On 20th July 2018, the Supreme Court held that its original jurisdiction can be invoked in instances where the action is a tax dispute between federating State(s) and the Federation of Nigeria (or between States of the Federation); involving a question of law or fact or both and pertaining to the existence or otherwise of a legal right.
The action was commenced by Rivers, Abia and Akwa Ibom States via Originating Summons against the Federation of Nigeria on alleged breached of Section 16 (1) of the Deep Offshore Production Sharing Contracts Act by the Federal Government for failing or refusing to adjust the share of the Government of the Federation in the production and sharing contracts under consideration in accordance with Section 16(1) of the Deep Offshore Production Sharing Contracts Act which provides as follows:
“The provisions of this Act shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, real terms, the share of the Government of the Federation in the additional revenue shall be adjusted under the Production Sharing Contracts to such extent that the Production Sharing Contracts shall be economically beneficial to the Government of the Federation.”
The Plaintiffs had contended that the Defendant is a trustee for the States of the Federation. Although the parties reached an amicable settlement and prayed the court to enter their Terms of Settlement as its judgment of the court, the Supreme Court, requested parties to address it on whether the Supreme Court could exercise its original jurisdiction in this case.
The Supreme Court held that pursuant to the provision of Section 232(1) of the Constitution, for the original jurisdiction of the Supreme Court to be successfully invoked in civil cases, the following must co-exist:
The court therefore concluded that in the instant case:
The Supreme Court in its ruling distinguished the facts of this case from the following earlier cases in which the Supreme Court held that the original jurisdiction of the apex court could not be properly invoked:
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