Court Bars Eunisell from Enforcing 177% Default Charges against Halkin

Wale Igbintade The High Court of the Federal Capital Territory (FCT), Abuja, has permanently restrained Eunisell Limited from demanding or enforcing late-payment charges imposed on Halkin Exploration and Production Limited under a contractual clause prescribing a default fee equivalent to 177 per cent annually. Justice SB Belgore, in a judgment delivered on October 22, 2026, declared the provision, which imposed a daily charge of 0.5 per cent on outstanding payments, an unconscionable penalty that was unenforceable and contrary to public policy. The judge also nullified all invoices, bills and assessments issued under the disputed clause in the service agreement executed by the two companies on January 20, 2022. The ruling has significant financial implications for the parties, as Eunisell had previously instituted a separate debt-recovery action against Halkin, seeking $10,240,679.98 in outstanding contractual fees, including $7,624,171.51 in late-payment charges calculated at the disputed rate. However, the judgment did not dismiss the entire $10.24 million debt claim, which is distinct from the substantive relief granted in the present suit. The dispute arose from a service agreement under which Eunisell was engaged to provide specialised engineering services and operate a modular Early Production Facility for Halkin’s operations at the Atala Marginal Oilfield, also known as Oil Mining Lease (OML) 46. Under the agreement, Halkin was required to pay a fixed daily service fee of $9,900, while Clause 10.4 stipulated that the payments made after the contractual deadline would attract a default charge of 0.5 per cent daily. Halkin approached the court to challenge the provision, arguing that the rate was excessive, oppressive and designed to punish it for delayed payments rather than compensate Eunisell for any genuine financial loss. In resolving the dispute, Justice Belgore acknowledged the freedom of commercial parties to negotiate contractual terms but held that such freedom did not oblige courts to enforce unconscionable penalty clauses. Relying on the Supreme Court’s decision in Oyeneyin v. Akinkugbe and the Court of Appeal’s decisions in Awutolo v. Okolo and Chevron Nigeria Limited v. Titan Energy Limited, the judge explained that a penalty clause was unenforceable where it was intended to frighten a party into performing its contractual obligations rather than serve as a genuine pre-estimate of the loss arising from a breach. Applying these principles, the court found that the disputed provision imposed an excessive financial burden on Halkin. Justice Belgore also noted that the agreement was denominated in United States dollars, reasoning that this insulated Eunisell from local inflation and currency fluctuations. The judge further observed that Eunisell had failed to file a response to Halkin’s amended originating summons within the time permitted by the applicable rules. Consequently, the material averments in Halkin’s affidavit evidence remained unchallenged. Citing judicial authorities on unchallenged affidavit evidence, the judge held that the claimant’s evidence was deemed admitted and accepted by the court. The court also dismissed Eunisell’s preliminary objection challenging the competence of the suit. Eunisell had argued that the action constituted an abuse of court process because the parties were already involved in a separate debt-recovery suit, marked FCT/HC/CV/5599/2024. The company also contended that the dispute involved contested facts that required a trial commenced by a writ of summons rather than an originating summons. Rejecting the objection, Justice Belgore distinguished between the earlier action, which sought to recover outstanding contractual fees, and the present suit, which sought an interpretation of a specific provision in the service agreement. He held that an originating summons was appropriate because the central issue concerned the construction of a written contract. The judge also rejected Eunisell’s argument that the existence of the separate debt-recovery action rendered Halkin’s suit an abuse of court process. In another aspect of the judgment, Justice Belgore dismissed an application by Eunisell challenging the accuracy of the court’s record of proceedings on May 18, 2026. The company had alleged that the court failed to consider its opposition to Halkin’s application to amend its originating summons and incorrectly recorded its counsel as having no objection. The judge, however, recalled that Eunisell’s counsel, PL Osakwe, had initially expressed opposition to the amendment but subsequently informed the court that he was not objecting after the judge sought clarification on the grounds for his opposition. According to Justice Belgore, the court had explained that the issues raised in the preliminary objection could be addressed after the amendment was granted. He maintained that the record accurately reflected counsel’s eventual position and faulted the company for failing to follow the prescribed procedure for challenging a court record. Relying on the Supreme Court’s decision in Andrew v. INEC, the judge held that a party seeking to challenge a court’s record must first file an affidavit disputing its accuracy and subsequently bring a formal application, supported by a separate affidavit, seeking an order to amend it. The judge dismissed the application as incompetent and rejected it on its merits. He consequently ordered Eunisell to pay N1million in costs to Halkin over the unsuccessful application, which had delayed the delivery of the substantive judgment. The judge made no order as to costs in the substantive suit.