The 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 move follows a $13.9 million arbitration award in favor of Gamji Nigeria Company Limited. The award arose from water infrastructure projects in Ilesa West Local Government Area of Osun State.
According to court documents, Gamji Nigeria Company Limited was awarded the contract in June 2017 for water infrastructure works. The projects involved constructing transmission mains, booster pump stations, and water reservoirs. The original contract value for the first slot was approximately $15.98 million, while the second slot was valued at around $9.70 million.
However, the project faced several challenges, including changes to engineering designs, variations in the scope of work, and variation orders, which resulted in delays and increases in contract values. By October 2023, about 93 percent of the work had been completed, and the state government issued a Substantial Completion Certificate on November 14, 2024.
Disagreements later arose over claims relating to extensions of time, price adjustments, and increases in the cost of materials, labor, and other inputs. Despite attempts at mediation, the parties could not resolve the dispute, leading to an arbitration notice issued by Gamji on April 3, 2025. The arbitration panel commenced proceedings and delivered its final award on July 24, 2026.
The arbitration panel ordered the Osun State Government to pay $13,924,343.32 and N157.5 million in reimbursable arbitration fees. The award also provided for interest at 20 percent 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.
In response, Gamji filed a court application seeking to preserve the awarded funds. Justice D.E. Osiagor granted the interim preservation order, directing the listed financial institutions to restrict withdrawals from the state government's accounts. The order 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 court adjourned the matter until October 22, 2026, for the hearing of the motion on notice. The "Post No Debit" restriction will remain in place until the court determines the motion. This development has significant implications for the Osun State Government, which must now rely on other sources to fund its activities.
Key points
- The Federal High Court in Lagos has ordered commercial banks to freeze Osun State Government accounts over a $13.9 million arbitration award.
- The arbitration award arose from water infrastructure projects in Ilesa West Local Government Area of Osun State.
- The court has adjourned the matter until October 22, 2026, for the hearing of the motion on notice.
