3 Oct 2025
- 2 Comments
When First Bank of Nigeria Limited walked into the Court of Appeal in Abuja on September 11, 2025, it wasn’t just another case file—it was the climax of a months‑long tug‑of‑war over a floating barrel of black gold.
The three‑judge panel, led by Justice Polycarp Kwahar, overturned a prior ruling from the Federal High Court in Port Harcourt and ordered the crude aboard the FPSO Tamara Tokoni to be sold, with every penny parked in an interest‑bearing escrow administered by the court’s Chief Registrar.
Here’s why the decision matters: the oil cargo, valued at roughly $225.8 million, was pledged as security for a loan facility that First Bank claims GHL never repaid. Yet the court stopped short of handing the proceeds directly to the bank, opting instead for a guarded escrow while arbitration and further litigation play out.
Background: A Debt Secured by a Ship‑Bound Oilfield
In early 2024, General Hydrocarbons Limited (GHL) secured a multi‑million‑dollar credit line from First Bank. The agreement stipulated that the crude oil produced on the offshore vessel – the FPSO Tamara Tokoni – would serve as collateral. By mid‑2025, First Bank alleged that GHL had diverted a portion of the oil sale proceeds to third parties, including Conoil and the Nigerian National Petroleum Corporation (NNPC), essentially breaching the pledge.
GHL, for its part, denied any debt, calling the claim a “baseless” attempt by the bank to “abuse” an ex parte freezing order that it says was lifted in January 2025 by Justice Emmanuel Obile of the Federal High Court, Port Harcourt.
The Courtroom Drama: From Federal High Court to the Appeal Bench
First Bank’s legal team – headed by senior counsel Babajide Koku SAN and Victor Ogude SAN – fought a series of defeats. Earlier judgments by judges Lewis Alagoa (Lagos) and Deinde Dipeolu (Lagos) had all sided with GHL, treating the dispute as a plain‑vanilla debt recovery case.
The turning point came when Justice Kwahar labeled the matter “maritime in nature,” emphasizing that the asset at stake – a cargo of crude oil physically situated on a vessel – falls under admiralty law, not merely a contractual claim. The appellate court therefore reinstated the arrest of the cargo and mandated its immediate sale.
Crucially, the ruling also appointed the Chief Registrar of the Court of Appeal – acting in coordination with the Admiralty Marshal – to take charge of the oil, safeguarding it from “expropriation, waste, dissipation, or fraudulent disposition” until the final determination of the suit or any arbitration.
Reactions from the Front Lines
First Bank celebrated the victory as a “strategic win” that validates its stance on protecting collateral. The bank’s spokesperson said the escrow arrangement ensures that the proceeds remain intact while the legal saga continues.
GHL, however, blasted the decision as “unjustified judicial overreach.” In a statement, its CEO, Dr. Chukwudi Nwankwo, warned that the escrow could cripple the company’s cash flow, forcing it to seek alternative financing.
Industry observers noted that the case underscores the thin line between banking security interests and Nigeria’s complex maritime jurisdiction. “If courts start treating oil cargoes as merely financial guarantees, we could see a chilling effect on offshore financing,” said Prof. Adaeze Okafor, a petroleum law expert at the University of Lagos.
Broader Impact: What This Means for Nigeria’s Oil‑Finance Landscape
- Precedent for Maritime Collateral: The decision may open the door for banks to demand more robust maritime liens on offshore assets.
- Escrow as a Protective Tool: Courts could increasingly use escrow accounts to balance creditor claims with asset preservation.
- Risk to Oil Companies: Firms that pledge production may now face tighter scrutiny and potential operational delays.
- Regulatory Scrutiny: The Central Bank of Nigeria may revisit guidelines on oil‑backed loans to avoid systemic risk.
What’s Next? The Road Ahead for the Dispute
With the crude slated for sale within weeks, the primary question is who ultimately pockets the money. The escrow account will earn interest, but the final allocation hinges on the outcome of the pending arbitration – a process that could stretch into 2026.
Both parties have indicated they will appeal aspects of the appellate ruling. GHL is expected to file a petition to the Supreme Court, arguing that the court misapplied admiralty law, while First Bank is preparing a parallel arbitration claim to recover the $225.8 million it believes is rightfully theirs.
Meanwhile, the Nigerian oil sector remains watchful. The FPSO Tamara Tokoni continues production, but its future ownership and revenue stream are now tangled in legal red tape.
Key Facts
- Date of Appeal Decision: 11 September 2025.
Frequently Asked Questions
How does the escrow arrangement affect First Bank’s claim?
The escrow keeps the crude proceeds safe and interest‑bearing, but it means First Bank cannot access the cash immediately. The bank will only receive the funds once the arbitration or any higher‑court ruling confirms its right to the pledged amount.
What legal basis did the Court of Appeal use to overturn the Federal High Court?
Justice Kwahar argued that the case involved a maritime asset – crude oil on a floating vessel – which falls under admiralty jurisdiction. This classification required the court to treat the cargo as a lienable maritime claim rather than a simple debt dispute.
Could this ruling change how Nigerian banks secure oil‑related loans?
Experts say the decision sets a precedent for using maritime liens as collateral. Banks may now demand stricter pledge agreements and seek court‑ordered escrow mechanisms to protect their interests, potentially tightening credit conditions for oil producers.
What are the chances GHL will succeed in a Supreme Court appeal?
It’s hard to predict. While GHL argues the appellate court misapplied admiralty law, the Supreme Court historically upholds decisions that protect creditor rights in oil‑backed transactions. A ruling either way could reshape Nigeria’s offshore financing landscape.
How might this dispute impact oil production on the FPSO?
The vessel remains operational, but uncertainty over revenue streams can affect maintenance budgets and future investment. If the escrow holds the proceeds for an extended period, cash‑flow constraints could delay planned upgrades.
Kim Coulter
October 3, 2025When I read about First Bank pulling the reins on that massive oil cargo, I see a glimpse of national sovereignty asserting itself against shadowy corporate machinations. This is not just a banking dispute; it is a micro‑cosm of how a nation's resources can be weaponized by foreign interests. The court's decision to hold the proceeds in escrow is a reminder that the state must guard its wealth like a vigilant sentinel. In the grand tapestry of history, every thread of oil that fuels a country's engine is a strand of its destiny. If we allow multinational lenders to skim the cream off the top with impunity, we surrender our economic future. The legal grounding in admiralty law, as highlighted by Justice Kwahar, underscores that the seas belong to the people, not just to financial engineers. Moreover, the escrow mechanism acts as a safeguard, ensuring that no rogue party can siphon wealth into hidden accounts. It is a modest but potent assertion of Nigerian agency in the global energy arena. The precedent set here may embolden other banks to demand proper collateral, but it also signals to oil firms that they cannot hide behind opaque structures. In the end, the balance of power tilts toward those who understand the law as a tool of national pride. We must cherish this victory, not as a victory for a single bank, but as a collective step toward reclaiming control over our oil reserves. Let the world take note that Nigeria will no longer be a passive player in its own resource game. The court's choice to involve the Admiralty Marshal reflects a deep respect for maritime heritage, which has always been a cornerstone of our economic identity. This case is a lesson in the importance of legal foresight when drafting loan agreements that touch upon national assets. As citizens, we should celebrate the vigilance displayed by the judiciary and the bank, while urging policymakers to tighten regulations that protect our oil from exploitation. The long‑term impact may ripple through future financing deals, ensuring more transparent and equitable terms. Ultimately, the battle for the Tamara Tokoni cargo is a battle for the soul of our nation's prosperity.
Michelle Toale-Burke
October 19, 2025Wow, the drama! 😱 First Bank finally getting a slice of that $225.8 million feels like watching a thriller where the underdog finally swings the bat. I can almost feel the tension in the courtroom-people holding their breath, the sighs, the whispers. It’s heartbreaking how GHL’s cash flow might crumble under this escrow; they’re probably losing sleep over it. 😢 The whole thing is a roller‑coaster of emotions, and I’m just here clutching my coffee, trying to process the fallout.