Summary

History and background

The appellants and other defendants and Pan Petroleum are all parties to a Joint Operating Agreement ("the JOA") dated 21 September 2007 in respect of a Nigerian offshore oilfield called the Aje field. The field was originally explored by the first defendant (and appellant) in 1991. Oil was discovered and Oil Mining Lease no. 113 was granted to the first defendant by the Nigerian Government for 20 years in 1998. The Lease is due to expire in June 2018.

Pan Petroleum became a party to the JOA by novation and assignment agreements made in June 2010. It has a minority stake in the field, its Participating Interest being 6.502%. The first defendant is the Operator under the JOA, which also provides for a Technical Adviser which is Folawiyo Aje Services Ltd ("FASL"), a company associated with the first and second defendants.

Article 5 of the JOA provides for an Operating Committee to exercise powers and make decisions in respect of the joint operations. It has power to vote on and pass binding resolutions as to the drilling and development of new wells, as set out in the Development Plan prepared by FASL as Technical Adviser, which also has the duty to prepare budgets to be submitted to the Operating Committee for approval pursuant to voting procedures set out in the JOA. Those voting procedures vary according to the significance of the decisions being taken. Some decisions require a qualified majority of votes from the parties' representatives on the Operating Committee. Other decisions, as set out in Article 5.9.1, are of such significance that they require unanimous approval. One such is where there is a "major modification" to the Development Plan or to the budget for the operations. It is the interpretation and application of those provisions which gave rise to the dispute between the parties, summarised in more detail below. Once a budget prepared by FASL is approved by the Operating Committee, the JOA authorises FASL to issue "Cash Calls" to the parties. It is in dispute whether certain Cash Calls have been validly issued.

These disputed cash calls essentially relate to two proposed new wells Aje-6 and Aje-7. The original dispute concerned the decision to drill and establish a budget for Aje-6, which Pan Petroleum opposed on technical, economic and legal grounds. Pan Petroleum's position is that the decision was a "major modification" requiring unanimous approval of the Operating Committee. The defendants' case is that a qualified majority Pass Mark vote suffices.

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