Interocean Oil v. Nigeria, Award, 6 Oct 2020

Arbitration Rules	ICSID Rules of Procedure for Arbitration Proceedings 2006
C-[#]	Claimants' Exhibit
CAC	Corporate Affairs Commission
CAMA	Companies & Allied Matters Act 1990
CL-[#]	Claimants' Legal Authority
Claimants' Counter-Memorial	Claimants' Counter-Memorial Pursuant to Procedural Order No. 1 of 24 February 2014, dated 11 April 2014
Claimants' Memorial	Claimants' Points of Claim, dated 18 June 2015
Claimants' Observations on Costs Allocation	Claimants' Observations on Costs Allocation, dated 30 June 2020
Claimants' Post-Hearing Brief	Claimants' Post-Hearing Brief, dated 13 June 2018
Claimants' Rejoinder	Claimants' Rejoinder to the Respondent's Reply in Respect of the Respondent's Notice of Objection to Jurisdiction, dated 9 May 2014
Claimants' Reply	Claimants' Reply to Respondent's First Memorial dated 17th November 2015, dated 25 May 2016
Claimants' Statement of Costs	Claimants' Statement of Costs dated 8 June 2020
Continued Hearing	Continued Hearing on the Merits held 19-21 July 2017 in London
Decision on Preliminary Objections	Tribunal's Decision on Preliminary Objections, dated 29 October 2014
EFCC	Economic and Financial Crimes Commission
Hearing	Hearing on the Merits held 2-4 August 2016 in London
Hearing on Preliminary Objections	Hearing on Preliminary Objections to Jurisdiction held on 26 June 2014 in London
ICSID Convention
Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965
ICSID or the Centre	International Centre for Settlement of Investment Disputes
JOA	Joint Operating Agreement
NIPC	Nigerian Investment Promotion Commission
NIPC Act	Nigerian Investment Promotion Commission Act
NNPC	Nigerian National Petroleum Corporation
OML 98	Nigerian Oil Mining Lease 98
OPL 275	Oil Prospecting Lease 275
Pan Ocean or POOC	Pan Ocean Oil Company
R-[#]	Respondent's Exhibit
Respondent's Counter-Memorial	Respondent's First Memorial, dated 17 November 2015
Respondent's Memorial on Jurisdiction	Respondent's Memorial on Objection to Jurisdiction, dated 14 March 2014
Respondent's Observations on Costs Allocation	Respondent's Observations on Costs Allocation, dated 30 June 2020
Respondent's Post-Hearing Brief	Respondent's Post-Hearing Brief, dated 13 June 2018
Respondent's Rejoinder	Respondent's Rejoinder on the Merits dated 26 July 2016
Respondent's Reply	Respondent's Reply Memorial, dated 25 April 2014
Respondent's Statement of Costs	Respondent's Statement of Costs dated 8 June 2020
RfA	Request for Arbitration
RL-[#]	Respondent's Legal Authority
Transcript Day, [#] [page:line]	Transcript of the Hearing
Tribunal	Arbitral Tribunal constituted on 11 December 2013

1.

Claimants are Interocean Oil Development Company and Interocean Oil Exploration Company, both of which were incorporated under the laws of Delaware and maintain registered offices at 901 N. Market Street, Suite 705, Wilmington, Delaware 19801, U.S.A.

2.

Claimants are represented in this arbitration by Mr. Olasupo Shasore, SAN and Mr. Bello Salihu of ALP, Lagos, Nigeria; Mr. Oba Nsugbe QC of 3 Pump Court, Temple, London, United Kingdom; and Ms. Bimpe Nkontchou of ADR Africa Limited, London, United Kingdom.

3.

Respondent is the Federal Republic of Nigeria. Claimants' Request for Arbitration ("RfA") was notified to the Attorney General for the Federation and Minister for Justice, Federal Ministry of Justice, Shehu Shagari Way, Central Area, Abuja, Nigeria.

4.

Respondent is represented in this arbitration by a team led by Mr. Aare Afe Babalola SAN and comprising Mr. Adebayo Adenipekun SAN, Mr. Olu Daramola, Mr. Oluwasina Ogungbade, Mr. Kehinde Ogunwumiju, Mr. Ola Faro, and Mrs. Esther Adenipekun, all of Emmanuel Chambers, Lagos, Nigeria, Mr. Robert Volterra and Mr. Álvaro Nistal of Volterra Fietta, London, United Kingdom, and Ms. Rose Rameau of Rameau Law Firm in Washington, D.C., USA.

5.

The Tribunal has considered all of the Parties' submissions and the arguments and evidence presented by them in these proceedings. This Award will focus on the materials determinative to its decisions and the resolution of this dispute. All issues have been considered. Any request for relief not expressly granted in this Award is hereby denied.

6.

The facts giving rise to this dispute on the merits are largely uncontested. The main differences between the Parties reside in the legal qualification of these events and in whether Respondent bears culpability or liability for them. The Tribunal adopts the "Overview of the Dispute" contained in its Decision on Preliminary Objections. Below, the Tribunal summarizes the factual submissions that were most relevant to the Tribunal's decisions. The Tribunal's factual findings as they relate to the arguments submitted and the claims raised are presented within the Tribunal's analysis.

7.

Nigeria is among the world's largest producers of oil and its oil assets are managed by the state-owned authority, the Nigerian National Petroleum Corporation ("NNPC").¹ This dispute centers on Claimants' investment in the oil and gas industry in Nigeria, which resulted in the joint venture, ownership, and operation of Nigerian Oil Mining Lease 98 ("OML 98") and Oil Prospecting License 275 ("OPL 275") through a Nigerian corporate entity, Pan Ocean Oil Company ("POOC" or "Pan Ocean").

8.

This joint venture is known as the "NNPC/POOC Joint Venture." Pan Ocean is the operator of OML 98 and holder of OPL 275. The current lease output is approximately 50,000 bpd of crude oil.² Until 1998, Claimants were the 100% beneficial owner of the 40% participating interest in OML 98 and related assets (as Pan Ocean) and Respondent was the owner of 60% of the participating interest (as NNPC).³ The subject of this arbitration is Claimants' 40% participating interest in OML 98 and OPL 275, created by the joint venture.⁴

9.

Claimants allege that they alone invested capital in the Asaboro and Ogharefe fields to make OML 98 profitable. Since July 1998, Claimants made further investments by discharging the 40% of the contributed operational costs to the production of OML 98 and all other operations of Pan Ocean, including the acquisition of a second rig and the purchase of another oil block OPL 275, in 2007 or 2008. OPL 275 is co-extensive of Claimants' original investment in OML 98.⁵

10.

Dr. Vittorio Fabbri was the beneficial owner of Impex Limited, which had been the legal owner of both Claimant companies since 1983.⁶

11.

Impex owned Claimants, which owned Pan Ocean.⁷ Claimants allege that the authorized share capital of Pan Ocean is Naira 10,000 divided into Ten Thousand Ordinary Shares of Naira 1.00 each.⁸ Claimants hold 1,250 shares each (2,500 shares total) in Pan Ocean and allege that these are the only shares of Pan Ocean that have been validly issued and allotted.⁹

12.

In the mid-1980s, the Board of Pan Ocean consisted of three directors: Dr. Fabbri, Dr. Festus Fadeyi, and Mr. Herbert Rooks, with Dr. Fabbri acting as Managing Director.¹⁰ Dr. Fadeyi later became Managing Director of Pan Ocean. He performed executive duties but held no ownership rights in the company.¹¹

13.

According to Respondent, on 9 October 1984, Pan Ocean and NNPC concluded a Crude Oil Sales Contract. Respondent alleges that, three years later in 1987, Pan Ocean lifted certain cargoes of crude oil without payment, in violation of the Crude Oil Sales Contract.¹²

14.

In July 1987, Mr. Rooks was in Nigeria with a power of Attorney from Dr. Fabbri to relieve Dr. Fadeyi of his duties.¹³ According to Claimants, Mr. Rooks and two others were detained without charges and were finally released from detention in Nigeria on 23 December 1987, after 5 months.¹⁴ Claimants allege that this was part of an effort by Respondent to enforce its rights as a joint venture partner.¹⁵ From 1987 onward, Dr. Fadeyi was the only Director of Pan Ocean who remained physically present in Nigeria.¹⁶

15.

In May 1989, Pan Ocean and NNPC signed a Settlement Agreement following a commercial arbitration, pursuant to which a debt related to the 1987 dispute was to be repaid from Pan Ocean to NNPC.¹⁷ Pan Ocean agreed to pay NNPC the sum of $371,991,279, comprising the principal sum of US$ 135,610,140, plus interest, in relation to crude oil purchases of 4,928,880 barrels.¹⁸ Pursuant to this agreement, payment would commence in 2002, with the balance fully paid in 2012.¹⁹

16.

In December 1997, Dr. Fabbri was diagnosed with terminal liver cancer.²⁰

17.

Claimants allege that Dr. Fabbri transferred 100% of the beneficial interest in Impex to his exwife, Mrs. Annabella Timolini, via stock transfer agreement on 13 January 1998, in the presence of his eldest son, Mr. Patrizio Fabbri.²¹

18.

Respondent states that on 17 June 1998, Dr. Fabbri, as Chairman of Pan Ocean, acknowledged the outstanding debt to the NNPC and proposed a debt repayment plan, pursuant to which the debt owed to NNPC would be repaid from 2002 – 2009, with the balance fully paid in 2012.²² The letter makes no mention of any change in the ownership of Impex.

19.

On 20 or 24 July 1998, at a Board Meeting of Pan Ocean, there was an allotment of shares purportedly made by Mr. Rooks to Mr. Jacob Tomisin.²³ Mr. Rooks in an affidavit of 26 August 2003 stated that he did not do this transaction.²⁴

20.

Months after contracting a terminal cancer, Dr. Fabbri died intestate on 1 September 1998.²⁵

21.

On 28 September 1998, on the invitation of Mrs. Timolini, Dr. Fadeyi attended a meeting in Geneva where Claimants allege that they informed Dr. Fadeyi and Justice Duro Adebiyi (Legal Secretary of Pan Ocean) of Mrs. Timolini's status as shareholder and Chairman of the Board of Impex.²⁶

22.

Claimants allege that, since September 1998, Claimants have been denied information about or access to joint venture meetings or joint operating committee deliberations and the accounting, financial, and business affairs or production status of the joint venture operations.²⁷

23.

Claimants' representatives Mr. John Brunner and Mr. Richard Evans made plans for late 1998 to travel to Nigeria to review Pan Ocean's accounts on Mrs. Timolini's behalf, but these were cancelled by Dr. Fadeyi.²⁸ Dr. Fadeyi directed all communication through his lawyers, the Law Union, who refused to accept the validity of the Deed of Transfer that Dr. Fabbri allegedly executed before his death.²⁹

24.

On 15 October 1998, Dr. Fadeyi called a meeting where he removed Mr. Rooks as Director and appointed two of his associates in his place: Mr. Alhaji Muhammed Dikko Yusufu and Justice Duro Adebiyi. This was later declared irregular by the Corporate Affairs Commission ("CAC").³⁰

25.

On 21 October 1998, the Law Union wrote to Mrs. Timolini's attorney, Mr. Jacques Jones, stating that the consent of the NNPC was required before any transfer of the interest of Pan Ocean could be valid.³¹

26.

It is unclear whether Dr. Fabbri's ex-wife, Mrs. Timolini, ever held the beneficial interest in Claimants. Dr. Fabbri and Mrs. Timolini divorced prior to his death. While the Parties agree that Mrs. Timolini yielded whatever interest she may have had to the estate of Dr. Fabbri in 2010, her alleged ownership of Impex, which owns Claimant companies, may have been an intervening factor with respect to Respondent's refusal to acknowledge communications from Mrs. Timolini regarding the ownership of the shares.³² Claimants have alleged that the beneficial interest of Claimants was owned by Dr. Fabbri until his death.³³ Claimants have also alleged that, prior to his death, Dr. Fabbri transferred 100% of the beneficial interest in Impex to his ex-wife via stock transfer agreement on 13 January 1998, in the presence of his eldest son, Mr. Patrizio Fabbri.³⁴ Respondent never recognized the validity of this transfer, and the transfer was declared invalid by Justice Olomojobi of the Federal High Court of Nigeria.³⁵

27.

In March 2000, Chief Sena Anthony, Legal Advisor to the NNPC, wrote a letter in response to an inquiry by Mrs. Timolini and confirmed that the NNPC's consent was not required in case of change of Pan Ocean's ultimate beneficial ownership.³⁶ Chief Anthony advised, however, that they seek the consent of the Government and of the other shareholders. Claimants allege that this is how they discovered the first irregular issuance of shares by Dr. Fadeyi to a third person, Mr. Tomisin. Respondent submits that the communications sent to the NNPC on behalf of Mrs. Timolini were only aimed at obtaining an acknowledgment or confirmation of her asserted beneficial ownership of Pan Ocean.³⁷

28.

In May 2002, Pan Ocean and NNPC entered into a Joint Operating Agreement.³⁸

29.

On 16 December 2002, Claimants initiated a claim against Dr. Fadeyi and others, seeking declarations that Claimants were the beneficial owners of Pan Ocean and seeking to nullify all purported general and board meetings following September 1998, among other actions occurring after that date. The action was withdrawn by notice of discontinuance on 11 March 2004.³⁹

30.

On 3 February 2003, Claimants petitioned the CAC to conduct an investigation into the affairs of Pan Ocean.⁴⁰

31.

On 29 March 2004, Pan Ocean (under the leadership of Dr. Fadeyi) filed an action against Mrs. Timolini, alleging that neither Mrs. Timolini nor Mr. Patrizio Fabbri were shareholders or directors of Pan Ocean ("2004 Fraud Case").⁴¹

32.

The Parties dispute whether, in 2004, Claimants' representatives scheduled a meeting with the then-Presidential Advisor to the President Nigeria on Petroleum and Energy Matters to seek a settlement of the dispute. According to Claimants, the Presidential Advisor subsequently refused to meet with Claimants' representatives, who had traveled from Geneva to Abuja for the meeting.⁴² Respondent disputes that in 2004 representatives of the Estate of Dr. Fabbri secured an appointment with the then-Presidential Advisor on Petroleum and Energy in an attempt to settle the case.⁴³ Respondent states that there is no evidence that any meeting was planned.⁴⁴

33.

In 2005, at Claimants' insistence while the 2004 Fraud Case was pending, the CAC investigated the affairs of Pan Ocean, pursuant to its statutory powers under Respondent's company law.⁴⁵ The CAC issued its report, which confirmed Dr. Fabbri as the sole owner of the beneficial interest in Pan Ocean and, consequently, Claimants' 40% participating interest in the OML 98.⁴⁶ As noted above, OML 98 serves as a focus for this dispute, given Claimants' investment in Nigeria having been effected through ownership and operation of Nigerian Oil Mining Lease 98 and Oil Prospecting License 275 through the Nigerian corporate entity, Pan Ocean Oil Company.

34.

The 2004 Fraud Case was concluded on 10 November 2005, when a Nigerian Court judgment dated 10 November 2005 declared Dr. Fabbri as the sole and beneficial owner of all the undertaking in Pan Ocean.⁴⁷ The case was, thus, resolved in Claimants' favor, finding that Dr. Fabbri and Claimants were the only owners of the beneficial interest in Pan Ocean.

35.

The "2005 Board Meeting Case" began on 21 November 2005, when Dr. Fadeyi applied for the Court's leave to hold a Board Meeting of Pan Ocean, and supported the same with an affidavit stating that the absence of directors of Pan Ocean made it impossible to uphold normal business operations in the Country.⁴⁸ The affidavit stated that Mr. Rooks "departed Nigeria and had since never returned to the country" and "his efforts to locate him had proven abortive."⁴⁹ This application was granted on 24 November 2005.⁵⁰ Claimants filed an appeal on the same day.⁵¹ The requested Board Meeting was held on 29 November 2005, and resolutions were passed allotting the remaining 7,500 unissued shares of Pan Ocean to Dr. Fadeyi and his associates.⁵² On 1 and 28 December 2005, Dr. Fadeyi sought to give notice of an Extraordinary General Meeting of Pan Ocean, where he would validate the allotment of shares made on 29 November 2005.⁵³ Claimants submit that no shareholders were present at that meeting and that "there is no evidence that they were even notified of it."⁵⁴ Dr. Fadeyi claimed that he attempted to serve notice of the meeting to Claimants, while in fact he only sent those notices to the Swiss address of Panoco SA, Swiss subsidiary of Pan Ocean that was liquidated in 1995, and did not attempt to serve them at the registered offices of Claimants or their counsel's address, both known to him from other litigations.⁵⁵ Respondent states that the court was entitled to rely on Dr. Fadeyi's statement that the notices were returned and points out that the address of the notice was the same address as listed on the annual returns of Pan Ocean, attached to the CAC Report of April 2005.⁵⁶

36.

On 19 January 2006, again in the absence of Claimants, an ordinary resolution was passed through which Dr. Fadeyi appointed his associates Justice Duro Adebiyi and Alhaji Muhammed Dikko Yusuf as Directors and the share allocation was effected.⁵⁷

37.

The decision of 8 February 2006 of the Federal High Court of Abuja validated the resolutions passed by Dr. Fadeyi.⁵⁸ On 8 February 2006, the CAC accepted and endorsed the registered filing of new shares purporting to represent 75% of the participating interest in OML 98 to Dr. Fadeyi, thus effecting the surrender of Pan Ocean shares and thus an alienation of the majority part of Claimants' 40% interest in the joint venture, based on the false assertion that Claimants were nowhere to be found, were non-responsive, or were not interested in the General Meeting of Pan Ocean.⁵⁹ Claimants state that, unlike in the prior transfer, Respondent did not provide the required written consent to this transfer as required under Nigerian Law, but continues to give legal effect to it.⁶⁰ Claimants filed an appeal on 4 April 2006, which the Court of Appeal of Abuja dismissed as untimely.⁶¹

38.

Mrs. Timolini waived her interest in Impex in 2010 in order to facilitate her children's obtaining Letters of Administration. A Letter of Administration of the Estate of Vittorio Fabbri was granted on 23 August 2011.⁶² She resigned as Director and President of Claimant companies on 31 January 2013.⁶³

39.

On 9 October 2012, 29 October 2012, and 21 March 2013, Claimants wrote to Respondent seeking a resolution of their claims and demands. Respondent did not reply to these letters and disputes whether they were even delivered.⁶⁴

40.

Although Claimants have lost control of their investment, that loss does not in itself give rise to international liability. Accepting the facts as pleaded by Claimants, one sees a story of someone (Dr. Fabbri) who gave his ex-wife a company in January 1998, but told no one else except one of their children. Dr. Fabbri continued to act as if this exchange had not occurred and then, months later, even made an agreement with the Nigerian government to the effect that the very same company would pay a nearly half billion dollar debt, starting in 2002.⁶⁵

41.

When Dr. Fabbri died intestate weeks later, his children and ex-wife would be forced to spend over two decades trying to establish their ownership of the company and to wrest control of the company back from Dr. Fadeyi.⁶⁶

42.

In their Memorial on the Merits,⁶⁷ Claimants made the following request for relief, which amended and supplemented their prior request contained in their Request for Arbitration:

Following the actions taken and omissions of the Respondent and its instrumentalities described above, the Claimants will respectfully request an award in their favour-

1. Declaring that Respondent has breached its obligations to the Claimants under Nigerian law and/or international law;

2. Directing the Respondent to restore only the nominees of the Claimants as representatives in the 40% participating interest under the operations of all Joint Venture Agreements and in particular OML 98 and OPL 275;

3. Finding that as matter of Nigerian and/or international law, any purported transfer or acquisition of the 100% interest of the Claimants, or any part thereof in 40% of OML 98/OPL 275 or any other asset, or its accumulated proceeds howsoever executed through the Respondent's instrumentalities without the consent of the Claimants and in breach of Nigerian law, is an indirect expropriation of its participating interest in the leases in violation of NIPCA and Nigerian Law;

4. Finding that as matter of Nigerian and/or international law, the acts and/or omissions of the Respondent (as particularised above) amount to a breach of the Respondent's duty to ensure that the treatment of the Claimants did not fall below international minimum standards and/or were not in breach of its duty to treat the Claimants fairly and equitably;

5. Directing the Respondent, its relevant privies and instrumentalities to pay damages in an amount to be proven during these arbitral proceedings which the Claimants estimate at being in excess of US$ 1 Billion (One Billion United States Dollars);

6. Directing the Respondent, its relevant privies and instrumentalities to pay aggravated damages in the sum of US$ 500,000,000 (Five Hundred Million United States Dollars).

7. Restitution of the undiluted 40% participating interest in OML 98 and OPL 275 and all monies accruing thereto by receiving the proceeds of unjust enrichment controlled in trust for the Claimants to date;

8. Directing that the Claimants be reinstated as the beneficial owner [sic] of the 40% participating interest in OML 98.

9. Directing the Respondent to pay the Claimants' interest and taxes on all sums awarded;

10. Directing the Respondents to pay the Claimants' costs associated with these proceedings including professional fees and disbursements on a full indemnity basis;

11. Ordering such further or other relief as the Tribunal deems appropriate in the circumstances.

43.

In its Counter-Memorial,⁶⁸ Respondent made the following request for relief:

"For all the reasons set out in this Memorial, the Respondent respectfully requests that the Tribunal:

a. declare by partial award on jurisdiction that it lacks jurisdiction over all, or in the alternative, one or more, of the Claimants' claims founded outside of the NIPC Act, in particular their claims based on indirect expropriation and/or on customary international law;

b. in the alternative, declare in its final award that it lacks jurisdiction over the present dispute;

c. further in the alternative, declare in its final award that it lacks jurisdiction over the Claimants' indirect expropriation claim and over any other claim that is not based on a violation of the NIPC Act, including any claims based upon customary international law;

d. to the extent that it may assert jurisdiction, dismiss all the relevant claims in their entirety;

e. order the Claimants to pay all of the Respondent's costs in connection with this arbitration, including the Tribunal's and ICSID's fees and expenses, and all legal fees and expenses incurred by the Respondent (including, but not limited to, the fees and expenses of legal counsel and experts); and

f. order any such relief as may seem just."

44.

In its Rejoinder,⁶⁹ Respondent made the following request for relief

"For all the reasons set out in this Rejoinder and in Respondent's First Memorial, the Respondent respectfully requests that the Tribunal:

a. declare that it lacks jurisdiction over the present dispute

b. in the alternative, declare that it lacks jurisdiction over: (i) the Claimants' indirect expropriation claim, including their judicial expropriation claim; and (ii) over any claim not based on a violation of the NIPC Act, including the Claimants' denial of justice claim and their other claims based on customary international law;

c. to the extent that it may assert jurisdiction, dismiss all of the relevant claims in their entirety;

d. order Claimants to pay all of the Respondent's costs in connection with this arbitration, including the Tribunal's and ICSID's fees and expenses, and all legal fees and expenses incurred by the Respondent (including, but not limited to, the fees and expenses of legal counsel and experts); and

e. order any such relief as may seem just."

45.

This arbitration is between Interocean Oil Development Company and Interocean Oil Exploration Company as Claimants and Federal Republic of Nigeria as Respondent. Their dispute is brought before the International Centre for Settlement of Investment Disputes ("ICSID"), under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States dated 18 March 1965 ("ICSID Convention") and the Nigerian Investment Promotion Commission Act ("NIPC Act").

46.

Claimants filed their RfA, dated 30 July 2013, with ICSID pursuant to Article 36 of the ICSID Convention in electronic copy on 31 July 2013 and in hard copy on 5 August 2013. In the RfA, Claimants requested that the Tribunal render an award:

"a) Declaring that Respondent has breached its obligations to the Claimants under NIPC [Act];

b) Directing the Respondent to restore only the nominees of the Claimants as representatives in the 40 % participating interest under the operations of all Joint Venture Agreements and in particular OML 98 and OPL 275;

c) Finding that any purported transfer or acquisition of the 100% interest of the Claimants or any part thereof in 40% of OML 98/OPL 275 or any other asset including its accumulated proceeds howsoever without the consent of the Claimants is an indirect expropriation of its participating interest in the leases;

d) Directing the Respondent, its relevant privies and instrumentalities to pay damages in an amount to be proven at the hearing but which the Claimants presently estimate to be in excess of $500,000,000 (Five Hundred Million United States Dollars);

e) Directing the Respondent, its relevant privies and instrumentalities to pay aggravated damages in the sum of $150,000,000 (One Hundred and Fifty Million United States Dollars) or such amount as may be proven by the Claimants at the hearing;

f) Restitution of the undiluted 40% participating interest in OML 98 and OPL 275 and all monies accruing thereto, by receiving the proceeds of unjust enrichment controlled in trust for the Claimants to date;

g) Directing that the Claimants be reinstated as the beneficial owner of the 40% participating interest in OML 98;

h) Directing the Respondent to pay the Claimants' interest and taxes on all sums awarded;

i) Directing the Respondents to pay the Claimants' costs associated with these proceedings including professional fees and disbursements on a full indemnity basis; and

j) Ordering such further or other relief(s) as the Tribunal deems appropriate in the circumstances."

47.

On 12 August 2013, the ICSID Secretariat responded to Claimants and asked that Claimants answer several questions prior to registration of the RfA.

48.

On 19 August 2013, Claimants responded to the Secretariat.

49.

On 9 September 2013, the Secretary-General of the Centre registered the RfA pursuant to Article 36(3) of the ICSID Convention.

50.

On 11 November 2013, Claimants requested that the Arbitral Tribunal be constituted pursuant to the formula provided by Article 37(2)(b) of the ICSID Convention. On 9 December 2013, Professor Julian D. M. Lew, a national of the United Kingdom, accepted his appointment as arbitrator appointed by Claimants, and Justice Edward Torgbor, a national of the United Kingdom and Ghana, accepted his appointment as arbitrator appointed by Respondent.

51.

On 11 December 2013, Professor William W. Park, a national of the United States and Switzerland, accepted his appointment as President of the Tribunal appointed by the Parties. The Tribunal in ICSID Case No. ARB/13/20 was constituted on 11 December 2013 in accordance with Article 37(2)(b) of the ICSID Convention.

52.

On 13 February 2014, the Tribunal and the Parties held a first session at the World Bank office in Paris. During that session, the Parties agreed on procedural issues and addressed outstanding issues that are outlined in more detail below.

53.

On 27 February 2014, the Tribunal issued Procedural Order No. 1 containing a schedule of submissions on the following preliminary objections raised by Respondent, as set forth in its Section 14:

"14.1.1. Respondent did not consent to submit this dispute to arbitration by ICSID ["Objection 1"];

14.1.2. Section 26 of the Nigerian Investment Protection Commission Act ("NIPC") does not provide a basis for finding consent on the part of Respondent as it merely provides that disputes should be conducted in accordance with the ICSID Rules ["Objection 2"];

14.1.3. Claimants are not registered with the NIPC and therefore cannot rely on Section 26(3) of the NIPC Act to invoke the jurisdiction of ICSID, and Claimants misled the Secretariat of ICSID to register their Request for Arbitration when they falsely claimed that their enterprise was registered with the NIPC. Pleadings on this objection shall be limited to whether Claimants are registered and the bearing of registration on the Tribunal's jurisdiction ["Objection 3"];

14.1.4. Respondent is not a competent party to this arbitration. Claimants' pleadings on this objection should identify the law and legal authorities on which they intend to rely and the corresponding liability of Respondent ["Objection 4"];

14.1.5. Claimants' claims are barred by statute ["Objection 5"]; and

14.1.6. The request is premature in that Claimants failed to explore local remedies/conditions precedent contained in the NIPC Act ["Objection 6"].

54.

On 14 March 2014, Respondent filed its "Memorial on Objection to Jurisdiction" ("Respondent's Memorial on Jurisdiction") with supporting documentation.

55.

On 11 April 2014, Claimants filed their "Counter-Memorial Pursuant to Procedural Order No. 1 of 24 February 2014" ("Claimants' Counter-Memorial") with supporting documentation.

56.

On 25 April 2014, Respondent filed its "Reply Memorial" ("Respondent's Reply") with supporting documentation.

57.

On 9 May 2014, Claimants filed their "Rejoinder to the Respondent's Reply in Respect of the Respondent's Notice of Objection to Jurisdiction" ("Claimants' Rejoinder") with supporting documentation.

58.

On 26 June 2014, the Tribunal and the Parties held a Hearing on Preliminary Objections to Jurisdiction at the International Dispute Resolution Centre in London. The following persons were in attendance:

Tribunal:
Professor William W. Park President
Professor Julian D. M. Lew QC Arbitrator
Justice Edward Torgbor Arbitrator

ICSID Secretariat:
Mr. James Claxton Secretary of the Tribunal

For Claimants:

Mr. Olasupo Shasore Ajumogobia & Okeke
Prof. Oba Nsugbe Pump Court Chambers
Mrs. Bimpe Nkontchou Addie & Co Advisory
Mr. Bello Salihu Legal Counsel
Mr. Jacques Jones Legal Counsel
Mr. Richard Evans Claimants' Financial Advisor
Mr. Patrizio Di Guevara Fabbri Director of Interocean Oil Development Company & Interocean Oil Exploration Company
Mr. Riccardo Di Guevara Fabbri Director of Interocean Oil Development Company & Interocean Oil Exploration Company

For Respondent:

Mr. Adebayo Adenipekun Emmanuel House
Mr. Olu Daramola Emmanuel House
Ms. Ann Biodun Babalola Emmanuel House
Mr. Oluwasina Ogungbade Emmanuel House
Mr. Kehinde Ogunwumiju Emmanuel House
Mr. Ola Faro Emmanuel House
Mrs. Esther Adenipekun Emmanuel House
Mr. Taiwo Abidogun Federal Ministry of Justice, Federal Republic of Nigeria
Mr. Rufai Khalid Nigerian National Petroleum Corporation ("NNPC")
Mr. Tijani Alkali Gazali Federal Ministry of Justice, Federal Republic of Nigeria

59.

On 7 July 2014, Respondent submitted documents related to the requirements for registration under the NIPC Act.

60.

On 28 July 2014, Claimants submitted comments on the documents related to the requirements for registration under the NIPC Act produced by Respondent.

61.

On 30 July 2014, without instruction from the Tribunal, Claimants submitted purported proof of delivery for letters filed as exhibits with the RfA as Annexes 1-3.

62.

On 1 August 2014, Respondent wrote to the Tribunal requesting that it refuse to consider the purported proof of delivery submitted by Claimants.

63.

On 2 August 2014, the Tribunal invited Claimants to comment on Respondent's letter of 1 August 2014.

64.

On 8 August 2014, Claimants wrote to the Tribunal requesting that it disregard Respondent's letter of 1 August 2014 and authorize Claimants to submit additional documents evidencing proof of delivery of the letters.

65.

On 29 October 2014, the Tribunal issued its Decision on Preliminary Objections, deciding that:⁷⁰

Objection 1 (Consent) is rejected insofar as it calls into question whether Section 26 of the NIPC Act constitutes a standing offer to arbitrate. The Tribunal finds that Section 26 does indeed constitute such a standing offer. However, questions related to the adequacy of the Claimants' acceptance of that offer are joined to the merits;

Objections 2 (Role of the ICSID Rules), 4 (Proper Party) and 5 (Time Bars) are rejected; and

Objections 3 (Registration) and 6 (Premature Filing) are joined to the merits.

66.

On 5 February 2014, the Tribunal issued Procedural Order No. 2 with an updated procedural calendar.

67.

On 18 June 2015, Claimants filed their "Points of Claim" ("Claimants' Memorial") with supporting documentation.

68.

On 17 November 2015, Respondent filed its "First Memorial" ("Respondent's Counter-Memorial") with supporting documentation.

69.

On 17 February 2016, the Tribunal issued Procedural Order No. 3 concerning the production of documents.

70.

On 20 April 2016, the Tribunal issued Procedural Order No. 4 concerning the production of documents.

71.

On 25 May 2016, Claimants filed their "Reply to Respondent's First Memorial dated 17th November 2015" ("Claimants' Reply") along with supporting documentation.

72.

On 26 July 2016, Respondent filed its "Rejoinder" ("Respondent's Rejoinder") along with supporting documentation.

73.

From 2 August until 4 August 2016, the Tribunal held a Hearing on the Merits (the "Hearing") in London. The following persons were present at the Hearing:

Tribunal:
Professor William W. Park President
Professor Julian D. M. Lew QC Arbitrator
Hon. Justice Edward Torgbor Arbitrator

ICSID Secretariat:
Mr. Benjamin Garel Secretary of the Tribunal

For Claimants:

Counsel:
Mr. Olasupo Shasore, SAN Counsel for Claimants
Professor Oba Nsugbe QC, SAN Counsel for Claimants
Mrs. Bimpe Nkontchou Counsel for Claimants
Mr. Bello Salihu Counsel for Claimants
Ms. Fadesike Salu Counsel for Claimants

Parties:
Mr. Patrizio Di Guevara Fabbri Director of Interocean Oil Development Company & Interocean Oil Exploration Company
Mr. Riccardo Di Guevara Fabbri Director of Interocean Oil Development Company & Interocean Oil Exploration Company
Mr. Eric Vazey Claimants' In-House Counsel
Mr. Richard Evans Claimants' Financial Advisor

For Respondent:

Counsel: Counsel for Respondent
Mr. Adebayo Adenipekun, SAN, FCIArb. Counsel for Respondent
Mr. Olu Daramola, SAN, FCIArb. Counsel for Respondent
Mr. Robert Volterra Counsel for Respondent
Mr. Christophe Bondy Counsel for Respondent
Ms. Ann Babalola Counsel for Respondent
Mr. Oluwasina Ogungbade Counsel for Respondent
Ms. Rose Rameau, MCIArb Counsel for Respondent
Mr. Kehinde Ogunwumiju Counsel for Respondent
Mr. Ola Faro Counsel for Respondent
Mr. Álvaro Nistal Counsel for Respondent
Mr. Chukwudi Maduka Counsel for Respondent
Mrs. Yemisi Adenipekun, MCIArb. Counsel for Respondent
Ms. Maria Fogdestam-Agius Counsel for Respondent
Ms. Isabella Seif Counsel for Respondent
Ms. Amanda Murphy Counsel for Respondent
Ms. Andrea Mauri Counsel for Respondent
Mr. Matthew Nelson Counsel for Respondent

Parties:
Mr. Taiwo Abidogun Permanent Secretary, Federal Ministry of Justice, Nigeria
Mr. Dayo Apata Director, Civil Litigation, Federal Ministry of Justice, Nigeria
Mrs. Adelore Olufolakemi Sarian Director, Legal Services, Ministry of Petroleum Resources, Nigeria
Mrs. Maimuna Shiru Assistant Director, Civil Litigation, Federal Ministry of Justice, Nigeria

Court Reporter:
Mr. Trevor McGowan The Court Reporter

74.

During the Hearing, the following persons were examined:

Witnesses:
Mr. Jacques Jones Claimants' Witness
Mr. Patrizio Fabbri Claimants' Witness
Mr. John Brunner Claimants' Witness
Mrs. Annabella Timolini Claimants' Witness

Experts:
Professor Yinka Omorogbe Claimants' Expert
Professor Fidelis Oditah, QC, SAN Claimants' Expert
Mr. Geoffrey Joel Barker Claimants' Expert

Witnesses
Mr. Ahmad Rufai Khalid Respondent's Witness
Mr. Bala Mohammed Yusuf Respondent's Witness

Experts
Hon. Justice Emmanuel Olayinka Ayoola JSC (Rtd.), Respondent's Expert
Prof. Lawrence Asekome Atsegbua, SAN Respondent's Expert
Engr. Mustafa Bello, FNSE Respondent's Expert
Daniel Matthews Harris (Dan Harris) Respondent's Expert

75.

On 15 October 2016, the Tribunal issued Procedural Order No. 5 on Claimants' Requests Regarding (i) the Authority of Volterra Fietta Lawyers to Represent the Respondent and (ii) the Source and Terms of the Funding of the Respondent's Defence.

76.

On 1 February 2017, the Tribunal issued Procedural Order No. 6 concerning provisional measures.

77.

On 11 June 2017, ICSID and the Parties received two emails purporting to be from Respondent's Counsel, Mr. Oluwasina Ogungbade, and a letter from him, stating that the emails were not sent by him and asking that their contents and enclosed documents be disregarded.

78.

From 19 to 21 July 2017, the Tribunal held a further Hearing on the Merits (the "Continued Hearing") in London. The following persons were present at the Continued Hearing:

Tribunal:

Professor William W. Park President
Professor Julian D. M. Lew QC Arbitrator
Hon. Justice Edward Torgbor Arbitrator

ICSID Secretariat:

Mr. Benjamin Garel Secretary of the Tribunal

For Claimants:

Counsel:

Mr. Olasupo Shasore, SAN Counsel for Claimants
Professor Oba Nsugbe QC, SAN Counsel for Claimants
Mr. Aloysius Okenwa Counsel for Claimants
Ms. Rebecca Okoria Counsel for Claimants
Mrs. Bimpe Nkontchou Counsel for Claimants
Mr. Bello Salihu Counsel for Claimants
Ms. Fadesike Salu Counsel for Claimants
Mr. Afolarin Shasore Counsel for Claimants
Mr. Folarin Awosika Counsel for Claimants

Parties:

Mr. Patrizio Di Guevara Fabbri Director of Interocean Oil Development Company & Interocean Oil Exploration Company
Mr. Riccardo Di Guevara Fabbri Director of Interocean Oil Development Company & Interocean Oil Exploration Company
Mr. Eric Vazey Claimants' In-House Counsel
Mr. Richard Evans Claimants' Financial Advisor
Mr. Gavin Ward RISC

For Respondent:

Counsel: Counsel to Respondent

Mr. Adebayo Adenipekun, SAN, FCIArb. Counsel to Respondent
Mr. Olu Daramola, SAN, FCIArb. Counsel to Respondent
Mr. Robert Volterra Counsel to Respondent
Mr. Christophe Bondy Counsel to Respondent
Ms. Ann Babalola Counsel to Respondent
Mr. Oluwasina Ogungbade Counsel to Respondent
Ms. Rose Rameau, MCIArb. Counsel to Respondent
Mr. Kehinde Ogunwumiju Counsel to Respondent
Mr. Ola Faro Counsel to Respondent
Mr. Chukwudi Maduka Counsel to Respondent
Mrs. Yemisi Adenipekun, MCIArb. Counsel to Respondent
Dr. Maria Fogdestam-Agius Counsel to Respondent
Mr. Alessandro Rollo Counsel to Respondent
Mr. Iurii Rybak Counsel to Respondent

Parties:

Mr. Taiwo Abidogun Permanent Secretary, Federal Ministry of Justice, Nigeria
Mr. Dayo Apata Director, Civil Litigation, Federal Ministry of Petroleum Resources, Nigeria
Mrs. Adelore Olufolakemi Sarian Director, Legal Services, Ministry of Justice Nigeria
Mrs. Maimuna Shiru Assistant Director, Civil Litigation, Federal Ministry of Justice, Nigeria
Mr. Ahmad Rufai Khalid Deputy Manager, Litigation and Property Law Department, NNPC

Court Reporter:
Ms. Dawn Larson Worldwide Reporting, LLP

79.

During the Continued Hearing, the following persons were examined:

On behalf of Claimants:

Experts:
Professor Yinka Omorogbe Claimants' Expert
Professor Fidelis Oditah, QC, SAN Claimants' Expert
Mr. Geoffrey Joel Barker Claimants' Expert

On behalf of Respondent:

Experts:
Hon. Justice Emmanuel Olayinka Ayoola, JSC (Rtd.) Respondent's Expert
Prof. Lawrence Asekome Atsegbua, SAN Respondent's Expert
Engr. Mustafa Bello, FNSE Respondent's Expert
Mr. Daniel Matthews Harris (Dan Harris) Respondent's Expert

80.

On 5 August 2017, Claimants applied to the Tribunal to have the emails received on 11 June 2017 admitted into the record.

81.

On 16 August 2017, Respondent filed a proposal for the disqualification of all three members of the Tribunal. The proceeding was thereby suspended in accordance with ICSID Arbitration Rule 9(6).

82.

On 4 September 2017, Claimants filed observations on Respondent's proposal for disqualification of the Tribunal members.

83.

On 11 September 2017, pursuant to ICSID Arbitration Rule 9(3), the members of the Tribunal furnished their responses to Respondent's disqualification proposal.

84.

On 18 September 2017, the Parties filed their observations on the Tribunal members' explanations.

85.

On 3 October 2017, the Chairman of the Administrative Council rejected Respondent's proposal for the disqualification of all three members of the Tribunal. The proceeding was resumed pursuant to ICSID Arbitration Rule 9(6).

86.

On 31 October 2017, Respondent filed its response to Claimants' 5 August 2017 request for the admission of the 11 June 2017 emails.

87.

On 20 March 2018, the Tribunal issued Procedural Order No. 7 regarding the admissibility of the 11 June 2017 emails; Justice Torgbor attached his dissent.

88.

On 30 March 2018, Respondent filed a request for the Tribunal to decide on the admissibility of new evidence.

89.

On 9 April 2018, Claimants filed observations on Respondent's 30 March 2018 request.

90.

On 16 April 2018, the Tribunal granted Respondent's 30 March 2018 request and admitted the judgment of the Court of Appeal of Nigeria delivered on 29 December 2017 in Appeal No. CA/L/530/2014 between InterOcean Oil Development Company (Nigeria) & 3 Ors V. Dr. Festus Alani Fadeyi & Anor into the record.

91.

On 14 May 2018, the Tribunal issued Procedural Order No. 8 detailing the schedule and formatting for the Parties' post-hearing submissions.

92.

On 13 June 2018, Claimants and Respondent filed their Post-Hearing Briefs ("Claimants' Post-Hearing Brief" and "Respondent's Post-Hearing Brief", respectively).

93.

On 11 February 2019, the Parties filed their Reply Post-Hearing Briefs.

94.

On 8 June 2020, the Parties submitted their statements of costs.

95.

On 30 June 2020, the Parties submitted observations on costs allocation.

96.

On 11 September 2020, Respondent submitted an Application to Adduce New Evidence Into Record.

97.

On 18 September 2020, Claimants submitted their Comments on Respondent's Application.

98.

On 29 September 2020, the Tribunal denied Respondent's Application and declared the proceedings closed in accordance with ICSID Arbitration Rule 38.

99.

The Tribunal recalls that Claimants invoked the Tribunal's jurisdiction, pursuant to the ICSID Rules, based upon Section 26 of the NIPC Act, set forth as follows:

Dispute settlement procedures

(1) Where a dispute arises between an investor an any Government of the Federation in respect of an enterprise, all efforts shall be made through mutual discussion to reach an amicable settlement.

(2) Any dispute between an investor and any Government of the Federation in respect of an enterprise to which this Act applies which is not amicably settled through mutual discussions, may be submitted at the option of the aggrieved party to arbitration as follows—

(a) In the case of a Nigerian investor, in accordance with the rules of procedure for arbitration as specified in the Arbitration and Conciliation Act; or

(b) In the case of a foreign investor, within the framework of any bilateral or multilateral agreement on investment protection to which the Federal Government and the country of which the investor is a national are parties; or

(c) In accordance with any other national or international machinery for the settlement of investment disputes agreed on by the parties.

(3) Where in respect of a dispute, there is disagreement between the investor and the Federal Government as to the method of dispute settlement to be adopted, the International Centre for Settlement of Investment Disputes Rules shall apply.

100.

With respect to its jurisdictional determination, the Tribunal's Decision on Preliminary Objections of 29 October 2014 rejected three of Respondent's preliminary jurisdictional objections, summarized in Section 14 of Procedural Order No. 1 as follows:

"14.1.1. Respondent did not consent to submit this dispute to arbitration by ICSID [Objection 1 (Consent)];

14.1.2. Section 26 of the Nigerian Investment Protection Commission Act ("NIPC") does not provide a basis for finding consent on the part of Respondent as it merely provides that disputes should be conducted in accordance with the ICSID Rules [Objection 2 (Role of the ICSID Rules)];

14.1.3. Claimants are not registered with the NIPC and therefore cannot rely on Section 26(3) of the NIPC Act to invoke the jurisdiction of ICISD, and Claimants misled the Secretariat of ICSID to register their Request for Arbitration when they falsely claimed that their enterprise was registered with the NIPC. Pleadings on this objection shall be limited to whether Claimants are registered and the bearing of registration on the Tribunal's jurisdiction [Objection 3 (Registration)];

14.1.4. Respondent is not a competent party to this arbitration. Claimants' pleadings on this objection should identify the law and legal authorities on which they intend to rely and the corresponding liability of Respondent [Objection 4 (Proper Party)];

14.1.5. Claimants' claims are barred by statute [Objection 5 (Time Bars)];

and

14.1.6. The request is premature in that Claimants failed to explore local remedies/conditions precedent contained in the NIPC Act [Objection 6 (Premature Filing)].

101.

Objection 1 (Consent) was rejected insofar as it called into question whether Section 26 of the NIPC Act constituted a standing offer to arbitrate. The Tribunal recalls that Section 26(3) of the NIPC Act provides that where disagreement exists between the investor and the Federal Government as to the method of dispute settlement, the ICSID Rules shall apply. The Tribunal found that Section 26 did indeed constitute such a standing offer to arbitrate under the ICSID Rules.

102.

Questions related to the adequacy of Claimants' acceptance of that offer were joined to the merits. In this connection, the Tribunal notes that the adequacy of Claimants' acceptance of Respondent's offer to arbitrate under the ICSID Rules (such as to meet the conditions set by the NIPC Act) intertwines with questions of registration and premature filing,⁷¹ each of which formed an independently articulated objection to jurisdiction, as noted below.

103.

The Tribunal joined to the merits of the case two other objections: Objection No. 3 related to Registration under the NIPC Act and Objection No. 6 related to Premature Filing of the Claims.

104.

Consequently, following the 2014 Jurisdictional Decision,⁷² the Tribunal was left with jurisdictional objections related to: (i) the adequacy of Claimants' acceptance of Respondent's standing offer to arbitrate under the NIPC Act (Objection 1), (ii) registration requirements for an enterprise under the NIPC Act (Objection 3), and (iii) premature filing of Claims (Objection 6),⁷³ with the first objection (adequacy of acceptance) implicating both registration and timeliness of filing.

105.

The Tribunal has noted Respondent's objections related to the Decision on Preliminary Objections⁷⁴ and responds that each Party presented further arguments and provided additional evidence related to the remaining objections in their subsequent pleadings.

106.

The jurisdictional landscape became more complex after Respondent's Counter-Memorial (17 November 2015), which raised jurisdictional objections related to: (i) whether some of Claimants' claims fall outside the scope of the NIPC Act and, therefore, are not covered by any consent to arbitration contained in Section 26 of the NIPC Act;⁷⁵ and (ii) whether claims in respect of the actions of private individuals, and their alleged violations of Claimants' rights, are attributable to Respondent.⁷⁶

107.

Subject to the comments below on "Further Jurisdictional Objections" (infra) the Tribunal has grouped Respondent's challenges to the Tribunal's jurisdiction into five (5) bases, some of which overlap: (i) the adequacy of acceptance of Respondent's offer to arbitrate under the NIPC Act, which implicates registration and premature filing; (ii) Pan Ocean's lack of registration under the NIPC Act; (iii) the premature nature of the filing of claims, due to Claimants' alleged failure to seek amicable settlement; (iv) whether the scope of consent to ICSID arbitration under the NIPC Act includes expropriation claims and claims based on customary international law, and (v) attribution to Respondent of actions of private individuals.

108.

Respondent has alleged that none of the three preconditions to the applicability of the ICSID Convention and the ICSID Rules apply and, thus, the Tribunal cannot have jurisdiction. The three conditions are: (i) there must be a dispute, (ii) the Parties were unable to settle the dispute by way of mutual discussion, and (iii) there must be disagreement between the investor and Respondent regarding the method of dispute resolution. As to points (ii) and (iii) (and other aspects of the adequacy of Claimants' acceptance of the offer to arbitrate) the Tribunal addresses the relevant contentions through its separate analysis of Registration and Premature Filing.⁷⁷

109.

In this section, the Tribunal explores the existence of a dispute. The Parties agree that Section 26 of the NIPC Act places upon Claimants the burden of establishing, at the outset, that there is a legal dispute between Respondent and the alleged investor, here, Claimants.⁷⁸ Respondent has argued that there was no legal dispute between Claimants and Respondent.⁷⁹

110.

Claimants have responded that they are in a dispute with Respondent involving the protection of their investment in Nigeria.⁸⁰ The Tribunal noted in its Decision on Jurisdiction that it has jurisdiction over the dispute, so long as that is in relation to Claimants' allegations of a violation of international law.⁸¹ Insofar as Claimants complain to have had their rights violated by Respondent and Respondent denies this, there is a dispute between the Parties that can support a claim.⁸²

111.

The Tribunal has found that it does not have jurisdiction over Claimants' contractual claims, although they might form part of the factual matrix to be considered in relation to Claimants' arguments about violations of international law.⁸³ The Tribunal affirms its findings in paragraphs 112 and 115 of the Decision on Preliminary Objections, that this dispute involves Claimants' allegation that Respondent conspired to seize ownership and control of Pan Ocean from Claimants.

112.

To the extent that Respondent has alleged that Claimants' failure to exhaust domestic remedies precludes this Tribunal's jurisdiction, the Tribunal notes that a jurisdictional requirement of exhaustion need not be implied into Article 26 of the NIPC.

113.

The Tribunal will address matters related to exhaustion of remedies, to the extent relevant, in the sections on "Liability and Damages."

114.

Respondent asserts that the Tribunal does not have jurisdiction over this dispute because neither Claimants nor their purported investment vehicle, Pan Ocean, are registered with the NIPC as required by the NIPC Act, and therefore cannot rely on Section 26(3) of the NIPC Act.⁸⁴ In Respondent's words, "Pan Ocean's lack of registration under the NIPC Act prevents the Claimants from properly accepting any offer to arbitrate under the Act."⁸⁵

115.

Section 26 of the NIPC Act allows investors to submit to arbitration only disputes "in respect of an enterprise" to which the Act applies,⁸⁶ and the definition of "enterprise" under Section 31 "establishes that 'where there is foreign participation' only industries, projects, undertakings or businesses that are 'duly registered with the [NIPC]' may qualify as an 'enterprise' under the NIPC Act."⁸⁷ Thus, since Pan Ocean is not duly registered with the NIPC, it does not qualify as an "enterprise" under the NIPC Act. Therefore, the "remedies and standards of treatment offered in the NIPC Act do not apply to Pan Ocean and cannot be invoked by Claimants."⁸⁸ Further, since Section 31 of the NIPC Act requires local companies with foreign participation to be registered with the NIPC, Pan Ocean's lack of registration would entail that it cannot be considered as a national of another Contracting State, including for the purpose of Article 25(2)(b) of the ICSID Convention.⁸⁹

116.

Respondent contends that the registration requirement applies to entities existing before the entry into force of the NIPC Act. Respondent rejects the interpretation of Sections 19 and 20 of the NIPC Act proposed by Claimants. First, Respondent distinguishes between the requirements that companies must meet to carry on business, governed by Sections 19 and 20, and the possibility to resort to arbitration provided for in Section 26 of the NIPC Act, to which the definition of "enterprise" contained in Section 31 of the NIPC Act applies.⁹⁰ Second, Respondent argues that, even if Section 20 of the NIPC Act was considered to apply only to companies commencing business after its enactment, such pre-existing companies wishing to benefit from provisions of the NIPC Act must still register with the NIPC.⁹¹ As for the "grandfather clause" in Section 29 of the NIPC Act, Respondent contends that the provision only applies to approvals granted and not to registration. In any case, there is no evidence that Pan Ocean was granted any approval under previous statutes.⁹² Moreover, if the registration requirement does not apply to pre-existing companies, "that must necessarily entail that the NIPC Act is not applicable to those entities."⁹³

117.

Respondent argues that Claimants have failed to provide evidence that the registers were unreliable. In any case, "the reliability of the registry is irrelevant because the Claimants have not proven that they ever requested that Pan Ocean be registered."⁹⁴ The procedure to register a company is straightforward and Claimants bear the burden of proving any shortcoming on the part of the NIPC. Here, Claimants have failed to prove that they attempted to file an application or even communicate about the issue with Pan Ocean.⁹⁵

118.

Respondent further argues that Claimants have failed to demonstrate how any act attributable to Respondent would have prevented them from fulfilling the registration requirement⁹⁶ or that they ever instructed Pan Ocean's management to comply with the requirement.⁹⁷ Claimants bore the responsibility of ensuring that Pan Ocean, the purported vehicle of their investment in Nigeria, was duly registered with the NIPC.⁹⁸ According to Respondent, the registration requirement arose in 1995 when the NIPC Act was enacted, and even if Claimants lost control of Pan Ocean in 1998 as they claim, they should have ensured that Pan Ocean was registered in the intervening period between 1995 and 1998.⁹⁹

119.

In these proceedings, Respondent contends that Claimants falsely represented that Pan Ocean was registered and have since admitted that Pan Ocean was not registered.¹⁰⁰ Claimants' alternative argument that they genuinely believed that Pan Ocean would have complied with the registration requirements "confirms that the Claimants themselves undertook no measures to ensure that Pan Ocean was registered since the entry into force of the NIPC Act."¹⁰¹

120.

At the Continued Hearing of 19 July 2017, the Tribunal admitted into the record, without any determination as to its probative value, a letter from the NIPC to the firm Ajumogobia & Okeke dated 26 September 2016, which confirmed that Pan Ocean is not registered, and acknowledged receipt of two letters of 2012 and 2013 inquiring about the status of the company.¹⁰² At most, the letter shows that Claimants made inquiries about whether Pan Ocean was registered. These inquiries, however, do not satisfy the registration requirement.¹⁰³ Moreover, any delay in responding to that inquiry is irrelevant, because Claimants could have verified their registration status by sending one of their representatives to the relevant registry.¹⁰⁴

121.

Finally, Respondent submits that the concepts of estoppel and acquiescence cannot be used to broaden the Tribunal's jurisdiction.¹⁰⁵ Claimants failed to demonstrate how the joint venture operations between NNPC and Pan Ocean would amount to acquiescence, and did not establish how NNPC's actions would have caused Claimants' alleged detrimental reliance.¹⁰⁶ Moreover, Respondent contends that NNPC's alleged acts or omissions do not constitute "acts of State by the Respondent."¹⁰⁷

122.

Respondent has also submitted that Claimants misled the Secretariat of ICSID to register the Request for Arbitration by falsely claiming that the enterprise was registered with the NIPC. It has urged the Tribunal to refuse jurisdiction on that basis.¹⁰⁸

123.

Claimants reject Respondent's contention that an enterprise with foreign participation must be registered to benefit from protection under the NIPC Act in all cases. The stated purpose of the NIPC Act is to encourage and assist investment in Nigeria and to create a conducive environment for the same.¹⁰⁹ These aims would be undermined if foreign investors were denied protections under the NIPC Act simply because they failed to register their "enterprise."

124.

Claimants observe that the definition of "enterprise" as being "duly registered with the Commission" in Section 31 of the NIPC Act is subject to the qualification "[i]n this Act, unless the context otherwise requires."¹¹⁰ The relevant "context" here is that Claimants made a long-standing, significant, and successful investment in Nigeria in partnership with Respondent and that this investment benefitted Respondent.¹¹¹ Claimants, thus, should not be automatically deprived of the protections of the NIPC Act for the simple reason that the enterprise was not registered. By insisting on registration, Respondent is relying on an artificial technicality, while Pan Ocean complied "in every way with any reasonable categorisation of an investment."¹¹²

125.

In any event, Pan Ocean is exempt from the registration requirement because the NIPC Act does not state that enterprises existing before its enactment, including Pan Ocean, must be registered.¹¹³ Other investment instruments entered into by Nigeria contain language providing for retroactive application, and this suggests that Nigeria would have done the same in the NIPC Act if that was its intention.¹¹⁴ In the alternative, the absence of such language presents an ambiguity that should be resolved in favor of foreign investors, in light of the stated purpose of the NIPC Act.¹¹⁵

126.

Several provisions of the NIPC Act confirm that enterprises operating in Nigeria prior to 1995, like Pan Ocean, were not required to register with the NIPC to be "enterprises" within the meaning of NIPC Act and entitled to investment protections and guarantees.¹¹⁶ The wording of Sections 19 and 20 of the NIPC Act confirms that the duty to register does not apply to pre-existing companies, as these sections provide that an enterprise in which "foreign participation is permitted" shall not "commence" business unless it is incorporated or registered under the Companies and Allied Matters Act 1990 ("CAMA") (Section 19), and shall "before commencing business, apply to the Commission for registration (Section 20)."¹¹⁷ This interpretation "is reinforced by the documents required for registration which by their nature relate to new businesses."¹¹⁸ Moreover, the "grandfather clause" contained in Section 29(2) of the NIPC Act made registration unnecessary for existing businesses, which could continue to rely on previous approvals obtained under the repealed legislation.¹¹⁹ Finally, Claimants point out that the NIPC Act is unclear as to the legal effects of registration with the NIPC.¹²⁰

127.

Claimants also challenge the "reliability" or "comprehensiveness" of the registers produced by Respondent.¹²¹ Respondent provided two versions of the list of registered companies that are inconsistent and contain errors and discrepancies.¹²² The entries of one of the lists only started in 2006, eleven years after the NIPC Act.¹²³ Moreover, "missing from the register(s) are five of the six other (Pan Ocean being the seventh) Joint Venture Partners (foreign investors) with NNPC in Nigeria namely Shell, Mobil, Chevron, Elf and Texaco (in their own rights and/or through their subsidiaries)", which invested Nigeria prior to the establishment of the NIPC.¹²⁴ Respondent's suggestion that all these entities could not claim the NIPC Act's protections is "illusionary."¹²⁵

128.

Claimants did not seek to mislead the ICSID Secretariat by stating that Pan Ocean had been registered with the NIPC. They state that their requests for proof of registration from the NIPC went unanswered and that they "genuinely believed that Pan Ocean would have registered its undertaking with the Commission."¹²⁶ Respondent, however, has an obligation under NIPC Act to keep records of the companies to which it applies and to assist enterprises and foreign investors. The failure to answer to Claimants' inquiries as to registration confirms the uncooperative attitude of Respondent and its instrumentalities.¹²⁷ Furthermore, Claimants highlight that they have lost control over Pan Ocean and this left gaps in their knowledge.¹²⁸

129.

Finally, Claimants argue that even if the Tribunal concluded that registration is a precondition of consent, Respondent is estopped from raising that objection to jurisdiction. Respondent, by operating as a joint venture partner with Pan Ocean, has not insisted that Pan Ocean be registered even though Respondent's own instrumentality "possesses and controls the register."¹²⁹ Since Respondent collaborated with those who control Pan Ocean and failed to raise the lack of registration, it should be considered to have waived the registration requirement or, as a matter of fairness, be estopped from relying on it.¹³⁰

130.

There is no dispute as to whether Pan Ocean exists, although some uncertainty may exist concerning whether Pan Ocean was registered pursuant to the NIPC Act, and what the legal effect registration might be on Claimants' claims.

131.

In its Decision on Jurisdiction, the Tribunal found that the following matters were so intertwined with the merits that they must be considered during the merits phase:

• "The definition of 'enterprise';

• Applicability of the registration requirement to entities existing before enactment of the NIPC Act;

• Reliability of the NIPC business register filed by the Respondent;

• The Claimants [sic] inability to register Pan Ocean, such inability allegedly deriving in part from the Respondent's actions, as well as the fact that the Claimants are outside the management of the company; and

• Estoppel based on the Respondent's alleged lack of complaint about registration during prior cooperation with the Claimants."¹³¹

132.

The issue before the Tribunal is not whether Pan Ocean was authorized to do business in Nigeria or whether registration for that purpose was validly waived at the latest when NNPC and Pan Ocean renewed the Joint Operating Agreement ("JOA") in 2002. Rather, the first jurisdictional issue is whether and how Nigeria limited its consent to arbitrate to those enterprises that were registered and whether Pan Ocean's lack of registration under the NIPC Act robs this Tribunal of jurisdiction. Below, the Tribunal dismisses these objections because, as envisioned within Section 31 of the NIPC Act's definition of "enterprise" to which the NIPC Act applies, the context requires it. Sections 31 and 20 of the NIPC Act states in relevant part:¹³²

31. Interpretation

In this Act, unless the context otherwise requires –

[…]

"enterprise" means an industry, project, undertaking or business to which this Act applies or an expansion of that industry, undertaking, project or business or any part of that industry, undertaking, project or business and, where there is foreign participation, means such an enterprise duly registered with the Commission; […]

20. Registration of enterprise with the Commission

(1) An enterprise in which foreign participation is permitted under section 17 of this Act shall, before commencing business, apply to the Commission for registration. […]

133.

Respondent argues that Sections 20 and 31 of the NIPC Act, which evidence the obligation to register, limit the consent to arbitration under Section 26 of the NIPC Act to those enterprises with foreign participation that have been registered with the NIPC. Respondent states that Pan Ocean is not registered with the NIPC and is, therefore, not "qualified for protection" under the NIPC Act.¹³³ Respondent argues that Claimants bore the responsibility of ensuring that Pan Ocean was registered during the 3-year registration period, from 1995 – 1998 (during Dr. Fabbri's lifetime).¹³⁴

134.

According to Claimants, even if there had been no registration, Dr. Fabbri or the owners could have applied to register Pan Ocean during the three-year grandfathering period. Had they done so the business would have been registered.¹³⁵

135.

In the context of the present dispute, a lack of registration would not necessarily preclude the Tribunal's exercise of jurisdiction. The current claims relate to Respondent's alleged failure to protect Claimants' investment in Nigeria in the circumstances of attempts by Dr. Fadeyi, Managing Director of Pan Ocean, to wrest control of that company from its rightful owners.¹³⁶

136.

In this context, it would be both unfair and illogical to decline jurisdiction on the basis of a lack of registration. Here, the person responsible for failure of registration remains the same person accused of orchestrating an expropriation.¹³⁷ An alleged wrongdoer's behavior would not normally nullify arbitral jurisdiction.

137.

The Tribunal, therefore, dismisses this objection to jurisdiction related to a lack of registration, and all claims and sub-claims related thereto, listed above in this section, are also dismissed.¹³⁸

138.

The Tribunal has considered Respondent's argument that Claimants' case should be dismissed, as a punitive measure, for Claimants' alleged intentional misleading of the ICSID Secretariat into registering the RfA.¹³⁹

139.

Respondent has provided no basis in law for such sanction. Further, there is no evidence of any intent on the part of Claimants to mislead the ICSID Secretariat concerning Claimants' registration with NIPC. The Tribunal, therefore, declines to refuse jurisdiction on that basis and makes no finding on whether Claimants have intentionally misled the ICSID Secretariat.

140.

Respondent argues that the Tribunal lacks jurisdiction because Claimants did not comply with the preconditions to arbitration contained in in Section 26 of the NIPC Act, which prevents them from commencing arbitration in accordance with Section 26(3) of the NIPC Act.

141.

First, contrary to what Claimants allege, there is no evidence of a scheduled meeting with the Managing Director of the NNPC in November 2004. Regardless, such a meeting would not be relevant because the purported purpose of the meeting was not to settle a dispute with Respondent.¹⁴⁰ Respondent rejects Claimants' contention that Respondent refused to meet with Claimants' representatives about the dispute in 2004.¹⁴¹

142.

Respondent urges the Tribunal to reject tracking reports purportedly evidencing delivery because those documents were not timely filed, and Claimants did not seek leave to introduce them into evidence.¹⁴² Respondent also argues that (i) there is no evidence that the Minister of Petroleum Resources received the letters, (ii) Claimants have not evidenced that the recipients identified in the tracking reports were officials of the Ministry of Petroleum Resources, and (iii) there is no record of the tracking reports on the websites of the corresponding courier companies.¹⁴³ Moreover, the letters allegedly sent between 9 October 2012 and 3 May 2013 were never received by the Ministry of Petroleum Resources and, regardless, should have been addressed to the Attorney-General. These letters cannot evidence Claimants' fulfilment of the requirement to seek amicable settlement.¹⁴⁴

143.

Second, Section 26(3) also imposes a separate requirement that the investor is only entitled to resort to ICSID arbitration and the applicability of the ICSID Rules as a default position, in the event of a dispute as to the method of dispute settlement to be adopted.¹⁴⁵ As recognized by Claimants as a condition precedent in their Points of Claim, there was no such disagreement in this case.¹⁴⁶

144.

Third, Claimants made no attempt to amicably settle the dispute with Respondent as required by Section 26(1) of the NIPC Act. The requirement to attempt to reach an amicable settlement constitutes a condition precedent to the institution of arbitration proceedings.¹⁴⁷ Section 26(2) should be interpreted as establishing that disputes may be submitted to arbitration only when the obligation set out in Section 26(1) has been fulfilled.¹⁴⁸ The purpose of this precondition would be to give the parties the opportunity to address the dispute, engage in good faith negotiations, and implement the internal processes to do so.¹⁴⁹ Respondent urges the Tribunal to reject Claimants' contention that the requirement should not be interpreted as mandatory because, unlike other preconditions, it does not textually impose a "cooling-off" or waiting period.¹⁵⁰

145.

Claimants argue that they have fully complied with the requirements under Section 26 and were within their rights to commence this arbitration.

146.

Respondent had knowledge of the dispute, and Claimants notified Respondent of the dispute orally and in writing on numerous occasions. Claimants refer to four letters from Claimants' counsel to the Nigerian Minister of Petroleum Resources that were exhibited with the RfA as evidence.¹⁵¹ To evidence that these letters were received by Respondent, Claimants rely on the formal tracking reports from the associated courier companies.¹⁵² Claimants submitted the delivery invoices issued by the courier companies¹⁵³ as well as evidence refuting Respondent's argument that there is no record of the tracking reports on the websites of the courier companies.¹⁵⁴

147.

Concerning the requirement to seek amicable settlement, Section 26 of the NIPC Act should not be interpreted as a mandatory jurisdictional precondition.¹⁵⁵ Unlike other statutes, this provision does not contain preconditions such as "cooling-off" or waiting periods for commencing arbitration, which are commonly imposed in the event a settlement is not reached. Moreover, even when these preconditions are imposed, they are interpreted by tribunals as "procedural and directory [rather than] mandatory and jurisdictional."¹⁵⁶

148.

Claimants contend that, since they lost control over Pan Ocean, they made genuine attempts to reach an amicable settlement with Respondent.¹⁵⁷ They allege that in 2004 representatives of their interests scheduled a meeting with an advisor on petroleum matters to the then-President of Nigeria to seek a settlement of the dispute. According to Claimants, the Presidential advisor subsequently refused to meet with Claimants' representatives, who had traveled from Geneva to Abuja for the meeting.¹⁵⁸ Furthermore, Claimants' attorneys wrote two letters in October 2012 and one in March 2013 to the Minister for Petroleum Resources, exposing the issues encountered in relation to their investment and demanding resolution of their claims, which remained unanswered.¹⁵⁹ Claimants state that they had requested inter alia the statement of affairs of the NNPC / Pan Ocean joint venture, including the volume of production for the preceding ten years, and had demanded that Respondent (through NNPC) desist from dealing with Dr. Fadeyi and his associates and refuse to give assent to any interest(s) other than that of Claimants in relation to the 40% participating interest in OML 98.¹⁶⁰

149.

The Parties dispute whether amicable settlement discussions are a pre-condition to bringing arbitration proceedings under Section 26(1) of the NIPC Act.

150.

The factual record indicates that Claimants did seek amicable settlement of this dispute in 2012 and 2013, after Mrs. Timolini yielded her interest to Dr. Fabbri's estate. Claimants cannot be faulted for Respondent having ignored these communications. Thus, to the extent that any requirement may exist, Claimants have fulfilled it.¹⁶¹

151.

The dispute had been ongoing for years prior to Claimants' filing of this claim in July 2013, and the Parties have had every opportunity to attempt to resolve this dispute.¹⁶²

152.

Given the history of this matter, including the procedural history in this arbitration, it is unlikely that further attempts at amicable settlement would have succeeded. Respondent's failure to reply to Claimants' correspondence forms part of the disputed merits in this arbitration. Claimants alleged that Respondent failed to protect their investment and/or conspired to deprive Claimants of their investment.¹⁶³ The Tribunal cannot deny jurisdiction in circumstances where one party appears to have been unwilling to entertain settlement or where further attempts may have been futile.¹⁶⁴

153.

Next, the Tribunal considers whether there must be disagreement between the investor and Respondent over the mode of dispute resolution in order for the ICSID Rules to become applicable under Article 26(3) of the NIPC Act.¹⁶⁵ This text is provided below:

(3) Where in respect of a dispute, there is disagreement between the investor and the Federal Government as to the method of dispute settlement to be adopted, the International Centre for Settlement of Investment Disputes Rules shall apply.

154.

In Claimants' RfA, Claimants inserted the text "or inability to agree" in parentheses following "disagreement", to reflect the de facto position at the time of filing the RfA, referring to a lack of consensus.¹⁶⁶ Respondent has argued that these two terms connote different factual situations and that, owing to the absence of a disagreement (based on there having been no opportunity to disagree), the ICSID Rules cannot apply.¹⁶⁷ The Tribunal does not regard this as an attempt to mislead ICSID into registering the RfA.¹⁶⁸ Further, having found that the filing of the RfA was not premature, Claimants cannot be faulted for any alleged failure to "attempt to agree on a dispute resolution mechanism", as argued by Respondent. The Tribunal agrees that this invocation of the ICSID Rules was proper.¹⁶⁹

155.

Respondent contends that even if the Tribunal were to find that Claimants had accepted the standing offer to arbitrate, their claims for indirect expropriation and violations of customary international law fall outside the scope of the Tribunal's jurisdiction because they are not encompassed by Respondent's consent to arbitration contained in Section 26 of the NIPC Act.¹⁷⁰

156.

Tribunals must verify whether the scope of consent is restricted in any way. In the present case, consent is limited to the protections offered by the NIPC Act, which are exhaustively listed in its Sections 24 and 25.¹⁷¹ Section 25 of the NIPC Act does not provide protection against both direct and indirect expropriation.¹⁷² According to Respondent, "Section 25 provides for protection against direct expropriation only. The provision does not expressly refer to indirect expropriation. Nor does it contain any of the language normally interpreted as implicitly covering indirect expropriation. In particular, it does not refer to 'measures equivalent to expropriation', a term which tribunals commonly understand to denote indirect expropriation."¹⁷³ Section 25(1)(b) of the NIPC Act does not refer to indirect expropriation, but rather to "circumstances of compelled transfer of assets",¹⁷⁴ which would not be relevant in the present case because Claimants remain in full possession of their original shareholding in Pan Ocean.¹⁷⁵

157.

The alleged violations of customary international law are excluded from the Tribunal's jurisdiction because they cannot be considered as claims under the NIPC Act. According to Respondent, "[t]here is neither explicit nor implicit language in the NIPC Act that expands the Act's protection or its dispute resolution clause to breaches of customary international law."¹⁷⁶ Respondent rejects any interpretation of consent under the NIPC Act as including disputes related to all breaches of Nigerian law, and states that, in any event, it was not established that customary international law is part of Nigerian law.¹⁷⁷ Moreover, there are no applicable bilateral or multilateral agreements to which Nigeria and the United States are parties that would contain other substantive protections.¹⁷⁸ Respondent also contends that Claimants cannot rely on Article 42 of ICSID Convention to broaden the scope of the Tribunal's jurisdiction to include claims based on customary international law, because Article 42 only concerns the rules applicable to the decision on the merits.¹⁷⁹

158.

In addition, Claimants' points of claim referring to the alleged unlawful detention of Mr. Rooks and others would fall outside the Tribunal's jurisdiction both ratione materiae and ratione temporis because the alleged events took place in 1987, and thus pre-date the enactment of the NIPC Act.¹⁸⁰

159.

Claimants urge the Tribunal to decline to hear this belated jurisdictional objection and, in the alternative, request that the Tribunal join its discussion and consideration to the merits phase.¹⁸¹

160.

Claimants contend that the allegations of indirect expropriation fall within the jurisdiction of the Tribunal. Section 25(1)(b) of the NIPC Act, establishing that no person owning a capital of an enterprise should be compelled "by law" to surrender his interest in the capital to "any other person", provides for protection against indirect expropriation.¹⁸² They also contend that it would be possible to rely on Section 25(1)(a) of the Act.¹⁸³ Protections against expropriation would be frustrated if forms of indirect expropriation were excluded from the prohibition on such acts.¹⁸⁴

161.

Claimants assert that through inter alia the decisions of Respondent's judiciary, they were indeed compelled to surrender their interest in Pan Ocean to Dr. Fadeyi and his associates.¹⁸⁵

162.

The Tribunal has jurisdiction over claims based on international customary law. First, according to Claimants, the present case should be distinguished from Tradex v. Albania, on which Respondent relies, because Section 26 of the NIPC Act is not as narrowly phrased as the dispute resolution clause examined in Tradex.¹⁸⁶ Second, the broad formulation of Section 26 of the NIPC Act, which also makes reference to disputes based on bilateral and multilateral agreements, would imply that "breaches of international law are admissible."¹⁸⁷ Moreover, "by their very nature, the allegations against the State of denial of justice as a result of the actions of the State's courts give rise to a liability / State responsibility in customary international law."¹⁸⁸ Finally, customary international law is part of Nigerian law, because Section 32 of the Interpretation Act integrated into the Nigerian legal system the English common law, and the latter includes customary international law.¹⁸⁹

163.

The Tribunal rejects Respondent's contention that indirect expropriation and protections afforded under customary international law are excluded from the protection offered under the NIPC Act. As indicated in Professor Oditah's report, there is nothing in the NIPC Act to indicate that indirect or creeping expropriation is excluded from its scope, and such a narrow and limited interpretation is unwarranted. Indeed, as argued, "it cannot have been the intention of the Respondent to accord the investor important safeguards with the one hand but then take them away with the other by permitting the same catastrophic state of affairs to be accomplished indirectly […]."¹⁹⁰

164.

Respondent's contention that, pursuant to Section 26(1) of the NIPC Act, the Tribunal lacks jurisdiction over claims based on customary international law must be rejected. The broadly drafted language in Section 26 of the NIPC Act includes claims under customary international law.

"26. Dispute settlement procedures

(1) Where a dispute arises between an investor an any Government of the Federation in respect of an enterprise, all efforts shall be made through mutual discussion to reach an amicable settlement.

(2) Any dispute between an investor and any Government of the Federation in respect of an enterprise to which this Act applies which is not amicably settled through mutual discussions, may be submitted at the option of the aggrieved party to arbitration as follows—

(a) In the case of a Nigerian investor, in accordance with the rules of procedure for arbitration as specified in the Arbitration and Conciliation Act; or

(b) In the case of a foreign investor, within the framework of any bilateral or multilateral agreement on investment protection to which the Federal Government and the country of which the investor is a national are parties; or

(c) In accordance with any other national or international machinery for the settlement of investment disputes agreed on by the parties.

(3) Where in respect of a dispute, there is disagreement between the investor and the Federal Government as to the method of dispute settlement to be adopted, the International Centre for Settlement of Investment Disputes Rules shall apply."

165.

The Tribunal further notes that customary international law is part of the English common law and that common law has been incorporated into Nigerian law by Section 32 of the Nigerian Interpretation Act.¹⁹¹ Thus customary international law has become part of Nigerian law, applicable by Nigerian courts to the same extent as is common law. In this context, Claimants' claims under international law are properly before this Tribunal.

166.

Respondent contends that the Tribunal lacks jurisdiction to the extent that the alleged acts of Dr. Fadeyi, even if causing damage to Claimants, were not attributable to Respondent.¹⁹²

167.

Section 25 of the NIPC Act does not protect against expropriation "by any person", as suggested by Claimants, but rather "by any Government of the Federation."¹⁹³ Thus, in order to apply the provision, the acts of private individuals must be attributable to the State.¹⁹⁴

168.

Claimants failed to prove that Dr. Fadeyi's actions are "attributable to Respondent" within the meaning of international law on state responsibility,¹⁹⁵ nor have they shown that they were victims of "miscarriage of justice or denial of due process" in relation to the court proceedings in which they challenged Dr. Fadeyi's actions.¹⁹⁶ Furthermore, several acts that allegedly caused damages to Claimants only could have been undertaken by Pan Ocean's representatives, and not by Respondent's representatives.¹⁹⁷

169.

Simply put, Dr. Fadeyi's acts are not attributable to Respondent and Claimants have not shown that he acted as an agent of Respondent.¹⁹⁸ None of the principles codified in the International Law Commission's Articles on State Responsibility for Internationally Wrongful Acts ("ILC Articles") would be applicable in this case.¹⁹⁹ First, Dr. Fadeyi was not an "organ" of Respondent nor was he part of the "organization" of Respondent, as required by ILC Article 4.²⁰⁰ Second, his actions were not "related to the exercise of governmental authority", nor was he empowered by Nigerian law to exercise elements of governmental authority within the meaning of ILC Article 5.²⁰¹ Finally, Claimants failed to prove that Dr. Fadeyi was acting as an agent or "on the instructions of, or under the direction or control of" Respondent, as required by ILC Article 8.²⁰²

170.

Pan Ocean's role as "Operator" of the joint venture in charge of the day-to-day conduct of operation does not entail that Dr. Fadeyi represented Respondent in the joint venture.²⁰³ Even assuming that it was the case, the representation would not go beyond the scope of Pan Ocean's role as Operator, and thus would not extend to the private dispute over Pan Ocean's management and control, which involves acts that do not pertain to the joint venture's authority.²⁰⁴ Moreover, the joint venture exercises a commercial activity, which cannot be considered an exercise of "governmental authority."²⁰⁵

171.

In principle, state-controlled entities are considered as separate from the state, unless they exercise elements of governmental authority within the meaning of ILC Article 5.²⁰⁶ The NNPC's operation and its role and powers as described in the Nigerian legislation confirm that the NNPC is a commercial entity that only engages in "private or commercial" activities.²⁰⁷ The alleged violations of Claimants' rights by the NNPC would, therefore, not be attributable to Respondent.²⁰⁸

172.

Claimants contend that relevant alleged acts were indeed attributable to Respondent.

173.

First, the expression "by law" in Section 25(1)(b) of the NIPC Act refers to both legislative acts and decisions by national courts.²⁰⁹ Courts are organs of the state within the meaning of ILC Article 4, and their acts are attributable to the state even when unlawful or contrary to instructions (according to ILC Article 7).²¹⁰ The decision of the Federal High Court of Abuja in the "2005 case" is therefore attributable to Respondent.²¹¹

174.

Second, Claimants contend that certain actions of Dr. Fadeyi are attributable to Respondent and engage its responsibility.²¹² According to Claimants, since Pan Ocean is the "Operator" of OML 98, Dr. Fadeyi, as representative of Pan Ocean, also acted as a representative of the NNPC/POOC joint venture.²¹³ For Claimants, "Dr. Festu Fadeyi's refusal to respond to the Claimants' demands to restore control of the operator company [and] to provide joint operation financial information to Claimants was an act attributable to the State."²¹⁴

175.

Finally, both the NNPC and Ministry of Petroleum Resources failed to protect Claimants' rights, thus triggering State responsibility.²¹⁵ The NNPC is not merely a private entity or commercial partner, as argued by Respondent, but rather a representative of Respondent in the petroleum sector.²¹⁶ The NNPC is a statutory entity that is owned and controlled by Respondent, and has the Minister of Petroleum as Chairman of the Board.²¹⁷ The long title of the NNPC Act states that the NNPC is "empowered to engage in all commercial activities relating to the petroleum industry and to enforce all regulatory measure[s] to the general control of the petroleum sector through its petroleum inspectorate department."²¹⁸ Claimants contend that the NNPC acted as an organ of the State, which had the duty to protect Claimants,²¹⁹ and for the purpose of attribution, it is irrelevant whether the conduct of an organ of the State is classified as "commercial" or "acta jure gestionis."²²⁰

176.

The Tribunal can have no jurisdiction over harms that are not attributable to Respondent. As the Parties have also recognized, however, that analysis is based on the context of each event. In the section on liability infra, the Tribunal's presents its analysis of whether the alleged harms should be considered attributable to Respondent.

177.

On 14 May 2018, in Procedural Order No. 8, the Tribunal invited the Parties to consider submitting a joint list of issues, with each side submitting its own list if agreement proved elusive. Following an exchange which included exchanges between the Parties on 13 June 2018, an email to ICSID from Claimants on 19 June 2018, and a letter to ICSID from Respondent on 29 June 2018, no lists were submitted until 18 January 2019, when Claimants submitted a list.

178.

The Tribunal renewed its invitation to Respondent to provide a list of its own, or to at least comment on the list of issues submitted by Claimants. On 4 February 2019, Respondent (through its representatives at the firm of Afe Babalola & Co, in a letter signed by Oluwasina Ogungbade, Esq.) declined to comment on Claimants' list of issues, or to provide any list of issues from Respondent itself. That letter of 4 February 2019 stated inter alia that "it is not for the Respondent to undertake the work of the Tribunal." The letter continued with citation to Article 48(3) of the ICSID Convention (providing for awards to deal with every question submitted to the Tribunal) and an admonition to the Tribunal on how its failures to consider all issues might result in an "annullable error" under Article 52(1) which relates inter alia to corruption, fundamental rules of procedure, and failure for an award to state reasons.

179.

For the sake of good order, the Tribunal on 3 June 2019 confirmed through the Tribunal Secretary that it had given Respondent an invitation to confirm its list of issues, and continued that the Tribunal "would welcome a List from the Respondent should it now decide to submit one." No list was forthcoming.

180.

The Tribunal has been cautious to ascertain that no jurisdictional objection has been overlooked. In reviewing the Parties' submissions for additional matters that might be characterized as jurisdictional objections, the Tribunal has identified the following two items that arguably contained jurisdictional arguments, addressed below: one related to Mr. Rooks and the other related to the nature of international law. For the avoidance of doubt, these will be addressed here in connection with jurisdiction.

181.

Claimants have submitted that the alleged unlawful detention of Mr. Rooks is an event that formed part of the alleged "creeping expropriation" of their investment.²²¹ Claimants have stated that the arrest and detention was a breach of the duty to provide full protection and security under customary law to the foreign investor and its employees.²²²

182.

Respondent does not admit that Mr. Rooks was detained in 1987. Respondent has alleged that Claimants' allegations in connection with the detention of Mr. Rooks and others fall outside of the Tribunal's jurisdiction ratione temporis (taking place in 1987, 8 years before the NIPC Act).²²³ Those actions, even if established, could not constitute a breach of the NIPC Act, which was not in force at the time. Further, the alleged detention appears to be irrelevant to Claimants' claims in this arbitration.²²⁴

183.

Respondent further states that Claimants have not requested that the Tribunal provide a declaration that Respondent failed to provide full protection and security to Claimants' investments. Claimants never provided any rebuttal to Respondent's objection to the Tribunal's jurisdiction over Claimants' claim regarding Mr. Rooks's detention. Claimants' customary law claims are, therefore, beyond the scope of the Tribunal's jurisdiction.²²⁵

184.

The Tribunal found that it has jurisdiction over Claimants' international law claims against Respondent, without temporal restriction. The alleged detention of Mr. Rooks formed part of Claimants' allegations against Respondent. As indicated infra, the Tribunal has found that Respondent bears no liability in respect of Claimants' allegations. The Tribunal, therefore, need not further delineate what jurisdiction, if any, it would have to resolve other claims regarding Mr. Rooks.²²⁶

185.

In addition to Respondent's objections to the Tribunal's jurisdiction over Claimants' claims based on customary international law, which the Tribunal has addressed supra, Respondent has asked whether (i) fair and equitable treatment, (ii) full protection and security, and (iii) denial of justice are standalone protections under customary international law.²²⁷ Respondent has asked whether Claimants' claims under customary international law must be limited to the minimum standard of treatment.²²⁸

186.

The Tribunal has determined that under either interpretation of the scope and extent of that customary law, the result of this award would be the same. The Tribunal does not find a breach of customary international law. The alleged wrongdoings are not attributable to Respondent or do not form part of a concerted effort involving Respondent to deprive Claimants of their investment. This is true regardless of whether one examines the cited standards as protections which standalone under customary international law. Consequently, the Tribunal need not speculate in the form of dictum on the matter, given that Claimants' claims fail under either interpretation of scope of international law, as discussed infra.

187.

Claimants allege that their investment in Nigeria has suffered difficulties since at least 1987, when Respondent detained Mr. Rooks, one of their employees, for 5 months for reasons disputed by the Parties. In 1998, the ultimate owner of Claimants' investment, Dr. Fabbri, died intestate and, according to Claimants, Dr. Fadeyi, the manager of Pan Ocean, seized on the opportunity to steal the company. This alleged theft was later validated by Nigerian Courts.

188.

Claimants allege that entities and individuals whose acts are attributable to Respondent contributed to the illegal dilution and seizure of Claimants' shareholding and control over Pan Ocean, and thus of the 40% participating interest in OML 98 and OPL 275, through a series of acts and omissions in violation of Claimants' rights.²²⁹ As a consequence of this conduct, Claimants have suffered a total loss of their investment and have been unable to receive profits and dividends, which has resulted in in a total loss of their investment.²³⁰

189.

Claimants contend that these acts and omissions are attributable to Respondent, which failed to protect Claimants from adverse control of its 40% interest in OML 98 and OPL 275. They argue that this failure constitutes violations of the provisions of the NIPC Act providing for protections for foreign investors. Further or in the alternative, Claimants contend that Respondent violated its duties and obligations under customary international law.²³¹

190.

Respondent argues that Claimants failed to demonstrate any violation of Respondent's obligations under the NIPC Act or under customary international law, as matters of fact and law.²³²

191.

Below, the Tribunal accepts that Claimants have been deprived of their investment in Nigeria and of Pan Ocean. This loss alone, however, does not implicate international responsibility. Rather, in order for this Tribunal to find that an expropriation has occurred, the actions alleged must be attributable to Respondent. As indicated in the Decision on Preliminary Objections (29 October 2014), if the alleged conspiracy involving Respondent is not established, Claimants will be found to have filed unfounded claims.²³³ The determinative factual element for whether Claimants' loss is attributable to Respondent is the existence or extent of cooperation and coordination between Respondent, its representatives and agencies, and Dr. Fadeyi in respect of his actions in relation to Pan Ocean.

192.

The Tribunal is not persuaded that Claimants' loss is due to breaches of Nigerian law (including customary international law) for which Respondent is responsible. Claimants have presented insufficient evidence to show that Respondent coordinated with Dr. Fadeyi to deprive Claimants of their investment. While the Tribunal can accept that Dr. Fadeyi, a long-time employee of Pan Ocean, was the beneficiary and perhaps even the architect of an alleged plan to deprive Claimants of their investment, it is Claimants' own case that it was Dr. Fadeyi who orchestrated the removal of directors and appointed new ones, including himself. He issued new shares to new shareholders, including himself, and so has reduced Claimants from sole to peripheral shareholders. No evidence demonstrates that Respondent cooperated or coordinated with Dr. Fadeyi to achieve this result. Every role that Respondent has played in Claimants' story has been independent of Dr. Fadeyi. Accordingly, the Tribunal does not find that there has been an expropriation.

193.

This case is not based on a treaty, but rather on a domestic investment statute, the NIPC Act. Below, the relevant provisions of the NIPC Act are summarized, followed by the Parties arguments related to the interpretation the Tribunal should give to each provision.

"24. Investment guarantees, transfer of capital, profits and dividends

Subject to this section, a foreign investor in an enterprise to which this Act applies shall be guaranteed unconditional transferability of funds through an authorized dealer, in freely convertible currency, of –

(a) Dividends or profits (net of taxes) attributable to the investment

(b) Payments in respect of loan servicing where a foreign loan has been obtained; and

(c) The remittance of proceeds (net of all taxes), and other obligations in the event of a sale or liquidation of the enterprise or any interest attributable to the investment

25. Guarantees against expropriation

(1) Subject to subsections (2) and (3) of this section –

(a) no enterprise shall be nationalized or expropriated by any Government of the Federation; and

(b) no person who owns, whether wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other person.

(2) There shall be no acquisition of an enterprise to which this Act applies by the Federal Government, unless the acquisition is in the national interest or for a public purpose and under a law which makes provision for—

(a) payment of fair and adequate compensation; and

(b) a right of access to the courts for the determination of the investor's interest or right and the amount of compensation to which he is entitled.

(3) Any compensation payable under this section shall be paid without undue delay, and authorization for its repatriation is convertible currency shall where applicable, be issued."

194.

Claimants submit that the alleged Respondent's acts and omissions amount to violations of the investors' protections provided for in Sections 24 and 25 of the NIPC Act.

195.

Claimants argue that the acts and omissions attributable to Respondent "have led to a state of affairs tantamount to expropriation, in breach of the guarantee enshrined in Section 25(1)(a) of the Act."²³⁴

196.

Pursuant to Section 25(1)(a) of the NIPC Act "no enterprise shall be nationalised or expropriated by any Government of the Federation."²³⁵ Section 25(1)(a) encompasses forms of both direct and indirect expropriation. According to Claimants, this is confirmed by the NIPC Act's failure to expressly distinguish between the two categories, which would have been done if the intention of the Legislator was to restrict its application.²³⁶ Moreover, this broader interpretation is in line with the nature and purpose of the NIPC Act, as Respondent's intention could not have been to protect investors from direct expropriation, while permitting indirect expropriation.²³⁷

197.

Claimants define indirect expropriation as not involving "physical takings", but "takings […] that […] permanently destroy the economic value of the investment or deprive the owner of its ability to manage, use or control its property in a meaningful way."²³⁸

198.

Claimants' losses fall within the notion of "creeping expropriation", a subcategory of expropriation that "results in a deprivation of property or a loss of control but which occurs gradually or in stages… it encapsulates the situation whereby a series of acts attributable to the State over a period of time culminate in the expropriatory taking of such property."²³⁹ Claimants also rely on the definition provided in Metalclad v. Mexico, which includes "[…] covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or significant part, of the use or reasonably to be expected economic benefit of property even if not necessarily to the obvious benefit of the host State."²⁴⁰

199.

Claimants conclude that these definitions describe the gradual erosion or deprivation of their legal rights and the losses suffered.²⁴¹ The fact that there was not an actual "seizure", and that the investment was not transferred to the State but to a third party, is irrelevant.²⁴² Contrary to what Respondent argues, Claimants' claims are not simply about a dispute between private parties, because the loss of Claimants' investment would have not occurred without Respondent's acts and omissions, which have thus caused the loss or contributed to it.²⁴³

200.

Section 25(1)(b) of the NIPC Act provides that "no person who owns, whether wholly or in part, the capital of any enterprise shall be compelled by law to surrender his interest in the capital to any other person."²⁴⁴ According to Claimants, this provision encompasses "judicial expropriation", and would therefore be triggered by the 2005 and 2006 decisions of the Federal High Court of Abuja.²⁴⁵

201.

Claimants, relying on Rumeli v. Kazakhstan, argue that a court decision may amount to expropriation attributable to the State, and that "it is a characteristic of judicial expropriation that it is usually instigated by a private party for his own benefit, and not that of the State […]."²⁴⁶ According to Claimants, "it is irrelevant that the State itself in the 2005 case did not actually take possession of Pan Ocean or the Claimants' interests in it or otherwise benefit from the taking. It lent itself to the taking by providing an unlawful and perverse mechanism by which those interests were taken thereby depriving the Claimants of their investment as if by decree. Consequently, this action by the Respondent qualifies as expropriation contrary to section 25 of NIPC Act."²⁴⁷

202.

Claimants also contend that, once judicial expropriation is proven in circumstances such as the one at issue, it is not necessary to establish that it amounts to a "denial of justice."²⁴⁸ This would also entail that "exhaustion of local remedies does not constitute a substantive requirement for a finding of expropriation by a court."²⁴⁹ In any event, Claimants suggest that the requirement of exhaustion of local remedies is not a rigid rule, and has been interpreted as including balancing considerations as to whether the local remedy is reasonably incapable to produce satisfactory reparation.²⁵⁰ They also allege that there was no other realistic remedy for them under Nigerian law.²⁵¹

203.

Claimants further submit that, without prejudice to their primary contention that judicial expropriation does not need to be accompanied by denial of justice, the present case would satisfy the latter test as well.²⁵² Denial of justice would include "a denial, unwarranted delay or obstruction of access to courts, gross deficiency in the administration of judicial or remedial process, failure to provide those guarantees which are generally considered indispensable in the proper administration of justice, or a manifestly unjust judgment."²⁵³

204.

Claimants argue that the circumstances in which the issuance of shares was validated show that the decision of Respondent's court was "seriously defective procedurally and in breach of the most basic tenets of fairness and natural justice."²⁵⁴ According to Claimants, "[t]he court could and should have protected the Claimants['] investment by taking the simple step of ensuring that they were on notice of the hearing and represented, or by insisting on the participation of the CAC at any point in the process. It ought to have picked up the serious defect in the procedure, namely that the Applicant who sought to have the shares allotment validated, was also running the company on his own."²⁵⁵

205.

Claimants argue that the deprivation of their rights also constitutes, a fortiori, a violation of Section 24 of the NIPC Act, which provides for the unconditional transferability of funds, including dividends or profits attributable to the investment.²⁵⁶ According to Claimants, the expropriation of their investment "has led directly to the inability to receive any dividends, profits or other proceeds from their asset."²⁵⁷

206.

Respondent argues that, even assuming that the Tribunal had jurisdiction over the expropriation claim, Claimants failed to establish that Respondent expropriated Claimants' investment, either directly or indirectly.²⁵⁸

207.

To establish a violation of Section 25 of the NIPC Act, Claimants should prove that Respondent: (i) "nationalised or expropriated Pan Ocean", as required by Section 25(1)(a) of the Act; or (ii) "compelled [the Claimants] by law to surrender [their] interest in [Pan Ocean] to any another person", as required by Section 25(1)(b) of the Act.²⁵⁹

208.

Respondent argues that Pan Ocean was neither nationalized nor expropriated. First, Respondent's alleged conduct clearly do not amount to nationalization, which can be defined as "large-scale takings of private property in all economic sectors, in an industry or on a sector-specific basis" generally motivated by policy considerations, nor did Claimants attempt to suggest that.²⁶⁰ Second, Respondent states that expropriations, as "property-specific or enterprise-specific takings", can be divided in two categories: direct and indirect.²⁶¹

209.

As mentioned above, Respondent argues that only direct expropriation is covered by the NIPC Act.²⁶² However, Respondent submits that, in any event, Claimants' claims based on either direct or indirect expropriation, as well as their arguments on "judicial expropriation", are meritless.²⁶³

210.

With respect to direct expropriation, Respondent argues that it is well established in the jurisprudence of international arbitration tribunals that direct expropriation requires "mandatory legal transfer of the title to the property or its outright physical seizure by the State itself or by a State entity."²⁶⁴ Respondent contends that it is undisputed that it has not legally or physically seized Claimants' investment, as it did not take possession of Pan Ocean.²⁶⁵ Moreover, it states that Claimants: (i) did not lose legal title of their investment, as they still own the shares in Pan Ocean; (ii) did not hold a direct interest in the Joint Venture or its assets; and (iii) cannot claim that they were deprived of a right to 100% of Pan Ocean's participating interest because "they never assumed more than 25% of the exposure or financial risk in Pan Ocean."²⁶⁶

211.

Respondent stresses that Claimants themselves and their expert admitted that Respondent's alleged acts and omissions cannot constitute direct expropriation.²⁶⁷ Although the Reply seemed to suggest the contrary, they did not provide any decision or legal authority supporting their contention.²⁶⁸

212.

Regarding indirect expropriation, Respondent argues that Claimants failed to establish how the alleged measures would constitute indirect expropriation and to provide a rigorous analysis on the applicable legal standards.²⁶⁹

213.

Indirect expropriation can be defined as "a measure or series of measures taken by a State that have an effect equivalent to direct expropriation without formal transfer of title or outright seizure."²⁷⁰ The guiding factors for determining its existence include the degree of interference with the property right, the purpose and the context of the governmental measure, and its interference with reasonable and investment-backed expectations.²⁷¹ According to Respondent, this confirms that an essential feature of indirect expropriation is that it also requires a substantial deprivation attributable to the State.²⁷²

214.

Respondent argues that the general interpretation is that "only acts attributable to the host State acting in its sovereign capacity can amount to indirect expropriation",²⁷³ and that "claimants bear the burden of proving that there is a direct causal link between the State measures complained of and the damages allegedly suffered."²⁷⁴ According to Respondent, Claimants failed to prove these elements.

215.

Respondent stresses that Claimants mostly complain about the conduct of Dr. Fadeyi, a private actor whose actions are not attributable to Respondent.²⁷⁵ Respondent further contends that Claimants failed to establish a causal link between the alleged acts and omissions of Respondent and Claimants' alleged loss.²⁷⁶

216.

First, Respondent rejects Claimants' contention that Respondent or the NNPC had a duty to protect them, and argues that, even if such a duty was affirmed, the State's failure to protect from the behavior of a private party would not amount to indirect expropriation.²⁷⁷

217.

Second, Respondent submits that Claimants did not provide any evidence of the alleged conspiracy between Dr. Fadeyi and Respondent.²⁷⁸

218.

Third, Respondent denies that its liability for expropriation can be engaged because the NNPC continued to deal with Dr. Fadeyi.²⁷⁹ According to Respondent, the NNPC "was [only] fulfilling its contractual obligations under the joint venture."²⁸⁰ Moreover, Respondent's expert Professor Atsegbua argues that: (i) nothing in the JOA imposed a duty or obligation on the NNPC to make inquiries into Pan Ocean, (ii) "the NNPC was entitled under Nigerian law to assume that Dr. Fadeyi was Pan Ocean's legitimate representative", and (iii) it would have been inappropriate for the Nigerian government and the NNPC to intervene into a private dispute that was pending before Nigerian courts or to meet Claimants' demands.²⁸¹ Furthermore, Respondent contends that, even assuming that the NNPC breached its obligations by dealing with Dr. Fadeyi, "it is well established in investment treaty jurisprudence that violations of contractual rights by a State or a State agency do not constitute an indirect expropriation unless procured by sovereign conduct."²⁸² Claimants failed to argue and prove that, in dealing with Pan Ocean, the NNPC was ever exercising sovereign authority, rather than acting as a mere contractual party.²⁸³

219.

Finally, Respondent argues that Claimants failed to point to any action of Respondent that would amount to a "substantial deprivation" of their investment (nor could the notion of "creeping expropriation" assist them).²⁸⁴ According to Respondent, neither the Government nor the other entities involved had the power or the right to intervene in a private dispute or to set aside the court decisions on the matter. Moreover, Respondent argues that Claimants were simply unable to defend their claims in a private dispute, but did not provide evidence of any measure that would amount to an indirect "taking" of their rights, for the purpose of establishing indirect expropriation.²⁸⁵

220.

Regarding the allegations of "judicial expropriation", Respondent contends that, since Claimants were unable to substantiate their claims based on the notion of indirect expropriation, they relied on the "unsound notion" of "judicial expropriation."²⁸⁶

221.

Respondent argues that, under both domestic law and international law, decisions of domestic courts on allocation of rights cannot qualify as "takings" amounting to expropriation.²⁸⁷ At the international level, a sanction against a domestic judicial decision could only be obtained if it amounts to a "denial of justice", i.e. to a "[m]anifest injustice in the sense of a lack of due process leading to an outcome which offends a sense of judicial propriety."²⁸⁸ Otherwise, international tribunals would become courts of appeal for domestic decisions that claimants disagree with.²⁸⁹

222.

According to Respondent, Claimants themselves acknowledged that the notion of "judicial expropriation" is controversial. Respondent suggests that they relied on this theory because they did not exhaust local remedies, which is required to establish a claim of denial of justice, and because the NIPC Act only provides for protection against direct expropriation and free transfer of capital, and does not extend to violations of customary international law, including "denial of justice."²⁹⁰

223.

Respondent argues that the court's decisions in 2005 and 2006, which authorized Pan Ocean's board meeting and the subsequent allotment of shares, were "procedurally just and reasonable in the circumstances" and that, in any event, Claimants failed to pursue the available judicial recourses to challenge them.²⁹¹ Moreover, it stresses that those decisions did not extinguish any of their rights.²⁹²

224.

Finally, Respondent argues that Claimants relied on Saipem and other decisions that can be characterized as "disguised denial of justice decisions."²⁹³ Moreover, according to Respondent, some of the decisions mentioned by Claimants, such as Rumeli v. Kazakhstan and Sistem v. Kyrgyz Republic, should be distinguished from the present case because they "involved seriously egregious conduct on the part of the State that manifested itself in a Court decision. In this sense, they are less about expropriation by the judiciary than expropriation by the executive."²⁹⁴ Respondent contends that there is no evidence of such "egregious conduct" by the executive, as the court's decisions were independent and taken in good faith, and Respondent did not even play a part in bringing the matter before the court.²⁹⁵

225.

Respondent contends that it did not operate any transfer of shares within the meaning of Section 25(1)(b) of the NIPC Act, nor did it acquiesce or participate in the alleged dilution of shares or surrender of interest operated by Dr. Fadeyi, a private individual.²⁹⁶

226.

Moreover, Respondent argues that it cannot be held responsible for Claimants' lack of success in this dispute, which has been litigated for over a decade before Nigerian courts, given that Respondent was never a party to the proceedings (except for the incidental naming of the CAC), and it would have been inappropriate for it to interfere with those proceedings.²⁹⁷ Finally, according to Respondent, Claimants failed to prove that they were treated unfairly by Nigerian courts.²⁹⁸

227.

Respondent concludes that Claimants failed to establish any violation of Section 25 of the NIPC Act.²⁹⁹ Furthermore, if they wanted to establish their expropriation claim, Claimants would have also had to prove that the alleged measures failed to comply with Section 25(2) of the NIPC Act, which provides for rights to adequate compensation and access to courts in case of expropriation for national interest or for a public purpose.³⁰⁰ However, Claimants did not present arguments on this point.³⁰¹

228.

Respondent rejects Claimants' argument that the decisions of the Federal High Court of Abuja in the "2005 Board Meeting Case" would also constitute a denial of justice. According to Respondent, this claim should be dismissed because: (i) Claimants failed to "demonstrate that the decisions they complain of were criticisable either from a procedural or a substantive point of view, let alone that they amount to an outrage, bad faith or wilful neglect of duty", thus failing to meet the threshold for a finding of denial of justice; and (ii) Claimants failed to exhaust local remedies in Nigeria.³⁰²

229.

First, Respondent contends that the standard of proof to establish a denial of justice is high. Respondent refers to different case-law definitions according to which a finding of denial of justice requires evidence of an act of the judiciary "bereft of a basis in law", or amounting to "an outrage, bad faith, wilful neglect of duty, or insufficiency of actions apparent to any unbiased man", or to a "[m]anifest injustice in the sense of a lack of due process leading to an outcome which offends a sense of judicial propriety."³⁰³ Moreover, Respondent states that the possibility that courts of another jurisdiction would have held otherwise is irrelevant to this kind of claim.³⁰⁴ Respondent stresses that, as Claimants seem to be aware of, "a finding of denial of justice can only be established once the judicial system as a whole has been provided the opportunity to correct any deficiencies but has failed to do so."³⁰⁵

230.

Claimants' arguments on denial of justice were not substantiated by evidence. On the contrary, the decisions at issue were procedurally fair and constituted reasonable applications of Nigerian law, which is also confirmed by Respondent's expert Justice Ayoola.³⁰⁶ Claimants thus failed to meet the high threshold for a finding of denial of justice, as they did not show evidence that Nigerian courts breached any specific law nor that the decisions at issue would amount to "outrage, bad faith or wilful neglect of duty."³⁰⁷

231.

Second, Claimants did not exhaust local remedies in relation to the decisions they complain of, which is a prerequisite to a finding of denial of justice.³⁰⁸ According to Respondent, "over the course of the domestic proceedings, they repeatedly abandoned proceedings, failed to take advantage of available remedies or failed to pursue avenues of appeal."³⁰⁹ In particular, there were multiple avenues available to attempt to reverse the decisions at issue, but Claimants failed to pursue some of these avenues and, in the others, failed to comply with the applicable procedural requirements.³¹⁰

232.

Furthermore, Respondent contends that Claimants failed to submit evidence to support their argument that it would have been futile to pursue the remedies available to them.³¹¹ Claimants' expert Professor Oditah suggested that Claimants could not pursue certain remedies because they did not comply with some procedural requirements, though "it should have been open to a Court of Appeal to … to waive the procedural defects."³¹² However, according to Respondent, Professor Oditah did not point to provisions or judicial precedents that would have allowed Nigerian courts to do so.³¹³ Moreover, it stresses that these procedural rules are "essential to the adequate functioning of any judicial system", and reflect important due process guarantees.³¹⁴ Respondent insists that, even if Nigerian courts were particularly formalistic, this would not amount to a denial of justice.³¹⁵ Finally, Respondent argues that, as affirmed in Limited Liability Company Amto : "[t]he investor that fails to exercise his rights within a legal system, or exercises its rights unwisely, cannot pass his own responsibility for the outcome to the administration of justice, and from there to the host State in international law."³¹⁶

233.

Respondent rejects Claimants' interpretation of Section 24 of the NIPC Act. Based on Section 24 of the NIPC Act and on the definition of "authorized dealer" in Section 41 of the Act, it is clear that Section 24 of the Act only provides for protection against eventual capital control measures Respondent may impose, by guaranteeing "unconditional transferability of funds through an authorised dealer."³¹⁷

234.

Respondent submits that Claimants' argument that Respondent was under an obligation to guarantee the payment of "profits and dividends" by Pan Ocean is a misconstruction of Section 24 of the NIPC Act, which cannot be used to intervene in payment disputes between two private parties.³¹⁸

235.

Claimants' case is not that Respondent itself seized their investment. Rather, Claimants contend "that acts or omissions attributable to [Respondent] have led to a state of affairs tantamount to expropriation" and that this was in breach of the guarantee enshrined in Section 25 (1)(a) of the NIPC Act.³¹⁹ Respondent denies that there was any conspiracy and that it played any role in the activities of Dr. Fadeyi designed to wrongly deprive Claimants of the benefits of its ownership and to wrest control of Pan Ocean from Claimants. In the absence of complicity by Respondent in the actions of Dr. Fadeyi or anyone else in any plan to deprive the Fabbri family of its investment in Pan Ocean, this Tribunal cannot find Respondent liable for an expropriation in violation of Section 25 of the NIPC Act.

236.

Below, the Tribunal explains why the events giving rise to Claimants' claims do not constitute a violation of Section 24 or 25 of the NIPC Act and, accordingly, do not constitute direct or indirect expropriations. The Tribunal considers allegations of violations of customary international law separately, as necessary.

237.

In this section, the Tribunal summarizes the respective positions of the Parties as to the events that led to this claim and, where in dispute, whether these events or activities are attributable to Respondent and whether they amount to a violation of Respondent's obligations. The Tribunal's findings as they relate to the arguments submitted and the claims raised, are presented within the Tribunal's analysis.

238.

Claimants allege that several acts and omissions attributable to Respondent have caused or have contributed to cause the "creeping expropriation" of their investment.³²⁰ This conduct is summarized as follows.

239.

In 1987, Dr. Fabbri gave special powers of attorney to Mr. Rooks to review Pan Ocean's affairs and remove Dr. Fadeyi.³²¹ However, when Mr. Rooks went to Nigeria in 1987, he and his two bodyguards were arrested by Nigerian State Security operatives and detained for at least 103 days or as much as five months.³²² Charges were never filed and these individuals were never informed of the reasons of their detention.³²³ Mr. Rooks never again returned to Nigeria, though he was a Director of Pan Ocean. Dr. Fabbri and his son also refrained to go back, because Dr. Fadeyi convinced them that they would have been arrested too, while Dr. Fadeyi himself never faced the same issues.³²⁴

240.

This unlawful detention was "oppressive, arbitrary and a serious breach of the most basic of human rights",³²⁵ and constituted a violation of Respondent's duty to provide full protection and security to foreign investors and their employees.³²⁶ This intervention by Respondent supported Dr. Fadeyi's gradual gain of control over Pan Ocean.³²⁷

241.

Claimants allege that their representatives made several attempts, most of which without success, to contact the NNPC and receive guidance in relation to the change in Pan Ocean's beneficial ownership.³²⁸ At first, their inquiries were triggered by Dr. Fadeyi's claim that they had to seek the NNPC's approval for the transfer of the beneficial ownership in Pan Ocean to Mrs. Timolini.³²⁹ Claimants finally received a short answer from the NNPC (signed by Chief Sena Anthony), affirming that they did not need NNPC's consent, but advising that they seek the consent of the Government and of the other shareholders.³³⁰ This is how Claimants discovered the first irregular issuance of shares by Dr. Fadeyi to a third person, Mr. Tomisin.³³¹ Further, in 2004, Mrs. Timolini and her son travelled to Nigeria to meet the Managing Director of the NNPC, but the meeting never took place.³³²

242.

Given the issues Claimants were raising, "it would have been obvious to the NNPC that there was the real possibility that either it was dealing with the wrong people altogether, or at the very least it was not dealing with everyone it ought to be in relation to the company", with potentially serious implications for both Claimants and the NNPC;³³³ and yet, "Respondent produced no notes, memoranda, minutes, report, or record of enquiry showing that NNPC has discussed, considered, or at least even enquired into this important issue […]."³³⁴

243.

Claimants' expert Professor Omorogbe asserts that the correct approach by the NNPC would have been to initiate an independent investigation.³³⁵ The NNPC should have at least searched the company at the CAC. In March 2000, this search would have shown the irregular distribution of shares to Mr. Tomisin and removal of Mr. Rooks as Director, and, in 2005, "the fraud at the heart of the company, (including the forgery of [Mr.] Rooks's signature)."³³⁶

244.

Claimants allege that "notwithstanding the continuing enquiry and protestations on behalf of the Claimants, in June 2002, the Respondent, (via NNPC), concluded a debt repayment agreement with Dr Fadeyi without the consent of.Timolini or the Claimants, and on 28th May 2003 renewed the JOA with Pan Ocean."³³⁷ The agreement, concluded without Claimants' knowledge or consent, "imposed an obligation on the Claimants to pay the sum of US$ 497,694,921 to the Respondent."³³⁸

245.

Claimants point to the witness statement of Mr. John Brunner, who declared that one of NNPC's legal officers told him that he had recommended that the NNPC not sign the JOA because Dr. Fadeyi had not furnished a valid Pan Ocean's board resolution authorizing him to execute the agreement.³³⁹ This shows "internal tensions and precariousness of the NNPC's own position even whilst it was executing acts which directly interfered with and undermined the rights of the true owners of Pan Ocean and 40% in OML98."³⁴⁰

246.

Claimants submit that the new issuance and allotment of shares in 2005/06 by Dr. Fadeyi required both ministerial and the NNPC's consent.³⁴¹

247.

First, they contend that the requirement of the Minister's consent is imposed by paragraph 14 of the First Schedule of the Petroleum Act, stating that "[w]ithout the prior written consent of the Minister, the holder of an Oil Prospecting License shall not assign his license or lease or any right power or interest therein or thereunder."³⁴² Respondent's expert's contention that the requirement did not apply to the allotment of shares at issue is incorrect.³⁴³ The provision includes changes of control in the company that holds the license or lease, and this has always been the common interpretation and practice.³⁴⁴ This is confirmed by the broad wording of paragraph 14, by the policy rationale behind it (i.e. to allow the government to know and approve its joint venture partners), and by paragraph 16 of the First Schedule of the Petroleum Act, which sets out acceptability criteria for the potential assignees and gives the Minister wide discretion in this regard.³⁴⁵ Moreover, the "Guidelines and Procedure for obtaining Minister's Consent" confirm that the term "assignment" includes "any transaction that may alter the ownership, equity rights or interest of the assigning company in question."³⁴⁶ The requirement of the government's consent was also mentioned in the letter from Chief Sena Anthony of the NNPC.³⁴⁷

248.

As confirmed by a decision of the Federal High Court in the case Moni Pulo v. Brass Exploration Nigeria Unlimited, the "statutory requirement makes any alienation of such right or interest without the Minister's consent void."³⁴⁸ According to Claimants, Respondent "ought to have known that the purported alienation of a portion of the Claimants' 40% participating interest in OML 98 was unlawful and ought not to have been recognised."³⁴⁹

249.

Second, Claimants contend that the NNPC's consent was also required, given the formulation of section 19.1.1. of the JOA between NNPC and Pan Ocean, which mirrors the requirement of ministerial consent and states that: "no Party may assign or transfer its Participating Interests or any part thereof or any right, power or interest therein or thereunder without the prior written consent and approval of the other Party […]."³⁵⁰ According to Claimants, if the NNPC had scrutinized Pan Ocean's situation, it would have denied its consent.³⁵¹

250.

Claimants contend that wrongful decisions of Respondent's courts allowed Dr. Fadeyi to gain control over Pan Ocean through an irregular issuance of shares and the consequent dilution of the shares of Claimants.³⁵²

251.

On 24 November 2005, the Federal High Court of Abuja granted Dr. Fadeyi's request (presented on 21 November 2005) to hold a Board Meeting of Pan Ocean.³⁵³ Dr. Fadeyi's affidavit in support of the application stated that he remained the only Director given the unavailability of Mr. Rooks, but failed to mention that the latter had left Nigeria after having been freed from detention (in the circumstances described supra).³⁵⁴ Claimants submit that the only parties to the application were Dr. Fadeyi and Pan Ocean, also represented by Dr. Fadeyi.³⁵⁵ The interests of the shareholders were thus not represented, nor did they receive notification of the application (which was, therefore, made ex parte).³⁵⁶ The CAC, which months before had issued a report finding irregularities in Pan Ocean's management, was not joined as a party nor notified of the application.³⁵⁷

252.

Claimants allege that the Board Meeting was held on 29 November 2005 and Dr. Fadeyi passed resolutions "allotting the remaining 7,500 unissued shared of Pan Ocean to himself and his associates."³⁵⁸ The shareholders were not present at the meeting, and there is no evidence they were notified.³⁵⁹ According to Claimants, this allotment of shares was invalid.³⁶⁰ On 19 January 2006, Dr. Fadeyi passed an ordinary resolution ratifying the share allocation and appointing his associates, Justice Duro Adebiyi and Alhaji Muhammed Dikko Yusuf, as Directors.³⁶¹ Dr. Fadeyi claimed that he attempted to serve notice of the meeting to Claimants, while in fact he only sent those notices to the Swiss address of Panoco SA, a Swiss subsidiary of Pan Ocean that was liquidated in 1995. He did not attempt to serve them to the registered offices of Claimants or their counsel's address, both known to him from other litigations.³⁶²

253.

Claimants argue that the decision of 8 February 2006 of the Federal High Court of Abuja, which validated the resolutions passed by Dr. Fadeyi, "endorsed a fraudulent usurpation of shareholders' authority by the complete misapplication of section 123 of CAMA."³⁶³ Claimants reject Respondent's expert's contention that the Court could rely on Section 123 to validate improperly issued shares and that the Court did not have a duty to "dig deep for facts."³⁶⁴ According to Claimants' expert, Professor Oditah, Section 123 of the CAMA is only meant to remedy procedural defects, such as failure to give notice to a shareholder, but "does not enable a court to override substantive provisions such as division of powers between the board and shareholders as reflected in section 124 of the same Act."³⁶⁵

254.

Claimants rely on Professor Oditah's conclusion that "[i]t is difficult to see how the Judge could have been 'satisfied that in all the circumstances it is just and equitable' to deprive the Claimants of their ownership of Pan Ocean and turn them into a 25% minority on an application of Dr Fadeyi, an employee of Pan Ocean, and to do so without asking for the CAC to be joined as a Respondent and for the Claimants to be put on notice. The court in effect made sections 223 and 123 of CAMA substantive expropriatory provisions rather than purely procedural provisions."³⁶⁶ According to Professor Oditah, "the decision in the 2005 Case is neither procedurally fair, nor a reasonable application of Nigerian law", and "falls far short of what can be regarded, under any circumstances, as an acceptable standard of civil justice administration."³⁶⁷

255.

Claimants submit that Respondent is responsible for the acts and omission of the CAC, which is a State organ and statutory agency for regulating and administering companies.³⁶⁸ According to Claimants, the CAC acted in an inconsistent, arbitrary, and non-transparent manner.³⁶⁹ The CAC did not follow-up on its report that contained serious findings about Pan Ocean's management, nor did it impose penalties.³⁷⁰ Moreover, despite its findings, the CAC registered Pan Ocean's new issue of shares to Dr. Fadeyi and his associates.³⁷¹

256.

Despite Claimants' repeated grievances and the CAC's serious findings, no criminal investigation into Dr. Fadeyi's conduct was ever initiated.³⁷² Claimants reject Respondent's argument that it was prevented from investigating because there were pending court proceedings on the matter.³⁷³

257.

First, the fact that the numerous letters sent by Claimants to Respondent's instrumentalities remained unanswered and/or went missing, suggests a "deliberate and systematic cover-up" that benefitted Dr. Fadeyi.³⁷⁴ In particular, Claimants draw the Tribunal's attention to the letter they received from the NIPC on 26 September 2016³⁷⁵ regarding Pan Ocean's registration status, and which acknowledges the receipt of two letters, three and four years prior.³⁷⁶ Claimants also argue that the cross-examination of Mr. Khalid "exposed the fact that NNPC's register of correspondence received was not especially reliable […]", notably because it did not include a letter Chief Sena Anthony admitted she received.³⁷⁷

William W. Park	President
Edward Torgbor	Appointed by the State
Julian D. M. Lew	Appointed by the investor

Interocean Oil v. Nigeria

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Award

TABLE OF SELECTED ABBREVIATIONS/DEFINED TERMS

I. The Parties

A. Claimants

B. Respondent

II. Overview of the Dispute

A. Summary of Facts

B. Summary of Relief Requested

III. Procedural History

A. Introduction

B. Constitution of Tribunal

C. First Session and Initial Order

D. Submissions, Hearing and Decision on Jurisdiction

E. Proceedings on the Merits

IV. Jurisdiction

A. Overview

B. Jurisdictional Objections

(1) Existence of Dispute

(2) Registration of Pan Ocean as a Jurisdictional Pre-Requisite

a. The Parties' Positions

i. Respondent's Objection

ii. Claimants' Position

b. The Tribunal's Analysis

(3) Premature Filing

a. The Parties' Positions

i. Respondent's Objection

ii. Claimants' Position

b. The Tribunal's Analysis

(4) Scope of the NIPC Act

a. The Parties' Positions

i. Respondent's Objections

ii. Claimants' Position

b. The Tribunal's Analysis

(5) Attribution to Respondent of Harm-Causing Acts

a. The Parties' Positions

i. Respondent's Position

ii. Claimants' Position

b. The Tribunal's Analysis

(6) Further Jurisdictional Objections

a. The Tribunal's Invitation for a List of Issues

b. The Alleged Detention of Mr. Rooks

c. Nature of International Law

V. Liability and Damages

A. Overview

B. Legal Foundations to Expropriation Claims: The NIPC Act

(1) Statutory Provisions

(2) The Parties' Positions

a. Claimants' Position

i. Section 25(1)(a) of the NIPC Act

ii. Section 25(1)(b) of the NIPC Act

iii. Section 24 of the NIPC Act

b. Respondent's Position

i. Section 25(1)(a) of the NIPC Act

ii. Section 25(1)(b) of the NIPC Act

iii. Section 24 of the NIPC Act

(3) The Tribunal's Analysis

C. Events Giving Rise to Claim

(1) The Parties' Positions

a. Claimants' Position

i. Alleged Arrest and Unlawful Detention of Claimants' Representative

ii. NNPC's Alleged Failure to Assist Claimants or Investigate

iii. Respondent's Renewal of the Joint Operating Agreement ("JOA")

iv. Respondent's Alleged Failure to Scrutinize Pan Ocean Change of Control

v. Federal High Court of Abuja 2005 and 2006 Decisions

vi. Failure to Act Upon CAC Findings or Investigate Alleged Criminal Acts Within Pan Ocean

vii. Respondent's Alleged Inaction or Facilitation of Dr. Fadeyi's Actions