Federal High Court Backs PIA, Dismisses Suit Against NNPC/MPN Trust

In a significant ruling, the Federal High Court sitting in Uyo has given its backing to the Petroleum Industry Act (PIA) 2021, by dismissing a lawsuit that had been filed against the NNPC/Mobil Producing Nigeria Unlimited Joint Venture Emoimee Host Community Development Trust. The Incorporated Trustees of Esit Eket Youth Association had initiated the legal action against Seplat Energy Producing Nigeria Unlimited, the trustee of the Host Community Development Trust, and four other defendants. The plaintiffs were seeking to be included in the decision-making processes of the Trust and had also requested access to detailed records of the statutory three per cent settlor’s remittances allocated to host communities in Esit Eket Local Government Area of Akwa Ibom State. However, the court, presided over by Justice C. S. Onah, upheld the preliminary objection raised by the counsel to Seplat Energy Producing Nigeria Unlimited, Dr. Jude T. U. Nnodum Jr., and ruled that the Esit Eket Youth Association lacked the necessary legal standing to institute the action. According to Justice Onah, the plaintiff was not among the entities recognized under Chapter III of the Petroleum Industry Act to administer or challenge the operations of a Host Community Development Trust. The court further rejected the argument that the matter was a public interest action, stating that merely describing a case as one filed in the public interest cannot substitute for a legally enforceable interest. The ruling is expected to have far-reaching implications for the administration of Host Community Development Trusts across Nigeria’s oil and gas industry, as it provides judicial clarity on the Petroleum Industry Act and affirms that only entities expressly recognized under the law have the legal capacity to participate in or challenge the governance of HCDTs. This decision is also expected to provide greater certainty for settlors, trustees, and operators, including Seplat Energy Producing Nigeria Unlimited, by reinforcing that the administration of Host Community Development Trusts must strictly comply with the statutory framework established under the Petroleum Industry Act.