AITEO vs Shell: Court Refuses To Unfreeze SPDC’s Bank Accounts

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A file photo of a court gavel.

 

A Federal High Court sitting in Lagos has refused to discharge an interim order it granted, freezing the bank accounts of Shell Petroleum Development Company of Nigeria (SPDC) and that of its subsidiaries.

In her ruling on the case on Tuesday, Justice Oluremi Oguntoyinbo summoned the secretaries and chief financial officers of two banks who allegedly disobeyed the interim ex-parte order directing the freezing of the accounts.

The affected banks and their officials are Citi Bank Ltd., its Company Secretary, Sola Fagbure, and Chief Financial Officer, Sharaf Mohammed, as well as United Bank For Africa (UBA) Plc, its Company Secretary, Bill Andrew Odum, and Chief Financial Officer, Ebenezer Kolawole.

Justice Oguntoyinbo court ordered the alleged contemnors to appear before the court on the next adjourned date of March 29, 2021.

She warned that their failure to appear would result in a warrant of arrest being issued against them.

The judge made these orders while ruling on three applications in a suit filed by AITEO Eastern E&P Company Ltd. against SPDC and four others.

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AITEO is claiming about $2.7 billion against SPDC over alleged problems with the Nembe Creek Trunk Line (NCTL) pipeline it bought from the Anglo-Dutch group in 2015, and over claims that Shell undercounted its oil exports.

At AITEO’s instance, Justice Oguntoyinbo granted an interim Mareva injunction on January 25, 2021, directing 20 commercial banks to block SPDC and its subsidiaries’ accounts and to bar Royal Dutch Shell’s Nigerian subsidiaries from withdrawing money at 20 banks until it ‘ringfences’ potential damages in the lawsuit brought against the firm.

The order was sequel to AITEO’s bid to recover from Shell, the cash equivalent of more than 16 million barrels of crude oil allegedly diverted by the oil giant.

Eighteen of the banks were said to have complied with the order, except Citi Bank and UBA.

On the respondents’ application to vacate the Mareva injunction and unfreeze the bank accounts, the judge held that the ex-parte order subsists, pending the determination of AITEO’s motion on notice.

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She, thereafter, adjourned until March 29 for the hearing of the committal proceedings and other applications.

Joined with SPDC as respondents in the suit were Royal Dutch Shell Plc; Shell Western Supply and Trading Ltd; Shell International Trading and Shipping Company Ltd; and Shell Nigeria Exploration and Production Company Ltd.

 

Three Applications, One Judge

At the last hearing on March 9, the court faced three applications by the plaintiff – AITEO and the defendants – SPDC and others – relating to its jurisdiction, motion to discharge its ex-parte order, and committal proceedings against the two banks.

AITEO’s counsel and Senior Advocate of Nigeria (SAN), Kemi Pinheiro, had asked the court to hear the committal proceedings first.

Pinheiro reasoned that it was “necessary that the named persons in committal proceedings (the bank officials) be present in court” because the proceedings “attached to their person”.

He said the alleged contemnors had been served “and there’s proof of service,” adding that the quasi-criminal nature of committal proceedings made their appearance a necessity.

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The senior lawyer noted that they had not filed a response.

In their responses, three SANs – Adewale Atake, Olawale Akoni and Chukwuka Ikwuazom – who represented SPDC, the banks, and the four Shell subsidiaries respectively, opposed the move.

They, however, asked the court to hear applications questioning its jurisdiction and another motion to discharge the order blocking the accounts.

After listening to the lawyers, the judge upheld Pinheiro’s application and prioritised the application for committal proceedings.

“The committal proceedings is the appropriate application to consider… I, therefore, hold that the first application to be heard is the committal proceedings,” she held.

The judge further ruled that the presence of the named bank officials was necessary, saying “The alleged contemnors must be present in court at the next hearing, otherwise a warrant of arrest shall be issued against them.”

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