Federal High Court Restricts Osun Government Accounts Over $13.9m Arbitration Award
The Federal High Court sitting in Lagos has ordered commercial banks to restrict withdrawals from accounts operated by the Osun State Government over an unpaid arbitration award involving $13.9 million and N157.5 million.
Justice D.E. Osiagor issued the interim preservation order after Gamji Nigeria Company Limited approached the court seeking to secure funds belonging to the Osun State Government pending further proceedings.
The case, marked FHC/L/CS/1233/2026, arose from a prolonged contractual dispute between Gamji and the Osun State Government over water infrastructure projects executed in Ilesa West Local Government Area.
The court directed several banks holding accounts operated by the state government to immediately place a “Post No Debit” restriction on the affected accounts.
Under the order, the banks are required to prevent withdrawals and other debit transactions to the extent necessary to preserve funds covering the amounts contained in the arbitration award.
The financial institutions named in the order 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.
Gamji is seeking to recover $13,924,343.32 and N157.5 million awarded to the company following arbitration proceedings arising from contracts it entered into with the Osun State Government.
PulseNets learnt that the dispute can be traced to June 2017, when the state government awarded two contracts to Gamji for water infrastructure projects in Ilesa West.
The first contract, identified as Slot 1, involved the construction of transmission mains and booster pump stations.
The second, known as Slot 2, was for the construction of water reservoirs.
The projects were part of a wider water supply and sanitation programme in the area and were reportedly financed through an Islamic Development Bank loan facility facilitated by the Federal Ministry of Finance.
The original value of the Slot 1 contract was approximately $15.98 million, while Slot 2 was valued at about $9.70 million.
However, subsequent changes to the engineering designs and variations in the scope of work affected the implementation of the projects.
Gamji told the court that the changes caused delays and increased project costs, prompting the company to seek revisions to the contract values.
The revised value of Slot 1 reportedly rose to $20.24 million, while the value of Slot 2 increased to $10.95 million.
The company further informed the court that significant progress had been achieved on the projects despite the disagreements between the parties.
Gamji claimed that approximately 93 per cent of the work had been completed by October 2023.
It also stated that the Osun State Government issued a Substantial Completion Certificate on November 14, 2024.
However, the completion of most of the works did not resolve the dispute.
Further disagreements reportedly arose over extensions of time, price adjustments and increased costs of materials and labour.
Gamji said several of its claims were rejected by the state government.
Attempts to resolve the dispute through mediation subsequently failed, leading the company to issue a notice of arbitration on April 3, 2025.
The Osun State Government accepted the arbitration process and nominated an arbitrator to represent it.
Preliminary proceedings were subsequently held in Lagos on May 15, 2025.
The arbitration proceedings eventually resulted in a final award issued on July 24, 2026.
The arbitral panel ordered the Osun State Government to pay Gamji $13,924,343.32.
The panel also awarded N157.5 million in reimbursable arbitration fees.
In addition, an annual interest rate of 20 per cent was imposed on any outstanding amount after the expiration of the period granted for compliance.
Gamji said the deadline for compliance with the award expired on August 24, 2026, but that the Osun State Government had not made the required payment.
Against this background, the company returned to the Federal High Court seeking an order to preserve funds held in the state government’s bank accounts pending further steps to enforce the arbitral award.
Justice Osiagor subsequently granted the interim preservation order.
The judge directed the affected financial institutions to immediately impose the “Post No Debit” restriction on the accounts operated by the Osun State Government.
The restriction is specifically limited to the sums of $13,924,343.32 and N157.5 million.
The court held that the preservation order was necessary towards the liquidation of the arbitration award, which it described as due and enforceable, pending the hearing and determination of the substantive application.
The judge stated in the order:
“A preservation order of interim injunction is granted directing the cited financial institutions in Nigeria to immediately place a Post No Debit restriction on the Respondent’s account domiciled with them for the preservation of the funds with them in the sum of $13,924,343.32 and N157,500,000.00 towards the liquidation of the Arbitral Award dated 24th July, 2026 which has become due and enforceable, pending the hearing and determination of the motion on notice.”
The latest order is an interim measure, meaning the substantive legal proceedings concerning enforcement of the arbitration award are still ongoing.
The development comes less than two months after the Osun State Government was involved in another dispute concerning restrictions placed on some of its bank accounts.
In a related development, Politics Nigeria had earlier reported that the Economic and Financial Crimes Commission restricted one of the state’s accounts in August as part of an investigation into alleged financial transactions involving about N11 billion.
That action triggered a legal and political dispute between the Osun State Government and the anti-graft agency, particularly because the restriction occurred shortly before the August 15 governorship election.
The Federal Government later directed that the restriction be lifted, with the affected accounts subsequently reported to have become operational.
The Osun State Government also withdrew its legal action against the EFCC after the restrictions were lifted following intervention by President Bola Tinubu.
Governor Ademola Adeleke said he directed the state Attorney-General to discontinue the case after the President personally contacted him concerning the matter.
The latest court order, however, is separate from the earlier EFCC dispute.
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In this case, the restriction resulted from an application by a private company seeking to preserve funds connected to an arbitration award arising from contractual dealings with the Osun State Government.
PulseNets obtained that the Federal High Court has fixed October 22, 2026, for the hearing of the motion on notice.
Until the hearing, the interim restriction remains applicable to the accounts and amounts covered by the court’s order.
