The High Court of the Federal Capital Territory, Abuja, has declared null and void a contractual provision imposing a 177 per cent annual default fee in a dispute between Halkin Exploration and Production Limited and Eunisell Limited.
Justice Suleiman Belgore held that Clause 10.4 of the service agreement executed by the two companies on January 20, 2022, was unenforceable.
The disputed provision required Halkin E&P to pay a late-payment charge of 0.5 per cent per day on outstanding payments. Calculated on a compound basis, the charge amounted to approximately 177 per cent annually.
The provision had reportedly formed the basis of Eunisell’s claims for accumulated default charges running into millions of dollars.
In its judgment, the court declared the clause null, void and of no legal effect. It also set aside and invalidated invoices, bills and assessments issued by Eunisell against Halkin E&P on the basis of the disputed provision.
The ruling followed a legal challenge by Halkin E&P, which questioned the enforceability of the default-charge provision in the parties’ service agreement.
The court also rejected Eunisell’s preliminary objection challenging the competence of the suit. According to the report, the company had argued that the dispute amounted to an abuse of court process because a separate debt-recovery action was already pending between the parties.
Justice Belgore reportedly distinguished the earlier debt-recovery proceedings from the present action, which sought the court’s interpretation of a specific contractual provision. He held that an originating summons was appropriate for determining the question of construction of the written agreement.
The ruling also addressed the validity of invoices issued under the disputed clause, removing the contractual basis on which the challenged late-payment assessments had been raised.
Reacting to the judgment, counsel to Halkin E&P, Chikaosolu Ojukwu, SAN, described the decision as a victory for the rule of law. He maintained that the disputed provision was contrary to public policy and unenforceable.
Ojukwu also alleged that Eunisell withdrew from an oil well without notice and caused damage to the wellhead. He said his client intended to pursue a separate claim of US$50 million over the alleged conduct.
Those allegations concerning the oil well are claims made by Halkin E&P and its counsel; they should not be treated as findings established by the judgment on the default-fee clause.
The decision raises an important contractual question for businesses entering service agreements: the extent to which default charges may be enforced where the rate or structure of the charge is challenged as an unconscionable penalty.
The judgment was delivered on October 22, 2026, and was reported by Nigerian media on November 3.
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