Pan Petroleum AJE Ltd v Yinka Folawiyo Petroleum Co Ltd & Ors

In contempt proceedings concerning an injunction, the court must construe the order according to its terms. The phrase “in respect of” is broad, and its meaning depends on the contractual or other provision to which it relates. A narrower meaning in one context does not necessarily govern another. An injunction may restrain conduct relating to specified wells even where the conduct is undertaken in reliance on defaults concerning other wells. If the order is considered too wide, the proper remedies are variation, discharge or appeal. Where the order’s meaning is sufficiently clear, a breach may found contempt.

The claimant and defendants were parties to a Joint Operating Agreement concerning an offshore Nigerian oil field. An interim injunction restrained the defendants from exercising or purporting to exercise specified rights under articles 8.2 and 8.4 of the agreement in respect of the Aje-6 or Aje-7 development wells.

The defendants subsequently convened an Operating Committee meeting without the claimant, treated the claimant as excluded under article 8.2, and approved financial calls and development budgets relating to Aje-6 and Aje-7. The claimant applied for the relevant defendants to be held in contempt. The central issue was whether their conduct fell within the injunction, notwithstanding that the asserted defaults concerned cash calls unrelated to those wells.

1. Contempt established. The relevant defendants had exercised or purported to exercise rights under article 8.2 of the Joint Operating Agreement to exclude the claimant from participating in, or voting at, an Operating Committee meeting.
2. The words “in respect of the Aje-6 or Aje-7 development wells” bore their plain and natural meaning. Excluding the claimant from a meeting approving financial calls or budgets for work on or with those wells constituted action in respect of those wells.
3. The fact that the phrase might have a narrower application when used in connection with article 8.4 did not require the same construction when it was used in connection with article 8.2. The relevant article informed the meaning and breadth of the phrase in each context.
4. The injunction was wide enough to restrain conduct relating to Aje-6 or Aje-7 even where the defendants relied on undisputed defaults concerning other wells. If the injunction was wider than the claimant was entitled to obtain, the appropriate course was an application to vary or discharge it, or an appeal.
5. The court accepted that a high degree of certainty was required before finding contempt on the basis of the meaning of an order. However, this case was sufficiently plain. The relevant defendants were therefore held in contempt of court. Consequences were reserved for further submissions.