The Supreme Court has ruled that First Bank failed to fulfil its obligations under its Memorandum of Understanding (MoU) with General Hydrocarbons Limited (GHL), while ordering the immediate release of crude oil aboard the FPSO Tamara Tokoni to the oil company.
In a unanimous judgment delivered by a five-member panel, the apex court held that the dispute between First Bank and GHL was contractual in nature rather than an admiralty matter, declaring that both the Federal High Court and the Court of Appeal lacked jurisdiction to entertain the suit.
The court consequently set aside the Court of Appeal’s judgment, which had ordered the arrest and sale of the crude cargo, and directed the Chief Registrar of the Court of Appeal and the Admiralty Marshal to immediately hand over the crude oil aboard the FPSO Tamara Tokoni to GHL.
Justice Emmanuel Agim, whose lead judgment was read by Justice Habeeb Abiru, held that FirstBank’s claim arose from an alleged breach of a financing agreement requiring proceeds from crude oil sales to be paid into a designated account.
“The cause of action is breach of the financing agreement… A dispute over the diversion of sale proceeds is fundamentally a banking and commercial dispute. It is not a dispute over ownership of the FPSO, the cargo of crude oil or a ship’s freight,” the court held.
The justices further ruled that the financing agreements did not create any legal or equitable mortgage or security interest over the crude oil itself.
“The MoU and the further financing agreements did not create a legal or equitable mortgage… The bare contractual obligation… cannot give the 1st respondent the right to arrest and sell the cargo through an admiralty action,” the judgment stated.
The Supreme Court also affirmed that FirstBank’s suit was essentially a contractual debt recovery claim outside the admiralty jurisdiction of the Federal High Court.
The ruling effectively restored GHL’s control over the crude cargo and nullified all previous orders made by the Court of Appeal relating to its arrest and sale.
Reacting to the judgment, one of GHL’s lawyers, Ojukwu Chikoso (SAN), said the decision confirmed that FirstBank failed to honour its obligations under the financing arrangement.
“The court made findings that First Bank could not even live up to its expectation to fund the Memorandum of Understanding it entered into with GHL,” he said.
Chikoso also argued that the prolonged litigation had significant economic consequences for Nigeria.
According to him, Nigeria lost more than $70 million because crude oil prices fell sharply while the cargo remained tied down by the legal dispute.
“They awarded ₦5 million against FirstBank… but to hold Nigeria’s crude oil when prices were around $160 per barrel and today crude is around $60 or $70 means Nigeria lost about $70 million,” he said.
He urged the Central Bank of Nigeria (CBN) to strengthen oversight of commercial banks to prevent similar disputes from disrupting investments in the oil and gas sector.
According to him, financing disputes should not be allowed to halt crude oil production or exports, warning that such actions ultimately undermine investor confidence and government revenue.
The dispute stemmed from First Bank’s claim that GHL owed about $19 million under financing arrangements linked to OML 120. GHL denied the claim, maintaining that First Bank had repeatedly breached the parties’ 2021 Memorandum of Understanding and that no payment was due.
Alex Enumah
