Aiteo Versus Shell: Court To Hear Contempt Proceedings Against 3 Nigerian Banks

Shell Petroleum

BEVERLY HILLS, February 24, (THEWILL) – Justice Oluremi Oguntoyinbo of the Federal High Court in Lagos will on March 22 decide whether or not to hear a contempt proceeding filed against three Nigerian banks by Aiteo Eastern E & P Company Limited for allegedly disobeying an order of the court.

Aiteo had dragged Shell Petroleum Development Company of Nigeria (SDPC) and four others before the court, accusing the oil company of shortchanging it by using an unapproved methodology to calculate the volume of crude it lifted on its behalf from the terminal.

Aiteo alleged that Shell deployed underhanded practices, including using unapproved meters, to facilitate crude theft.

The court had on January 25, 2021, while granting an ex parte application filed by Aiteo’s Counsel, Kemi Pinheiro, frozen SDPC’s account as well as ordered all banks in Nigeria that has any money belonging to SDPC in their custody, to file affidavit showing how much the debtor creditor has with them.

The court specifically directed the 20 banks, joined in the suit, where the Shell companies operated accounts in Nigeria to “ring-fence any cash, bonds, deposits, all forms of negotiable instruments to the value of $2.7 billion and pay all standing credits to the Shell companies up to the value into an interest yielding account in the name of the Chief Registrar of the court, who is to hold the funds in trust” pending the hearing of the motion and determination of the motion on notice for interlocutory injunction filed before it by Aiteo.

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At the resumed hearing of the matter on Wednesday, Pinheiro told the court that he had filed two applications, the first a motion for interlocutory injunction and a committal of proceedings against the three banks for disobeying the court order to block Shell Petroleum Development Company of Nigeria Ltd bank accounts.

Pinheiro told the Judge that the alleged contemnors willfully disobeyed the court’s interim orders of January 25, 2021 directing them to block SPDC accounts, for allegedly “interfering, obstructing and/or frustrating compliance with the interim orders.”

The banks and their officials are: Citi Bank Ltd, its Company Secretary Sola Fagbure and Chief Financial Officer, Sharaf Mohammed; First Bank of Nigeria Ltd, its Company Secretary, Irene Netimah, and Chief Financial Officer, Patrick Iyamabo; United Bank For Africa (UBA) Plc, its Company Secretary, Bill Andrew Odum, and Chief Financial Officer, Ebenezer Kolawole.

Pinheiro further prayed for an order “directing the Inspector General of Police through his officers to “immediately arrest, detain, investigate and prosecute the respondents for interfering with the course of administration of Justice”

The lawyer also informed the court that five of the banks had complied with the directive of the court while three others, FCMB, Wema Bank PLC and Zenith Bank Plc, had no relationship with the Defendant.

He asked the court to discharge the banks.

However, other lawyers in the matter challenged the hearing of the contempt application on the ground that they had separate applications challenging the jurisdiction of the court.

Counsel to Shell, Adewale Atake (SAN), informed the court that he had two applications pending before the court, one application was seeking to stay proceedings and the other challenging the jurisdiction of the court and as well as seeking to discharge the Mareva Injunction.

He said the Fifth Defendant also had a motion seeking an extension of time to file response to the Plaintiff’s motion.

Atake made an oral application that the Mareva Order be varied, on the ground that it had imposed “hardship” on Shell and even the Federal Government. He said there was a danger that the oil giant could not pay workers’ salaries, and contractors would not be able to execute contracts.

But the judge declined his oral application, noting that the Federal Government was not a party to the suit.

Olawale Akoni (SAN), who represented all the banks in the suit, told the court that he also had two applications, one was a motion on notice dated February 1, 2021 while the second application was the one challenging the contempt proceedings dated February 21, 2021.

Akoni, however, insisted that the contempt application could not be heard until the issue of jurisdiction was settled.

He said: “I submit that where a Defendant is challenging the validity of the court, the court cannot (proceed) until the issue of legality is settled. The position of the law in Group Dannon v. Foltis 2008 7NWLR part 1087 at page 367.The validity in this case is fundamental. The issue of contempt does not arise.”

Pinheiro in his response submitted that banks are not party to the application. He said the contempt proceedings were between the Plaintiff and the Defendants.

He further argued that the Defendants could not be challenging the jurisdiction as well as asking the same court to give them time for regularisation and extension of time to file response.

Justice Oguntoyinbo adjourned ruling to March 22, 2021.