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Application of Limitation Laws to Oil Spill Compensation Claims in Nigeria
Published online by Cambridge University Press: 30 October 2018
Abstract
This article examines a recent decision of the Nigerian Court of Appeal that essentially pronounces that, in respect of oil spill litigation in Nigeria, statutes of limitation are inapplicable to the federal law that creates the basis for oil spill compensation claims. This decision has dire consequences for the Nigerian oil and gas industry. The article finds this decision not only bad for public policy but actually based on very faulty reasoning and contradictory of an earlier decision of the Court of Appeal that was not considered. The article concludes that, despite this decision being the most recent, lower courts in Nigeria are not bound to follow it.
Keywords
- Type
- Research Article
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- Copyright
- Copyright © SOAS, University of London 2018
Footnotes
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PhD (international investment law), LLM (petroleum law and petroleum policy) (Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee (CEPMLP)); LLB (hons) (University of Ife). Partner, Extractive and Energy Group, Babalakin & Co. Fellow, Chartered Institute of Arbitrators; fellow, Energy Institute. Admitted to practise law in Nigeria.
References
1 See Adaralegbe, B “Nigerian oil pollution claims: Are US courts really viable?” (2006) Alexander's Gas & Oil Connections 34Google Scholar. See generally Y Belgore “Problems with oil pollution injury litigation in the Nigerian legal system: Can Nigerian litigants gain access to courts in England and the USA?” (PhD thesis, CEPMLP, 2003).
2 In 2013, in what was a first, a Dutch court ruled that Shell Nigeria was liable to pay compensation to a Nigerian fisherman for oil pollution damage that occurred in the Niger Delta. See Friday Alfred Akpan and Vereniging Milieudefensie v Royal Dutch Shell and SPDC C/09/337050 / HA ZA 09–1580.
3 In 2014 an English court ruled that Shell Nigeria was liable to pay compensation for an oil spill that occurred in the Niger Delta area of Nigeria. See The Bodo Community and Others v The Shell Petroleum Development Company of Nigeria Limited (2014) EWHC 1963.
4 See SERAP v Federal Republic of Nigeria, Attorney General of Federation, NNPC, SPDC, ELF, Agip, Chevron, Total and Exxonmobil No ECW/CCJ/APP/07/09. See also B Adaralegbe “ECOWAS court … more than a passing glance” (16 August 2010) ThisDay Newspaper at 23.
5 Initially, by virtue of sec 230 of the old Constitution of the Federal Republic of Nigeria 1979, State High Courts had unlimited jurisdiction. Subsequently, by the Federal High Court (Amendment) Decree 1991 (Decree No 60 of 1991) and the Constitution (Suspension and Modification) Decree 1993 (Decree No 107 of 1993), the Federal High Court was vested with exclusive jurisdiction in respect of mines and minerals, including oil fields and oil mining. This jurisdictional arrangement was retained in the 1999 Constitution by virtue of sec 251(1). This was the source of the controversy and confusion as to which of these courts has jurisdiction in respect of oil spill cases, resulting in a long line of cases. See generally Shell Petroleum Development Company (SPDC) v Isaiah (1997) 6 NWLR (pt 508) 236 CA; SPDC v Amaro (2010) 10 NWLR (pt 675) 248; SPDC v Maxon and Others (2001) FWLR (pt 47) 1030; Barry and Two Others v Obi A Eric and Three Others [1998] 8 NWLR (pt 562) 404; SPDC v Isaiah (2001) FWLR (pt 56) 608; SPDC v Bukuma Fishermen Co-Operative Society Ltd (2001) FWLR (pt 70) 1507; SPDC v Tiebo VII (2005) 9 NWLR (pt 931) 439 at 459–60; Abieto Alagoma v SPDC (2013) LPELR 21394; CGG (Nigeria) Ltd v Chief Lawrence Ogu (2005) 8 NWLR (pt 927) 366.
6 SPDC v Isaiah, ibid.
7 NNPC and Another v Chief Sele and Two Others (2013) 4–5 SC (pt II) 1.
8 (2014) All FWLR (pt 722) 1821.
9 1956, cap 07, LFN 2004.
10 Limitation Law of Bayelsa State 2006, cap 18, Laws of Bayelsa State.
11 (21 Ja 1) cap XVI at 1623.
12 The Court of Appeal panel consisted of MD Muhammad, PA Galinje and TO Awotoye, JJCA.
13 Dadoru v Mobil, above at note 8 at 1831, para D.
14 Ibid. Note that this finding is at variance with the lower court's own finding that the cause of action accrued in 1999, not 1998, due to some acknowledgement by Mobil Producing.
15 Ibid.
16 Ibid.
17 Id at 1832, para G.
18 Constitution of the Federal Republic of Nigeria 1999, cap C23, LFN 2004 (as amended).
19 Dadoru v Mobil, above at note 8 at 1832, para G.
20 Ibid.
21 Unreported suit no FHC/PH/179/2013.
22 Id at 11 and 12.
23 Above at note 10. The relevant sec 16 states: “No action founded on contract, tort or any other action not specifically provided for in Parts I and II of this Law shall be brought after the expiration of five years from the date on which the cause of action accrued.”
24 “And be it further enacted, That all Actions of Trespass Quare clausum fregit, all Actions of Trespass, Detinue, Action sur Trover, and Replevin for taking away of Goods and Cattle, all Actions of Account, and upon the Case, other than such Accounts as concern the Trade of Merchandize between Merchant and Merchant, their Factors or Servants, all Actions of Debt grounded upon any Lending or Contract without Specialty; all Actions of Debt for Arrearages of Rent, and all Actions of Assault, Menace, Battery, Wounding and Imprisonment, or any of them which shall be sued or brought at any Time after the End of this present Session of Parliament, shall be commenced and sued within the Time and Limitation hereafter expressed, and not after (that is to say) (2) the said Actions upon the Case (other than for Slander) and the said Actions for Account, and the said Actions for Trespass, Debt, Detinue and Replevin for Goods or Cattle, and the said Action of Trespass Quare clausum fregit, within three years next after the End of this present Session of Parliament, or within six Years next after the Cause of such Actions or Suit, and not after; (3) and the said Actions of Trespass, of Assault, Battery, Wounding, Imprisonment or any of them, within one Year next after the End of this present Session of Parliament, or within four Years next after the Cause of such Actions or Suit, and not after; (4) and the said Actions upon the Case for Words, within one Year after the End of this present Session of Parliament, or within two Years next after the Words spoken, and not after …”
25 See E Dix “The origins of the action of trespass on the case” (1937) 46/7 Yale Law Journal 1142.
26 (1868) LR 3 HL 330.
27 Above at note 5 at 248.
28 It is to be noted that this issue had no bearing on the existence of the act.
29 Shell v Amaro (Per Rowland JCA), above at note 5 at 273, para E.
30 (1990) 6 NWLR (pt 159) 693.
31 Id at 724.
32 NOGC 4 (2003–04) 164.
33 Id at 216–17.
34 (1975) 9–11 SC 155.
35 It is important to note that this was not based on the existence of the act.
36 Umudje v Shell, above at note 34, para 108. See also Shell v Isaiah, above at note 5, among other cases.
37 Dadoru v Mobil, above at note 8 at 1831, para E.
38 This is based on the relevant sec 4(5) of the Constitution that states that the consequence of a conflict between state and federal laws is that the state law will be void “to the extent of its inconsistency” (ie, not have a legal effect in its application to federal law) and will continue to have legal effect for other purposes.
39 Thus sec 32(1) of the Interpretation Act states: “Subject to the provisions of this section and except in so far as other provision is made by any Federal law, the common law of England and the doctrines of equity, together with the statutes of general application that were in force in England on the 1st day of January, 1900, shall, in so far as they relate to any matter within the legislative competence of the Federal legislature, be in force in Nigeria” (emphasis added). See generally AO Obilade The Nigerian Legal System (1990, Spectrum Law Series) at 77.
40 (1988) 5 NWLR (pt 93) 138.
41 See leading judgement of Karibi Whyte, JSC, id at 152–53. See also Awolowo v Shagari (1979) 6–9 SC 51; Adeshina v Lemonu [1965] 1 All NLR 233; Universal Trust Bank and Others v Chief Oludotun Olajide Koleoso (2006) 18 NWLR (pt 1010) 1 CA; Harka Air Services (Nigeria) Ltd v Keazor (2011) LPELR 1353 (SC); Cameroon Airlines v Otutuizu (2011) 4 NWLR (pt 1238) at 512.
42 (2014) EWHC 1963.
43 Id at 14 and 15.
44 Dada v State (1977) NCLR 135 (locus classicus); Attorney General of Bendel v Attorney General of the Federation and Others (1981) 10 SC 1; Eliochin Nigeria Limited v Mbadiwe [1986] 1 NWLR (pt 14) 47; National Supply Co Ltd v Alhaji Hamajoda Sabana Co Ltd (1988) 5 NWLR (pt 40) 204 CA; Union Bank v Oki [1999] 8 NWLR (pt 614) 255, para B; Adetoun Oladeji (Nigeria) Ltd v Nigerian Breweries Plc (2007) 5 NWLR (pt 1027) 415.
45 See Uzodike, E “Tort law in the oil industry” in Omotola, JA (ed) Essays in Honour of Justice TO Elias (1987, Faculty of Law University of Lagos) 237Google Scholar; Damfebo, KD “Litigation problems in compensation claims for oil and gas operations in Nigeria” in Emiri, F and Deinduomo, G (eds) Law and Petroleum Industry in Nigeria: Current Challenges (2009, Malthouse Press Limited) 11Google Scholar; G Deinduomo “An overview of the law relating to compensation for oil and gas operations in Nigeria” in Emiri and Deinduomo, id, 139; Fagbohun, O The Laws of Oil Pollution and Environmental Restoration: A Comparative Review (2009, Odade Publishers)Google Scholar; Worika, IL Environmental Law & Policy of Petroleum Development (2002, Anpez Centre for Environmental and Development)Google Scholar; Amokaye, O Environmental Law and Practice in Nigeria (2004, University of Lagos)Google Scholar at 24; Olawuyi, DS The Principles of Nigerian Environmental Law (2015, Afe Babalola University Press)Google Scholar at 84.
46 Referring to sec 11(5)(a), (b) and (c) of the Oil Pipelines Act, the writer states that “all the paragraphs embody distinct torts in statutory form”: F Fekumo “Compensation for oil pollution in Nigeria: A new agenda for sustainable development” in Simpson, S and Fagbohun, OA (eds) Environmental Law and Policy (1998, Law Centre, Faculty of Law, Lagos State University) 337Google Scholar at 345.
47 Fekumo states: “The common law remedies could be invoked in appropriate circumstances”: ibid.
48 Deinduomo “An overview of the law”, above at note 45 at 141 (emphasis added).
49 (1980) 1 RSLR 12.
50 For instance, sec 11(5)(a) would have served as a legal basis for the claim in Umudje v Shell, above at note 34, while sec 11(5)(c) would have been basis for the claims in Shell v Amaro, Shell v Otoko and Arong v Mobil, above at notes 5, 30 and 32 respectively.
51 It is instructive and ironic that, while this English decision assumed jurisdiction over the dispute based on private international law principles obtainable in England, and arrived at the Oil Pipelines Act as applicable to the dispute based on English private international law rules, the English court in this case reviewed, but apparently ignored, sec 19 of the same act that it invoked and applied, to the effect that the court for the enforcement of rights created in the act will be the Magistrates’ Court in Nigeria. This clearly exposes some of the contradictions and problems of transnational tort litigation.
52 Dadoru v Mobil, above at note 8 at 1833.
53 Chigbu v Tonimas Nigeria Ltd (2006) 4 SC (pt II) 186; Atolagbe v Awuni (1997) 9 NWLR (pt 522) 536 at 575; and Egbe v Adefarasin (1987) 1 NWLR (pt 47) 1 at 20.
54 Dadoru v Mobil, above at note 8 at 1833, para C.
55 Raleigh Industries (Nigeria) Limited v Nwaiwu (1994) 4 NWLR (pt 341) 760.
56 It is notable that a number of cases have recognized the application of the 1623 Act to states that do not have a limitation law. See Alhaji Aminu Ishola v Société Générale Bank (Nigeria) Limited (1997) 2 NWLR (pt 488) 405; Chigbu v Tonimas, above at note 53; Michael Arowolo v Chief Titus Ifabiyi (2002) 4 NWLR (pt 757) 356.
57 Sec 4(7) of the Constitution empowers state law-making organs to make laws in areas on the concurrent list and also in areas not on the exclusive list. See generally Edet v Chagoon (2008) 2 NWLR (pt 1070) 85 CA; Doherty v Balewa (1961) 2 SCNLR 256; and Balogun v AG Lagos State (1981) 2 NCLR 589.
58 See L Pedro Jurisdiction of Courts in Nigeria (2006, Ministry of Justice Law Review Series) at 331. See also WAPC Plc v Adeyeri (2003) 12 NWLR (pt 835) 517; FRIN v Gold (2007) 11 NWLR (pt 1044) 1 SC; Ajayi v Mil Adm, Ondo State (1997) 5 NWLR (pt 504) 237.
59 See Edebor v Elf (2011) LPELR 4878; Chigbu v Tonimas, above at note 53. But see also Raleigh v Nwaiwu, above at note 55 at 760; CSMBH & Co v Emespo J Cont Ltd (2002) 3 NWLR (pt 753) 205 CA; CRU Tech v Obeten (2011) 15 NWLR (pt 1271) 588 CA.
60 E Apeh Nigerian Laws of Limitation of Actions (2001, Elaigwu Apeh Law Publications) at 11.
61 In Akapo v Hakeem-Habeeb (1992) 6 NWLR (pt 247) 266 at 297, the Supreme Court stated that “incidental” means “depending upon or appertaining to something else as primary”. It has also been defined as: “subordinate to something of greater importance; having a minor role”; “incidental power” is also defined as: “a power that, although not expressly granted, must exist because it is necessary to the accomplishment of an express purpose”; “supplemental” is defined as “supplying something additional; adding what is lacking”. See Blacks Law Dictionary (10th ed, 2014, Thomson Reuters) at 879, 1359 and 1667 respectively.
62 See generally sec 12 of the Nigerian National Petroleum Corporation Act, cap N123, LFN 2004; sec 26 of the Nigerian Television Authority Act, cap N136, LFN 2004; sec 25 of the Nigerian Education Bank Act, cap N104, LFN 2004; sec 16 of the Nigerian Institute of Advanced Legal Studies Act, cap N112, LFN 2004; sec 83 of the Nigerian Railway Corporation Act, cap N127, LFN 2004; sec 50 of the National Lottery Act, cap N145, LFN 2004; sec 20 of the National Oil Spill Detection and Response Agency (Establishment) Act; sec 25 of the Nigerian Airspace Management Agency (Establishment ETC) Act, cap N90, LFN 2010; sec 26 of the Nigerian Agricultural Insurance Corporation Act, cap N89, LFN 2010; sec 25 of the Nigerian Civil Aviation Authority (Establishment) Act, cap N94, LFN 2010; and sec 20 of the Federal Airports Authority of Nigeria Act, cap F5 LFN 2010.
63 (1994) 5 NWLR (pt 347) 649.
64 Id at 661.
65 (2006) 4 NWLR (pt 971) 595.
66 Id at 615.
67 (2000) 2 NWLR (pt 644) 339.
68 Id at 350.
69 (2011) ALL FWLR (pt 576) 616.
70 Id at 623.
71 (2014) All FWLR (pt 724) 141.
72 Id at 154.
73 The court only referred to Eboigbe in the judgment. Even so, the court misapplied the principle in Eboigbe. The court appeared to be saying that the Supreme Court did not mind applying the limitation law in Eboigbe because the subject matter in that suit was not on the exclusive list. This pronouncement appears faulty. The claim in Eboigbe arose from the destruction of economic crops caused by the laying of pipes in the course of the operations of the NNPC, an oil company. Sec 20(1) of the Oil Pipelines Act creates liability for damage to buildings, crops or profit trees. That action in fact dealt with an oil matter on the exclusive list of the Constitution no less than it did in the case under review. It therefore seems simplistic to state that the claim dealt with the destruction of economic crops not contained on the exclusive list.
74 The legislative competence of the National Assembly to deal with this area is based on item 39 of the exclusive list and secs 4(2) and (3) and 44(3) of the Constitution.
75 On when state and federal laws can be said to be inconsistent in requiring the application of sec 4(5) of the Constitution, see Chikelue v Ifemeludike (1997) 11 NWLR (pt 529) 390; Olaleye Ote and Another v Babalola (2012) 1 SC (pt III) 1. For an interesting discussion of the doctrine of covering the field under the Nigerian constitutional system, see generally BO Babalakin “The supreme court and constitutional developments in Nigeria (1960–1985)” (PhD thesis, University of Cambridge, 1986) at 17–56; Nwabueze, BO Federalism in Nigeria under the Presidential Constitution (1983, Sweet & Maxwell)Google Scholar at 71; Oluyede, PA and Aihe, DO Cases and Materials on Constitutional Law in Nigeria (2003, University Press, Ibadan)Google Scholar at 128.
76 (1995) 3 NWLR (pt 382) 148.
77 Id at 201.
78 According to Onalaja JCA: “It is even erroneous to apply the State Limitation Law to the Petroleum Act which is [sic] Federal Act whilst the Limitation Law is the Law of the State. Where there is any conflict under our constitutional law between a Federal legislation and state legislation on the same issue, the state legislation shall be void to the extent with the Federal legislation” (emphasis added): ibid.
79 CA/OW/136/2012 94 (unreported).
80 See for instance Bayelsa Limitation Law, sec 41(c) and (d).
81 For authority on the desirability of considering the public policy implications of judicial decisions, see Total Nigeria Plc v Ajayi (2004) 3 NWLR (pt 860) 270 at 293–94.
82 Various reports put the estimate of crude oil spilled in the Niger Delta Area of between 1.5 and 3 million barrels over the past few decades. See generally R Eben “A systemic appraisal of Nigeria's vessel-source compensation regimes for spill victims “(2016) African Journal of International and Comparative Law 1.”
83 See Bayelsa Limitation Law, sec 41(2) that states: “Nothing in this Law shall affect any equitable jurisdiction to refuse relief on the ground of acquiescence or any other equitable defence”. See generally Moss v Kenrow Nigeria Ltd (1992) 9 NWLR (pt 264) 207; Davies v Ajibona (1994) 5 NWLR (pt 343) 234; Atuchukwu v Adindu (2012) 6 NWLR (pt 1297) 534.
84 For cases that have adjudged the defence of estoppel to be valid in law, see Sanusi A Alade v Olalere Akanji Alemuloke (1988) 2 SC (pt 1) 1; Buhari v INEC (2008) 12 SC (pt 1) 1; Gregory Ude v Clement Nwara and Another (1993) 2 NWLR (pt 278) 638.
85 The argument can be developed that the phrase “any other action” in the Bayelsa Limitation Law can only pertain to actions arising out of laws on which a state House of Assembly can competently legislate and that, since the Oil Pipelines Act is a federal law, the Bayelsa Limitation Law cannot apply to it. That would mean that the Bayelsa Limitation Law would be inapplicable to the oil spill claim, being one that can only be enforced under the Oil Pipelines Act, a federal law. As already noted, state laws apply to federal laws and federal activities within that state, provided they are within their area of legislative competence. More importantly, in Etim v IGP (2001) 11 NWLR (pt 724) 266, the Court of Appeal held (at 283) that a similar limitation law in Kaduna State “applies to any action filed in any court operating within the territorial area of Kaduna state, including the Federal High Court” (emphasis added). Based on this decision, the argument that the limitation law of a state cannot apply to a cause of action arising out of a federal law is not tenable.
86 See Asaboro v Pan Ocean Oil Corporation (Nigeria) Ltd (2017) 7 NWLR (pt 1563) (SC) 42.
87 Alao v VC, Unilorin (2008) 1 NWLR (pt 1069) 421 at 450; Sea Trucks (Nigeria) Ltd v Payne (1999) 6 NWLR (pt 607) 514 at 541–42.
88 See Umaru v Aliyu (2010) 3 NWLR (pt 1180) 135 at 167, where the court stated that “this court unlike the Supreme Court is bound by its decision and can only depart from its previous decision when new facts emerge to show that the previous decision was wrongly decided, or decided per incuriam or that it was decided without jurisdiction”. See also Odu v Fawehinmi (2005) 15 NWLR (pt 949) 518 at 578; Bounwe v REC, Delta State (2006) 1 NWLR (pt 961) 286 at 314; Chieshe v NICON Hotels Ltd (2007) All FWLR (pt 388) 1152; Usman v Umaru (1992) 7 NWLR (pt 254) 377; Ogunsola v NICON (2010) 13 NWLR (pt 1211) 225; Sule v Kabir (2011) 2 NWLR (pt 1232) 504 at 532–33, Ojugbele v Lamidi (1999) 10 NWLR (pt 621) 167.
89 See Osakue v FCE (Technical) Asaba (2010) 10 NWLR (pt 1201) 1 at 29, para G; Alhaji MC Dahiru and Another v Alhaji Kamale [2005] 9 NWLR (pt 929) 8 at 48–49, paras F–A; Justice Okwuchukwu Opene v National Judicial Council and Others (2011) LPELR – 4795 (CA).
90 (1997) 1 NWLR (pt 484) 680.
91 Id at 689.
92 Above at note 7.
93 Asaboro (SC), above at note 86 at 60.
94 2018 LPELR-44290.
95 Id at 14–15.