PAN OCEAN OIL CORPORATION (NIG.) LTD. v. KCA DEUTAG DRILLING GMBH & ANOR.

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Facts:

The respondents entered into a Land Drilling Rig Agreement with the appellant for the provision and operation of a land drilling rig T-76 and other associated drilling services to the appellant, including the provision of other supporting equipment, spare parts, supplies, services and personnel to drill oil and gas wells on locations designated by the appellants. It was agreed by the parties that the 1st respondent being a foreign company, should incorporate a Nigerian entity as required by Nigeria laws before engaging in business in Nigeria. The 2nd respondent in accordance with the terms of the contract, was incorporated to carried out the performance and execution of the contract in Nigeria.

The respondents duly issued invoices to the appellant for services rendered under the contract, which invoices were duly received by the appellant. The appellant failed to settle the outstanding invoices that were issued by the respondents. Following several unsuccessful demands by the respondents for the payment of the outstanding invoices and pursuant to clause 13 of the contract, the respondents submitted the dispute regarding the failure of the appellant to settle the outstanding invoices to arbitration under the Arbitration Rules of the International Chamber of Commerce.

The parties advised the Arbitral Tribunal that they had in November, 2016 entered into a settlement agreement which was executed by the parties and requested the Arbitral Tribunal to enter an award by consent in terms of the Settlement Agreement. The Arbitral Tribunal then entered a consent award in favour of the respondents in the sums totaling US $13,487,286.17 (Thirteen Million, Four Hundred and Eighty-Seven Thousand, Two Hundred and Eighty-Six United States Dollars and Seventeen Cents) and NGN1,164,766, 574.72 (One Billion, One Hundred and Sixty-Four Million, Seven Hundred and Sixty- Six Thousand, Five Hundred and Seventy-Four Nigerian Naira and Seventy Two Kobo) payable in respect of services provided by the respondents to the appellant under the contract.

The appellant thereafter made voluntary payment of part of the award sums and the respondents also recovered some portions of the award sum through garnishee proceedings. However, a significant part of the award debt remained outstanding. Following the refusal of the appellant to liquidate the award sums, the respondents by an originating motion sought an Order at the trial court that the final arbitral award made on 3rd May, 2017 between the appellant and the respondents be enforced in the same manner as a judgment of the trial court. The appellant was duly served with the originating motion and was represented by counsel during the proceeding of 10th August 2017, but did not oppose the originating motion. He pleaded for some time to allow the appellant settle the matter. The originating motion was moved and accordingly granted by the trial court.

The appellant subsequently fi led an application seeking: an order for stay of further execution of the arbitral award dated 3rd May, 2017 recognized by the court as enforceable as a judgment of the court; an order setting aside the ruling of the trial court recognizing the arbitral award as enforceable as a judgment of the trial court on ground of lack of jurisdiction of the court. The appellant’s application challenged the jurisdiction of the trial court to entertain the suit on the ground that the arbitral award dated 3rd May, 2017 recognized by the lower court was illegal and that the order recognizing the illegal award is a nullity. It is pertinent to note that neither at the arbitration proceedings nor at the hearing of the respondents’ application for enforcement of the arbitral award did the appellant raise any question regarding the illegality of the Contract/Land Drilling Agreement.

The trial court in its ruling delivered on 18th March, 2020 dismissed the appellant’s application for lacking in merit.

Dissatisfied, the appellant appealed to the Court of Appeal (court below). The court below dismissed the appellant’s appeal and affirmed the ruling of the trial court. Further aggrieved, the appellant appealed to the Supreme Court.

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