ATTORNEY GENERAL OF THE FEDERATION V ATTORNEY-GENERAL OF ABIA STATE & 35 OTHERS

1. CASE CITATION AND BASIC INFORMATION

This case shall be cited as Attorney-General of the Federation v Attorney-General of Abia State & 35 Ors (2002) 6 NWLR (Pt 764) 542 (SC). It was heard by the Supreme Court of Nigeria presided over by Muhammadu Lawal Uwais (Chief Justice), Abubakar Bashir Wali (JSC), Idris Legbo Kutigi (JSC), Michael Ekundayo Ogundare (JSC), Emmanuel Obioma Ogwuegbu (JSC), Sylvester Umaru Onu (JSC) & Anthony Ikechukwu Iguh (JSC) on 5^th April 2002.

2. INTRODUCTION

This case highlights the issues surrounding revenue distribution and territorial claims as regards Nigerian federalism. Due to Nigeria’s federal structure, the Federal and State Governments do not always agree on who has jurisdiction over certain territory or how revenue accruing to the Federation Account should be shared, leading to conflicting interpretations of Nigerian laws. The decision of the court in this case highlights the Constitution’s position on maritime jurisdiction, exposing the limitations of the States concerning their claim to maritime territory and to what extent revenue from the Federation Account accrues to them.  

3. FACTS OF THE CASE

A dispute arose between the Federal Government of Nigeria and the 7 coastal states of the Federation regarding the allocation of revenue earned from oil exploration and other economic activities carried out in the county’s maritime territory. The Federal Government withheld allocation derived from oil exploration off the coast of these littoral states, claiming the states hold no maritime territory hence, they cannot claim revenue generated from offshore oil exploration. The States, however, deemed the revenue generated from offshore oil production as accruable to them, arguing that Nigerian sovereign territory only exists as a result of its composition of states. The States demanded that revenue allocation accruable to them which have been withheld by the Federal Government, dating back to the 1980s in the case of Cross River State, be returned to them.

To resolve the dispute, the Federal Government filed a petition before the Supreme Court, requesting it interprete the Constitution to determine the seaward boundary of littoral states for the purpose of revenue allocation and decide if, as a matter of law, states could hold any claim to the Federation’s maritime territory and the revenue thus attributed.

4. LEGAL ISSUES

The issues raised by the court to decide upon include

Issue I: Whether the boundary of littoral states extend beyond the low-water mark into the nation’s territorial waters

Issue II: Whether the territorial sea, continental shelf and Exclusive Economic Zone adjacent to Nigeria—and the natural resources therein—fall within the territory of littoral states or are vested exclusively in the Federation

Issue III: Whether revenue gained from offshore oil production is considered accruable to a littoral state, thus qualifying it for the application of the derivation principle provided in section 162 of the Constitution

Issue IV: Whether the Federal Government has exclusive legislative and executive authority over maritime areas and their resources to the exclusion of the states.

5. ARGUMENTS OF THE PARTIES

5.1. PLAINTIFF’S ARGUMENTS

The plaintiff, in this case the Federal Government, contended that

• The seaward boundary of the littoral states ends at the low-water mark of the land surface of the states, or the seaward limit of the internal waters of a state if the case necessitates (as was applicable to Cross River State)
• the territorial sea, continental shelf and Exclusive Economic Zone are products of international law, particularly the United Nations Convention on the Law of the Sea (UNCLOS)[1] of which the Federal Government as the representative of the Nigerian state is party to, not the state governments. Thus, states cannot claim such areas as part of their territory since they lack constitutional backing to conduct foreign policy or implement international treaties[2]
• the natural resources within the territorial sea, continental shelf and Exclusive Economic Zone of the Federation fall under Federal jurisdiction, relying on section 44(3) of the Constitution[3]
• the Federal Government, as the successor of the British Crown in Nigeria, holds executive and legislative jurisdiction over Nigeria’s maritime territory to the exclusion of the states, relying on the decisions of the courts in US v Louisiana[4] and New South Wales & Ors v Commonwealth[5]

5.2. DEFENDANTS’ ARGUMENTS

The counterclaiming defendants argued that

• The seaward boundary of littoral states indeed exceed the low-water mark and extend into the nation’s maritime territory, relying on historical antecedents of kingdoms and communities that existed prior to British colonial rule and held jurisdiction over the maritime area contiguous to their land territory.
• The maritime territory contiguous to the littoral states and the natural resources therein form part of these states, at least to the extent of the territorial sea. They relied on UNCLOS which recognised the rights of coastal states over their territorial sea, continental shelf and EEZ, and also emphasized the heavy geographical links between the territorial sea and the littoral states
• The revenue gained from offshore oil production is indeed accruable to the littoral states, relying heavily on the constitutionally-entrenched derivation principle[6] and asserting that the intent of the derivation principle, which was to offer adequate compensation for areas natural resources were derived from, should take precedence over the narrow manner which it is phrased.
• The Federal Government holds no exclusive jurisdiction over the Federation’s maritime territory. The littoral states posited that the jurisdiction of the Federal Government over maritime territory for the purpose of international sovereignty does not negate the internal attribution of maritime territory to littoral states for the purpose of revenue allocation, once again relying on UNCLOS which recognizes the jurisdiction of coastal states over maritime territory in relation to other states, but says nothing to negate domestic arrangements as to the administration of said maritime territory.

6. COURT’S REASONING AND ANALYSIS

The Supreme Court took into consideration the varying views of the Plaintiff and the Defendants. It highlighted the influence of the country’s political history, common law, as well as international law in the shaping its political reality. Consequently, it recognised the Crown as the sole exerciser of sovereignty in colonial Nigeria, hence jurisdiction over the country’s maritime territory rested with Her Majesty. However, upon attaining independence, the powers of the Crown were inherited by the Federal Government as its successor in governing Nigeria, not the Regional governments of which the current states are their successors. Hence, the jurisdiction of the Federal Government over Nigeria’s maritime territory is as a matter of law[7] as well as historical antecedence[8]. With this in mind, the seaward boundary of the littoral states ends at the low-water mark and does not extend into the territorial sea.

The Court asserted the position of the Constitution on signing and implementing treaties, stating that such power lies with the Federal Government as the representative of Nigeria, hence the provisions of UNCLOS and the benefits therein bestowed apply to its signatory (the Federal Government) and not the states. With this, only the Federal Government could derive benefit from exploiting natural resources located in such area.

The Court, in assessing the constitutional provision for derivation, asserted that this principle only applied to natural resources derived within the territory of a state. Following its reasoning, the principle of derivation cannot apply to natural resources exploited in the country’s maritime territory.

7. JUDGEMENT AND RATIO DECIDENDI

The Court ruled in favour of the Plaintiff, striking out the counterclaims of the Defendants. In the judgement delivered by Ogundare JSC, the Court held thus:

“ …the seaward boundary of a littoral state within the Federal Republic of Nigeria for the purpose of calculating the amount of revenue accruing to the Federation Account directly from any natural resources derived from that state pursuant to section 162(2) of the Constitution of the Federal Republic of Nigeria 1999 is the low-water mark of the land surface thereof or (if the case so requires as in the Cross River State with an archipelago of islands) the seaward limits of inland waters within the state.”

To this end, the Court declared

• The seaward boundary of littoral states terminated at the low-water mark of the land surface or seaward limits of the internal waters of a state (as the case may necessitate)
• Every other maritime territory beyond said mark -and the natural resources bestowed therein- remain under the executive and legislative jurisdiction of the Federal Government and are to its benefit, to the exclusion of the states.
• Revenue can only be said to be derived from a state if it originated from within the states territory, and since no state holds maritime territory, offshore oil revenue doe not qualify for the application of the derivation principle provided in Section 162(2) of the Constitution.

8. ANALYSIS OF THE CASE

• Significance of the case

This case holds serious significance in the development of Nigerian fiscal federalism. The decision of the Supreme Court settled the question surrounding the seaward boundary of littoral states, highlighted the limits of state governments claiming jurisdiction within the Federation, and served as a guide for the revenue allocation formulas developed for the Federation afterwards.

• Implications

The Court’s decision carried certain implications for the country. First, it highlighted the advantageous position the Federal Government holds. By limiting the boundary of littoral states to the low-water mark of the land surface, the decision effectively shrank the revenue accruable to these littoral states, leaving it in the Federation Account. As a result, the decision received great public outcry and sparked tensions in the country’s Niger Delta region where most of the littoral states are located.

The response to the decision by the legislature was the  enactment of the Allocation of Revenue (Removal of Dichotomy) Act[9],which effectively removed any distinction between offshore and onshore revenue for the purporse of allocation by inserting a 200 metre isobath clause[10], making the derivation principle provided in section 162(2) applicable to revenue generated form economic undertakings in the country’s maritime territory[11]. The enactment of this Act calmed tensions surrounding the Court’s decision and put the underlying issues surrounding the dispute to rest.

• Critical Evaluation

To this writer, this case highlights a tussle between two canons of constitutional interpretation and which would best apply in deciding consequential issues in a delicate system like Nigeria’s. On one hand, the literal rule, which the Federal Government relied, interpreted section 162(2) of the Constitution as being limited by Section 44(3), thereby placing the country’s maritime territory, and the benefits that come from it, in the Federal Government hands, to the exclusion of the States. On the other hand, the purposive rule, applied by the defendant littoral states, was to construe the Constitution to grant them jurisdiction over the adjacent maritime territory, at least for the purpose of revenue.

While this writer finds no particular fault in the accuracy of the Court’s decision, attention must be given to the possible intent of the drafters of the Nigerian Constitution in entrenching the derivation principle in said Constitution. The derivation principle was intended, in this writer’s opinion, to compensate states that incurred some sort of damage from the exploitation of natural resources within their territory. For the littoral states, they tend to incur a greater deal of loss due to Nigeria’s vast oil industry and the offshore nature of the industry. As a means of compensating the states for the potential damage oil spills and leaks could cause, the derivation principle seems a fair deal, but the literal interpretation of the Constitution by the Court in this case defeated this fundamental reasoning, effectively handing over what was intended to be the littoral states’ compensation to the Federal Government on the grounds of geography and exercise of jurisdiction therewith.

To this writer, the Court should have viewed the case as a matter of equity, not geography. For equity and fairness to the States seemed to be intent of the Constitution’s framers, notwithstanding sovereignty resting in the Federal Government.

CONCLUSION

The case of Attorney-General of the Federation v Attorney-General of Abia State & 35 Ors is one of many around the world highlighting the disputes that may arise in the practice of a Federal system of government, showcasing the role the judiciary plays in settling said conflicts, and the essence of the law in balancing the interests between the disputing parties to achieve political stability.

REFERENCE(S):

United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3

The Constitution of the Federal Republic of Nigeria (CFRN), 1999, as amended

Nigeria (Constitution) Order in Council No. 1172 of 1951

Allocation of Revenue (Abolition of Dichotomy in the Application of the Principle of Derivation) Act, Cap A27, LFN 2004

United States of America v the State of Louisiana  L.Ed 1025; (USA)

New South Wales & Ors v the Commonwealth (1975-6) 8 LR I (Australia).

[1] Articles 2,55 & 76 United Nations Convention on the Law of the Sea (UNCLOS) 1982 1833 UNTS 3

[2]Item 31, Part 1, First Schedule, Constitution of the Federal Republic of Nigeria (CFRN) 1999 as amended

[3] S44(3) CFRN 1999  as amended; which places jurisdiction over mineral resources in the county’s territorial sea and EEZ in the Federal Government, subject to laws made by the National Assembly.

[4] L.Ed 1025; (USA)

[5] (1975-6) 8 LR I (Australia).

[6] S162(2) CFRN 1999 as amended

[7] S44(3) CFRN 1999 as amended

[8] Nigeria (Constitution) Order in Council No. 1172 of 1951

[9] Cap A27 LFN 2004

[10] S1(1) Ibid.

[11] S1 Ibid.