BRITTANIA-U NIGERIA LIMITED v. CHEVRON NIGERIA LIMITED & 4 ORS.
SUPREME COURT OF NIGERIA
(OKORO; JAURO; AGIM; OGBUINYA; ADEWALE; ABIRU, JJ.SC)
FACTS
Brittania-U Nigeria Limited (the Appellant) instituted an action against Chevron Nigeria Limited (1st Respondent), asserting that the 1st Respondent held a 40% participating interest in Oil Mining Leases (OMLs) 52, 53, and 55 under a joint venture arrangement with the Nigerian National Petroleum Corporation (NNPC), which owned the remaining 60%. The Appellant averred that the 1st Respondent, acting through its parent company Chevron U.S.A. Inc. (3rd Respondent), engaged BNP Paribas Securities Corporation (2nd Respondent) to manage the divestment process and appointed Mr. Hermant Patel (4th Respondent) as Bid Coordinator to oversee the competitive bidding process for the sale of its interests in the said OMLs. According to the Appellant, the Bid Procedure Documents outlined a two-stage bidding process culminating in the submission of final binding offers by shortlisted bidders.
The Appellant pleaded that it fully participated in the bid process by submitting an indicative offer of $1.2 billion on July 29, 2013, successfully advancing to the next stage, undertaking due diligence in Houston on August 19, 2013, and thereafter submitting a final binding offer of approximately $1.67 billion on September 30, 2013, backed by bank funding letters and an irrevocable letter of credit for $250 million. Despite complying with all bid requirements and adjusting to unilateral revisions imposed by the Respondents, the Appellant alleged that it was neither issued a letter of award nor a sales agreement. Instead, after it sent a pre-action notice and demanded performance, it received a letter from the 1st Respondent purporting to unilaterally withdraw from the sale while raising objections to the structure and funding of its bid. The Appellant averred that if denied the acquisition of the OML assets, it stood to lose billions of US Dollars in lost business opportunities, and given the substantial costs already expended on the bid process, supported by significant collateralised assets, it was deprived of the optimal opportunity to participate in other contemporaneous bid offers. The Appellant further contended that its business reputation within Nigeria’s oil and gas industry and the wider subcontinent was damaged, as the public impression created by the leakage and misrepresentation of its confidential information was that it lacked the financial capacity to consummate its firm offer, thereby exposing its business to grievous and tortious economic losses attributable directly to the actions and inactions of the 1st to 5th Respondents.
Upon being served with the originating processes, the 1st to 5th Respondents filed notices of preliminary objection challenging the jurisdiction of the Federal High Court to hear the claims on the basis that they arose from a simple contract, and further filed applications seeking dismissal for failure to disclose a reasonable cause of action. The trial court, after hearing the objections and applications on their merits, delivered a considered ruling holding that it had jurisdiction to entertain the claims and that the Appellant’s case disclosed a reasonable cause of action, thereby dismissing the Respondents’ objections and applications.
Dissatisfied, the Respondents appealed to the Court of Appeal, which allowed the appeal, holding that the matter was a simple contract claim beyond the jurisdiction of the trial court and did not disclose a reasonable cause of action.
Aggrieved by this decision, the Appellant appealed further to the Supreme Court. One of the issue raised for determination was: Whether the Court of Appeal correctly held that the trial court lacked jurisdiction to entertain the suit on the state of the pleadings and process before it.
ARGUMENTS
Learned counsel for the Appellant contended that participation interests in oil and gas assets are heavily regulated by statute and cannot be perfected or enforced without the requisite ministerial approvals and compliance with statutory procedures. Counsel emphasised that mineral oil resources in Nigeria are nationalised under the Constitution and the Petroleum Act, and private individuals or entities can only acquire rights in such resources through formal grants in the form of permits, licences, and leases issued by the Federal Government. He further distinguished between “simple contracts,” “formal contracts,” and “statutory contracts,” asserting that contracts dealing with mineral oil rights fall within the category of statutory contracts due to the extensive regulatory and executive oversight required for their validity and enforceability. Accordingly, he argued that any agreement purporting to transfer or confer participation interests in oil mining licences remains incomplete and unenforceable until all legal and regulatory prerequisites are satisfied.
Counsel further submitted that the contract in question, which concerns the transfer of interests in Oil Mining Licences (OMLs) 52, 53, and 55 by the 1st Respondent, inherently engages the statutory and executive functions of the Nigerian National Petroleum Corporation (NNPC) and the Federal Government of Nigeria. He highlighted that the Appellant specifically pleaded the role of the NNPC in the originating processes, particularly in reliefs 4 and 5, which directly relate to the statutory functions of the NNPC in the administration of oil and gas assets. Learned counsel therefore maintained that the subject matter of the Appellant’s claims falls within the exclusive jurisdiction of the Federal High Court under Section 251(1)(n) of the 1999 Constitution (as amended), which confers jurisdiction over matters relating to mines and minerals, including oil fields, oil mining, geological surveys, and natural gas. Counsel concluded that the decision of the lower court dismissing the Federal High Court’s jurisdiction was erroneous, perverse, and ought to be set aside.
In response, learned counsel for the Respondents argued that the lower court’s assessment of the Appellant’s claims was correct, as it was based on a proper and holistic evaluation of the pleadings before it. Counsel submitted that the substance of the Appellant’s case was simply the enforcement of an alleged binding agreement for the purchase of participation interests in certain Oil Mining Licences (OMLs), which is essentially a contractual dispute governed by general principles of contract law. According to counsel, the mere fact that the subject matter of the contract relates to interests in OMLs does not, in itself, transform the dispute into one that requires the specialised jurisdiction of the Federal High Court. Rather, the nature of the action remains that of an ordinary contractual claim between private parties.
Counsel further argued that the Appellant’s pleadings did not raise any issue affecting mining or oilfield operations, nor did they require the interpretation of any constitutional provision, statute, the Petroleum Act, or regulations governing the petroleum industry. He emphasised that the Supreme Court has consistently held that where the resolution of a dispute involves the straightforward application of general contract principles without necessitating the interpretation of statutes regulating oil and gas operations, such disputes fall within the jurisdiction of the State High Court. Consequently, counsel urged the court to uphold the decision of the lower court, reiterating that the Appellant’s claims did not invoke any specialised statutory issues that would confer exclusive jurisdiction on the Federal High Court under Section 251(1) of the Constitution.
DECISION OF THE COURT
In resolving this issue, the Supreme Court held that:
The Federal High Court lacks jurisdiction to entertain matters that are purely predicated on the enforcement of ordinary commercial contracts between private parties. The Court emphasised that the mere involvement of the Federal Government or any of its agencies as a party to a suit does not, in itself, vest jurisdiction in the Federal High Court where the subject matter of the dispute is solely a claim for specific performance of contract or damages for breach of contract. Jurisdiction must be determined by the nature of the claims presented, and not merely by the identity of the parties involved.
The Supreme Court further observed that the crux of the Appellant’s case was the enforcement of an alleged binding contract entered into with the 1st to 4th Respondents for the acquisition of participation interests in the OMLs. The Court held that the matter neither involved the Federal Government nor any of its agencies in their executive or administrative capacities, nor did it require judicial examination of any statutory, regulatory, or constitutional provisions governing oil and gas operations. Rather, the Appellant’s primary reliefs were for specific performance of the contractual obligations and/or damages for their breach. Accordingly, the Court concluded that the determination of the case rests solely on the application of general principles of contract law, which fall within the jurisdiction of the State High Court and not the Federal High Court.
Issue resolved in favour of the Respondent.
This summary is fully reported at (2025) 6 CLRN in association with ALP NG & Co.
See www.clrndirect.com ; www.alp.company.
