PUC’S Victory for Exxon Mobil Corporation, USA at the Nigerian Federal High Court

After nine grueling years and after one of the most keenly contested legal tussles in the history of our legal jurisprudence that took the disputants up to our apex Court, the Supreme Court, PUC secured an exhilarating victory on behalf of the international oil giant, Exxon Mobil Corporation USA, before the Nigerian Federal High Court sitting in Abuja.

The odyssey began sometime in 2012 when, by a Writ of Summons, Statement of Claim and other accompanying processes (“Originating Processes”) dated and filed on 03 February 2012, the Plaintiffs (suing for themselves and on behalf of the people of Ibeno Clan of Ibeno Local Government Area of Akwa Ibom State) brought an action jointly and severally against the 1st to 3rd Defendants to wit; Nigerian National Petroleum Corporation (“NNPC”), Mobil Producing Nigeria Unlimited (“MPNU”) and Exxon Mobil Corporation (“EMC”) sued as the 1st, 2nd and 3rd Defendants respectively It was contended by the Plaintiffs that MPNU and NNPC, operate a joint venture agreement for the purposes of exploring crude oil located in Ibeno Local Government Area of Akwa Ibom State and the acts of negligence occasioned by the operations of the various oil exploration activities allegedly resulted in several oil spillages that occurred over a period of time from oil pipelines owned and maintained by MPNU.

It was the Plaintiffs’ contention that EMC, our client, though an American-based company, presides over or “holds itself” out as the parent organization of MPNU, a Nigerian company that engages in crude oil exploration and production in Nigeria. According to the Plaintiffs, MPNU is a shell company and an appendage of EMC and as such EMC should bear joint liability for the tortious claims of the Plaintiffs against NNPC and MPNU. The Plaintiffs further contended that the unlimited liability status of MPNU, renders it incapable of satisfying any corporate debt that may accrue to the Plaintiffs in the event of a successful determination of the Suit in their favour of the Plaintiffs and therefore, EMC “being the parent company should be compelled to bear whatever liability that may arise from the Suit”. The Plaintiffs accordingly sought inter alia for an order of court to hold financially liable, NNPC, MPNU and EMC for the various tortuous liabilities occasioned by the various alleged oil spills which they purportedly claim resulted in injuries to the entire community and its inhabitants.

PUC was called into action and our mandate was very clear. Represent EMC and establish to the Court that in actual fact and more particularly from the processes filed by the Plaintiffs, not only did EMC (which has no physical presence in Nigeria), not commit any of the tortious acts alleged by the Plaintiffs, but more importantly that MPNU and EMC enjoy distinct and separate corporate personalities such that EMC cannot and should not bear liability for any wrong allegedly committed by MPNU.

In response to the Plaintiffs’ Originating Processes, PUC as Counsel to EMC filed its Statement of Defence wherein preliminary issues and objections on issues of law were raised. The objections on issues of law as contained in the Statement of Defence filed on behalf of Exxon Mobil Corporation were as follows:

I. Whether the Federal High Court is seised with the requisite jurisdiction to entertain this Suit against the 3rd Defendant given the fact that the 3rd Defendant is not a Nigerian-registered company, is domiciled outside the territorial jurisdiction of this Honourable Court and has no presence whatsoever in Nigeria?

II. Without prejudice to Objection Point 1 and based on the Plaintiffs’ averments in their Statement of Claim, whether the Suit discloses any reasonable cause of action whatsoever against the 3rd Defendant?

III. Without prejudice to Objection Points 1 and 2, whether the averments in the Plaintiffs’ Statement of Claim, as they relate to the 3rd Defendant are not, entirely speculative, totally academic in nature, wholly conjectural and without any foundation or basis whatsoever?

On the strength of that Statement of Defence, PUC filed a Motion on Notice dated 25 September 2012 wherein it raised the threshold objections against the Plaintiffs’ Suit and invited the Federal High Court to determine same on a preliminary basis before going to trial in the matter. However, Kafarati J (as he then was) of the Federal High Court, who presided over the Suit at the material time, ruled that the objections should and could only be taken at the conclusion of Trial after evidence had been considered. This was the beginning the journey up to the Supreme Court. Upon appeal to the Court of Appeal and a further appeal to the Supreme Court, both appellate Courts upheld the Ruling of the Federal High Court concerning the timing of EMC’s threshold objections and held that the objections should be considered at the conclusion of Trial.

So, the theatre of the dispute returned to the Federal High Court sitting in Abuja and Trial in the Suit commenced on 12 November 2019 now before Taiwo Taiwo. J of that Court, with the Plaintiffs calling the first of their 3 (three) witnesses and in the course of their evidence, tendered various documents that were admitted by the Court. NNPC opened its defense on 24 February 2020 and called a sole witness, whilst MPNU opened its defense on 16 March 2020, called 11 (eleven) witnesses and tendered various documents that were admitted in evidence. EMC opened its own defense on 30 September 2020 and called a sole witness and tendered in evidence several documents that were admitted by the Court. The Trial was concluded on 13 October 2020 and, pursuant to the Rules of Court, the parties filed their respective Final Written Addresses and Reply Addresses.

EMC in its Address incorporated arguments on its threshold objections that had been consistently argued right up to the Supreme Court and back. PUC’s position that reverberated throughout its Written Address was crystal clear. On Objection Point 1, we contended that EMC is not resident in and has no presence in Nigeria and consequently is not subject to the territorial jurisdiction of Court. In terms of physical residence, the EMC occupies no physical address in Nigeria, “whether as owner, lessee or licensee” of the said space. In regard to Objection Point 2, we prayed the Court to hold that the Plaintiffs’ Originating Processes disclose no cause of action whatsoever and howsoever against the 3rd Defendant and that the Suit be dismissed as against the 3rd Defendant. The Plaintiffs averred that the tortious acts which constitute the subject matter of this Suit were done or carried out pursuant to the Joint Venture Agreement between MPNU and NNPC. The only connection that EMC is presumed to have to those tortious acts was that it is purportedly the “parent” and “owner” of the 2nd Defendant. Relying on the Plaintiff’s Statement of Claim, we argued that the averment was factually untrue as showed in the State of Claim; the 3rd Defendant holds no shares whatsoever in the 2nd Defendant. But even if it did and the 2nd Defendant was its subsidiary company which was denied at every turn, the principles that vest independent and distinct corporate personalities on parent companies and their subsidiaries would avail EMC in which event no cause of action can be disclosed against EMC in and by the Plaintiffs’ Originating Processes. On Objection Point 3, we submitted that the Plaintiffs’ claim were speculative and conjectural to the extent that EMC was joined to the Suit albeit in the misplaced belief by the Plaintiffs that it is liable for the alleged torts of the MPNU and that MPNU is incapable of satisfying any judgment of the Court against it. The parties adopted their Final Addresses on 21 January 2021.

In its judgment delivered on 21 June 2021, the Federal High Court sitting at the Abuja Judicial Division, whilst considering the threshold objections filed on behalf of EMC found in respect of the first threshold objection point that a foreign company on the basis of reciprocity can sue and be sued in Nigeria. As it relates to the second and third threshold objections points, the Court agreed completely with PUC’s submissions and held that MPNU is not a subsidiary of EMC and that the Plaintiffs action as it relates to EMC was speculative. In addition to concurring with PUC that MPNU is capable of defraying the judgment liability that may arise from this Suit against it, the Court also found that in any case the NNPC should share the liability with the MPNU and not the EMC. On the basis of the above findings and reasonings, the Court held that the EMC was not a necessary party to the Suit and was accordingly struck out.

With the principles of law that were thrown up in the resolution of this dispute particularly as it relates to the status of a foreign company and the relationship between a parent company and a subsidiary, PUC has made tremendous contribution to the advancement of Nigerian jurisprudence on those principles and reaffirmed its pride of place as the go to law firm for highly complex litigation matters.

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