First Bank of Nigeria Limited (FirstBank) has recorded a major victory at the Court of Appeal in its dispute with General Hydrocarbons Limited (GHL).
In a judgment delivered on Thursday, the Court of Appeal, specially convened during its vacation at the instance of GHL, set aside the earlier decision of the Federal High Court, Port Harcourt, which had dismissed FirstBank’s claims over the diversion of proceeds from the sale of crude oil pledged as collateral for loan facilities.
The dispute centered on crude oil aboard the FPSO Tamara Tokoni, which GHL had pledged to FirstBank as security for substantial loan facilities. Contrary to the pledge, GHL allegedly diverted proceeds from the sale of the cargo, prompting the bank to seek judicial intervention.
FirstBank appealed the trial court’s ruling, which had treated the matter as a simple debt recovery claim. The Court of Appeal, however, upheld the bank’s position, affirming the maritime nature of the dispute and stressing the importance of preserving the res (the crude oil cargo) as the core subject of litigation. It accordingly set aside the trial court’s order vacating the arrest of the second respondent.
The appellate court granted FirstBank’s appeal, ordered the sale of the crude oil aboard the FPSO Tamara Tokoni, and directed that the proceeds be lodged in an interest-bearing escrow account under the custody of the Chief Registrar of the Court of Appeal.
The Registrar was further mandated to take possession of the cargo and safeguard it against any dissipation or unauthorised disposal pending resolution of the case at both the trial court and the court of arbitration.
This ruling represents a significant milestone for FirstBank, reinforcing its commitment to protecting its assets, upholding the integrity of financial transactions, and safeguarding the interests of its stakeholders.
Experts also said the judgment established a strong precedent for the enforcement of collateral agreements and accountability in high-value commercial transactions.
This ruling represents a milestone for FirstBank, reinforcing its commitment to protecting its assets and upholding the integrity of financial transactions.