Unpaid Debt: Court Orders Shebah Coy, Its Chairman, Dr. Orjiako To Pay 3 Banks $144.2m

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In an effort to ensure that judgments delivered by High Court of Justice Queen’s Bench division, a United Kingdom’s Court, upheld by Supreme Court of United Kingdom, ordering  Shebah Exploration & Production Company Limited, Allenne Limited and Dr. Ambrosie Bryant Chukwueloka Orjiako (defendants) to pay three banks the sum of $144.2 million being the outstanding and accrued interest of a facility granted to the defendants since 2011, the Lagos division of Federal High Court, has certified the judgment

The three banks to benefit from the said UK’s court judgments are: African Export-Import Bank, Diamond Bank Plc and Skye Bank Plc (Claimants), who are claimants in the suit.

Dr. Orjiako, who is known as one of the founders of Seplat Petroleum and is also currently the Chairman of Seplat, is also listed as the President of Shebah Exploration & Production Company Limited.

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’ judgment on March 28, 2018, the Lagos Federal High Court, ordered the defendants to comply with the judgment and denied the defendants permission to appeal it.

The three banks had dragged the defendants to the High Court of Justice Queen’s Bench Division in order to be able to recover an outstanding of the facility loan granted to them.

The claimants had applied for a summary judgment against the defendants for sums
outstanding under a syndicated loan facility agreement totaling over $144.2m, together with interest on those sums. While 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’).

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The first defendant, Shebah Exploration & Production Company Limited, is a Nigerian company engaged in oil exploration and production and the borrower of 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 Mr.
Justice Phillips of the High Court of Justice Queen’s Bench Division, UK, 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, but Shebah has failed to meet any further repayment installment,
despite the claimants agreeing to the deferral of several installments.

The judge stated that in a previous proceeding, which commenced on March 11, 2014, the defendants 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. Adding that Shebah failed to pay any part of the sum due on April 30, 2014.

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“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.”, he said.

The judge 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 applicants also entitled to the management fees claimed; and

interest calculated on the alternative basis that the loan was accelerated on October 2, 2014″, the judge held.

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Not satisfied with the High Court judgment, the defendants headed to the Supreme Court of United Kingdom, seeking to appeal the judgment of Mr. 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.

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