Reported by: Ijeoma G | Edited by: Oravbiere Osayomore Promise.
The Federal High Court sitting in Lagos has ordered commercial banks to place a “Post No Debit” restriction on accounts operated by the Osun State Government, following an application by Gamji Nigeria Company Limited to preserve funds linked to a $13.9 million arbitration award.
Justice D.E. Osiagor granted the interim order in suit number FHC/L/CS/1233/2026 after Gamji approached the court through its counsel, Yunus AbdulSalam, SAN. The company is seeking to secure $13,924,343.32 and N157.5 million awarded to it after an arbitration arising from water infrastructure projects in Ilesa West Local Government Area of Osun State.
The order affects a number of commercial banks where the state government maintains accounts. They include Guaranty Trust Bank, Access Bank, First Bank, Zenith Bank, United Bank for Africa, Ecobank, Fidelity Bank, Stanbic IBTC, Sterling Bank, Union Bank and Wema Bank, among others.
Rather than simply declaring the state liable for payment, the court’s interim order is aimed at preserving funds that could be used to satisfy the arbitral award while the substantive application before the court proceeds. The banks were directed to immediately place the restriction on the affected accounts and preserve funds up to the value of the amounts specified in the order.
The dispute can be traced to June 2017, when the Osun State Government awarded Gamji two contracts for water infrastructure works in Ilesa West. One contract, known as Slot 1, involved the construction of transmission mains and booster pump stations, while Slot 2 covered the construction of water reservoirs.
According to the affidavit filed in support of Gamji’s application, the projects formed part of a water supply and sanitation programme and were to be financed through an Islamic Development Bank loan facility facilitated by the Federal Ministry of Finance. The original contract values were stated as $15.98 million for Slot 1 and $9.70 million for Slot 2.
Gamji told the court that changes to engineering designs, variations in the scope of work and related variation orders resulted in delays and increased project costs. Following the changes, the value of the first contract was revised to about $20.24 million, while the second rose to approximately $10.95 million.
The company further claimed that substantial progress was made despite the disputes surrounding the projects. According to its court filings, about 93 per cent of the contracted work had been completed by October 2023. The state government subsequently issued a Substantial Completion Certificate on November 14, 2024.
However, disagreements later developed over claims relating to extensions of time, price adjustments and increases in the cost of materials, labour and other inputs. Gamji said it submitted claims to the state government but that they were rejected.
Attempts to resolve the disagreement through mediation were unsuccessful, according to the company. Gamji subsequently issued an arbitration notice on April 3, 2025. The Osun State Government accepted the arbitration process and nominated its arbitrator, with preliminary proceedings held in Lagos on May 15, 2025.
The arbitration eventually produced a final award on July 24, 2026. The panel directed the Osun State Government to pay Gamji $13,924,343.32 and N157.5 million described as reimbursable arbitration fees.
The award also provided for interest at the rate of 20 per cent per annum on any outstanding portion after the stipulated compliance period. Gamji told the Federal High Court that the compliance deadline expired on August 24, 2026, without the awarded sums being paid.
The company then returned to court to seek interim protection for the funds in the state government’s accounts. Its application was based on the need to preserve assets that could be used to satisfy the award while the court considers the motion on notice.
In granting the application, Justice Osiagor directed the listed financial institutions to place a “Post No Debit” restriction on the Osun State Government accounts maintained with them. The restriction is intended to preserve $13,924,343.32 and N157.5 million towards liquidation of the arbitral award.
The court’s order described the July 24 award as having become due and enforceable, but the current order remains an interim preservation measure pending the hearing and determination of the motion on notice. The distinction is significant because the court has not, in the order reported on Sunday, October 4, finally determined all issues surrounding enforcement of the award.
The case is scheduled to return to court on October 22, 2026, when the motion on notice is expected to be heard. Until then, the financial institutions named in the order are expected to maintain the restrictions covering the sums identified by the court.
The $13.924 million award is separate from the N157.5 million described as reimbursable arbitration fees. In addition, the 20 per cent annual interest provision means the financial exposure could increase if an outstanding amount remains unpaid after the compliance period, subject to the terms of the arbitral award and subsequent legal proceedings.
For now, the immediate effect of Justice Osiagor’s order is on the operation of the affected accounts. The banks have been directed to preserve funds up to the specified amounts rather than allow transactions that could undermine the purpose of the interim order.
The matter will therefore remain before the Federal High Court as Gamji seeks to secure the value of the arbitration award and the state government’s position is considered through the continuing proceedings. The October 22 hearing is expected to provide the next significant step in determining how the dispute over the award proceeds.
The order does not itself amount to a final judgment on every aspect of the underlying contractual dispute between the parties.
The latest proceedings also show how disputes over public infrastructure contracts can continue years after projects are awarded. In this case, contracts signed in 2017 eventually led to arbitration in 2025 and a final award in July 2026, followed by the present court action over preservation and enforcement of the awarded sums.
📩 Stone Reporters News | 🌍 stonereportersnews.com
✉️ info@stonereportersnews.com | 📘 Facebook: Stone Reporters News | 🐦 X (Twitter): @StoneReportNew | 📸 Instagram: @stonereportersnews
Add comment
Comments