Mr Kingsley’s Testimony will convince you

Mr. Kingsley Erhie of Ethiop Local Government Area of Delta State was arrested by the men of the Nigerian Police on the 8th   day of February 2020 for an alleged crime of unlawful assault occasioning grievous bodily harm. Mr Ehire was not charged to court until the 18th of March, 2020, more than one month after his arrest. Upon being charged to Court, the accused Kingsley pleaded not guilty to the charges, and was subsequently remanded.

Due to his inability to afford the services of a legal practitioner, he was left to languish at the Warri Custodial Center of the Nigerian Correctional Service. As part of our community service initiative,  Compos Mentis Chambers visited the Custodial Center with the view to providing pro bono services to some inmates of the Center who are indigent and unable to secure legal aid. Mr. Kingsley Ehire was one of those whose matter was taken up by the Chambers on a pro bono basis.

Our Litigation/Dispute Resolution team in Compos Mentis Chambers, being a firm reputed and devoted to delivering sterling services to all her clients, quickly swung into action to ensure the fair trial of all the pro-bono clients selected. The team set the law rolling, with commitment and undeterred devotion.

On the 1st day of September 2020, the Chambers was overflowing with joy, and Mr. Kingsley Ehire full of gratitude as he walked out of the Court hall discharged of the charges, set free to go home and attend to his family. Mr. Kingsley and his family were joyed and appreciated immensely, all the efforts put forward by Compos Mentis Chambers in securing his freedom.

MARGINAL FIELDS IN NIGERIA: ALL YOU NEED TO KNOW

By Kester Oyibo LLB, LLM and Nkobowo Frederick Nkobowo LLB

On the 1st of June 2020, the Department of Petroleum Resources (DPR) announced the commencement of marginal fields bid round for 2020. The importance in the oil & gas sector cannot be understated since the last bid round took place in 2002, almost twenty years ago. As announced by the DPR, a total of 57 fields are on offer in the current oil bid round exercise and registration for the bid ended on the 21st day of June 2020[1].

The process and criteria for the current marginal fields bid is contained in the Guidelines for the award and operations of Marginal Fields in Nigeria (the Guidelines) as issued by the DPR.

What is a marginal field?

A Marginal field is any oil field that has been discovered but has been left unattended for a period of not less than ten (10) years from the date of first discovery or an oil field that the President of the Federal Republic of Nigeria declares to be a marginal field[2].

Put differently, marginal fields are oil fields in Nigeria that have been discovered by major International Oil Companies (IOCs) but have not been developed for not less than 10 years or fields that have been so declared by the President[3].

Eligibility to take part in the Marginal Fields Bid

It is stipulated that only companies that are duly registered to principally carry out petroleum exploration and production business in Nigeria are eligible to participate in the bid. Such companies are required to have a hundred percent (100%) indigenous shareholding. Where two or more companies carry out a joint bid, each joint bidder is expected to satisfy the requirement of 100% indigenous shareholding. Apparently, this measure is geared towards increasing local participation and technical competence in the sector. However, companies that are indebted to the Government of Nigeria are disqualified from taking part in the bid. In addition, companies that are not run or operated in a business-like manner would not be accepted for the bid[4]. This would imply that companies that are not operated in an efficient manner with a clear business template or structure would not be accepted for the bid.

How to acquire a marginal oil field from the current bid round?

The process which is expected to be run for a period of about six months involves different aspects which include registration, application and bid processing, data prying, data leasing, Competent Persons Report (CPR), Fields Specific Report (FSR), payment of applicable fees and signature bonus.[5] At the pre-qualification stage of the bid, interested companies are expected to submit specific information that include; evidence of the company’s existence, evidence of the company’s technical capability and the fields it is interested in amongst others[6].

Companies that scale through the pre-qualification stage will be invited to submit a field specific technical and commercial proposal based on relevant and available field data. These proposals are very important documents in the bid process. Consequently, bidding companies are expected to set out in these documents detailed plans to develop the field, demonstrate their technical competence to explore the field and their capacity commercialise same upon successfully acquiring the field. The application, documentation and information supplied by the interested companies will be screened by the DPR before recommendations are made for the award of the fields.

As part of the bid requirements, a bidding company is expected to present a comprehensive strategy for maximising local capabilities and manpower in the exploration of the field. Also, a bidding company is expected to give ample consideration and in fact show commitment to the socio-economic development of the host community as well as the state where the field is located[7].

While the DPR is expected to make appropriate recommendation of successful bidders to the Minister for Petroleum Resources after its evaluation of the bids submitted, the final approval rests with the President. This is followed by the execution of relevant agreements to transfer the fields to the successful bidders, subject to any condition precedent.  

Relevant Contractual Framework

It is noteworthy that a farmout agreement is a very important agreement that sets outs the legal and commercial framework for the running of the field. Paragraph 8 of the Guidelines provides that a farmout agreement is to be executed between the holder of the Oil Mining Lease (OML) that covers the marginal field (the farmor) and the successful company (the farmee). It is a contractual agreement where the farmor assigns all or part of the working interest in the lease to the farmee in exchange for services involving exploratory, development and production activities on the farm-out area. The farmout agreement usually requires the farmee to drill a well to a certain depth, at a specified location, and within a certain time frame, at the farmee’s own risk and expense. It is vital to note that farmout agreements are negotiated agreements and take varied forms that often include complex provisions. Hence, the OML holder is expected to negotiate the terms of the farmout agreement with the successful bidders and reach an agreement on the terms and conditions within 90 days. If the parties are unable to reach an agreement on any of the terms and conditions of the farmout agreement within the stipulated period, the Minister for Petroleum Resources (HMPR) shall adjudicate in


[1]             FG EXTENDS DEADLINE FOR MARGINAL OILFIELD BIDS TO JUNE 21 available at https://www.dpr.gov.ng/fg-extends-deadline-for-marginal-oilfield-bids-to-june-21/

[2]            Paragraph 4 of the Guidelines for the Award and Operations of Marginal Fields in Nigeria, DPR Guide 0041 – 2020 

[3]             Under the Petroleum (Amendment) Act No. 23 of 1996, the President has such powers.

[4]            Paragraphs 5.4.6 and 5.4.8 of the Guidelines

[5]             Paragraph 5.3 of the Guidelines

[6]            Paragraph 5.4 of the Guidelines

[7]             Paragraphs 5.4.4 and 5.4.5 of the Guidelines

respect of the relevant terms and conditions. Also, where the successful bidders comprise of more than one company, the execution of a joint operating agreement shall precede the farmout agreement between the leaseholder and the joint bidders.

Applicable Fees for the Current Marginal Field Bid Round

The fees stipulated in the Guidelines to be paid by Applicants in the current marginal field bid round are:

DescriptionFee
Registration Fee (Per Applicant)N500,000.00
Application FeeN2,000,000.00
Processing FeeN3,000,000.00
Data Prying FeeUS$15,000.00
Data Leasing FeeUS$25,000.00
Specific Field ReportUS$25,000.00
Competent Person’s Report (w applicable)US$50,000.00

The Registration fee is to be paid per applicant but all other fees are payable per field of interest.

Financing the Development of a Marginal Field

It is important to note that the Federal Government of Nigeria is keen to ensure that awardees of the marginal fields demonstrate and indeed possess the ability to finance their proposed development plans and commercialisation projects on the fields. Therefore, it is unsurprising that the Guidelines clearly emphasise that interested companies must show evidence of financial and technical ability.

This requirement that an interested company must show evidence of financial ability definitely brings to the fore the issue of how funds can be raised by indigenous companies for the successful exploration of the field. On this note, internal financing or structured financing models exist to help indigenous Companies raise sufficient funds to finance operations on the field.

The internal financing option entails securing funds for the operation of the field through direct financial contributions from shareholders or partners of the indigenous company. This type of funding has allowed indigenous companies to explore a number of successful marginal fields. Nonetheless, this option may not be readily available for some companies considering the capital-intensive nature of exploring the field.

An alternative to the internal financing model is the structured financing model. This model usually entails sourcing for bank funding. Indigenous companies who successfully obtained funding from local commercial banks have profitably exploited a number of marginal fields. An example is the Union Bank funding of the marginal field acquired by Brittania-U Nigeria Limited for its operation of the Ajapa marginal oil field. Therefore, bidding companies can take steps to secure funds from commercial banks and other lenders to ensure the required capital is raised.

ABEL O. AKPEDEYE ESSAY COMPETITION Winning Entries

We are pleased to recognize the winners of the ABEL O. AKPEDEYE ESSAY COMPETITION for Law Students across ALL Nigerian Universities by publishing their essays on our website for all to enjoy.

  • Florence David Ubi – (Winner)
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  • Ayobami Olaoluwa Andrew – (First Runner Up)
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  • Habeebullah Adesumade – (Second Runner Up)
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  • Samuel Adeoti – (Third Runner Up)
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  • Ayooluwa Adekoje – (Fourth Runner Up)
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The Employer’s Right To Hire And Fire: A Paradoxical Principle In The Nigerian Oil And Gas Industry

by Oluwatobi Adetona

It is a well settled principle of law that an employer who has a right to hire, also has the right to fire. The employer has unfettered right to terminate the employee’s employment. He may terminate for good or bad reason or even for no reason at all. Also, the motive for exercising the right does not render the exercise ineffective. What is essential is that the exercise of the right to fire an employee must be done in accordance with the terms and conditions of the employment. The rationale behind this principle of law is that a servant, though willing, cannot be foisted upon an unwilling master. However, in cases where the employment is governed by the agreement of the parties, removal by way of termination of appointment or dismissal must be in accordance with the terms agreed upon. Failure to comply with the terms renders the termination a breach of the agreement, but not void.

The extant law regulating employment and labour relationship in Nigeria is the Labour Act CAP. L1, Laws of the Federation of Nigeria, 2004. The employment recognized under the labour Act in Nigeria is categorized below:

  • Employment which is governed by statute;
  • Employment by written contract of employment;
  • Employment at will or servant holding an office at pleasure of employer or Master and servant relationship.

Modern employment is governed by a contract of employment. A contract of employment is defined in Section 91 of the Labour Act as-

any agreement, whether oral or written, express or implied whereby one person agrees to employ another as a worker and that other person agrees to serve the employer as a worker”.

Further, Section 54 of the National Industrial Court Act, defines the word: “employee” to mean “a person employed by another under a written contract of employment whether on a continuous, part time, temporary or casual basis and includes a domestic servant who is not a member of the family of the employer. In same vein, the apex Court in IYERE V. BENDEL FEED & FLOUR MILL LTD (2008) LPELR-1578 (SC) held inter-alia that “…although much of modern employment law is contained in statutes and statutory instruments, the legal basis of employment (by whatever means) remains the contract of employment between the employer and the employee. The contract of employment is important in itself, in that it may give rise to a common law action for its enforcement or for damages for its breach. I should add that an employee, except where a different meaning is given in the context of the employment, means an individual who has entered into or works under, or where the employment has ceased, worked under a contract of employment…” Per Muhammad, J.S.C. (P. 21, Paras. B-E).

An employer’s right to hire and fire is however limited in the oil and gas industry despite the fact that parties are governed by a contract of employment. The oil and gas sector is one of the most highly regulated industries in Nigeria and the release of employees in this sector is governed by the regulation made pursuant to Regulation 15A of the Petroleum (Drilling and Production) Regulations 1969 (as amended) which are made pursuant to Section 9 of the Petroleum Act , Cap P10 LFN, 2004, which is to the effect that before any worker is released, a prior approval of the Minister of Petroleum through the Director of Petroleum Resources (DPR) must be sought and obtained. Accordingly, the DPR on the 18th of October 2019 released a new guideline for the release of staff in the oil and gas industry 2019. These 2019 guidelines repealed the 2015 guideline earlier regulating the release of staff in the oil and gas industry.

Further, an employer who wishes to release a staff  in this sector must not only seek the consent of the Minister in writing, Paragraph 4.0 of the Guidelines mandates the employer to also state the manner of release, reasons for the release and compensation due to the worker. A staff release under Paragraph 3 of the 2019 Guideline includes dismissal, retirement, termination, redundancy, release on medical grounds, resignation, death and abandonment of post. Where the  release is by involuntary retirement, dismissal, termination, redundancy, or on medical grounds, the DPR shall conduct an enquiry into the circumstances of the proposed staff release and make a decision on whether to convey the minister’s approval or otherwise.

Any employer who fails to comply with these guidelines is liable to a penalty issued by the DPR in an amount not exceeding Two Hundred and Fifty Thousand United States Dollars (USD) ($250,000.00); and in addition, any permit, license or lease granted to that person may be withdrawn or cancelled by the DPR.

While the guidelines may be trying to curb or rectify some anomalies in the oil and gas industry, especially with regards to the arbitral release of employees, it is safe to say that this Guideline is more or less foisting a willing employee on an unwilling employer. It is my humble submission that in as much as the Minister has the power to make regulations by the power conferred on him, the regulations should not re-write the contract freely entered into by parties, neither should it interfere with, nor usurp the performance of the respective parties’ obligations under the contract of employment. Since the courts in Nigeria with all its might lacks the power to re-write a contract freely entered into by parties, neither should the Minister of Petroleum resources have that power.

AMOTEKUN Security And The Federal Government’s Stance

Written by Abdulbasit Usman

Amotekun-6

The Western Nigeria Security Network (WNSN) on 9th January 2020 declared the formation of Operation Amotekun (Leopard), the first regional security outfit in Nigeria, with the principal aim of combating terrorism and insecurity in the south west region. In a counter move, the Federal government on 14th January 2020 via the office of the Attorney General of the Federation declared the newly formed security outfit as illegal and directed the immediate disbanding of the outfit for having been formed contrary to the spirit of the constitution of the federal republic of Nigeria and for having no legal backing within the legal framework of the Federation.

The move by the Federal government has led to widespread uproar within the polity, with some calling for the Federal government to review its decision, while some are in support of the declaration of illegality by the Federal government, citing the constitution as the grundnorm and the father of all laws, a breach of which renders everything made contrary to its provisions ultra vires and devoid of any force of law.

Even though proponents of the establishment of the security outfit are quick to point out the existence of other state sponsored or state-owned security outfits like the Hisbah Police of Kano State, and the Civilian Joint Task Force ( CJTF ) in war torn Borno and Yobe States, the divide opposed to the idea are quick to point out the distinguishing factors being that the former can be found within the legal framework of kano state, i.e Shariah Law, while the latter is not the result of any specific act of Government, but an evolution or hybridization caused by necessity of the situation forced upon the region by its security challenges.

The conservatives however are cautious of the intrigues that the novelty of the issue brings to the fore in the legal coliseum that is our courts. These conservatives however are quick to avert their minds to the provisions of the 1st Part of the SECOND SCHEDULE to the Constitution of the Federal Republic of Nigeria (Exclusive Legislative List), particularly items; 17, 38 and 45. So that a combined reading of these items will create an impregnable impression that anything that has to do with the Defence of the Country, The Military of the Country and the Police or other Security services established by or under any law, are or ought to be done or established under the exclusive powers of the federal government.

However, as stated, that is only but an illusion until same solidifies into an unbreakable principle of law after standing the test of our courts. So for now the arguments for and against rages on, until our apex court lays the matter to rest.  On what side of the divide do you rest? Join the conversation by leaving us your views in the comments section.

HIGHLIGHT ON THE CENTRAL BANK’S REGULATION ON INSTANT (INTER-BANK) ELECTRONIC FUNDS TRANSFERS IN NIGERIA

By Victor Chikezie 

The Central Bank of Nigeria on the 13th of September 2018 introduced a Regulation for Instant Electronic Transfer Funds (EFT) Services in Nigeria. The new regulation titled: ‘Regulations on Instant (Inter-Bank) Electronic Funds Transfer Services in Nigeria’ was issued to all deposit money banks, microfinance banks, mobile money operators and other financial institutions; with the aim of regulating all Instant EFT services on various payment channels in Nigeria.

The Regulation makes provision for Responsibilities of a Sending and Receiving Entity in an EFT, stipulates stiff sanctions for non-compliance, and also provides for Dispute Resolution mechanisms to aid the effective implementation of the rules contained therein. The major highlights of the Regulation are as follows:

  • The Regulation prohibits Sending Entities from providing Instant Electronic Fund Transfer Services to anyone who does not have a bank account in Nigeria. In line with its objective of promoting sound financial systems in Nigeria, the CBN under this Regulation mandates Sending Entities to ensure that EFT messages contain the sender’s name, BVN and Account number, beneficiary’s name, account number and narration information specified by the Customer at the point of initiating the transfer, to aid reconciliation.

 

  • It provides further that where an EFT fails, the Sending Entity shall refund into the Customer’s account full proceeds returned by the Receiving Entity within 10 minutes of receiving same.

 

  • The Regulation states that where a sending entity erroneously sends a value contrary to the Customer’s instruction to a receiving entity and requests the reversal in writing within 14 working days of the transaction, the Receiving Entity should oblige within one business day without recourse to the Customer who benefitted from the erroneous transaction provided the funds are available in the wrongly credited Customer’s account.

 

  • Where the funds are no longer available in the Customer’s account, the Receiving Entity should immediately notify its Customer that the account was wrongly credited and provide proof of such notification to the Sending Entity. Furthermore, the Receiving Entity is to notify the Customer about the consequences of not funding the account within 24 hours, which includes sanctions such as watch-listing, credit bureau, and reporting the Customer to the law enforcement agencies.

 

  • The Regulation also makes provisions for situations where a transfer is made in error by the Customer. Where the beneficiary is known to the complainant, the apex Bank and the Sending Entity shall encourage the complainant (in this case the Customer who made the erroneous transfer) to contact the beneficiary in an amicable manner for a refund. However, where the beneficiary is unknown to the complainant, the Sending Entity having received a tenable complaint from a Customer shall notify the Receiving Entity. Upon notification, the Regulation provides that the Receiving Entity shall place a lien on the amount in the account of the beneficiary and thereafter obtain the consent of the beneficiary to execute a refund.

 

  • Again, the Regulation provides that a failed NIP Transaction not reversed into a Customer’s account within 24 hours (based on a complaint from a sender and/or a beneficiary) would attract a sanction of N10, 000 per item. Also, any delay in application of inward NIP into a beneficiary’s account beyond 4 minutes (based on a complaint from a sender and/or a beneficiary) would equally attract a sanction of N10, 000 per item in addition to any other sanction prescribed in the Nigeria Bankers’ Clearing System rules or any amendment thereto.

 

  • Furthermore, the Regulation imposes rights and responsibilities on the Bank Customers involved in electronic transfers. In effect, a bank Customer in an EFT transaction is required to provide accurate beneficiary account details for every EFT instruction. Where the Customer experiences problems arising from the EFT transaction, the Regulation mandates the Customer to promptly report the issue to the Sending/Receiving Entity. In line with the dispute resolution procedure in Article 10 of the Regulation, Section 5.4 of the Regulation provides that where a credit has been erroneously applied to a Customers’ account with the Receiving Entity, the customer shall promptly notify the Receiving Entity and authorise the reversal of such erroneous credit. In the event that the customer’s account is unfunded, the Regulation stipulates that the Customer shall provide funds within 24 hours and failure to do so shall be a ground for watch-listing of the Customer, credit bureau, and reporting the defaulter to law enforcement agencies.

 

The move by the CBN to regulate Electronic Fund Transfers and problems arising therefrom is commendable. In an accompanying circular, the Apex Bank stated that the regulation shall take effect from the 2nd day of October 2018. It is therefore imperative for all EFT stakeholders to be familiar with the responsibilities imposed by the Regulation to avoid any of the stiff penalties applicable thereunder.

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The 58th NBA Annual conference commenced in Abuja on Sunday with about 10, 000 lawyers, the biggest gathering in Africa

The Nigerian Bar Association (NBA) Annual General Conference (AGC), which commenced in Abuja on Sunday, is coming on the heels of a number of controversies that have trailed the association in recent weeks.

The programme, which will hold August 26-30 in Abuja, will have as its theme: ‘Transition, Transformation and Sustainable Institutions’ with Ghana’s President, Akufo-Addo as keynote speaker.

Among the controversial issues is the ratification of the just-concluded NBA national elections by the National Executive Committee (NEC) .

The other candidates in the election that produced Paul Usoro (SAN) as the new President of the NBA, were Prof Ernest Ojukwu (SAN) and Arthur Obi-Okafor (SAN) have both criticized the election.

There are also rumblings over moves to amend the NBA constitution during the AGM. Lawyers claim the newly elected executive will be used to implement the new constitution.

Former General Secretary of the NBA, Femi Adesina (SAN) and former NBA President, Wole Olanipekun (SAN) among others have kicked against the constitution amendment by the Abubakar Mahmoud (SAN) outgoing executive especially in the area of succession of the governing board of the association.

“I was the General Secretary of our great Association between August 2002 and August 2004 and a life member of the National Executive Committee, yet I never received the Notice of the proposed Amendment to the Constitution from the General Secretary of the Bar up to the date of writing this publication,” Adesina said.

Olanipekun said the amendment is coming despite advice by former presidents and secretaries of the association to postpone such amendment to a later date.

“You are advised not to force the amendments on our beloved Association at the AGM, which, with much respect, might be constituted in such a way that the attendees would not readily understand or appreciate the unending conundrum we will be plunged into if the amendments sail through. And in case you insist on going ahead to present the amendments at the AGM, can you be gracious enough, as a lawyer and leader, to circulate this letter of mine to the AGM,” he said.

Also, many lawyers have complained that the conference bags for this year’s conference is not with the tablets as contained in the previous edition despite the spending of N750 million to organize the conference and the retention of the fees like the previous year.

The 58th conference will have five sub-themes which include Political Transition and Governance; Rule of Law & Security; Sustainable Economic Development; Technological Disruptions; and Diversity and Inclusion.

The stakeholders will examine the theme of ensuring peaceful and successful transitions, drawing references from Africa, the Americas, Asia and Europe.

The NBA AGC will be held in partnership with the British-Nigeria Law Forum (BNLF), the Bar Council of England and Wales, the American Bar Association (ABA) and other bar associations from across the continent and they have offered to provide technical support to the conference planning.

About 10, 000 lawyers, the biggest gathering in Africa, are expected to attend the conference in Abuja.

Besides, the keynote address by the President of the Republic of Ghana, Nana Akufo-Addo, there will be a conversation with President Muhammadu Buhari, and an address by a former Head of State of Nigeria, General Abdusalami Abubakar (Rtd), who is generally acclaimed to have overseen one of the most peaceful transitions of power from military to civilian authorities.

The conference will also feature high level panel discussions by renowned global and industry leaders in various fields as well as a complement of young minds who will be making robust contributions to nation-building from their perspectives.