A Federal High Court in Lagos has issued an interim order directing commercial banks to place a "Post No Debit" restriction on accounts operated by the Osun State Government. This order stems from a $13.9 million arbitration award granted to Gamji Nigeria Company Limited. The award arose from disputes over water infrastructure projects in Ilesa West Local Government Area of Osun State.
The dispute originated from two contracts awarded to Gamji by the Osun State Government in June 2017 for water infrastructure works. The projects involved constructing transmission mains, booster pump stations, and water reservoirs. The original contract values were approximately $15.98 million and $9.70 million for Slot 1 and Slot 2, respectively. However, due to changes in engineering designs and variations in the scope of work, the contract values increased.
Gamji Nigeria Company Limited claimed that about 93% of the work was completed by October 2023, and the state government issued a Substantial Completion Certificate on November 14, 2024. Despite this, disagreements arose over claims relating to extensions of time, price adjustments, and increases in the cost of materials, labor, and other inputs. The company submitted several claims, which were rejected by the state government, leading to arbitration.
The arbitration panel delivered its final award on July 24, 2026, ordering the Osun State Government to pay $13,924,343.32 and N157.5 million. The award also included interest at 20% per annum on any outstanding portion of the debt after the stipulated compliance period. The deadline for compliance expired on August 24, 2026, but the awarded sums remained unpaid, prompting Gamji to file a court application.
Justice D.E. Osiagor issued the interim order, directing listed financial institutions to place a "Post No Debit" restriction on the Osun State Government's accounts. The restriction aims to preserve funds up to the value of $13,924,343.32 and N157.5 million towards the liquidation of the arbitral award. The listed financial institutions include Guaranty Trust Bank, Access Bank, First Bank, Zenith Bank, and several others.
The court adjourned the matter until October 22, 2026, for the hearing of the motion on notice. The interim order allows for the preservation of funds pending the hearing and determination of the motion. This development has significant implications for the Osun State Government, as it may impact its financial operations and ability to access funds.
The case highlights the importance of arbitration in resolving disputes and the need for parties to comply with arbitration awards. The Osun State Government's accounts will remain restricted until the court determines the motion on notice. Key parties involved include Gamji Nigeria Company Limited, the Osun State Government, and the listed financial institutions.
Key points
- A Lagos Federal High Court has ordered a "Post No Debit" restriction on Osun State Government accounts due to a $13.9 million arbitration award in favor of Gamji Nigeria Company Limited.
- The dispute arose from water infrastructure projects in Ilesa West Local Government Area of Osun State, with original contract values of approximately $15.98 million and $9.70 million.
- The court adjourned the matter until October 22, 2026, for the hearing of the motion on notice.
