Nigeria: Case Review: NOSDRA v. ExxonMobil - Examining The Powers Of Regulatory Agencies To Impose Penalties

Last Updated: 14 February 2019
Article by AELEX  


In March 2018, the Court of Appeal upheld the ruling of the Federal High Court (the trial Court) and decided that the National Oil Spill Detection and Response Agency (NOSDRA) acted beyond its statutory powers when it imposed a fine on Mobil Producing Nigeria Unlimited (ExxonMobil).

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 alleged infringement of the National Oil Spill Detection and Response Agency Act 2006 (NOSDRA Act), and the regulations made thereunder.


The dispute between the parties arose as a result of oil spillage from ExxonMobil's facility. ExxonMobil alleged 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 levying a fine on the ExxonMobil was done under Section 6(2) and (3) of the NOSDRA Act1 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 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:

  1. "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.
  2. 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."


It could be distilled from this decision that the imposition of a fine on ExxonMobil by NOSDRA was invalidated on the following grounds:

  1. Under the 1999 Constitution, only judicial bodies can impose fines or penalties and NOSDRA, not being a judicial body, cannot impose fines or penalties;
  2. The law establishing NOSDRA does not clothe it with the powers to impose fines; and
  3. 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 (a) above, it appears the Court of Appeal took 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, which must be done through criminal prosecution.

We 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, we opine that it is not correct that every imposition of a fine or penalty must be preceded by a criminal trial which must be 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 such powers are specifically granted to the bodies and there is no requirement for an establishment of criminal culpability before imposition of the sanction.

For example, in 2015, a US$5.2 billion fine was handed down to MTN Nigeria Communications Limited, a mobile network operator by the Nigerian Communications Commission (NCC) due to MTN's failure to disconnect the Subscribers Identification Modules (SIM) that were improperly registered. 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 amount imposed was based on a regulation that prescribed the penalty for every improperly registered SIM, which amounted to $5.2 billion in MTN's case.

In the above case, it is clear that the NCC is not a criminal tribunal and lacks capacity to conduct a criminal trial. The facts of the case show that no crime was committed so as to require the conduct of a criminal trial. However, the NCC regulations 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 regulation is to disincentivise or penalise certain conducts but without the necessity of a criminal conviction.

In contrast, in October 2018, the Central Bank of Nigeria imposed various fines on MTN and four commercial banks in Nigeria as punishment for a breach of the provisions of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995 and the Foreign Exchange Manual. While it has been reported that this matter has now been settled, we believe that the CBN was acting in excess of its powers since the Central Bank of Nigeria Act 2007 does not specifically confer the CBN with the power to impose penalties for the commission of offences under the CBN Act or any other law, in the manner in which these penalties were imposed on MTN and the banks.

It is our view that the powers the CBN exercised in penalising MTN is similar to NOSDRA's powers under the Act. The implication of the ruling of the Court of Appeal in the NOSDRA case would be that the CBN did not have the powers to impose the fine on MTN and the banks, since making the findings of fact that led to the imposition of the fine is the exclusive preserve of the courts.

A literal application of the NOSDRA decision could weaken the regulatory powers of various statutory bodies, and will subject matters that can be speedily settled administratively to lengthy criminal prosecution. It will also require the criminalisation of acts or omissions that would best be described as administrative or operational lapses or inaction. 

This seeming uncertainty on when a body, in the exercise of its regulatory powers, can impose financial penalties could be settled if there is a provision in the establishing law that expressly designates such bodies as the authority to impose or collect any fine stipulated in the law or subsidiary legislation. Nonetheless, where no such provision exists, the implication, as decided in the NOSDRA case, will be for criminal proceedings to be brought against defaulter with the expectation that the fine or penalty will be imposed once guilt is established.

It will be incongruous to conclude that a literal application of the NOSDRA case would mean that even though the NOSDRA Act 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.


Administrative agencies are vital for the smooth operation of the modern state. Thus a ruling that restricts the powers of these agencies without a solid basis could have far-reaching consequences, and will impact negatively on even decisions of other bodies such as the Federal Inland Revenue Service, the Corporate Affairs Commission and even court registries who, as a matter of course, impose penalties for failure or lateness in taking certain actions.

While resort to the courts as a prerequisite for imposition of penalties may prevent capricious imposition of fines by administrative bodies, a requirement for all infractions to be determined in court by way of criminal proceedings will simply create additional burden for a legal system that is already bursting at its seams, and will lead to significant delays in the enforcement of laws.

It is expected that the Supreme Court would, in entertaining an appeal, provide more clarity on the NOSDRA decision. Nonetheless, it might be more expedient to retain the powers of regulatory bodies to impose penalties and fines for civil infractions, while leaving the burden of penalising actions or omissions that have already been criminalised to the courts.


1. Cap N157, LFN 2004.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Advocaat Law Practice
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Advocaat Law Practice
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions