Indigenous Firms Lack Power to Enforce Local Content Act, Edo CJ

Delivering a ruling in a case brought by an indigenous company – CMES Flanges and Fittings Limited against Cheveon, Shell and Mobil Oil Producing Companies in Benin on Tuesday, the Court accepted the submissions of the counsel to Chevron, Dr. Momodu Kassim-Momodu, that the indigenous company had no locus standi to bring an action against the international petroleum producing companies, for noncompliance with the provisions of the Act, because the Act provides the mechanism for the supervision, coordination, monitoring and implementation of its provisions, with the establishment of the Nigerian Content Monitoring Board in Section 69 of the Act. It ruled that the Nigerian Oil and Gas Industry Content Development Act, vests such power in the Monitoring Board only. The Court also ruled that the claimant did not disclose any reasonable cause of action against the international petroleum companies, and therefore, the Court lacked jurisdiction to determine the suit against the oil companies, especially as there was no evidence before the court, that the indigenous company bidded for any contract with any of the three international petroleum companies; or that the international companies have been awarding contract to only foreign contractors. The judge also agreed with the defendants that since none of the oil companies reside or do any business in Edo State, the High Court of Edo State is devoid of the territorial jurisdiction to entertain the lawsuit. The court ruled that the failure of the Claimant to comply with the mandatory provisions of Section 97 of the Sheriff and Civil Processes Act by endorsing the Writ of Summons as specified in the, law rendered the Writ of Summons fundamentally defective and incurably bad, and therefore, null and void. It frowned on the filing of the case in the State High Court instead of the Federal High Court, pointing out that it is the Federal High Court that has jurisdiction over oil and gas matters, and not the High Court of the State. CMES Flanges and Fittings Limited, a Benin City based indigenous company in a suit brought by its counsel, L.I.T. Erhabor Esq, claimed that Shell, Chevron, and Mobil did not comply with the Nigerian Content Act, in respect of contracts for provision of flanges. The company alleged that the defendants were mandated to carry out all fabrication and welding activities in Nigeria, saying that they set up a factory in Benin City to produce flanges, yet the trio of Shell, Chevron and Mobil had refused to patronise the company. The company sought from the Court the following reliefs: 1. A Declaration that, by virtue of the provisions of Section 53 of the Nigerian Oil and Gas Industry Content Development Act, 2010, the Defendants are mandated to carry out all fabrication and welding activities in the country. 2. A Declaration that, by virtue of Section 3(2) & (3) of the Act, the company having demonstrated ownership of equipment, Nigerian personnel, and capacity to execute the contract of the production, manufacturing, and/or fabrication of flanges and fittings, is entitled, being a Nigerian company, to the exclusion of foreign companies, in the execution of such contracts in the Nigerian oil and gas industry. 3. A Declaration that the continuous refusal of the Shell, Chevron, and Mobil to engage and/or award contracts to the them for the fabrication of flanges and fittings whilst same is sourced abroad, is illegal, unlawful, unconstitutional, and a clear violation of the provisions of the Act. 4. An Order of Injunction restraining the oil companies by themselves, their servants, agents, or privies from sourcing, bringing into Nigeria, importing, or contracting the supply, production or fabrication of flanges and fittings to a non-Nigerian company or a local company where foreigners have majority or controlling shares. 5. An Order directing the oil companies jointly and severally to pay to the Claimant, the sum of N1.5 billion for the losses, damages and sundry expenses incurred and suffered by the Claimant in consequence of the supply and/or failure of the Defendants to engage the Claimant for the supply, production or fabrication of flanges and fittings, the Claimant having established a factory in Benin City, for the manufacture and or production/ fabrication of flanges and fittings, in accordance with the provisions of the Nigerian Oil and Gas Industry Content Development Act, 2010 The Court struck out the suit in its entirety, against the three oil companies.]]>