Federal High Court declares it is unlawful for regulatory agencies to impose fines

We received this press release on a ruling revealing that a Federal High Court has declared unlawful, the imposition of fines by regulatory agencies in Nigeria. The landmark ruling was made by the Federal High Court sitting in Uyo.

Here are key details of the judgement;

• The Judgement delivered by Honourable Justice Ojukwu held that the imposition of fines by Regulatory Agencies was unlawful.
• The ruling was based on Motion filed by Mobil Producing Nigeria Unlimited in Suit FHC/UY/CS/1623/2016 – National Oil Spill Detection & Response Agency (NOSDRA) vs. Mobil Producing Nigeria Unlimited.
• NOSDRA fined Mobil Producing Nigeria Unlimited (MPN) N10 million as penalty for the alleged breach of the NOSDRA Act and its Regulations.
• The court basically ruled that NOSDRA acted outside its powers by imposing fines on Mobil without first approaching the Courts. The Court it said held the “judicial or quasi judicial power” to impose fines, which a regulatory body cannot exercise without recourse to Court.
• Being a Federal Court ruling, its implication could be widespread and could significantly affect the powers of the states to rely on fines to increase their internally generated revenue.
• Cases like these typically proceed to the Supreme Court, which could mean that the ruling might not be adhered to by regulatory agencies until the supreme court makes a final decision.

Here is the press release sent to Nairametrics.

ONLY COURTS OF LAW (NOT REGULATORY AGENCIES) CAN LAWFULLY IMPOSE FINES: COURT TELLS NOSDRA

In what industry analysts referred to as a landmark decision in the oil and gas sector, the Honourable Justice Ojukwu of the Federal High Court, Uyo Division, on Tuesday, May 16, 2017 held that the imposition of fines by Regulatory Agencies was unlawful. The Court delivered this Ruling on a Motion filed by Mobil Producing Nigeria Unlimited in Suit FHC/UY/CS/1623/2016 – National Oil Spill Detection & Response Agency (NOSDRA) vs. Mobil Producing Nigeria Unlimited.

NOSDRA had instituted a suit against Mobil Producing Nigeria Unlimited (MPN) claiming, N10 million as penalty for the alleged breach of the NOSDRA Act and its Regulations. Mobil, through its Counsel, Prof. Fabian Ajogwu SAN, filed a Motion asking the Court to strike out the suit on the ground that NOSDRA lacked the inherent powers to impose fines. In upholding the arguments for Mobil as canvassed by Mr Ituah Imhanze of Kenna Partners, the Federal High Court held that NOSDRA acted outside its powers by imposing fines on Mobil without first approaching the Courts. The Court further held that the power to impose fines is a judicial or quasi-judicial power, which a regulatory body cannot exercise without recourse to Court. NOSDRA was represented by Mr. Charles Ateboh. The Court frowned against the absence of a platform for aggrieved persons to object to Fines imposed by NOSDRA under its Act stating that this oversight does not accord with the rules of natural justice and fairness.

By implication, the Federal High Court has essentially struck down the provisions of section 6(3) of the NOSDRA Act on imposition of fines, for violating the right to fair hearing which is guaranteed under the 1999 Constitution.