Chinedu Anaje, Partner and Head of Dispute Resolution, Arbitration and Risk Management Practice Group at AO2 Law says the Alternative Dispute Resolution Centre set up by the Nigerian Upstream Petroleum Regulatory Commission is timely. He notes there cannot be any meaningful implementation of the provisions of the Petroleum Industry Act, if disputes relating to host communities and operators are allowed to unnecessarily continue and consequently endanger conducive operating environment and productivity. He joins CNBC Africa for more.
Chinedu Anaje, Partner and Head of Dispute Resolution, Arbitration and Risk Management Practice Group at AO2 Law says the Alternative Dispute Resolution Centre set up by the Nigerian Upstream Petroleum Regulatory Commission is timely. He notes there cannot be any meaningful implementation of the provisions of the Petroleum Industry Act, if disputes relating to host communities and operators are allowed to unnecessarily continue and consequently endanger conducive operating environment and productivity. He joins me now for more on this. Chinedu, thank you for joining us today. Thank you Esther for having me. Right, now you've said that this Alternative Dispute Resolution Centre is timely and obviously this is always a topic of conversation when we have conversations around the Nigerian oil and gas industry, especially around, particularly the host communities, the environmental degradation and of course lingering issues where we see these issues, you know, last for in a month, years in mainstream judicial processes. But talk to us about how soon this can hit the ground running and if it does have the capacity to address lingering cases that have been issues that have been ongoing for years, sometimes even decades, with host communities. All right, thank you Esther. So first of all I want to say, just like you rightly pointed out, that the setting up of the ADR Centre by the NUPRC is quite timely. And I say this because of the fact that if you look at the provisions of the Act, you know, the Commission actually has the powers to set up some kind of dispute resolution mechanism and as of 2021, when the Act came into operation, I for one, among others, felt that, you know, setting up an Alternative Dispute Resolution mechanism, aside, you know, allowing parties, and what I mean parties here, the host community and the operators to be in the courtroom would not help to unlock, you know, the envisaged potentials which the Act, you know, has enshrined. And that's why I said it's actually timely. In terms of whether it has become operational, I think it is with the inauguration of the body of neutrals by the CEO of the Commission, I think it was on the 9th of September, you know, my belief is that the body has hit the ground running. Now we take a look at the kind of the caliber of professionals that were, you know, assembled by the Commission as constituting the body of neutrals. These are people who are experts either within the industry as legal practitioners or who have also, you know, showed up their potential and ability while working within the industry. So in terms of hitting the ground running, I think it is. In terms of capacity, like I said, you know, the move made by the Commission is one that resonates strongly with me. I say this because as an arbitration practitioner and an AR practitioner for over two decades, I can tell you authoritatively that for such an environment, litigation is not the way to resolve disputes. And if you look at the professions of the PIA, you know, particularly under Chapter 3, speaking about Section I think 234, 235, that speaks to the issue of host communities, how they will be able to benefit from operations that are, you know, going on within their environment. Now typical of what we normally know or what we see is that once there's an issue, the next place is court. And of course, you can get into the court one year, two years, three years, if not achieved anything meaningful. And what that then translates to is that it's not going to give access to productivity, it's not going to give access to development. Because if you look at visions of the arts, there's a lot of available funds in terms of statutory contributions that are supposed to be made by these operators, right, for purposes of developing their host communities. Now typical of that is, you know, under Section 235, it envisages what you call the host community development trust to be set up by the settler. And there are statutory contributions that ought to be made into that trust for the benefit of the host community. And if the host community are in co-op with the producers that operate within their environment, typical of what we see is that once it starts to go to court, injunctions will start, you know, flying left, right and center. And it becomes impossible to have access to these funds. Now the only way this can be done is that when you have an ADR, which is an alternative dispute resolution mechanism, which in my view, from my experience over the past two decades, is faster, is cheaper, and again, it addresses the core contractual issues, which at the end of the day, because it's faster and it's cheaper online litigation, right, there's every high tendency that issues will be easily resolved. And also, there will be a quicker approach to resolution of issues, because ultimately, the whole essence of the PIA Act is to see true benefit that are creased to the host communities. But when everything is locked down, you know, in litigation, at least there are some that are involved at the moment. Right, and I wanted to ask you about that, you know, those that are currently in mainstream courts, can the litigants be encouraged to bring, I don't know if this is possible, to bring those cases to the arbitration table to have them settled out of court, if you will, with this new sentence? Absolutely. Yes, I agree with you, it's not shut out, parties are not shut out to explore, you know, settlement out of court. As a matter of fact, courts also encourage parties and litigants to do that. So, notwithstanding that they are already in court, with the establishment of the ADR Centre, they can, by mutual agreement, decide to, you know, step back, discuss among themselves, and once they agree, they will file what you call a settlement in court, and the matter will be, you know, withdrawn completely. So, again, it doesn't foreclose even matters that are already in court, from being discussed, and then finding an amicable settlement. And I think, just like I said, basically, it's just to be able to create an opportunity to unlock the accessible funds for the development of the cause. Right, Chinedu, I must thank you for your time. Thank you so much for talking to us today. Chinedu Anaje, Partner and Head of District Resolution, Arbitration, and Risk Management Practice Group at AO2 Law.
Theme: Timely Establishment of ADR Centre to Enhance Dispute Resolution in Nigerian Oil and Gas Industry
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has taken a crucial step forward with the establishment of the Alternative Dispute Resolution (ADR) Centre to address longstanding issues in the Nigerian oil and gas industry. Chinedu Anaje, Partner and Head of Dispute Resolution, Arbitration, and Risk Management Practice Group at AO2 Law, emphasized the timeliness of this initiative during a recent interview with CNBC Africa. Anaje highlighted the significance of resolving disputes between host communities and operators promptly to maintain a conducive operating environment and enhance productivity. The need for effective dispute resolution mechanisms has long been a critical topic in the Nigerian oil and gas sector, particularly concerning environmental degradation and protracted legal processes. According to Anaje, the ADR Centre established by the NUPRC aligns with the provisions of the Petroleum Industry Act, which grants the Commission the authority to implement dispute resolution mechanisms. He commended the selection of professionals with expertise in the industry to constitute the ADR body of neutrals. Anaje expressed confidence in the operational readiness of the ADR Centre following the inauguration of the body of neutrals by the CEO of the Commission on September 9th. The presence of skilled professionals within the ADR Centre suggests the capacity to effectively address longstanding disputes that have lingered for years or even decades. Anaje emphasized the limitations of litigation in resolving complex disputes in the oil and gas sector, highlighting the inefficiencies and delays associated with traditional legal processes. He underscored the importance of expeditious dispute resolution in unlocking the potential benefits outlined in the Petroleum Industry Act, particularly concerning host community development. Anaje detailed the statutory contributions that operators are required to make towards the development of host communities and the significance of avoiding prolonged legal battles that hinder access to these funds. The establishment of the ADR Centre offers a faster and more cost-effective alternative to litigation, enabling parties to address core contractual issues efficiently. Anaje's extensive experience in arbitration and dispute resolution spanning over two decades underscores the effectiveness of ADR in streamlining dispute resolution processes and facilitating quicker resolutions. The ADR mechanism not only expedites the resolution of disputes but also fosters a more collaborative approach between host communities and operators, ultimately contributing to sustainable development. In response to a question about ongoing court cases, Anaje affirmed that litigants can opt to pursue arbitration through the ADR Centre to seek amicable settlements outside the courtroom. He highlighted the importance of encouraging parties to explore settlement options and discussed the potential for existing court cases to transition to arbitration for swifter resolution. By promoting dialogue and negotiation through the ADR Centre, parties have the opportunity to unlock financial resources earmarked for host community development and facilitate mutual agreements that benefit all stakeholders. The establishment of the ADR Centre by the NUPRC represents a significant milestone in advancing effective dispute resolution practices within the Nigerian oil and gas industry. As the sector navigates complex challenges related to host community relations and environmental concerns, the ADR mechanism offers a proactive and collaborative approach to resolving disputes and fostering sustainable development. By embracing alternative dispute resolution strategies, the Nigerian oil and gas sector can enhance operational efficiency, promote stakeholder engagement, and unlock new opportunities for growth and prosperity.
"The establishment of the ADR Centre offers a faster and more cost-effective alternative to litigation, enabling parties to address core contractual issues efficiently."
['Nigeria', 'Oil and Gas Industry', 'Alternative Dispute Resolution', 'ADR Centre', 'Petroleum Industry Act', 'Host Communities', 'Arbitration', 'Sustainable Development']