The Supreme Court has ruled that FirstBank failed to meet its obligations under its Memorandum of Understanding (MoU) with General Hydrocarbons Limited (GHL), 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 the parties was contractual rather than an admiralty matter, ruling that both the Federal High Court and the Court of Appeal lacked jurisdiction to hear the case.
The court set aside the judgment of the Court of Appeal, 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 release the crude oil aboard the FPSO Tamara Tokoni to GHL.
In the lead judgment, prepared by Justice Emmanuel Agim and read by Justice Habeeb Abiru, the Supreme Court 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 court ruled that the dispute was a banking and commercial matter and not one involving ownership of the FPSO, the crude cargo or a ship’s freight.
It further held that the Memorandum of Understanding and subsequent financing agreements did not create any legal or equitable mortgage or security interest over the crude oil, adding that FirstBank had no legal basis to arrest or seek the sale of the cargo through admiralty proceedings.
The apex court concluded that FirstBank’s action was essentially a contractual debt recovery claim that fell outside the admiralty jurisdiction of the Federal High Court.
The judgment restores GHL’s control of the crude cargo and nullifies all previous Court of Appeal orders relating to its arrest and sale.
Reacting to the ruling, GHL’s counsel, Ojukwu Chikoso (SAN), said the judgment confirmed that FirstBank failed to fulfil its obligations under the financing arrangement with the company.
According to him, the prolonged legal dispute cost Nigeria more than $70 million due to the decline in global crude oil prices while the cargo remained under arrest.
He also noted that the Supreme Court awarded ₦5 million against FirstBank and urged the Central Bank of Nigeria (CBN) to strengthen oversight of commercial banks to prevent financing disputes from disrupting investments in the oil and gas sector.
Chikoso warned that allowing contractual disagreements to halt crude oil production and exports could undermine investor confidence and reduce government revenue.
The dispute arose from FirstBank’s claim that GHL owed about $19 million under financing arrangements linked to OML 120. GHL denied the allegation, insisting that FirstBank repeatedly breached the parties’ 2021 Memorandum of Understanding and that no payment was due.
