Interocean Oil Development Company and Interocean Oil Exploration Company v. Federal Republic of Nigeria
ICSID · Investment (ICSID and treaty) · Nigeria · 6 Oct 2020
Why it matters
This case is significant for its detailed analysis of the NIPC Act's arbitration provision and the requirements for establishing State responsibility for expropriation. It clarifies the limits of investor protection under Nigerian investment law and the importance of proper corporate governance. The award also addresses the allocation of costs in ICSID arbitration, particularly where the respondent is represented pro bono.
Summary
The dispute arose from Claimants' investment in Nigerian oil and gas assets through Pan Ocean Oil Company (POOC), which held a 40% participating interest in Oil Mining Lease 98 (OML 98) and Oil Prospecting License 275 (OPL 275) under a joint venture with the Nigerian National Petroleum Corporation (NNPC). After the death of the beneficial owner, Dr. Vittorio Fabbri, in 1998, a power struggle ensued over control of POOC. Claimants alleged that the Nigerian government, through NNPC and other state actors, colluded with Dr. Festus Fadeyi (a director of POOC) to expropriate their investment by denying them access to information, meetings, and dividends, and by irregularly issuing shares to third parties. Claimants brought claims under the NIPC Act and customary international law for expropriation and unfair treatment. The Tribunal first confirmed jurisdiction under Section 26 of the NIPC Act, rejecting Nigeria's objections. On the merits, the Tribunal found that the alleged harmful acts were committed by private individuals (Dr. Fadeyi and his associates), not by the State. The Tribunal held that Nigeria did not breach its obligations because the acts were not attributable to the State under international law, and there was no evidence of State involvement or failure to protect. The Tribunal also found that Claimants failed to prove that they had a valid legal interest in the investment at the relevant time due to disputed ownership. Consequently, all claims were dismissed. The Tribunal ordered Claimants to reimburse Nigeria for half of the arbitration costs (USD 660,129.87), but declined to award legal fees because Nigeria was represented pro bono and its claimed expenses were deemed unreasonable or unsubstantiated.
The detail
Parties: Interocean Oil Development Company and Interocean Oil Exploration Company v. Federal Republic of Nigeria
Case number: ICSID Case No. ARB/13/20
Outcome: The Tribunal dismissed all claims by Claimants and ordered Claimants to pay USD 660,129.87 to Respondent as reimbursement of arbitration costs.
Applicable law: Nigerian Investment Promotion Commission Act (NIPC Act), Nigerian law, customary international law, ICSID Convention
Issues in play: The case involved the interpretation of Section 26 of the NIPC Act as a standing offer to arbitrate, and the attribution of acts of private individuals to the State under international law.
Read the full decision at italaw ↗
Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.