OML 29 deal: Court nullifies ICC arbitration in Tempo Energy’s suit against Aiteo

A federal capital territory (FCT) high court in Garki has nullified arbitration proceedings instituted against Aiteo Eastern E&P Company Limited at the International Chamber of Commerce (ICC) in London.

The lawsuit was instituted by a consortium of lenders that partly financed Aiteo’s $3 billion acquisition of oil mining lease (OML) 29 and the Nembe Creek Trunk Line (NCTL) from Shell in 2014.

In a ruling on Tuesday, the judge, S.B. Belgore, stated that the London arbitration constituted a clear violation of the FCT high court’s subsisting injunctive orders.

Consequently, the court declared the international proceedings null and void.

THE DISPUTE’S GENESIS

The court’s decision was prompted by an application filed by Tempo Energy Nigeria Limited, a minority stakeholder in the 2014 acquisition.

Tempo Energy accused the lending consortium, which includes prominent Nigerian and international financial institutions, of breaching contractual obligations and deliberately circumventing Nigerian court directives by pursuing arbitration in London.

Tempo’s grievances stemmed from a complex, multi-party financing arrangement.

The company had alleged that several lenders initiated legal actions in the high court of England and Wales, followed by the commencement of the ICC arbitration in London on December 11, 2020, without being included as a party to the proceedings.

To safeguard its interests, Tempo filed suit FCT/HC/CV/079/2021 on January 14, 2021, seeking injunctions to halt the foreign legal processes.

On January 22, 2021, the FCT high court issued interim orders explicitly restraining all parties from taking further steps in both the English court and the ICC arbitration proceedings, pending a full hearing of the matter.

Despite the interim orders, the lenders proceeded with the ICC arbitration between 2021 and 2024.

RECENT COURT RULINGS

The FCT high court’s stance was reinforced by the court of appeal in Abuja.

In a unanimous decision on April 25, the appellate court upheld the FCT high court’s interim injunctions, dismissing the lenders’ appeal as an abuse of court process and imposing a cost of N1.5 million against them.

The appeal court also mandated an accelerated hearing of pending applications at the trial court and issued a stern warning against any further violations of existing court orders.

During the FCT high court hearing on May 20 and 22 — which followed the appellate court ruling — Kehinde Ogunwumiju, counsel to Tempo Energy, filed a motion requesting the court to set aside the ICC arbitration.

The lenders’ legal representatives, Joke Aliyu and Babatunde Fagbohunlu, contested this application, raising a preliminary objection challenging the FCT high court’s jurisdiction over foreign arbitral proceedings.

However, Belgore dismissed their objection as incompetent and without merit, describing it as an abuse of process.

The judge subsequently granted Tempo’s application, unequivocally declaring the ICC arbitration, conducted in defiance of the high court’s injunctions, as null and void. 

The court insisted on the validity and binding nature of its January 22, 2021, injunctive orders, directing all parties to cease any actions that contravene its rulings.

Tempo Energy was also awarded N500,000 in costs, and further hearing in the consolidated applications was adjourned to September 29.

Those listed as defendants in the suit are AEEPCO, Africa Finance Corporation, Ecobank Nigeria Limited, First Bank of Nigeria (FBN) Limited, Guaranty Trust Bank Plc, Fidelity Bank Plc, Shell Western Supply and Trading Limited, Shell International Trading and Shipping Company Limited, Citibank Europe Plc, UK Branch, Citibank N.A. London Branch, and FBN Trustees Limited.

Others are Zenith Trustees Limited, FBN Merchant Bank Limited, Sterling Bank Plc, Union Bank of Nigeria Plc, Ζenith Bank Plc, and Dame Elizabeth Gloster.