Nigeria Escapes Another $1.8bn Arbitration Award

In a case that bears some resemblance to P&ID $9.6b claims against
Nigeria, a U.S. judge on Wednesday rejected Exxon Mobil Corp’s and Royal
Dutch Shell Plc’s effort to revive a $1.8 billion arbitration award
against the Nigerian National Petroleum Corporation, NNPC.

The case stemmed from a dispute over a 1993 contract to extract oil near Nigeria’s coastline.

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U.S.
District Judge William Pauley in Manhattan cited public policy and due
process considerations in deciding not to enforce the October 2011 award
against Nigerian National Petroleum Corp (NNPC), which was subsequently
set aside by courts in Nigeria.

“While this court may have
inherent authority to fashion appropriate relief in certain
circumstances, exercising that authority to create a $1.8 billion
judgment is a bridge too far,” Pauley wrote in a 50-page decision.

The companies said last November that the award had grown to $2.67 billion, including interest.

Exxon, Shell and their respective lawyers did not immediately respond to requests for comment.

“NNPC
is very pleased with the decision, and was always confident that there
was no basis for a U.S. court to confirm the award,” its lawyer Cecilia
Moss said in an interview.

According to court papers, the 1993
contract anticipated that Exxon and Shell affiliates would invest
billions of dollars to extract oil from the Erha field, about 60 miles
(97 km) off Nigeria’s coast, and share profits with NNPC.

But the
affiliates, Esso Exploration and Production Nigeria Ltd and Shell
Nigeria Exploration and Production Co Ltd, accused NNPC of unilaterally
“lifting” more oil than was contractually allowed, at the behest of
Nigeria’s government, depriving them of billions of dollars of oil.

Pauley
said Exxon and Shell still have “multiple appeals pending” in Nigeria,
and rejected their argument that it might be difficult to collect there.

Exxon
and Shell “executed a contract in Nigeria with another Nigerian
corporation containing an arbitration clause requiring any arbitration
to be held in Nigeria under Nigerian law, and it then sought to confirm
the award in Nigeria,” Pauley wrote. “[They] cannot now reasonably
complain that [their] efforts to collect will be frustrated in Nigeria.”

In
an Aug. 7 regulatory filing, Exxon said it did not expect the case to
materially affect its operations or financial condition.

The case
is Esso Exploration and Production Nigeria Ltd et al v Nigerian
National Petroleum Corp, U.S. District Court, Southern District of New
York, No. 14-08445.

Source:- Pmnewsnigeria

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