Abuja Court Nullifies 177% Annual Fee In Halkin E&P-Eunisell Suit

A High Court of the Federal Capital Territory (FCT), Abuja, has ruled in favour of Halkin Exploration and Production Limited (Halkin E&P) in its contractual dispute with Eunisell Limited, declaring a provision imposing a 177 per cent annual default fee null and void.

In a Certified True Copy (CTC) of the judgment made available to newsmen, the trial judge, Justice Suleiman Belgore, held that Clause 10.4 of the service agreement between the two companies, dated 20 January 2022, was unenforceable.

The disputed clause required Halkin E&P to pay a late-payment charge of 0.5 per cent per day on outstanding payments, translating to approximately 177 per cent annually on a compound-interest basis.

The provision reportedly formed the basis of Eunisell’s claims for accumulated default charges totalling millions of dollars, with the total allegedly exceeding 10 times the underlying debt.

In its ruling, the court declared that, “Clause 10.4 of the Service Agreement between Halkin Exploration and Production Limited and Eunisell Limited dated 20th January 2022, which imposes an annual default fee of 177% (equivalent of 0.5% per day), is null, void, and of no legal effect whatsoever.”

The court further set aside and invalidated all late-payment and default invoices, bills and assessments issued by Eunisell against Halkin E&P on the basis of the disputed clause.

The judgment stated that the invoices and assessments predicated on Clause 10.4 were being “set aside, quashed, nullified and invalidated”.

Reacting to the decision, counsel to Halkin E&P, Chikaosulu Ojukwu, SAN, described the ruling as a victory for the rule of law, saying it vindicated his client’s position that the contractual provision was contrary to public policy and therefore unenforceable.

“This decision is a victory for the rule of law and vindicates the consistent position maintained by our client, Halkin E&P, that the impugned clause in the agreement was contrary to public policy and therefore unenforceable,” Ojukwu said and alleged that Eunisell had sought to use the provision to secure an unjustified financial windfall from the company.

Ojukwu also alleged that Eunisell withdrew from an oil well in the middle of the night without notice, causing damage to the wellhead.

According to the lawyer, Halkin E&P intends to pursue a $50 million claim against Eunisell through appropriate legal proceedings for the alleged conduct and resulting damages.

“Our client will pursue a US$50 million claim against Eunisell Limited through the appropriate legal proceedings. This is a classic case of get-rich-quick,” he said.