Dipo Kehinde/
Details have emerged on how former Lagos State Attorney General and Senior Advocate of Nigeria, Mr Olasupo Shasore, lost a bid to secure over $1.650, 000, 000 damages for the ex-wife of an aggrieved American Investor against Nigeria.
NewsmakersNG learnt from legal documents that the ex-wife of the American investor lost the bid to make the Federal Government of Nigeria pay the damages and restitution after losing her late husband’s Oil Company to a Nigerian partner accused of a dubious takeover of the firm that landed in trouble for lifting oil without payment.
The reliefs which included a restoration of its shareholding, was being sought by Interocean Oil Development Company and Interocean Oil Exploration Company owned by Impex Limited that dragged the Federal Government of Nigeria before the International Centre for Settlement of Investment Disputes (ICSID) in Washington DC, USA, in Case No. ARB/13/20.
One Dr. Vittorio Fabbri, who died intestate in 1998, was the beneficial owner of Impex Limited, which had been the legal owner of both Claimant companies since 1983. The firms were incorporated under the laws of Delaware and maintain registered offices at 901 N. Market Street, Suite 705, Wilmington, Delaware 19801, U.S.A.
Mrs Annabella Timolini had told the Tribunal President, Professor William W. Park, how Nigerian billionaire businessman, Dr. Festus A. Fadeyi, who was her ex-husband’s partner, snatched the oil firm from the family.
In spite of the claims, Professor Park ruled that the Tribunal finds no liability on the part of Respondent in connection with Claimants’ loss of control over their investment and ordered Claimants to pay USD 660,129.87 to Respondent as reimbursement of its share of the arbitration costs incurred in the proceedings.
The Tribunal admitted that the facts giving rise to the dispute on the merits are largely uncontested. It stated that 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 adopted the “Overview of the Dispute” contained in its Decision on Preliminary Objections and summarized the factual submissions that were most relevant to its decisions thus:
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”). 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”).
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. 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). The subject of this arbitration is Claimants’ 40% participating interest in OML 98 and OPL 275, created by the joint venture.
Claimants alleged 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.
Dr. Vittorio Fabbri was the beneficial owner of Impex Limited, which had been the legal owner of both Claimant companies since 1983.
Impex owned Claimants, which owned Pan Ocean.7 Claimants allege that the authorized share capital of Pan Ocean is N10,000 divided into Ten Thousand Ordinary Shares of Naira 1.00 each. 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.
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. Dr. Fadeyi later became Managing Director of Pan Ocean. He performed executive duties but held no ownership rights in the company.
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.
In July 1987, Mr. Rooks was in Nigeria with a power of Attorney from Dr. Fabbri to relieve Dr. Fadeyi of his duties. 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. Claimants allege that this was part of an effort by Respondent to enforce its rights as a joint venture partner. From 1987 onward, Dr. Fadeyi was the only Director of Pan Ocean who remained physically present in Nigeria.
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.
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. Pursuant to this agreement, payment would commence in 2002, with the balance fully paid in 2012.
In December 1997, Dr. Fabbri was diagnosed with terminal liver cancer.
Claimants allege that Dr. Fabbri transferred 100% of the beneficial interest in Impex to his ex-wife, Mrs. Annabella Timolini, via stock transfer agreement on 13 January 1998, in the presence of his eldest son, Mr. Patrizio Fabbri.
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. The letter makes no mention of any change in the ownership of Impex.
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. Mr. Rooks in an affidavit of 26 August 2003 stated that he did not do this transaction.
Months after contracting a terminal cancer, Dr. Fabbri died intestate on 1 September 1998.
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.
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.
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. 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.
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: Alhaji Muhammed Dikko Yusufu and Justice Duro Adebiyi. This was later declared irregular by the Corporate Affairs Commission (“CAC”).
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.
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. Claimants have alleged that the beneficial interest of Claimants was owned by Dr. Fabbri until his death. 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. Respondent never recognized the validity of this transfer, and the transfer was declared invalid by Justice Olomojobi of the Federal High Court of Nigeria.
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. 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.
In May 2002, Pan Ocean and NNPC entered into a Joint Operating Agreement.
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.
On 3 February 2003, Claimants petitioned the CAC to conduct an investigation into the affairs of Pan Ocean.
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”).
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. 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. Respondent states that there is no evidence that any meeting was planned.
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. 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. 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.
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. 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.
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. 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.”
This application was granted on 24 November 2005. Claimants filed an appeal on the same day. 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. 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. Claimants submit that no shareholders were present at that meeting and that “there is no evidence that they were even notified of it.” 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. 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.
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 Yusufu (former Inspector General of Police) as Directors and the share allocation was effected.
The decision of 8 February 2006 of the Federal High Court of Abuja validated the resolutions passed by Dr. Fadeyi. 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. 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. Claimants filed an appeal on 4 April 2006, which the Court of Appeal of Abuja dismissed as untimely.
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. She resigned as Director and President of Claimant companies on 31 January 2013.
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.
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.
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.
In their Memorial on the Merits, 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-
Declaring that Respondent has breached its obligations to the Claimants under Nigerian law and/or international law;
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;
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;
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;
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);
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).
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;
Directing that the Claimants be reinstated as the beneficial owner [sic] of the 40% participating interest in OML 98.
Directing the Respondent to pay the Claimants’ interest and taxes on all sums awarded;
Directing the Respondents to pay the Claimants’ costs associated with these proceedings including professional fees and disbursements on a full indemnity basis;
Ordering such further or other relief as the Tribunal deems appropriate in the circumstances.
In its Counter-Memorial, Respondent made the following request for relief:
“For all the reasons set out in this Memorial, the Respondent respectfully requests that the Tribunal: 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; in the alternative, declare in its final award that it lacks jurisdiction over the present dispute; 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; to the extent that it may assert jurisdiction, dismiss all the relevant claims in their entirety; 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 order any such relief as may seem just.”
In its Rejoinder, 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: declare that it lacks jurisdiction over the present dispute 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; to the extent that it may assert jurisdiction, dismiss all of the relevant claims in their entirety; 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 order any such relief as may seem just.”
The Tribunal President, however, ruled that: “The Tribunal finds no liability on the part of Respondent in connection with Claimants’ loss of control over their investment, Pan Ocean.
“The Tribunal finds that Respondent has not breached its obligations toward Claimants under Nigerian law or under international law.
“The Tribunal hereby dismisses Claimants’ claims for damages and for restitution.
“The Tribunal hereby dismisses Claimants’ claim to be reinstated as the beneficial owner of the 40% participating interest in OML 98.
“The Tribunal hereby orders Claimants to pay USD 660,129.87 to Respondent as reimbursement of its share of the arbitration costs incurred in these proceedings.
“All other claims are dismissed.”
Other members of the Tribunal are Prof. Julian D.M. Lew and Hon. Justice Edward Torgbor, with Mr Benjamin Garel as the Secretary.
The Nigerian bench was led by Aare Afe Babalola SAN, CON who handled the brief bro bono.
In the legal team are Mr. Adebayo Adenipekun, SAN, Mr. Olu Daramola, SAN, Mr. Kehinde Ogunwumiju SAN, Mr. Oluwasina Ogungbade, Mr. Ola Faro, Mr. Chukwudi Maduka, Ms. Esther Adenipekun, who are based in Nigeria, and London-based Mr. Robert Volterra, Mr. Álvaro Nistal, Volterra Fietta, as well as Ms. Rose Rameau from Rameau International Law in Washington, USA.
The legal team of Interocean Oil Development Company and Interocean Oil Exploration Company was led by Mr. Olasupo Shasore, SAN and London-based Mr. Oba Nsugbe QC.
Other lawyers in their team are Mr. Bello Salihu, Ms. Fadesike Salu, and Ms. Bimpe Nkontchou who is based in London.
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