Court orders Shell to pay $3.6bn fine to NOSDRA

By Richards Adeniyi

Justice Mojisola Olatoregun of the Federal High Court in Lagos has ordered Shell Nigeria Exploration and Production Company Limited to pay a fine of $3.6bn to the National Oil Spill Detection and Response Agency acting on behalf the Federal Government.

Justice Olatoregun dismissed the suit filed by Shell before the court challenging the fine awarded against it by the agency.

Shell had sued NOSDRA, challenging its powers to impose levies or fines over oil spills.

It sought the order of the court to declare that NOSDRA could not, in the light of Sections 1, 3, 4, 5 and 6 of the 1999 Constitution, validly exercise any powers under Section 5, 6, 7 and 19 of the NOSDRA Act.

Shell, through its lawyer, Chief Wole Olanipekun (SAN), said the sections’ provisions encroached on the judicial powers vested exclusively in the courts.

He argued that it was the Federal High Court that was vested with the responsibility of determining liability and to assess, impose and direct the payment of any sum as penalty, damages or compensation in connection with an incidence of oil spillage, particularly the Bonga oil spill of December 20, 2011.

Shell urged the court to declare that the decision leading to the imposition of $3,600,191,206 on it by NOSDRA was in breach of its right as enshrined in Sections 36, 43 and 44 of the 1999 Constitution.

It also urged the court to nullify NOSDRA’s powers to impose such levies over oil spills.

Responding, NOSDRA, through its counsel, D. A. Awosika, argued that the cause of action arose on March 25, 2015 when it served Shell with the notice of sanction over the Bonga oil spill.

Awosika argued that Shell was enjoined to exercise its right of litigation if it felt aggrieved by the letters within three months from March 25, 2015 and not beyond.

“The plaintiff waited for more than 13 months to institute this action against the defendant,” he said, adding that Shell’s action was caught by the statute of limitation.

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Justice Olatoregun, in her judgment, held that NOSDRA acted in line with its powers and did not violate Shell’s rights in any manner.

The judge also found that Sections 5, 6 and 7 of the NOSDRA Act, which empower it to impose penalties, did not violates the Constitution.

“I found no conflict with the duties conferred on NOSDRA by law and the power of the court to adjudicate in this matter…I find no violation of the 1999 Constitution within these sections,” the judge held.

Justice Olatoregun further held that NOSDRA’s demand letters to Shell were not in conflict with Section 44 of the 1999 Constitution.

The judge said, “The plaintiff had notice and opportunity to fair hearing. The plaintiff ought to have had recourse to the court for the determination of its civil rights and a proper adjudication on the issues if it felt its rights were infringed or about to be infringed.

“I do not find the two letters ultra vires the duties and functions of the defendant.

“I have no reason to set both letters aside as well as the sums ordered, as parties did not make evaluation of the assessed damage an issue for consideration in the questions raised for determination. No evidence upon which an evaluation could be made was also proffered.”