Respondent had applied for an allocation of Offshore Oil Blocks No.248,249 and 250 in November, 1998 guided by the Petroleum Act LFN 1990. The application was approved by the Head of State in March 1999 vide a letter dated March 8th 1999 under the hand of the Director of Petroleum Resources. The said letter also carried the terms and conditions of the approval.

Respondent in a letter letter dated 22nd March 1999 accepted the conditions as conveyed in the letter and proceeded to pay the application and bid fees with a promise to pay the signature bonus and reserved value fees whilst seeking clarification on how the figures were arrived at. The said letter also stated that the sum of $20m could be paid in 2 parts within a period of 3 months.

Again, respondent in may 1999, wrote a letter to the 5th Appellant stating that it had paid $1 Million being part payment of the signature and reserved value while asking for further extension of time to payment of the second instalment. 5th appellant then wrote on May 31st 1999 intimating the respondent that a 45 day extension had been granted for him to pay the outstanding signature/reserved value with effect from June 1, 1999 up to 15th July 1999.

Suddenly, on 8th July 1999, the 5th Appellant wrote to the Respondent to cancel the allocation of OPL 248 previously made in the Respondents favour.

Aggrieved, Respondent commenced an action at the Federal High Court Abuja claiming declaratory and injunctive reliefs. The court found that there was a valid contract between the parties. He ordered the parties to go and conclude the contract.

Appellants' appeal to the Court of appeal was dismissed. They further appealed to the Supreme Court.