Lekoil and Afren filed a Notice of Appeal before the Court of Appeal, Lagos Division but subsequently withdrew the appeal.

Thereafter, Optimum and Mayfair entered into a Cost and Revenue Sharing Agreement (CRSA) dated  August 22, 2019 in respect of OPL 310. By the CRSA, Optimum and Mayfair agreed that the 22.86 per cent interest in OPL 310 should be held by a third party not Afren and they further agreed that Lekoil 310 Ltd has no business with the 22.86 per cent interest in OPL 310 but it has a non-exclusive right to nominate a third party as a technical and financial partner for the 22.86 per cent interest.

Meanwhile, Mayfair failed in performing its obligations under the CRSA which negatively affected the development of OPL 310 and Optimum exercised its right to terminate the CRSA by a letter dated February 8, 2021.

Prior to the expiration of OPL 310, Optimum applied to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for the conversion of OPL 310 to a Petroleum Prospecting Licence (PPL).

Sometime in January 2023, Optimum said it conducted a search on Afren’s file at the Corporate Affairs Commission (CAC) and discovered the several steps taken by Afren and Lekoil in violation of the laws of the Federal Republic of Nigeria and the final judgment of the court delivered on March 28, 2019 in Suit No. FHC/L/CS/482/2018 particularly with the transfer of the shares of Afren and change of management.

In the light of these discoveries, Optimum in a petition dated February 5, 2023, notified the CAC through its Registrar-General and Administrative Proceedings Committee to remedy them. Optimum also copied the said petition to Lekoil 310 Ltd and the NUPRC.

By a letter which was delivered to Optimum on  March 28, 2023, the CAC wrote to Optimum to respond within two weeks to the issues raised in a letter dated March 1, 2023 by counsel to Afren and Lekoil 310 Ltd.

However, Afren and Lekoil 310 Ltd as plaintiffs commenced another action (Suit No. FHC/L/CS/563/2023) by originating summons against Optimum as defendant before the same Federal High Court, Lagos Division together with a Motion Ex parte and a Motion on Notice for Injunctions essentially seeking to restrain Optimum from unreasonably refusing to give subsequent consent to the acquisition of the shares of Afren by Lekoil 310 Ltd, and to restrain Optimum from further representations to the CAC, among other statutory bodies, regulatory and government agencies, in respect of the 22.86 present participating interest in OPL 310.

Besides, on  March 30, 2023, the plaintiffs obtained an ex parte order of injunction from the said court restraining Optimum from interfering with the subject matter of the suit by further representations to CAC, among other statutory bodies, regulatory and government agencies that the right of Afren in respect of the 22.86 per cent participating interest in OPL 310 has reverted or devolved to Optimum or any other person or authority, or carry out any action that will foist a fait accompli on the court in any way, form or manner.

Meanwhile, the ex parte order of injunction which was granted by the court in the fresh suit on March 30, 2023 and served on Optimum on April 6, 2023 automatically lapsed upon the expiration of 14 days after the filing of Optimum’s Motion on notice for discharge of the ex parte order on  April 17, 2023.

However, the court documents reveal that Optimum is contesting that the fresh suit has the same or similar issues with the previous suit that was decided in favour of Optimum and the minister.

For instance, Optimum in its Notice of Preliminary Objection dated April 19, 2023, Optimum raised objections to the suit on grounds of lack of jurisdiction, lack of locus standi, res judicata, limitation of statute, and functus officio.

It further contended that proper and necessary parties were not added to the suit as none of the parties to the suit are the owners of OPL 310 or the interest therein as recognised by Section 44(3) of the 1999 Constitution (as amended); Section 1 of the PIA and Section 1 of the Petroleum Act.

Optimum also filed a counter affidavit and written address to the originating summons contending, among others, that the entire action of the plaintiffs is premised on their right to own immovable property in Nigeria under the provisions of Section 43 of the 1999 Constitution (as amended) and by that section, only a citizen of Nigeria has the right to acquire and own immovable property anywhere in Nigeria, and that Lekoil 310 Limited is not a Nigerian company.

Optimum, among others, is arguing that the Federal High Court cannot sit and assume the status of an appellate court over its own decision in the previous suit more so as the same plaintiffs in this fresh suit appealed the earlier judgment of the court to the Court of Appeal but subsequently withdrew the appeal, and the legal effect of this withdrawal is that the appeal is dismissed and the judgment of the court in Suit No. FHC/L/CS/482/18 is final, valid and subsisting.

It added that with the benefit of hindsight, with this fresh suit, the plaintiffs are attempting to surreptitiously use the same court, to implead its previous judgment, halt, frustrate or freeze its enforcement, set it aside and thereby deprive Optimum and the Federal Government of Nigeria the fruits of the judgment.

Afren and Lekoil are yet to respond to the application for security for costs, notice of preliminary objection, counter affidavit and written address against the originating summons filed by Optimum.