Reuters
Published Sep 04, 2019 22:39
Exxon, Shell cannot revive $1.8 bln Nigerian arbitration award -U.S. judge
By Jonathan Stempel
NEW YORK, Sept 4 (Reuters) - A U.S. judge on Wednesday
rejected Exxon Mobil (NYSE:XOM) Corp's XOM.N and Royal Dutch Shell Plc's
RDSa.L effort to revive a $1.8 billion arbitration award
against Nigeria's state-run oil company, which stemmed from a
dispute over a 1993 contract to extract oil near the African
country's coastline.
U.S. District Judge William Pauley in Manhattan cited public
policy and due process considerations in deciding not to enforce
the October 2011 award against Nigerian National Petroleum Corp
(NNPC), which was subsequently set aside by courts in Nigeria.
"While this court may have inherent authority to fashion
appropriate relief in certain circumstances, exercising that
authority to create a $1.8 billion judgment is a bridge too
far," Pauley wrote in a 50-page decision.
The companies said last November that the award had grown to
$2.67 billion, including interest.
Exxon, Shell and their respective lawyers did not
immediately respond to requests for comment.
"NNPC is very pleased with the decision, and was always
confident that there was no basis for a U.S. court to confirm
the award," its lawyer Cecilia Moss said in an interview.
According to court papers, the 1993 contract anticipated
that Exxon and Shell affiliates would invest billions of dollars
to extract oil from the Erha field, about 60 miles (97 km) off
Nigeria's coast, and share profits with NNPC.
But the affiliates, Esso Exploration and Production Nigeria
Ltd and Shell Nigeria Exploration and Production Co Ltd, accused
NNPC of unilaterally "lifting" more oil than was contractually
allowed, at the behest of Nigeria's government, depriving them
of billions of dollars of oil.
Pauley said Exxon and Shell still have "multiple appeals
pending" in Nigeria, and rejected their argument that it might
be difficult to collect there.
Exxon and Shell "executed a contract in Nigeria with another
Nigerian corporation containing an arbitration clause requiring
any arbitration to be held in Nigeria under Nigerian law, and it
then sought to confirm the award in Nigeria," Pauley wrote.
" They cannot now reasonably complain that their efforts to
collect will be frustrated in Nigeria."
In an Aug. 7 regulatory filing, Exxon said it did not expect
the case to materially affect its operations or financial
condition.
The case is Esso Exploration and Production Nigeria Ltd et
al v Nigerian National Petroleum Corp, U.S. District Court,
Southern (NYSE:SO) District of New York, No. 14-08445.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.