Nigerian Supreme Court and ownership of offshore oil

This article discusses the decision of the Supreme Court of Nigeria on the constitutional provision dealing with the sharing of revenues derived from natural resources located within the states of the Federation, the ‘derivation principle.’ Although the case relates to the interpretation of a constitutional provision, the arguments of the parties suggest that the real battle was — and still is — about the ownership and control of Nigeria's offshore oil. The article details the legal history and precedents as well as constitutional provisions relevant to the case. Disagreements arose over legal questions such as the seaward boundaries of littoral states (from which oil revenues are derived), and whether a distinction can be made between offshore and onshore oil revenues in applying a 13% constitutionally prescribed derivation principle. The article shows that, in its judgment, Nigeria's Supreme Court relied heavily on rules of international law, while failing to apply existing Nigerian laws and constitutional provision, and argues that the decision might have been different had the court investigated and invoked the legislative history of the provision in question, as required in Nigerian law. Furthermore, it is argued that the court was wrong to disregard the provision of the law which had abolished any distinction between onshore and offshore natural resources in the application of the derivation principle. The article concludes that the legal tug of war is set to continue for some years.