Do orders made in English courts supersede those made by their Nigerian counterparts? This is the question the Federal High Court in Lagos will answer when a suit by PhoenixTide Offshore Nigeria Limited against Tidewater Marine and others is heard. ERIC IKHILAE reports.
Can an English court, at the pleasure of having its orders obeyed, compel a Nigerian to disobey subsisting injunctions by Nigerian courts? Are orders made later by English courts superior to earlier subsisting orders made by courts in Nigeria?
These and others are issues to be examined as hearing opens on April 17 in a suit before Justice Okon Abang of the Federal High Court, initiated by PhoenixTide Offshore Nigeria Limited against Tidewater Marine International Incorporated, its local agent, Tidex Nigeria Limited, Total E & P Nigeria Limited and two others.
The suit is in relation to the operations of PhoenixTidex (created in 2005 by a company owned by former Commerce and Tourism Minister, Mrs Bola Kuforiji-Olubi – Phoenix Ocean Line Limited – and a foreign company, Tidewater Marine International Incorporated, as a wholly Nigeria company to provide support services to international oil companies). It was created in compliance with then legal regime, which required that vessels on bareboat charter for cabotage trade in the country must be hired by Nigerian citizens.
According to court documents filed by parties, PhoenixTide, upon its creation entered into blanket bareboat charter (BBC), technical services agreement (TSA) and marketing agreement (MA) with Tidewater Marine. By the agreements, Tidewater Marine was engaged to run PhoenixTide, including handling the management and operations of all vessels bareboat hired by the plaintiff, except for some other local issues.
In the course of its operations, PhoenixTidex provided services for some international oil companies (IOCs), which included Total E &P Nigeria Limited, Total Upstream Nigeria Limited, Total E & P Nigeria Deepwater Limited.
In court documents filed by PhoenixTide, in support of the suit marked; FHC/L/CS/609/2013, the company stated that parties had no problem until some years later, when Nigerian investors in the plaintiff began to notice some alleged sharp practices on the part of Tidewater Marine in the operations of PhoenixTide,
Some of the identified sharp practices, it said, included making false tax claims and misrepresenting facts about its revenues with the aim of deceiving Nigerian regulatory agencies.
It was stated that the Nigerian directors became more concern about how Tidewater was running the affairs of the plaintiff when on November 4, 2010, the US Department of Justice announced that it had filed a criminal information, charging Tidewater Marine International Incorporated, a Cayman Island subsidiary of Tidewater Incorporated (collectively “Tidewater”), with conspiring and violating the books and records provisions of the Foreign Corrupt Practices Act (FCPA) for allegedly engaging in unethical practices in its operations in Nigeria and Azerbaijan.
To resolve the issue, the US Justice Department and Tidewater later entered into a deferred prosecution agreement that required, among other things, that Tidewater Marine pay $7.35 million as criminal penalty.
The plaintiff stated that in the following year, (2011) the Nigerian government moved against senior officials of PhoenixTide over similar issues on which the US government had earlier sanctioned Tidewater. The Economic and Financial Crimes Commission (EFCC) accused PhoenixTide of among others, non-payment of required taxes and non-disclosure of actual revenues in relation to their operations in the country.
A terms of settlement and non-prosecution agreement was entered between the Nigerian government and PhoenixTide, including other companies with which it had relationships as a way of resolving the issue.
The agreement, which had the Attorney General of the Federation (AGF) signing for the Nigerian government and Tidex Nigeria (a local agent of Tidewater) signing for PhoenixTide, Tidewater and other companies with which it had relationships, saw the company paying $6million to Nigeria as penalty.
Under the agreement dated February 25, 2011, the companies also undertook to ensure that their business dealings in the country were “carried out in accordance with all applicable laws and regulations.”
PhoenixTide stated that rather than comply with its undertaking as contained in the 2011 agreement with the Nigerian government, the 1st defendant (Tidewater) allegedly persisted in its old ways.
PhoenixTide also stated that on realising that the 1st defendant’s activities have exposed it to the risk of being held liable by the Federal Inland Revenue Service (FIRS), Lagos State Inland Revenue Service (LSIRS), Nigerian Maritime Administration and Safety Agency (NIMASA), Rivers State Board of Inland Revenue (RSBIR) and other regulatory authorities, it petitioned the relevant bodies, particularly the FIRS and AGF, intimating them of the activities of the 1st defendant and sought investigation.
In its petition to the FIRS, dated October 29, 2012, the plaintiff requested the agency to “establish the tax liabilities due on the plaintiff’s operations.” In a similar petition to the AGF, dated on February 20, 2013, PhoenixTide drew the AGF’s attention to the development and the 1st and 2nd defendants’ alleged “continued violations of the corporate compliance scheme provisions of the agreement.”
The plaintiff further stated that in view of its insistence on the restructuring of their operations and the need to comply with the corporate compliance scheme provisions, Tidewater, via letter dated October 23, 2012 written by its lawyers (Clyde & Co) decided to end their relationship.
PhoenixTide averred that it was not averse to the severance of their relationship, as indicated by Tidewater, but demanded from it (the plaintiff) indemnities to insulate it (the plaintiff), its shareholders and directors from any liabilities which may arise from its alleged refusal to comply with the 2011 non-prosecution agreement with the government.
The plaintiff stated that rather than address its demands, Tidewater, via a letter by one of its officials, Arthur McGimsey, sought the consent of its (PhoenixTide’s) local directors to transfer abroad payment made within that period by Total for the services earlier rendered to it while the relationship between the plaintiff and 1st defendant lasted.
PhoenixTide stated that it refused to accede to granting consent to Total to pay the money to a foreign account, but insisted that details about how Tidewater had managed the plaintiff, including detailed information about its revenue and expenditures from inception; other pending issues including the settlement of all outstanding taxes and obligations, must be resolved before what is left of the payment by Total could be taken out of the country.
The plaintiff averred that its position was informed by its realization that the 1st defendant’s (Tidewater’s) violation of the terms of the non-prosecution agreement with the Nigerian government was capable of prejudising its (plaintiff’s) business interest in the country and the economic activities of the Federal Government of Nigeria.
It prayed the court to among others, compel Tidewater “to make full disclosure and provide necessary information for the assessment of its tax liabilities and other statutory charges by the relevant government agencies,” and “an order directing the 1st defendant (Tidewater) to pay its tax liabilities and other statutory charges as may be assessed by the relevant government agencies in consultation with, and satisfaction of the plaintiff.”
The plaintiff also stated that rather than address the issues it raised, Tidewater went before the High Court of England, Commercial Division to it, with the principal intention to compel its local directors to give consent to Total to pay into its (Tidewater’s) account without first, resolving issues relating to unpaid taxes and other dues owed to local agencies.
The English court rejected PhoenixTide’s objection to its jurisdiction. PhoenixTide had, among others, argued that in view of the provisions of Nigeria’s Admiralty Jurisdiction Act (AJA) and that fact that the dispute arose from parties’ maritime operations in Nigeria, the Federal High Court in Nigeria possessed the jurisdiction to hear the case.
The trial judge in the English court, Mr. Justice Burton proceeded with the case marked: “Claim 2013 Folio 290” without PhoenixTide’s further participation. The judge later gave a default judgment in favour of Tidewater.
While the English court proceeded with the Tidewater case, the Federal High Court in Nigeria also proceeded to hear the three cases filed before it. The cases included the suit filed by PhoenixTide, marked: FHC/L/CS/609/2013; the one initiated by Total and two of its subsidiaries, marked: FHC/L/CS/274/2013 and the last marked: FHC/L/CP/975/2014 between Tidewater Marine and PhoenixTide.
In a ruling on May 7, 2013, Justice Okon Abang, the trial judge in the suit marked: FHC/L/CS/609/2013, ordered parties to maintain status quo ante bellum and refrain from taking any further steps in relation to the subject matter of the case pending its determination.
The judge’s order was informed by allegations that the Tidewater and Tidex (1st and 2nd defendants in the suit) were engaged in clandestine moves to ensure that the funds to be paid by Total E&P Nigeria Limited, Total Upstream Nigeria Limited and Total E & P Nigeria Deepwater Ltd (which formed the subject matter of the suit) was transferred abroad.
Unable to decide who to pay to, Total E&P Nigeria Limited, Total Upstream Nigeria Limited and Total E & P Nigeria Deepwater Ltd filed the suit marked: FHC/L/CS/274/2013 praying the court for directive on whether to pay the funds into a local account in the name of PhoenixTide (named as 1st defendant) or to Tidewater and Tidex (named as 2nd and 3rd defendants)
As a third option, the plaintiffs prayed the court to be allowed to pay the amount into an interest yielding account in the name of the Chief Registrar of the Federal High Court, should the court finds that, in view of pending cases, the funds should not be paid to any of the defendants.
In a judgment on November 8, 2013, the trial judge, Justice Ibrahim Buba accepted the third option and ordered that “the sums shall be paid into interest yielding account in the name of the Chief Registrar pending when it is decided by a competent court, who is entitled to the funds between the respondents.”
On the argument by Tidewater and Tidex that the court should decline jurisdiction in view of Tidewater’s pending case before the England court, Justice Buba held that the decision by the English court was only persuasive.
“It is the law that the decision by English court on exclusive jurisdiction clause is only persuasive and not binding on this court. A Nigerian court will not abdicate its responsibility to a foreign court where the parties agree to a foreign jurisdiction undermining the integrity of the Nigeria court,” the judge said.
Dissatisfied with the court’s decision, Tidewater and Tidex appealed the judgment. But before the appeal could be heard, they applied to the Federal High Court, Lagos in a suit marked: FHC/L/CP/975/2014 for the registration of the English court’s judgment to enable them execute it in the country.
On learning about the move to register the English court’s judgment, PhoenixTide filed a counter application, urging the court to refrain from registering the foreign judgment on the grounds, among which was that the proceedings in the English court were in violation of the provisions of AJA and the Nigerian Constitution.
PhoenixTide also stressed the implication of the registration of the English court’s decision on the pending cases, including the appeal by Tidewater and Tidex, which they did not bring to the court’s attention while seeking to register the foreign judgment.
Justice Buba, in a ruling dated December 16, 2014 in the suit marked: FHC/L/CP/975/2014, refused to register the judgment as required. He equally granted an order of perpetual restraining Tidewater Marine and Tidex “from executing or attempting to execute the English judgments/orders either in this court or in any other court in Nigeria.”
It was justice Buba’s opinion that, not only did Tidewater and Tidex fail to meet the conditions precedent to the registration of the English court’s judgment , “the registration of the judgment has the effect of making useless the order of November 8, 2014 (asking Total and two others to pay into an account in the name of the court’s Chief Registrar) and the pending case before Justice Abang.
“Until a legally admissible judgment of a competent court has decided who is entitled to the funds between the respondents, this court cannot ignore the disputes in courts between the respondents and act on an inadmissible default judgment,” Justice Buba said.
On March 6, 2015 Justice Abang ruled on the preliminary objection by Tidewater and Tidex (in PhoenixTide’s suit marked: FHC/L/CS/609), challenging the court’s jurisdiction on the ground that the suit was an abuse of court process in view of the pendency of the case before the English Court.
Justice Abang dismissed the objection and assumed jurisdiction over the case, noting that the subject matter of both pending cases are not the same.
Justice Abang noted that the suit PhoenixTide relates to complaints about the alleged willful failure by Tidewater and Tidex to implement a scheme of corporate compliance improvement and their alleged refusal to perform the contract in line with the terms of settlement and non-prosecution agreement entered into by the 2nd defendant on behalf of the 1st defendant with the Federal Government of Nigeria (FGN).
The judge held that subject of the suit before him was entirely different from the claim and issues arising in the suit before the English court. Justice Abang has fixed April 17 for hearing of substantive suit.
Rather than await the determination of their appeal against the November 8, 2014 judgment by Justice Buba, the determination of the suit before Justice Abang, or seek the setting aside of the order for the maintenance of status quo made by Justice Abang on May 7, 2013, Tidewater and Tidex went back to the English court.
They initiated contempt proceedings against PhoenixTide’s Managing Director, Olutokunbo Kuforiji and his mother, Mrs. Kuforiji-Olubi, who was a non-executive Chairman of the company, accusing them of disobeying the English court’s judgment.
It is PhoenixTide’s contention that due process must be observed, with Tidewater made to settle all tax liabilities and other statutory charges due to Nigerian agencies, and ensure total disclosure of all its revenues and expenditure while it ran the affairs of PhoenixTide, before it is allowed to exit and move funds out of the shores of the country.
