- BY BAYO BELLO ESQ.
The restiveness in the oil producing area of Niger-Delta is partly due to problems stemming from lack of proper understanding of compensation both as a palliative and restorative measure by the oil community and as social responsibility by the oil companies.
It is imperative to note from the onset that the issue of compensation has a legal and regulatory basis; it also has political and social aspects. It must, however, be noted that this write up is not to hold brief for neither the oil companies nor the oil producing communities; it is a dispassionate look at the law with a view to present a clear legal solution to the protracted issues of compensation.
The first question that comes to mind in compensation matters is; at what point does compensation claim arise? Compensation arises under the Land Use Act in accordance with S. 28 (1) which state that it shall be lawful for the governor to revoke rights for overriding public interest in this context shall mean S.28 (2) (c) ‘’The requirement of the land for mining purposes or oil pipelines or for any purpose connected therewith’’. So if the government for the purpose of building a refinery, mining or prospecting for oil acquired a parcel of land, the owners- (holder and occupier) – of rights of occupancy whether statutory or customary- of the land where the activities are to be carried out are entitled to compensation. Under this heading farmland, Economics trees, House or buildings that fall under acquisition will give rise to a claim for compensation by the owner of the land. Apart from the above communities or individuals are also entitled to compensation s are also entitled to compensation from oil companies where activities of the companies have led to disaster, such as oil spillage, fire and pollution of rivers and ponds.
Additionally, under the provisions of the oil pipeline Act of 1956, compensation arose where an oil pipeline license had been issued to a company. The license is to enable such company to construct, maintain and operate an oil pipeline and operate on the route of such pipeline all other installations that are ancillary to the construction, maintenance and operation of such pipeline … oil pipeline is defined by the Act as a pipeline for the conveyance of mineral oils, natural gas and any of their derivatives or components.
It must be noted however, that before the grant of oil pipeline license a permit to survey allows the holder of such permit to:
(a) Survey and take levels of the land
(b) To dig and bore into this oil & subsoil
(c) To cut and remove such trees and other vegetation as may impede the purposes specified in this subsection.
(d) To do all other acts necessary to ascertain the suitability of the land for the establishment of an oil pipeline or ancillary installations. So the combination of permit to survey and issuance of oil pipeline licence will give rise to issue of compensation because invariably the land upon which survey has been done is the route of oil pipeline. Those entitled to compensation to be paid by a licensee under the Act as stated in section 11 (5) are;
(a) any person whose land or interest in land (whether or not it is the land in respect of which license has been granted) is injuriously affected by the exercise of the rights conferred by the licence, for any such injurious affection not otherwise made good;
(b) any person suffering damage by reason of any neglect on the part of the holder or his agents, servants or workmen to protect, maintain or retain any work structure or thing executed under the licence, for any such damage not otherwise made good; and
(c) any person suffering damage (other than account of his own default or on account of the malicious act of a third person) as a consequence of any breakage of or leakage from the pipeline or an ancillary installation, for any such damage not made good.
The section concluded by saying that ‘’if the amount of such compensation is not agreed between any such person and the holder, it shall be fixed by a court in accordance with part IV of this Act’’
However the use of the sentence…….. “damage otherwise not made good’’ , introduce some complications, because it is easy going by this wordings to “make good” a building or house partly damaged as a result of construction of oil pipeline but how do you make good (in the short term) a land that has been scorched due to oil spillage. It is possible in the long term, but the farmer wants to claim his compensation immediately. The solution in most cases is to pay compensation measured from the time of leakage till the time land would be made whole again for farming.
Also the conclusion that says the compensation payment has to be agreed between the licensee and the landowner, in most cases is followed in breach. There is always disagreement leading to agreement (sometimes litigation) but in some cases the land owner will go back to the licensee to ask for more after having discovered that what his neighbour collected is more than what he received not taken into consideration the size of his land and attachment thereon vis-a-vis his neighbours.
ASSESSMENT OF COMPENSATION
Where amount to be paid as compensation was presented by one of the parties to the court for adjudication, the ‘’court shall assess the value of the land or interest injuriously affected as at the date immediately before the grant of the license and shall assess the residual value to the claimant of the same land or interest consequent upon and at the date of the grant of the licence and shall determine the loss suffered by the claimant as the difference between the value so found if such residual value is a lesser sum’’
A good understanding of this section by the payer and the claimant of compensation will solve a whole lots of problems, as in a particular claim the basis of valuation may arise from two conditions e.g. where a building in a large expanse of land was completely affected through demolition before a pipeline could be laid, the value of compensation to be paid on the building shall be different from that of the bare land not ‘’ affected injuriously (although falls within the route of the pipeline) the value to be placed on the building would be the value of the building before the grant of the licence and the value to be placed on the bare land would be the value of the land as at the time the licence was granted.
Of note is section 20 (4) oil pipeline Act which says that no compensation shall be awarded in respect of an unoccupied land as defined in the Land use Act – this is ironic because practitioners in this area have discovered that there is actually no land that is unoccupied as far as compensation in oil industry is concerned because villagers and communities as far as 5 kilometers from areas seemingly unoccupied will come up with several theory of an central burial sites, shrines and abode of deities to claim compensation.
However, in order to reduce the protracted argument and negotiation via-a-vis compensation some oil producing companies have designed procedures and guidelines upon which compensation payment (whether for laying of gas pipeline, for spillages – causing pollution- and other activities bordering on the acquisition of land) is based. Although this could be criticised as being unilateral and against the roundtable agreement as laid down by law, these procedures and guidelines provide a good starting point for negotiation and it dispenses with preliminaries involved.
It is however important to note differences in the law as introduced in terms of settlement of disputes between oil pipeline licensee and oil mining lease on the one hand and owner or occupier of land on the other hand.
As I said earlier, disputes between holders of oil pipeline licences and landowners or occupier in terms of compensation will eventually be referred to the High Court in whose jurisdiction the dispute occurred. Contrast this with the provisions of S.95 and 96 of Minerals and Mining Act CAP M12 Laws of Federation of Nigeria 2004, which provide for reasonable compensation by mining lease for disturbance of surface rights to owner or occupier of the land in addition to payment of compensation for destruction of crops, economic trees or building and that if there is disagreement as to amount to be paid, the dispute shall be refer to the appropriate minister who shall decide the amount to be paid within 14 days of the minister’s decision.
The question that arose from the provision of the above section is: has jurisdiction of court been done away with by these provisions? One interesting thing to note is that this law does not say that the decision of the minister is final, which gives room for disputants to still explore the court for adjudication where the decision of the minister is not satisfactory to either or both parties. In any case the law would be inconsistent with the provision of the constitution of Nigeria 1999 S. 272 (1) which givers unfettered power to state High Court ‘’to hear and determine any civil proceeding in which the existence or extent of a legal right, power, duty, ability, privilege, interest, obligation or claim is in issue or to hear and determine any criminal proceedings involving or relating to any penalty, for forfeiture, punishment of any offence committed by any person’’ it therefore connotes that the high Court has jurisdiction to determine any dispute relating to compensation and any law that is inconsistent with the constitution shall be null and void to the extent of its inconsistency.
However, the framers of the Mineral & Mining Act, with the benefit of insight apparently do not want a protracted litigation which resort to court (in the first instance) may cause taken into consideration the importance of oil in the Nigeria economy.
Additionally, the law has also sought to reduce disputes arising out of the cultural belief system vis-a-vis compensation claims for acquisition of ‘’sacred place’’ which I earlier referred to, an apparent recognition of our traditional system.
S.8 (1) Mineral & Mining Act provide that ‘’ No person shall in the course of prospecting or mining, carry out operation in or under any area held to be sacred or permit injury or destruction of any tree or other thing which is the subject of veneration ………….. where any question arises under this section as to whether an area is held to be sacred or tree or thing is the object of veneration the question shall be decided by the Governor of the state whose decision shall be final’’
Now the above has ousted the jurisdiction of the court in compensation claim for ‘’sacred places’’ I cannot agree less with the framer because empirical evidence of such location would only be known as the custom of his subjects. The danger here is that the decision may be politicized and the court may eventually settle the dispute.
In conclusion, experience has shown that communities in oil-producing areas prefer mediation by 3rd party, rather than one with officials of oil companies, and it behooves on mediator to work conscientiously in bringing the dispute to an end by deploying law and competent valuers towards this end so that at the end of the day everybody will go home rest assured that they have not been short-changed as far as the issue of compensation claim is concerned.
08023127175, E-mail: BAYBEL2001@YAHOO.CO.UK