The Federal Capital Territory (FCT) High Court in Abuja has nullified the arbitration proceedings instituted at the International Chamber of Commerce (ICC), London, against Aiteo Eastern E&P Company Limited by a consortium of lenders that financed its $3 billion acquisition of Oil Mining Lease (OML) 29 and the Nembe Creek Trunk Line (NCTL) from Shell in 2014.
In a ruling on Tuesday, the judge, S.B. Belgore, described the arbitration as a violation of the court’s subsisting injunctive orders and declared the proceedings null and void.
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The decision followed an application by Tempo Energy Nigeria Limited, a minority stakeholder in the 2014 transaction, which accused the lenders—including top Nigerian banks and international institutions—of breaching contractual obligations and sidestepping Nigerian court orders by proceeding with the ICC arbitration.
Background
Tempo’s claim stemmed from a complex, multi-party financing arrangement under which it alleged that several lenders, without including it as a party, initiated proceedings in the High Court of England and Wales and later commenced arbitration in London on 11 December 2020.
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To protect its interest, Tempo filed suit FCT/HC/CV/079/2021 on 14 January 2021, seeking injunctions to halt the foreign proceedings.
The FCT High Court, on 22 January 2021, granted interim orders restraining all parties from taking further steps in the English and ICC proceedings pending a full hearing.
Defendants in the suit include Aiteo Eastern E&P, African Finance Corporation (AFC), Shell Western Supply & Trading, Ecobank Nigeria, First Bank of Nigeria, Guaranty Trust Bank, Fidelity Bank, Citibank N.A. (London), FBN Trustees, Zenith Trustees, Sterling Bank, Union Bank, and Elizabeth Gloster.
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Despite the court’s interim orders, the lenders proceeded with the ICC arbitration between 2021 and 2024.
Court of Appeal upholds injunctions
In a unanimous decision delivered on 25 April, the Court of Appeal in Abuja upheld the FCT High Court’s interim injunctions.
The appellate court dismissed the lenders’ appeal as an abuse of court process and awarded N1.5 million in costs against them.
It also directed an accelerated hearing of pending applications at the trial court and warned parties against violating subsisting court orders.
Court restores status quo
At the FCT High Court hearing on 20 and 22 May, Tempo’s lead counsel, Kehinde Ogunwumiju, who is a Senior Advocate of Nigeria (SAN), filed a motion asking the court to set aside the ICC arbitration in light of the appellate court’s ruling.
The lenders’ lawyer, Joke Aliyu and Babatunde Fagbohunlu, also a SAN, opposed the application, filing a preliminary objection challenging the court’s jurisdiction over foreign arbitral proceedings.
However, Mr Belgore dismissed their objection as incompetent and lacking merit.
He described it as an abuse of process. The judge then granted Tempo’s application and declared that the ICC arbitration, conducted in defiance of the FCT High Court’s injunctions, was null and void.
The court reaffirmed that its 22 January 2021, injunctive orders remain valid and binding, and directed all parties to cease any further actions that contravene its rulings.
It awarded N500,000 in costs to Tempo and adjourned further hearing in the consolidated applications to 29 September.
Legal disputes with Shell
In a separate suit marked FHC/ABJ/CS/738/2021, which was filed on 27 July 2021, Aiteo accused Shell of misrepresenting the condition of the oil assets it sold in 2014.
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The company claims Shell failed to disclose the true state of the oil wells and supporting infrastructure, which allegedly impacted production and made it difficult to meet debt obligations.
Aiteo is seeking $2.5 billion in damages.
Documents seen by Premium Times show that the consortium of lenders committed approximately $2 billion in financing for the acquisition. The breakdown includes: Zenith Bank ($323 million), First Bank and GTBank ($200 million each), Fidelity Bank ($175 million), AFC ($125 million), Ecobank and Union Bank ($100 million each), Sterling Bank ($60 million), and Shell Western ($512 million).
Aiteo’s founder, Benedict Peters, reportedly contributed $898.2 million in cash as initial equity, with an additional $257 million at closing for fees and restarting production.
Tempo Energy, one of the minority investors, reportedly contributed $136 million.
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