New Judgement Alert! For Employees in the Nigerian Oil & Gas Industry

COMPANIES IN THE NIGERIAN OIL AND GAS INDUSTRY CANNOT DISENGAGE EMPLOYEES WITHOUT MINISTER’S APPROVAL (NO LONGER A PRIVATE BUSINESS)

JUDGEMENT UNDER REVIEW: The Shell Petroleum Development Company of Nigeria LTD v The Minister of Petroleum, Nigerian Upstream Petroleum Regulatory Authority and Attorney General of the Federation, Suit No: NICN/ABJ/178/2022.

BACKGROUND

The Department of Petroleum Resources (now Nigeria Upstream Petroleum Regulatory Commission (NUPRC) issued the Guidelines for the Release of Staff in the Nigerian Oil & Gas Industry (the Guidelines) 2019 pursuant to a Regulation made by the Minister of Petroleum Resources (the Petroleum (Drilling and Production) (Amendment) Regulations 1988) (the Regulation). The exercise of power to make this Regulation was conferred upon the Minister by the erstwhile Petroleum Act, now replaced by the Petroleum Industry Act (PIA).

The Guideline states that no upstream oil company in the Nigerian Oil and Gas Industry is permitted to release a staff by way of dismissal, termination, and redundancy, except the approval of the Minister of Petroleum Resources through the Department of Petroleum Resources (DPR) is sought and obtained. A failure to abide by this attracts a fine of USD250, 000 on the defaulting company.

CAUSE OF ACTION

The Shell Petroleum Development Company of Nigeria Limited (SPDC) terminated the employment of Mrs. Olanitori in 2021 without seeking and obtaining the Minister’s consent. The latter petitioned the DPR.

Previous precedent in the case of PENGASSAN & 3 Ors v Chevron Nigeria Limited, NICN/LA/411/2020, an unreported decision of the National Industrial Court delivered on 26^th February 2021 held that the Guidelines is beyond the powers of the DPR to make, as the Petroleum Act does not empower the Minister to make regulations to cover private contracts of service.  Therefore, SPDC responded to DPR citing this authority and stated that the petitioner had no case given the invalidity of the Guidelines.

The DPR was dissatisfied with SPDC’s response and slammed the Company with a fine of USD250, 000 and ordered the reinstatement of Mrs. Olanitori. SPDC being dissatisfied with DPR’s position, approached the National Industrial Court seeking the nullification of the Guidelines and all the actions of the DPR, now NUPRC.

APPLICABLE LAW; PIA or PETROLEUM ACT?

It is worthy of note that while the cause of action brewed, the PIA came into force on the 16^th day of August 2021, and that was exactly the day the fine of USD250,000 was levied against SPDC. Given that the new law came into force at 12 midnight, the PIA commenced before the imposition of the fine. Consequently, the Court held that the cause of action fell within the realm of the PIA. However, SPDC relied only on the previous Petroleum Act in prosecuting this suit.

WHAT IS THE EFFECT OF THE PIA?

While the Petroleum Act did not empower the Minister to make Regulations affecting private contracts of service in the Oil and Gas Industry, the PIA took a more liberal approach and hence, accommodates private contractual relationships.

DECISION OF COURT

In view of the PIA, the Court decided that since the PIA allows the Minister to make regulations to cover private contracts of service, the Guidelines were now valid. Accordingly, PENGASSAN & 3 Ors v Chevron is no longer good law as it has been overridden by the PIA. Therefore, the Court affirmed the sanction of USD250,000 levied against SPDC.

OUR COMMENT

We opine that there could be valid grounds of appeal against this decision. One of such, and likely the most prominent, is that the despite the fact that the PIA allows the Minister to make regulations covering private contracts of service, the Guidelines are still invalid. It is invalid on the following grounds:

• The legal maxim that “one cannot place something on nothing and expect it to stand’ is apposite in this regard. The unchallenged decision of the Court in PENGASSAN’s case held that the Minister had no powers under the Petroleum Act to regulate private employment. Thus, the implication is that the Guidelines made by the DPR in that respect, pursuant to powers donated to it by the Minister is invalid, null and void. It is not suspended or inchoate, but rather invalid. It is as good as non-existent. Since it is invalid and non-existent, a later law, like the PIA, cannot infuse life into it. It was dead, not in comatose. Laws do not act retrospectively only except when expressly permitted to.

• While we acknowledge that there are saving and transitional provisions in the PIA which adopted previous subsidiary legislations and statutory instruments (regulations and guidelines), we submit that that is only to the extent of regulations and guidelines validly made by the DPR. Any invalid regulation/guidelines are non-existent and cannot be ratified.

• The Interpretation Act is clear that subsidiary legislations do not come into force before the principal legislations which donate authority to them, except to the extent of bringing the principal legislation to force. This tiny sliver of exception does not avail the Guidelines in question.

Notwithstanding our comments above, the law is clear that decisions of Courts subsist and are applicable unless the decision is overturned by a higher court. Therefore, this decision stands until overturned by the Court of Appeal. We understand that SPDC has appealed the judgment by filing a Notice of Appeal. Thankfully, the Court of Appeal is the Court of last resort in this respect, and the Nigerian Oil & Gas industry eagerly awaits the position of the three wise men on this critical matter.

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