INTRODUCTION
In March 2018, the Calabar Division of the Court of Appeal upheld the ruling of the Federal High Court, Uyo Division (the trial Court) which held that the National Oil Spill Detection and Response Agency (NOSDRA) had acted beyond its statutory powers when it imposed a fine on Mobil Producing Nigeria Unlimited (ExxonMobil) for its alleged infringement of the National Oil Spill Detection and Response Agency Act 2006 (NOSDRA Act) and regulations made thereunder. NOSDRA (the Appellant) had instituted the action against ExxonMobil (the Respondent) claiming the sum of N10,000,000 (ten million Naira) as penalty for the infringement.
THE DISPUTE
The dispute between the parties arose as a result of oil spillage from ExxonMobil’s facility. ExxonMobil averred at the trial Court that the spillage was accidental and upon becoming aware of the spillage, it immediately shut down the affected tanks, activated its Emergency Response Procedure and carried out a clean-up, remediation and assessment exercise on the impacted site in accordance with the stipulated standards of the NOSDRA Act and its regulations. ExxonMobil further alleged that NOSDRA rated the Emergency Response Procedure it implemented as satisfactory. NOSDRA however, subsequently instituted the action against ExxonMobil claiming the sum of N10,000,000 (ten million Naira) as penalty for an alleged infringement of the NOSDRA Act and its regulations.
In its judgment, the trial Court held that NOSDRA’s imposition of the penalty was ultra vires (outside) its powers. NOSDRA was dissatisfied with the decision and appealed to the Court of Appeal.
In dismissing the appeal, the Court of Appeal considered whether, having regard to Section 6(2) and (3) of the NOSDRA Act, the judge was right in holding that the imposition of a penalty on ExxonMobil by NOSDRA was ultra vires its powers.
NOSDRA argued that its act of levying a fine on the ExxonMobil was done under Section 6(2) and (3) of the NOSDRA Act[1] which provides as follows:
(2) An oil spiller is by this Act to report an oil spill to the Agency in writing not later than 24 hours after the occurrence of an oil spill, in default of which the failure to report shall attract a penalty in the sum of five hundred thousand naira (N500,000.00) for each day of the failure to report the occurrence.
(3) The failure to clean up the impacted site, to all practical extent including remediation, shall attract a further fine of one million naira.
ExxonMobil on its part, argued that only the judicial arm of government has the exclusive powers of imposing fines and penalties, and queried if NOSDRA, being a non-judicial entity, could impose a fine or penalty on ExxonMobil.
After considering the parties’ submissions, the Court of Appeal dismissed the appeal and affirmed the ruling of the trial Court. Relevant portions of the decision are set out below:
- “On the facts and circumstances of this case, I am of the firm, but humble view that the imposition of penalties by the Appellant was ultra vires its powers, especially where no platform was established to observe the principles of natural justice.
- Penalties or fines are imposed as punishment for an offence or violation of the law. The power as well as competence to come to that finding belong to the courts, and the Appellant is not clothed with the power to properly exercise that function in view of the law creating the Appellant (NOSDRA). There is, therefore, a Lacuna in that law establishing the Appellant.”
ANALYSIS OF THE JUDGMENT
It could be distilled from the above decision that the imposition of a fine on ExxonMobil by NOSDRA was invalidated :
- Under the 1999 Constitution, only judicial bodies can impose fines or penalties, and NOSDRA not being a judicial body, cannot impose fines or penalties;
- The law establishing NOSDRA does not clothe it with the powers to impose fines; and;
- NOSDRA did not observe the principles of fair hearing in its fact-finding, thus the fine imposed as a result of that flawed process cannot stand.
In examining ground (1) above, it appears the Court of Appeal was of the view that before a fine or penalty is imposed on any person or entity, such person or entity must have been found guilty of a contravention of a law, and only judicial bodies have the powers to conduct this fact-finding, achieved via a criminal trial.
I concur that the Court of Appeal was right when it held that only judicial bodies can conduct criminal trials. Section 36(4) of the 1999 Constitution provides that whenever a person is charged with a criminal offence, such person shall be entitled to a fair hearing in public within a reasonable time by a court or a tribunal. Thus the courts and other criminal tribunals created under different statutes in Nigeria are the proper fora for the conduct of criminal trials in Nigeria.
However, I am of the opinion that it is not correct that every imposition of a fine or penalty must be preceded by a criminal trial which must prosecuted before judicial bodies. In Nigeria, administrative bodies can make findings of fact that can lead to the imposition of sanctions on subjects within their regulatory purview provided that no finding of fact regarding the criminal guilt of such subjects is made.
While NOSDRA in this case is clearly not a criminal tribunal and lacks capacity to conduct a criminal trial, the facts of this case do not require the conduct of a criminal trial as held by the Court of Appeal. No crime was committed, and the NOSDRA Act did not intend that there will be a prosecution and determination of guilt by a court. It can be argued that the aim of the legislature in enacting the NOSDRA Act, is to de-incentivise or penalise certain conducts but without the necessity of a criminal conviction.
For example, in 2015, a US$5.2 billion fine was handed down to MTN, a mobile network operator by the Nigerian Communications Commission (NCC). The issuance of the fine was not preceded by a criminal trial but was made by the NCC in its capacity as the regulator. The NCC arrived at a factual determination that MTN had failed to meet the deadline for disconnecting the Subscribers Identification Modules (SIM) that were improperly registered. MTN was then fined $1000 for every improperly registered SIM, and the total fine amounted to $5.2 billion.
It is my view that the powers NCC exercised in penalising MTN is similar to NOSDRA’s powers under the Act. The implication of the ruling of the Court of Appeal in this case would be that the NCC did not have the powers to impose the fine on MTN since making the findings of fact that led to the imposition of the fine is the exclusive preserve of the courts.
This position, if upheld, could weaken the regulatory powers of various bodies, and will subject matters that can be speedily settled administratively to lengthy criminal prosecution.
As regards ground (2) in the Court of Appeal’s decision above, the lacuna which the Court of Appeal held exists in the law can either be the absence of the power to impose fines, or the lack of provisions that mandate the observance of the principles of fair hearing in the course of the fact-finding investigations prior to the imposition of a fine or penalty. Concerning the absence of the power to impose fines under the NOSDRA Act, an examination of the Act reveals that there is no provision expressly designating NOSDRA as the authority to impose or collect the fine stipulated under its section 6 (2) and (3) of the NOSDRA Act.
A literal interpretation of the Act would mean that even though it prescribes a fine for a failure to report an oil spill, a person who fails to report an oil spill can escape this liability simply because the Act did not expressly designate a particular authority to collect the fine or to ensure the payment of the fine.
Notwithstanding, I believe that the Court of Appeal could have interpreted the provisions of the NOSDRA Act in a way that renders its provisions useful. The provisions of Section 6(1)(a) and (e) of the NOSDRA Act could have been interpreted as conferring on NOSDRA the power to collect this fine as those provisions provide as follows:
6(1)(a) The Agency shall be responsible for surveillance and ensure compliance with all existing environmental legislation and the detection of oil spills in the petroleum sector;
6(1)(e) The Agency shall perform such other functions as may be required to achieve the aims and objectives of the Agency under this Act or any plan as may be formulated by the Federal Government under this Act.
I am of the opinion that there is enough latitude in the above provisions within which the Court of Appeal could have found that the Appellant was clothed with the necessary powers to impose the fine.
CONCLUSION
Administrative agencies are vital for the smooth operation of the modern state, thus a ruling that restricts their powers without a good basis (as in this case) could have far-reaching consequences. Even where there is a lacuna in an enabling law, courts should in providing an interpretation, strive to ensure that the mischief the law was created to address, is cured.
Nonetheless, it remains to be seen what position the Supreme Court would take in this matter upon any further appeal. It is expected that a Supreme Court decision will provide more clarity on the application of NOSDRA’s powers under the Act.
Notes
[1] Cap N157, LFN 2004.
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