257. The Claimants have prepared damages calculations as of 31 January 2011 based on prevailing on all issues of liability. These calculations need to be updated to reflect the Tribunal’s determinations on the liability issues, as well as the passage of time. Accordingly, the Tribunal determines that it will issue this Award as a Partial Award and, hereafter, issue a Final Award following further proceedings on issues relating to monetary relief.
258. While this Award has been made as a Partial Award solely to resolve issues concerning the calculation of monetary relief, all other findings of fact and conclusions of law stated, and relief granted, in this Award are final and binding.
259. This Partial Award is signed by a majority of the members of the Tribunal. The signature of Dorothy Ufot is absent because she does not assent to the Partial Award.1
... taking and or continuing to take any further step in the Arbitral proceedings and particularly from submitting an updated and revised damages in accordance with the Partial Award or any other monetary claims pursuant to the Award dated 3d October 2011 pending the hearing and determination of the Motion on Notice for Interlocutory injunction filed before this Honourable Court is granted (order, para. 3)
We refer to the Claimants' letter to the Tribunal dated 28 October 2011... in which the Claimants informed the Tribunal:
- that the Respondent had sought and obtained from the Federal High Court an order restraining the progress and completion of this arbitration; and
- that the Claimants were, accordingly, unable to take any step in the arbitration, including complying with the Tribunal's direction of 10 October 2011 to "furnish their updated and revised damages in accordance with the terms of the Partial Award, on or
We also refer to the Chairman's email of 30 October 2011... stating that the Tribunal would await further advice on the matter from the parties.
We are pleased to inform the Tribunal that, in a judgment delivered earlier today, the Nigerian Court of Appeal has vacated the injunction granted by the Federal High Court. In light of this development, the Claimants are now able to continue with this arbitration. The Tribunal is also at liberty to conclude this arbitration by issuing a Final Award.
In the circumstances, and in compliance with the Tribunal's Partial Award dated 3 October 2011 and direction of 10 October 2011, the Claimants are pleased to provide the following documents:
a) a letter from the Claimants setting out the Claimants' updated and revised damages computation in accordance with the terms of the Partial Award, and
b) a schedule setting out the costs (and interest thereon) claimed by the Claimants.
Dear NNPC Representatives:
On February 26, 2014, the Tribunal invited the Respondent to submit its comments on the letters received from Claimants in the above matter... regarding the issuance of a Final Award and the granting of costs. On the due date of March 26, 2014, and up to today, the Tribunal has not received any response from NNPC.
Due to the large sums being sought, it would be preferable if NNPC would offer its views on any portions of the correspondence or costs being sought by Claimants in this matter. Toward that end, the Tribunal hereby grants NNPC until April 21, 2014 to submit its views on the indicated subjects. Unless NNPC submits any comments, the Tribunal will have no alternative but to render its Final Award on the sole submissions of Claimants.
The Tribunal kindly requests NNPC to confirm receipt of this email.
1. We act as Solicitors representing the Nigerian National Petroleum Corporation (NNPC) in respect of the Ad Hoc Arbitration between NNPC and Nigerian Agip Oil Exploration Ltd (NAE) & Oando 125 & 134 Limited (Oando).
2. We confirm that receipt of the email dated 7 April, 2014 from the Chairman of the Arbitral Tribunal and note that by earlier email dated 1 April, 2014, the Tribunal had requested NNPC to submit its response/comments in reaction to the Respondents (NAE & Oando) submissions on updated and revised damages and Claimants' schedule of costs.
3. We have been instructed by NNPC to respond on its behalf to the present request from the Arbitral Tribunal regarding submissions now made to the Tribunal by NAE & Oando.
- the order granted in favor of NNPC by the Federal High Court on 24 October 2011 was dismissed by the Court of Appeal on 25 February 2014 ("the "Judgment");
- NNPC filed a Notice of Appeal on 8 April 2014 against said Judgment to the Supreme Court of Nigeria;
- NNPC also applied to the Court of Appeal for (i) an order staying the execution of the Judgment, and (ii) an order of injunction to maintain the status quo in the Arbitration pending the hearing and determination of the appeal filed in the Suprem
- Finally, NNPC provided legal arguments seeking to convince the Tribunal to "refrain from any continuation of the Arbitral Proceedings including consideration of any revised/updated damages as a step toward issuing any Final Award in this matter pending"
- It is common ground among the Parties that the injunction which prevented the continuation and completion of this Arbitration was vacated by the Court of Appeal in its judgment of 25 February 2014.
- The current position of Nigerian law is that a court cannot grant an injunction to restrain arbitral proceedings based on section 34 of the Arbitration and Conciliation Act, Cap. A18, LFN 2004 (the "ACA") which provides that:
A court shall not intervene in any matter governed by this Act, except, where so provided in this Act.
- In a previous Nigerian court proceeding, the Court of Appeal (Lagos Division) vacated, for lack of jurisdiction under the ACA, an injunction to restrain proceedings in another arbitration in which NNPC was a party.
- The position against granting injunctions was reaffirmed by the Court of Appeal (Abuja Division) in its judgment of 25 February 2014, in which it vacated the Federal High Court's injunction which previously restrained proceedings in this Arbitration. Th
I have scanned the entire pages of the Arbitration and Conciliation Act, Cap A.18, Laws of the Federation of Nigeria, 2004 but I am unable to find the Section that provides for the Federal High Court to exercise the powers of entertaining and granting ex parte interim or interlocutory injunctions as the case may be to restrain arbitral proceedings from taking place or continuing to finality. The Federal High Court or any High Court for that matter is not to exercise jurisdiction in arbitral causes and matters"... except, where so provided for in this Act" according to the provisions of Section 34 of the Act." (emphasis in original).
- Claimants provided further legal argument and Nigerian Court decisions relating to the ability of the courts to enjoin pending arbitrations and indicated that, if the Tribunal would issue its Final Award, Respondent would, in any event, be at liberty to
- Finally, Claimants urged the Tribunal to (i) discountenance Respondent’s latest attempt to delay the conclusion of this Arbitration and (2) direct Respondent to provide its substantive response to Claimants’ revised and updated damages.
7. Accordingly, having reviewed and considered all of the Parties' correspondence in this matter, the Tribunal directs as follows:
Unless, within thirty (30) days from the date of this Order, the Tribunal or any Party to this Arbitration is ordered by either the Court of Appeal or the Supreme Court of Nigeria to refrain from taking further steps in this Arbitration, Respondent shall submit, on or before forty-five (45) days from the date of this Order, its substantive response to Claimants' updated and revised damages and Schedule of Costs, failing which the Tribunal will proceed to issue a Final Award based on Claimants' submissions on damages and costs.
(i) If NNPC had prevailed on all issues of liability, the amount of lifting-generated Proceeds to which it would have been entitled as at 31 January 2014 would have been $5,092,342,000.
(ii) In view of the Tribunal's decision on the issues of Interest on Loans (paragraphs 202 to 213 of the Partial Award) and Non-Operator Sole Costs (paragraphs 214 to 218 of the Partial Award), the amount of lifting-generated Proceeds to which the Claimants were in fact entitled as at 31 January 2014 was $5,052,516,000.
(iii) The amount of lifting-generated Proceeds which Claimants had received, as at 31 January 2014, was $4,555,265,000.
(iv) $5,052,516,000 minus $4,555,265,000 = $497,251,000.
ABO Over/Under-Position (USD)
|- Sales Revenues||3,093,720||551,545||2,889,753||7,445,028|
ABO Over/Under-Position (USD)
|(K US$) 1TD 2014||NAE||OANDO||NNPC||TOTAL|
|Cost Oil Royalty Concession Rental||2,660,876||430,355||3,091,130|
|Sub-Total Profit Profit Oil||445 1,306,117||445 1,306,117|
|- Sales Revenues||1,567,178||294,208||490,347||2,451,733|
Professional fees of Hogan Lovells $2,120,541.52
Professional fees of Aluko & Oyebode 811,167.78
Photocopying, binding and printing disbursements of Hogan Lovells and Aluko & Oyebode 81,070.13
Travel and accommodation disbursements of Hogan Lovells and Aluko & Oyebode 223,883.29
Journal articles/electronic research/transcription/taxis and couriers disbursements of Hogan Lovells and Aluko & Oyebode 36,694.65
First advance paid by the Claimants (to the Tribunal in April 2009) $ 19,000.00
Second advance paid by the Claimants (to the Tribunal in December 2009) 21,052.63
Third advance paid by the Claimants (to the LCIA in September 2010) 300,000.00
Fourth advance paid by the Claimants (to the LCIA on 15 June 2011) 155,000.00
Legal fees and disbursements $3,273,357.37
Expert fees 157,199.28
Advances on costs 495,052.63
Costs and expenses of Claimants' fact witnesses and in- house counsel 18,034.68
Hearing room hire costs paid by the Claimants and not reimbursed by NNPC 24,067.60
(1) The Respondent has breached the PSC by purporting to nominate, lift, receive and retain the proceeds of the sale of, quantities of available Crude Oil which the Claimants had allocated to themselves and nominated in accordance with the PSC and which Claimants were, accordingly, entitled to lift.
(2) Under the PSC:
(i) The Respondent is not entitled to nominate, and is not entitled to lift Available Crude Oil in excess of the quantities of Available Crude Oil allocated from time to time to the Respondent by the Claimants.
(ii) The Claimants are entitled to allocate to themselves and to lift as Cost Oil from OPL 316 and any OML(s) derived therefrom (including OML 125) such quantum of Available Crude Oil as will generate an amount of Proceeds sufficient for recovery of Operating Costs incurred in OPL 211 and any OML(s) derived therefrom (including OML 134), as well as for recovery of Operating Costs incurred in OPL 316 and any OML(s) derived therefrom (including OML 125).
(iii) The Claimants are entitled to allocate to themselves and to lift as Cost Oil from OPL 316 and any OML(s) derived therefrom (including OML 125) such quantum of Available Crude Oil as enables the Claimants to recover Capital Costs in five equal instalments over five consecutive accounting periods, without any pro-rating of instalments.
(iv) The Claimants are entitled to (a) compute the PPT (if any) payable, (b) prepare and submit to the Respondent PPT returns (which PPT returns the Respondent is obliged to file with the FIRS), and (c) allocate and lift Available Crude Oil on the basis:
(a) that the Claimants are entitled to consolidate for PPT purposes OPL 316 and OPL 211 and any OML(s) derived therefrom (including OML 125 and OML 134);
(b) that ITC is to be deducted only from assessable tax, and is not to be deducted from the cost of capital assets, nor from "qualifying expenditure" (as that term is defined in the Second Schedule of the PPT Act);
(c) that the "actual PPT liability payable during each month" is determined (in accordance with Section 33 and Section 45 of the PPTA) on the basis of one-twelfth of the amount of PPT estimated to be chargeable for the accounting period;
(d) that the "actual PPT liability payable during each month" reflects one-twelfth of the amount of the capital allowances estimated to be due for the accounting period, and reflects the fact that a full accounting period’s capital allowance (at the applicable rate set out in Table II of the Second Schedule to the PPTA) is available for the accounting period in which an asset which is "qualifying expenditure" (as that term is defined in the Second Schedule of the PPTA) is acquired or first used, regardless of when in that accounting period the asset was acquired or first used, without any pro-rating;
(e) that the total sum of the Signature Bonuses paid under the PSC and the 211 PSC (which, as set out above, the Claimants are entitled to consolidate for PPT purposes) attracts capital allowances under the Second Schedule of the PPT Act; and
(f) that, for the remainder of the term of the PSC, the Respondent (whether acting by itself, its privies, agents, sub-contractors, or any person claiming through or under it).
(v) shall not nominate and shall not lift any Available Crude Oil in excess of the Claimants’ allocations to the Respondent of Available Crude Oil; and shall not in any way impede the Claimants' allocations, nominations and liftings of Available Crude Oil;
(vi) shall not file with FIRS any PPT returns (whether estimated or final) in respect of the PSC, other than the PPT returns prepared and submitted from time to time to the Respondent by the Claimants;
(vii) shall not pay as PPT any sums in excess of the amount of Proceeds generated from the lifting of Available Crude Oil which is, from time to time, allocated to the Respondent by the Claimants as Tax Oil;
(viii) shall file with FIRS any and all PPT returns (whether estimated or final) which the Claimants have submitted to the Respondent for onward filing with FIRS but which the Respondent has, prior to the date of the Tribunal's Award, failed to file with FIRS;
(ix) shall make available to the Claimants copies of receipts issued by FIRS, bearing the names of each Party, for all payments made (including past payments) for PPT; and
(x) the PPT returns which the Respondent has itself prepared and filed with FIRS (instead of, or in addition to, the PPT returns prepared by the Claimants and submitted to the Respondent for onward filing with FIRS) are contrary to the PSC in that they do not reflect Claimants' entitlement to compute the PPT (if any) payable on the basis of the points set out above.
(3) Claimants' claims for interest on loans and non-operator costs are denied.
(i) damages in the amount of $497,251,000 (Four Hundred Ninety-Seven Million Two Hundred Fifty-One Thousand Dollars);
(ii) interest on the amount in "(i)" above in the amount of $71,034,814 (Seventy-One Million Thirty-Four Thousand Eight Hundred Fourteen Dollars);
(iii) costs, in the amount of $3,967,712 (Three Million Nine Hundred Sixty-Seven Thousand Seven Hundred Twelve Dollars);
(iv) interest on the costs in "(iii)" above in the amount of $1,029,257 (One Million Twenty-Nine Thousand Two Hundred Fifty-Seven Dollars); and
(v) in addition to the above, NNPC shall pay to Claimants simple interest upon all monetary sums awarded to Claimants from the date hereof until the date of payment, at the rate of Twelve Percent (12%).
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