Unpaid Debt: Court Orders Shebah Exploration Ltd, Dr. Orjiako To Pay 3 Banks $144.2M

* Pix source: Shouse Law Group

 

 

The Federal High Court sitting in Lagos has certified a judgment delivered by the High Court of Justice, Queen’s Bench Division United Kingdom which was also upheld by the Supreme Court of the United Kingdom, directing Shebah  Exploration & Production Company Limited, Allenne Limited and Dr. Ambrosie Bryant Chukwueloka Orjiako  both defendants to pay three banks the sum of $144.2 million being the outstanding and accrued interest of a facility granted to the defendants in 2011.

The banks are: African Export-Import Bank, Diamond Bank Plc and Skye Bank Plc.

Dr. Ambrosie Bryant Chukwueloka Orjiako, who is also the current Chairman of Seplat, is also listed as the President of Shebah Exploration & Production Company Ltd.

The court gave this certification following two decisions from both the High Court of Justice Queen’s Bench Division and the Supreme Court.

Certifying the Uk courts’ judgement the Federal High Court, Lagos directed the defendants to comply with the judgement.

The claimants had dragged the defendants to the High Court of Justice Queen’s Bench Division in a bid to recover an outstanding of the facility loan granted to them.

The claimants had apply for a summary judgement against the defendants for sums outstanding under a syndicated loan facility agreement totaling over $144.2million, together with interest on the said sums.

The claimants (banks) had prayed the court to determine whether it is arguable that, in entering the facility agreement, the parties were contracting on the claimants’ written standard terms of business so as to engage section 3 of the Unfair Contract Terms Act 1997 (‘UCTA’).

The first defendant, Shebah Exploration & Production Company Limited, is a Nigerian company engaged in oil exploration and production and the borrower of the said loan, while second defendant, Allenne Limited is the guarantor of the borrowed loan and the third defendant, Dr. Orjiako, is the President of Shebah and a personal guarantor of the liabilities of Shebah and Allenne pursuant to a Deed of Guarantee and Indemnity dated July 1, 2011.

In a judgment delivered by Justice Phillips of the High Court of Justice Queen’s Bench Division on February 19, 2016, the judge stated that Shebah had taken the loan for purpose of discharging certain of its existing borrowing and to provide working capital for its operations, including funding for a work-over programme to stimulate production at oil wells in the Ukpokiti oil field.

According to the judgment, the defendants never denied that the claimants advanced $150 million

to Shebah pursuant to the Facility Agreement, nor dispute that, apart from paying one installment of

$6,111,111.11 in June 2012, that Shebah has failed to meet any further repayment installment, despite the claimants agreeing to the deferral of several installments.

The judge had in previous  proceeding which commenced on March 11, 2014, held that the defendants have  agreed that in exchange for the

claimants’ discontinuing the proceedings, Shebah would repay all sums outstanding under the

Facility Agreement in two tranches: $49.999,999.86 (with accrued interest) by April 30, 2014 and the

balance of the loans and interest by July 1, 2014, but that Shebah failed to pay any part of the sum due on April 30, 2014.

“The claimants were therefore entitled, under the terms of the Discontinuance Agreement, to commence fresh proceedings in respect of their claims.

These proceedings were commenced on June 2014, repeating the claims previously made and adding a claim against Shebah in respect of the $49. 999, 999.86 due under the Discontinuance Agreement”, the judge said.

Justice Phillips stated that notwithstanding their previous stance, the defendants now contended that no sums whatsoever are due to the claimants, adding that they (the defendants) have arguable defence to the claim.

The judge, however, ruled that there is no merit in the defendants’ contention on the issues on the ground that there is simply no basis for inferring that the claimants, or any of them, habitually put forward the LMA form (or a tailored version of it) as a basis for their syndicated loan transactions.

“The most likely scenario is that it was chosen or selected by the claimants’ lawyer and that they will have adapted it to reflect the specifics of the transactions. It is impossible to draw any inferences as to what starting points may have been taken in other transactions, involving other permutations of lenders and other lawyers.

“I therefore satisfied that the defendants do not have a realistic prospect of establishing at trial that the Facilities Agreement is on the claimants’ written standard terms of business.

The suggestion that the disclosure might alter the position is a classic example of hoping that something may turn up, in this case a forlorn hope given the evidence that there was in fact a degree of real negotiation of the final terms.”, the said.

Justice Phillips in his judgment held that whilst the claimants’ purported acceleration of the loans on October 16, 2013 was ineffective, the defendants do not have a defence to the claimants’ alternative case, based upon the acceleration notice dated October 2, 2014 and subsequent demands dated April 14, 2015 and July 27, 2015. For the reasons set out above,” The claimants are entitled to summary judgment against all three defendants for the principal outstanding under the Facility Agreement of $143, 888, 888. 89, subject to giving credit for the sum paid during the course of this application and the sums conceded in respect of default charges and hedging fees; the management fees claimed; and  interest calculated on the  alternative basis that the loan was accelerated on October 2, 2014″, the judge held.

Dissatisfied with this judgment of the High Court, the defendants went further to apply to the Supreme Court of United Kingdom, seeking to appeal the judgement of Justice Phillips. Ruling on the defendants’ application, the Supreme Court sitting comprising Lord Mance, Lord Reed and Lord Lloyd-Jones upheld the decision of the lower court and refused the permission to appeal the decision.

After consideration of the application filed on behalf of the Appellants seeking permission to appeal the order made by the Court of Appeal on June 28, 2017 and of the notice of objection filed by the respondents.

“The court ordered that, Permission to appeal be refused because the application does not raise an arguable point of law of general importance.

The court also ordered that the Appellants pay the respondents costs of the application and where the respondents apply for costs, the costs to be awarded be assessed”, the ordered.

 

Be the first to comment on "Unpaid Debt: Court Orders Shebah Exploration Ltd, Dr. Orjiako To Pay 3 Banks $144.2M"

Leave a comment

Your email address will not be published.


*