MONROVIA – The Full Bench of the Supreme Court of Liberia is hearing a high-stakes commercial dispute between SRIMEX Oil & Gas Company and the Liberia Petroleum Refining Company (LPRC) over the enforceability of an arbitration clause in a petroleum storage agreement and the government’s authority to revise fuel pricing policies.
By Victoria G. Wesseh
The case could have significant implications for contractual rights, state regulatory powers, investor confidence, and the enforcement of arbitration agreements involving state-owned enterprises.
SRIMEX, represented by its President and Chief Executive Officer, Nimba County District #7 Representative Musa Hassan Bility, is seeking a writ of certiorari to review the Commercial Court’s handling of its request to compel arbitration.
The company argues that a presidential directive revising the national petroleum pricing structure undermines the commercial terms of its agreement with LPRC, while the state-owned entity challenges the agreement’s legality and enforceability.
At the heart of the dispute is whether the parties must resolve their disagreement through arbitration or whether the courts should first determine the validity of the underlying contract.
The Disputed Petroleum Storage Agreement
The dispute stems from a Petroleum Storage Agreement executed between SRIMEX and LPRC on September 3, 2025, covering the storage and handling of petroleum products at LPRC’s Product Storage Terminal.
According to court filings, the agreement was followed less than a month later by a directive from the Office of the President revising the national petroleum pricing structure.
SRIMEX, through its lead counsel, Cllr. Jonathan T. Massaquoi, contends that the directive altered the commercial and tariff arrangements contemplated under the agreement, amounting to a material breach of its contractual rights.
On September 29, 2025, the company filed a 16-count petition before the Commercial Court for Montserrado County, seeking an order compelling LPRC to submit the dispute to binding arbitration under the agreement’s arbitration clause.
SRIMEX also requested a preliminary injunction restraining LPRC, its agents, assigns, and privies from implementing the revised pricing formula pending the outcome of arbitration.
The company maintains that the agreement requires arbitration of disputes arising from, under, or in connection with the contract. It argues that the clause should be enforced even where the disagreement stems from subsequent government action.
SRIMEX further argues that implementing the revised pricing structure before the dispute is resolved could cause irreparable commercial harm, including financial losses and damage to investor confidence.
The Commercial Court issued a temporary restraining order to preserve the status quo, held a pretrial conference on October 21, 2025, and heard arguments from both parties on whether the dispute was subject to arbitration.
According to the account of the proceedings provided in the filings, the court reserved its ruling on the request for an injunction without granting the requested order compelling arbitration, prompting SRIMEX to seek the Supreme Court’s supervisory intervention.
LPRC Challenges the Contract’s Legality
LPRC has mounted a separate challenge, arguing that the dispute is not simply about interpreting the agreement’s pricing provisions but also about whether the agreement is legally valid and enforceable.
In its 23-count returns filed on October 7, 2025, LPRC contends that the Petroleum Storage Agreement was not executed in conformity with the Public Procurement and Concessions Act, the applicable petroleum laws, and the statutory governance framework governing state-owned enterprises.
The company also questions aspects of the agreement’s historical basis, noting that the document references storage arrangements dating as far back as 1989.
LPRC’s position is that an arbitration clause cannot automatically be enforced if the underlying agreement is illegal or void from the outset.
The argument invokes the legal principle ex nihilo nihil fit, commonly translated as “nothing comes from nothing,” to support the contention that an invalid contract cannot, by itself, provide an enforceable basis for compelling arbitration.
The challenge places the legality of the agreement at the center of the proceedings and raises the question of whether a court must first establish the contract’s validity before directing the parties to arbitration.
Two Major Legal Questions
The Supreme Court’s consideration of the matter raises two central legal questions.
The first concerns the relationship between contractual arbitration rights and the government’s authority to regulate petroleum pricing in the public interest.
SRIMEX maintains that the arbitration clause represents a binding contractual commitment that should be respected, notwithstanding the subsequent presidential pricing directive. Its position also invokes Article 26 of the Liberian Constitution, which addresses the enforceability of contractual obligations and the right to bring actions in court, subject to constitutional and legal limitations.
LPRC, on the other hand, argues that petroleum pricing falls within the government’s regulatory responsibilities and that a private storage agreement cannot override applicable laws or prevent the state from exercising its lawful regulatory powers.
The court must therefore consider whether the government’s pricing directive can affect the parties’ contractual obligations and, more specifically, whether it can prevent the dispute from being referred to arbitration.
The second question concerns the doctrine of separability, an established principle in international arbitration under which an arbitration clause may be treated as legally distinct from the broader contract containing it.
Under this doctrine, an allegation that the underlying agreement is invalid does not necessarily invalidate the arbitration clause. The principle allows an arbitral tribunal, where the applicable law permits, to consider disputes concerning the validity of the underlying contract.
In the SRIMEX-LPRC dispute, the question is whether the arbitration clause can be enforced while the legality of the wider agreement remains contested, or whether the courts must first determine whether the agreement was lawfully executed.
The answer could shape how future disputes involving state-owned enterprises and private commercial partners are handled in Liberia.
Potential Economic and Legal Implications
Beyond the two parties, the case carries implications for businesses that enter storage, supply, importation, and other commercial agreements with government institutions.
A decision requiring arbitration could reinforce the principle that parties must honor agreed dispute-resolution mechanisms, potentially strengthening confidence in contractual arrangements involving state-owned entities.
However, compelling arbitration would not necessarily determine the ultimate validity of the agreement or permanently prevent the government from enforcing a lawful petroleum pricing policy. Those questions would depend on the court’s ruling, the applicable law, and any subsequent proceedings.
Conversely, a decision requiring judicial determination of the contract’s legality before arbitration could clarify the circumstances under which state-owned enterprises may challenge agreements allegedly entered into contrary to procurement, petroleum, or governance laws.
Such a ruling would also raise questions about the extent to which private contractual arrangements can coexist with government policies governing strategic commodities such as petroleum.
For investors and commercial operators, the case underscores the importance of clear contractual terms, lawful procurement procedures, and enforceable dispute-resolution provisions when doing business with public institutions.
A Potential Precedent for Liberia
The Supreme Court’s decision could provide important guidance on the interaction between arbitration agreements, the legality of contracts involving state-owned enterprises, and the government’s regulatory authority.
The outcome will depend on the court’s interpretation of the agreement, the applicable statutory framework, and the arguments advanced by both parties.
For now, the central issue remains whether SRIMEX can compel LPRC to honor the agreement’s arbitration clause while the state-owned company challenges the contract’s validity.
The Full Bench’s determination could influence future commercial disputes involving public entities and private investors, particularly where contractual commitments intersect with changes in government policy.
The case therefore presents a significant test of how Liberia balances contractual certainty, lawful public administration, and the state’s authority to regulate the petroleum sector.