Construing Conversion Contracts in the Nigerian Petroleum Industry in the Light of the Decision in Central Bank of Nigeria (CBN) V. Adani Mega System Ltd: Jurisdiction of the Federal High Court to Entertain Disputes Arising From Statutory Contracts

Description

ABSTRACT

Construing Conversion Contracts in the Nigerian Petroleum Industry in the Light of the Decision in Central Bank of Nigeria (CBN) V. Adani Mega System Ltd: Jurisdiction of the Federal High Court to Entertain Disputes Arising From Statutory Contracts

Eric Odion Otojahi*

Conversion contracts executed pursuant to the Petroleum Industry Act 2021 (the “PIA”) now form part of the types of contracts in the Nigerian Petroleum Industry. The PIA permits pre-PIA licensees or lessees (holders of oil prospecting licenses or oil mining leases) to convert their licenses or leases to reflect the licensing regime under the PIA. These conversion contracts have statutory underpinnings which could elevate their status from ordinary simple oil and gas contracts to contracts with statutory flavour. The decision in CBN v Adani Mega System Ltd established an exception to the general rule that the Federal High Court lacks jurisdiction to entertain disputes arising from simple contracts. Based on the decision, the Federal High Court can assume jurisdiction to entertain disputes arising from contracts with statutory flavour. When viewed from the prism of this decision, conversion contracts made pursuant to the PIA may be elevated to the status of contracts with statutory flavour for which the Federal High Court can assume jurisdiction to hear and determine any dispute arising therefrom. While the general rule applies to purely private oil and gas contracts between licensees or lessees or between licensees/lessees and third parties, conversion contracts entered between licensees or lessees and the Nigerian Upstream Petroleum Regulatory Commission pursuant to the PIA could be regarded as contracts with statutory flavour within the exception established in CBN v Adani Mega System Ltd.

Keywords: Conversion contracts, Petroleum Industry, Oil Prospecting, oil mining leases, Petroleum Industry Act.

INTRODUCTION
Conversion contracts executed pursuant to the Petroleum Industry Act 2021 (the “PIA”) now forms part of the types of contracts in the Nigerian Petroleum Industry. The PIA permits pre-PIA licensees or lessees (holders of oil prospecting licenses or oil mining leases) to convert their licenses or leases to reflect the licensing regime under the PIA. These conversion contracts have statutory
underpinnings which could elevate their status from ordinary simple oil and gas contracts to contracts with statutory flavour. This article argues that any dispute arising from the enforcement of these conversion contracts made pursuant to the PIA can be entertained by the Federal High Court in the light of the recent decision of the Court of Appeal in Central Bank of Nigeria v Adani Mega System Ltd.1 The article discusses briefly the jurisdiction of the Federal High Court to entertain simple contracts; the judicial position regarding oil and gas contracts; the statutory contract exception rule established in Central Bank of Nigeria v Adani Mega System Ltd (supra) and the need to construe conversion contracts in the Nigerian Petroleum Industry as contracts with

* LLB, BL, LLM (Oil and Gas Law, University of Aberdeen, UK).

1. [2025] 8 CLRN 47.

THE GRAVITAS REVIEW OF BUSINESS & PROPERTY LAW Vol.16 No.4