· Voids appeal court judgement
· Says FBN failed to meet MoU obligations to GHL
· Lawyer: Nigeria lost $70m to oil company, bank’s legal battle
Alex Enumah in Abuja
In a landmark judgment that reshapes one of Nigeria’s most closely watched oil industry disputes, the Supreme Court yesterday ordered the immediate handover of the crude oil aboard the FPSO Tamara Tokoni to General Hydrocarbons Limited (GHL), overturning the basis of the prolonged legal tussle.
The apex court issued the order shortly after it set aside the orders of the Court of Appeal, which directed that the crude oil aboard the FPSO Tamara Tokoni be sold and the proceeds placed under the custody of court officials pending the outcome of a dispute between First Bank of Nigeria and GHL.
This comes as one of the lawyers to GHL, Ojukwu Chikoso, SAN, while advising Nigerian banks to allow investors concentrate on their business as going concerns, revealed that Nigeria as a country lost over $70 million due to the legal battle between FBN and GHL. The senior lawyer therefore urged the Central Bank of Nigeria (CBN) to be alive to its responsibilities, arguing that the court case revealed that the apex bank was not doing enough to control the activities of some banks.
A three-member panel of the appellate court sitting in Abuja, had last year, set aside the ruling of Justice E.A Obile of the Federal High Court, Port Harcourt, which had in March last year, dismissed the case of FBN against GHL, in respect of the cargo of crude on board FPSO Tamara Tokoni.
After setting aside the judgment of the trial court, the three-member panel led by Justice Hamma Barka, had ordered that the crude be sold and that the proceeds be paid into a court-administered escrow account, pending the hearing and determination of the arbitration and other processes currently ongoing.
According to the justices, the order was made in the interest of justice and the need to preserve the “res” (subject matter) of the case, pending the determination of the case at the high court and before an arbitration panel.
Taken aback by the appellate court’s verdict, GHL had approached the apex court to set aside the September 11 judgment of the Court of Appeal against its assets.
The appellant among others argued that the lower court erred in law, when it made the orders against the assets of the appellant, adding that the appellate court lacked the necessary jurisdiction to hear the case of FBN.
Delivering judgment in the appeal yesterday, the five-member panel of the apex court held that the suit instituted by First Bank of Nigeria was contractual in nature and not an admiralty matter.
Although, the lead judgment was prepared by Justice Emmanuel Agim, it was read by Justice Habeeb Abiru.
Other members of the panel led by Justice Mary Uwani Abba Aji, Justice Ibrahim Saulawa and Justice Uwa Chidiebere held that the trial court lacked the necessary jurisdiction to entertain the suit brought by FBN, on the grounds that the nature of the suit was not within the general maritime case that involves the loss or damage of products or cargo.
“The cause of action is breach of the financing agreement by the appellant not paying the proceeds of the crude oil produced and lifted from OML120 into a collection account maintained by the appellant with 1st respondent and diverting same elsewhere.
“A dispute over the diversion of sale of proceeds of produced and lifted crude oil in breach of a financing agreement is fundamentally a banking and commercial dispute. It is not a dispute over ownership of the FSPO, the cargo of crude oil or a ship’s freight. The contractual promise to pay the sale proceeds into a designated account as a condition for financing the production of the crude oil creates, at most, a contractual right against the appellant not a proprietary right in the crude oil,” Justice Agim held.
While emphasising that FBN does not have any right to seize the crude cargo, the apex court explained that the fact that FBN financed the appellant’s production of the crude oil and was entitled to recover the facility from the proceeds of sale of the produced crude paid by the appellant into a designated account maintained with it, did not by itself gave FBN ownership of the crude oil or make the crude oil security for the financing of the crude oil production.
“The MoU and the further financing agreements did not create a legal or equitable mortgage or a fixed charge or security interest over the produced crude oil itself or constitute an assignment of title in the Crude by the appellant to the 1st respondent.
“The bare contractual obligation of the appellant to pay the proceeds of Sale of the produced and lifted crude oil from OML120 cannot give the 1st respondent the right to arrest and sell the cargo through an admiralty action.
“First Respondent’s Suit No. FHC/PH/CS/02/2025 being solely for breach of the proceeds domiciliation clause in the MoU and further financing agreements cannot be a valid basis for the arrest, take over and sale of the crude oil cargo at the instance of the 1st respondent as the financier of the production of the said cargo.
“Such a suit cannot be entertained and determined under the admiralty jurisdiction of the trial Federal High Court. The 1st respondent’s claim for diversion of the sale proceeds is ordinarily a contractual or debt recovery claim, not a maritime claim and falls outside the admiralty jurisdiction of the trial court,” the apex held.
The justices went ahead to fault the trial court for exercising admiralty jurisdiction over the suit on the grounds that the dispute is about the proceeds of sale of cargo stored on an FSPO at sea or that the underlying transaction relates to offshore oil production.
“It is clear from the above provisions that the admiralty jurisdiction of the trial court extends only to matters expressly recognised as maritime claims, which are either proprietary or general.
“Proprietary maritime claims relate to ownership or possession of a ship or mortgage over a ship or its freight or dispute between co-owners of a ship. A general maritime claim refers to a claim for loss of or damage to goods carried by a ship and a claim out of an agreement relating to the carriage of goods or persons by a ship or to the use or hire of a ship whether by charter party or otherwise.
“It is obvious that 1st Respondent’s Suit No. FHC/PH/CS/02/2025 is neither a general maritime claim nor a proprietary maritime claim. It is a claim for breach of contract to pay proceeds of sale of produced crude oil into a designated account and recovery of the diverted proceeds,” the apex court held.
Emphasising that the jurisdiction of the Federal High Court over contractual disputes was limited or confined to contracts on the matters expressly listed in Sub-section(1) of Section 251 of the 1999 Constitution, the apex court held that the contract to pay proceeds of sale of produced crude oil into a designated account is not connected to any of the subject matters listed in Section 251(1) of the 1999 Constitution as constituting the subject matter jurisdiction of the Federal High Court.
“The trial Federal High Court lacked the subject matter jurisdiction to entertain the claim in Suit No. FHC/PH/CS/02/2025.
“Therefore, its exercise of jurisdiction over the suit is a nullity, Equally, Appeal No. CA/PH/292/2025 arising from Suit No. FHC/PH/CS/02/2025 and the proceedings in the said appeal and all the decisions and orders made therein in exercise of jurisdiction in respect of Suit No. FHC/PH/CS/02/2025 are equally a nullity.
“Accordingly, the orders made by the Court of Appeal on 11-9-2025 for inter alia the arrest and sale of the cargo of crude oil on board FPSO Tamara Tokoni are hereby set aside.
“In the light of the foregoing, no useful purpose would be served determining all other issues raised for determination in this appeal. On the whole this appeal succeeds.
“It is hereby allowed. The judgment of the Court of Appeal delivered on September 11, 2025 in Appeal No. CA/PH/292/2025 and all the orders made therein are hereby set aside.
“It is hereby further ordered that the Chief Registrar of the Court of Appeal and the Admiralty Marshal forthwith release from their possession and control and hand over to the appellant the said cargo of crude oil on board FPSO Tamari Tokoni.
“The 1st respondent shall pay costs of 5 million naira to the appellant,” the court ordered.
Justice E. A. Obile of the Port Harcourt division of the Federal High Court, had in a ruling in an ex parte application brought by FBN, ordered the seizure of the whole crude as well as the seizure of the vessel carrying the crude, over an alleged indebtedness by GHL.”
However, Justice Obile later reversed his earlier order after the court discovered that FBN withheld facts and that the order was made against another order of the Lagos division of the Federal High Court.
The court had also in its ruling in the preliminary objection to the case of FBN, dismissed the suit in its entirety, citing lack of jurisdiction and abuse of court process.
Besides, the judge further held that the plaintiff’s attempt to distinguish the instant suit from the one numbered FHC/L/CS/1953/2024 could not stand.
He had maintained that every subsequent agreement entered into by the parties was pursuant to the legally enforceable Memorandum of Understanding between GHL and FBN which was breached repeatedly by FBN.
The court consequently held that by the instant suit, First Bank approached the court to do the very act that Justice Lewis-Allagoa had restricted it from doing, and as such, the suit was a classic case of abuse of court process, and consequently dismissed the suit.
Justice Obile also agreed with GHL that the ex-parte orders of January 9 had lapsed by operation of law.
These are: “An order to arrest and/or attach or lien the entire cargo of crude oil on board the Floating Production Storage and Offloading (“FPSO”) vessel Tamara Tokoni;
“An order directing the officers of the Nigerian Navy, NUPRC, NIMASA, Harbour Master of the Nigeria Ports Authority to render necessary assistance to the Admiralty Marshall of the Court in giving effect to the order of arrest made in (a) above.”
The court had held that the orders had lapsed automatically by effluxion of time and consequently set them aside.
Dissatisfied, FBN approached the appellate court to challenge Justice Obile’s reversal order, following which the appellate court ruled partially in its favour.
The appellate court also issued an order directing payment of the proceeds of each sale into a single interest yielding escrow account in the name of the Chief Registrar of the Court of Appeal, pending the hearing of the suit before the trial court and or before the court of arbitration.
According to the appellate court, the Chief Registrar of the Court, shall liaise with the Admiralty Marshal to take charge, possession and to secure any cargo of crude oil on board FPSO Tamara Tokoni against expropriation, waste, dissipation and or fraudulent disposition pending the hearing and determination of a suit before the trial court and or court of arbitration in the case.
The funds according to the ruling will remain under the custody of the court until the matter is determined either at trial or in arbitration.
Barka had also expressed the determination of the appellate court to protect the crude from First Bank dissipation pending determination of the court case and/or arbitration.
The FPSO has crude oil belonging to GHL, Conoil/NNPC. First Bank claimed that GHL owed it $19 million in debt. However, GHL strongly denied the claim, saying FBN on several occasions breached the 2021 Subrogation Agreement and no payment was due.
GHL also accused FBN of abusing an ex parte freezing orders when it selectively released part of the crude in the FPSO to Conoil and NNPCL.
Lawyer: Nigeria Lost $70m to Oil Company, Bank’s Legal Battle
Meanwhile, one of GHL’s lawyers, Ojukwu Chikoso, SAN, stressed that it was time for Nigerian banks to allow investors in the country to carry out their businesses without undue interference, alleging that Nigeria had lost more than $70 million to the legal battle between FirstBank and GHL.
“The court made some findings at the time of recital that this is a case that First Bank could not even live up to its expectation to fund the memorandum of understanding (MoU) it entered with GHL,” he added.
According to Chikoso, the price of crude oil was much higher as at the time the court ordered for its seizure, compared to what it is sold today.
“They awarded N5 million against First Bank, they have the money, they will pay, but to hold crude oil of Nigeria, when Iran war had that crude at about $160 and today crude oil is around $60 and $70, Nigeria has lost about $70 million, when you minus or deduct 20 percent of royalty of $70 million to Nigerian government in an unnecessary litigation”, he said.
The senior lawyer therefore urged the CBN to be alive to its responsibilities, saying the suit revealed that the apex bank was not doing enough to control the activities of some banks.
Chikoso wondered if the apex bank was allowing banks to overstep into investment areas and by so doing indirectly working against investors and the country.
He also wondered whether the central bank was also allowing banks to stifle revenues due to the federal government.
“Do the central bank allows to wake up in the morning and take over OML crude oil production?” he queried, adding that no matter the situation banks should not target the sales of crude oil in the event of any dispute with investors.
“You could target any other thing” he said, “financing of OMLs, taking over of oil wells, putting oil production companies into receivership needs to stop”.
According to him, the CBN must put a stop gap mechanism that would require banks to come to it first before enforcing such contracts, in order to protect investors, arguing that “without investors our naira would continue dying”.
“So, the central bank should wake up and the Supreme Court decision has reinforced that. General Hydrocarbons Ltd has come to stay and they will continue to discharge their business without fear and fear of molestation.
“The Supreme Court has said so and has restored the faith we have in the court processes and that the judiciary is the last hope of the common man”, the lawyer added.