English receivers appointed over Nigerian oil revenues

The High Court has appointed Prashan Patel and Nicholas Wood of Grant Thornton as receivers by way of equitable execution over future oil revenues payable to a Nigerian oil company, holding that it was just and convenient to do so in aid of enforcing a registered Nigerian judgment for over US$16.6 million.

Brightwaters Energy Limited, a Nigerian services provider, had obtained a consent judgment in Lagos in 2022 for approximately US$25 million against Eroton Exploration and Production Company Limited and another entity. After partial payments, a balance of US$16.65 million remained outstanding.

Following service of a statutory demand and stalled winding up proceedings in Nigeria, Brightwaters applied without notice to register the Nigerian judgment under s 9 of the Administration of Justice Act 1920. Justice Robin Knowles granted registration and made an asset preservation and disclosure order, deferring the question of receivership to a return date. The judgment debt remained unpaid 3½ years after entry.

The proposed receivership focused on revenues due to Eroton under a contract with a Shell entity for the sale of 32,000 barrels of oil per day from a Nigerian oilfield. The Court inferred, in light of non-compliance with disclosure orders, that the contract was governed by English law with arbitration seated in England, giving the English Court a sufficient jurisdictional nexus.

As Justice Butcher emphasised, equitable receivership operates in personam and does not confer proprietary rights; the key question is whether there is personal jurisdiction over the debtor and a real prospect that the appointment will assist enforcement.

The Court was satisfied that there was a “hindrance or difficulty” in using normal enforcement processes. Nigerian insolvency proceedings had been stayed pending appeal. Attempts to secure payment through other avenues had failed. In those circumstances, equitable execution was engaged.

Citing Cruz City 1 Mauritius Holdings v Unitech Ltd (No. 2) [2014] EWHC 3131 and Masri v Consolidated Contractors International (UK) Ltd (No. 2) [2009] QB 450, the judge reiterated that the jurisdiction is flexible and responsive to the demands of justice in a global commercial context, including in relation to future receivables.

Eroton argued that the oil revenues were subject to a debenture in favour of Guaranty Trust Bank plc, including fixed and floating charges and an assignment by way of security, such that there was no asset over which receivers could effectively be appointed. The Court rejected that submission. Even if there were an absolute assignment by way of security, Eroton retained an equity of redemption, itself a valuable asset. More fundamentally, the existence of security did not make a receivership futile. A receivership order operates subject to prior charges and does not interfere with third-party proprietary rights. The question was whether there was a reasonable prospect that a receivership would assist enforcement, not whether success was guaranteed. On the evidence, that threshold was met.

Eroton contended that by presenting a winding up petition in Nigeria, Brightwaters had elected to pursue a class remedy and could not seek individual enforcement in England. The Court described that submission as “unattractive”. No winding up order had been made. Even if one were later made, it would require recognition in England before affecting English enforcement steps. In the meantime, there was no basis to confine Brightwaters to the Nigerian insolvency process.

Although both parties were Nigerian and the underlying debt arose in Nigeria, the Court found sufficient connection through the registered English judgment and the English-law governed oil sales contract. The order was consistent with comity. Far from undermining Nigerian proceedings, it assisted in enforcing a Nigerian judgment through an English-law contractual stream.

Eroton alleged non-disclosure at the without notice stage, including failure to draw attention to registered charges. The Court found that any omission was not material. The initial order was limited and preserved the status quo pending an inter partes hearing. In any event, the issue had now been fully ventilated.

As a result, the Court concluded it was just and convenient to appoint receivers. The debt was substantial, the likely recovery exceeded the probable costs, and there was at least a real prospect that appointment would assist enforcement.

Read the decision here.

Patrick Dunn-Walsh of Twenty Essex (instructed by Osborne Clarke) represented Brightwaters Energy.

Stuart Adair of XXIV Old Buildings (instructed by Mishcon de Reya) acted for Eroton.