The Appellant/cross respondent and the respondent/cross appellant executed a contract on the 7th day of October 1994. In that contract it was agreed that the appellant/cross respondent would sell to the respondent/cross appellant twenty four cargoes of Vacuum Gas oil (VGO) at the rate of one cargo per month. The contract was for two years certain and it commenced on 7th of October 1994. As at 1999 the appellant/cross respondent had only made available to the respondent/cross appellant five cargoes of VGO. Rather than sue for breach of contract the respondent/cross appellant preferred Novation. The parties had a meeting on the 27th of October 1999, and at that meeting a Novation emerged. The old contract had been novated into a new contract. New terms were agreed in substitution for some of the-terms of the term contract. The new terms were that in substitution for VGO, Nineteen cargoes of Low Pour Fuel Oil (LPFO) at the same rate would be supplied to the respondent/cross appellant commencing from November, 1999.

The parties went to arbitration because the appellant/cross respondent failed to deliver to the respondent/cross appellant the nineteen cargoes of LPFO as agreed in the novation, in place of the same amount of VGO.

On the 12th of December, 2000 the arbitrators published their award, which was in favour of the respondent/cross appellant. The award by the Arbitral Panel runs as follows:

"We award and determine that the respondent (i.e the appellant in this appeal) jointly and severally shall pay to the claimant sum the of $4,500,000 (four million, five hundred thousand US Dollar) OR in the alternative, we order the delivery by the respondent to the claimant a total of 18 cargoes of LPFO of 25,000 metric tons each month for every consecutive month commencing from the month of January, 2001 for the next eighteen months. It was further ordered that if the respondents should default in any months delivery, the balance of the cargoes will become due and exigible in cash at the rate of US $250,000.00 (two hundred and fifty thousand US Dollars) each, at the prevailing price in the oil market. It was further ordered that the respondent shall bear and pay the whole costs of the arbitration which includes fees and expenses assessed at N4, 000,000.00 (four million Naira). Finally the respondent were ordered to pay the claimant interest at the rate of 10% per annum from the day after the award was made until the date of payment of the sums awarded, both dates inclusive".

Before the arbitral panel the Pipelines and Products marketing Company was the 2nd respondent. The Court of Appeal struck them out.