FCT High Court Voids “Penalty Clause” in Halkin E&P vs Eunisell Contract Dispute
The High Court of the Federal Capital Territory, Abuja, has delivered judgment in favour of Halkin Exploration and Production Limited (Halkin E&P) against Eunisell Limited, striking down Clause 10.4 of their service agreement as an unenforceable penalty clause.
Under Clause 10.4 of the agreement, Halkin E&P was required to pay a late payment charge of 0.5 per cent daily, equivalent to approximately 177 per cent annually on a compound interest basis, on outstanding payments.
The provision resulted in Eunisell claiming millions of dollars in accumulated charges, reportedly exceeding ten times the underlying debt.
Justice S.B. Belgore, in a ruling on October 22, 2026, declared the clause—which imposed a 0.5% daily late payment charge, amounting to 177% annually—“null, void, and of no legal effect.” The court further set aside all invoices and assessments issued under the provision, which had led Eunisell to claim charges exceeding ten times the underlying debt.
In addition, the court ruled that it was “setting aside, quashing, nullifying and invalidating all late payment/default invoices, bills and/or assessments, howsoever described, predicated on Clause 10.4 of the Service Agreement between Halkin Exploration and Production Limited and Eunisell Limited dated 20th January 2022 issued by the Defendant against the Claimant.”
Counsel to Halkin E&P, Chikaosulu Ojukwu, SAN, hailed the decision as a victory for the rule of law, noting that the clause was contrary to public policy and designed to secure an unjustified financial windfall. Halkin E&P has indicated plans to pursue a US$50 million claim against Eunisell Limited for damages allegedly caused by its abrupt withdrawal from the oil well.
Chikaosulu Ojukwu, SAN, said “This decision is a victory for the rule of law and vindicates the consistent position maintained by our client, Halkin E&P, that the impugned clause in the agreement was contrary to public policy and therefore unenforceable.
“Our client maintains that Eunisell Limited sought to use that clause to secure an unjustified financial windfall. The defendant Eunisell Limited withdrew from the oil well in the middle of the night, without notice, causing damage to the wellhead, according to our client. Our client will pursue a US$50 million claim against Eunisell Limited through the appropriate legal proceedings. This is a classical case of get rich quick” .
