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Lagos Airport concessions: Disputes that defy court judgments

By on July 8, 2013

This is obviously not the best of time for the Federal Airports Authority of Nigeria, FAAN. This is because the agency is beset by battles against some of its concessionaires. On one hand, the agency is locked in a war of attrition with Bi-Courtney Aviation Services Limited over the management of the local wing of the Murtala Muhammed Airport in Lagos, which Bi-Courtney management is laying claims, following the Build, Operate and Transfer, BoT, agreement signed between both parties about a decade ago.

On the other hand, it is waging a battle against Maevis Nigeria Limited over its Airport Operations Management System, AOMS, designed to shore up its revenue generation and AIC Hotels Limited over a parcel of land at the Lagos airport leased to the company for the purpose of building an international hotel under a concession arrangement. Although the issues relating to these developments are currently in one court or the other, parties involved have lately resorted to self-help, with each accusing the other of circumventing court orders and, at the same time, laying claims to victory in the courts.

But the one that appears to be assuming a dangerous dimension, as weapons are now reportedly deployed, is the case between the airports authorities and AIC management. While FAAN argued that the agreement that covered the leased land was skewed in favour of AIC, alleging that the promoters of the hotel used their closeness to the Presidency at the time they got the land in 1998 to arm-twist it into signing an agreement it was not a party to its drafting, AIC management said nothing of such happened, contending that since government was a continuum, the agreement subsists.So far, neither FAAN nor AIC Hotels Limited, owned by industrialist and politician, Chief Harry Akande, has indicated interest to shift ground. Besides, FAAN said its efforts to retrieve the parcel of land from AIC were in tandem with a review of skewed concession agreements with many organisations in public interest. Recent developments, it said, made it imperative for the statusquo to be altered. Citing security reasons, FAAN said it was leaving nothing to chance in ensuring that all concessions, including the lease agreement on the use of land, guaranteed public interest.

The agency said even if the land was leased to AIC Hotels Limited some 14 years ago to build a hotel, emerging security situation in the country had nullified that intention, noting that the facility would expose the airport to potential terror attacks. The land in question is close to the diplomatic car park of the MMIA .
However, armed with what it described as government’s approval secured in 1998, AIC Hotels Limited recently attempted to resume construction at the site, which it abandoned some years ago but was met with resistance by FAAN.

Since the crisis broke, FAAN and the firm had been at daggers drawn, making the issue difficult to resolve, especially as the company is asking for $78 million compensation the former considered outrageous.
The question being asked is, why should FAAN pay the concessionaire that much, when the firm has nothing on ground to show that it means business, after many years of inability to deliver the project?

However, AIC Limited had, by virtue of the ruling of late Justice Kayode Eso delivered on June 1, 2010, been awarded $48.124 million damages and loss of income arsing from frustration suffered in the hands of FAAN. The company had gone to an arbitration panel , headed by the late jurist, to seek redress.

Reacting to the frequent of face-offs between both parties since the crisis began, General Manager, Corporate Communication, FAAN, Mr Yakubu Dati, accused the firm of taking the laws into its hands by attempting to forcefully gain access to the land belonging to the agency and, by extension, the federal government.

Dati said the moves by the concessionaire was one of the steps taken by some private sector players to derail the implementation of the transformation agenda of President Goodluck Jonathan and vowed that the agency would not be deterred in its efforts to retrieve the land. According him, the land in dispute is meant for construction of a new international terminal for MMIA, as envisaged in the airport master plan, in line with the Memorandum of Understanding (MoU) the government entered into with China. The construction work had since began and is expected to be expanded further into the disputed land.

“Without prejudice to the fact that the Federal Government did not find the parcel of land in question fit for a hotel project from the beginning, this land is being acquired now by the government in the public interest for the reasons stated earlier,” the FAAN spokesperson said.

“It is curious that AIC chose this time to forcefully enter into the said piece of land, having kept quiet for over 15 years. We hate to believe that this act of brigandage is a calculated attempt to blackmail the Federal Government, which is on a mission to rescue the aviation industry from the rot that resulted from many years of neglect.

“We are informing all aviation stakeholders that FAAN has the mandate of government to transform all our airports to meet acceptable international standards and no act of blackmail, or intimidation can deter the government from accomplishing this mandate.”

But AIC Limited would have none of this. Personal Assistant to Chief Harry Akande, Mr Gbenga Akinyemi, said the company was on the land by virtue of the lease agreement it entered into with FAAN since February 1998 and subsisting for 50 years.

He alleged that the personnel of FAAN, numbering about 20, led by a retired colonel, in conjunction with security agencies, chased workers out of the site as they set to commence work on the hotel building.

According to him, there is a subsisting court order, which stopped FAAN from coming into the land to harass its workers.

Akinyemi said the project would in no way compromise safety and security at the airport, as major airports in other parts of the world had hotels built in them for the comfort of travellers.

Speaking in the same vein, General Manager , Administration and Business Development, AIC Hotel Limited, Chief Niyi Akande, said the land was leased to AIC Hotel Limited in 1998 and that the agreement was registered as number 55  at page 55 in Volume 2010 of the Land Registry of Lagos State.

“There is a court injunction which is still subsisting. We did not go through the back door. They leased the land to us for 50 years. We signed an agreement and we did not just come here to take the land. FAAN should obey court decisions,” he said. His entreaty on FAAN stemmed from the injunction granted the company on February, 18, 2002, by Justice R.O Nwodo, and other subsequent injunctions restraining the agency from disturbing AIC Limited from conducting its legal business on the land.

With men of the police keeping watch over the disputed land to avoid any break down of law and order, the controversy rages.

But FAAN’s Director of Legal Services, Mr. Jacob Mark, was quick to dismiss this, saying all the lands in Nigeria belong to the Federal Government. According to him, what the agency was doing to secure the land was in overriding public interest, national security and and aviation safety considerations.

He said: “All the land around the airport anywhere in Nigeria belongs to the Federal Government. Not to any individual. When the land is given to any individual or organisation, it is given as lease, under some terms and conditions for a specified number of years that the agreement covers.

“In the case of AIC Hotel Limited which claims to own land at the airport, it is unthinkable for anybody to reason that way and hold on to such argument”.

Although Airport Police Commissioner, Mr. Olatunde Caulkrick, had assured repeatedly that the police would maintain security at the disputed land until peace was restored, the incident, last Tuesday, completely defeats that assurance, as clash again broke out between both parties, with each allegedly accusing the other of  hiring thugs to foment trouble.

Observers contend that past dispensations in FAAN were not thorough in signing concession agreements with private players who indicated interest in investing in the aviation sector, arguing that in as much as the agency was desirous of opening  to foreign investments, the right draft agreements should have been prepared by its legal department. But again, the present dispensation in FAAN had said consistently that contentious concession agreements were foisted on the management in the past by forces close to the corridors of power. Perhaps only

“In the case of AIC Hotel Limited which claims to own land at the airport, it is unthinkable for anybody to reason that way and hold on to such argument”.

Although Airport Police Commissioner, Mr. Olatunde Caulkrick, had assured repeatedly that the police would maintain security at the disputed land until peace was restored, the incident, last Tuesday, completely defeats that assurance, as clash again broke out between both parties, with each allegedly accusing the other of  hiring thugs to foment trouble.

Observers contend that past dispensations in FAAN were not thorough in signing concession agreements with private players who indicated interest in investing in the aviation sector, arguing that in as much as the agency was desirous of opening  to foreign investments, the right draft agreements should have been prepared by its legal department. But again, the present dispensation in FAAN had said consistently that contentious concession agreements were foisted on the management in the past by forces close to the corridors of power.

Perhaps only an intervention by the Presidency would help resolve the issue, especially as the courts have not been able to do that.

President of Aviation Round Table, ART, an advocacy group on the industry, Capt. Dele Ore, said though FAAN was doing the right thing in retrieving its parcel of land from AIC Hotels, it was, however, going about it the wrong way. Ore, a former Director of Operations of the defunct Nigeria Airways and a DC-10 pilot, blamed past dispensations in the agency who he accused of signing ridiculous agreements with concessionaires to service their selfish interest and not that of  FAAN. He condemned the situation where both parties  resorted to self-help, instead of allowing the court to decide the matter.

Speaking in the same vein, General Secretary of Nigerian Aviation Professional Association, NAPA, Comrade Abdul Rasaq Saidu, said:  “All I know is that when government rolls out a very good policy, the executors of these policies have not always been upright in terms of element of corruption that they possess, I believe the government should involve external bodies such as the Attorney General of the Federal, Accountant General, the Auditor General and so on in the process of signing concession agreements because when you look at the previous concessions that were signed, they were signed fraudulently and FAAN didn’t partake in the signing process and I think that is the bone of contention.

”But since the court has given its judgement on FAAN and AIC over the parcel of land, both parties should abide by the ruling of the court, whatever the court says should be binding on each of the parties because we are all civil citizens of this country and we are governed by the laws of the land.

Again I see most private individuals who want to do business with government as people who want to rip the government off  its resources and that is not good.   They should work together so both parties could profit from whatever concession agreement that is entered into.”

FAAN DEFIES COURT ORDER ON BI-COURTNEY

 Meanwhile the saga between FAAN and Bi-Courtney in respect of the concession agreement entered into on April 24, 2003 took a violent turn on June 6, when FAAN officials  pulled down bill boards erected at the Lagos airport by the concessionaire.

This action was said to have been taken without notice and in total violation of the concession agreement.

On November 15, 2011, in a case titled Bi-Courtney Limited vs. The Managing Director, Federal Airport Authority of Nigeria and FAAN, the issue of the agency’s right to pull down advertisements installed by Bi-Courtney came before the Federal High Court for resolution.

In a judgment delivered by Hon. Justice Stephen Jonah Adah, the court decided that under the agreement, FAAN had no right whatsoever to take laws into its own hands. If there is any dispute between FAAN and Bi-Courtney, the dispute, according to the court, must be resolved by arbitration in accordance with Article 22 of the concession agreement.

“The sum of it is whether the defendants can in any dispute relating to the concession agreement take action to resolve disputes without resorting to Article 22 of the said agreement for dispute resolution mechanism. It is obvious in the light of the said agreement that the defendant cannot so act … It is ordered also in consequence of this that the parties should refer their dispute for amicable settlement as prescribed by their agreement”, the court stated.

FAAN and Bi-Courtney have been in dispute over the concession agreement.

In 2009, the Federal High Court sitting at Abuja ordered the Federal Government of Nigeria and FAAN to hand over the General Aviation Terminal to Bi-Courtney in suit No. FHC/ABJ/CS/50/2009 delivered on Tuesday, March 3, 2009. There have been four appeals against this judgment all resolved in favour of Bi-Courtney. The orders are yet to be obeyed by FAAN.

 

 

 

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