Court Freezes Osun State Accounts Over $13.9 Million Arbitration Award
The Federal High Court in Lagos has issued an interim order directing multiple commercial banks to place a “Post No Debit” restriction on accounts belonging to the Osun State Government. This decisive action stems from an outstanding arbitration award of $13.9 million in favour of Gamji Nigeria Company Limited.
The order, granted by Justice D.E. Osiagor, follows an application filed by Gamji through its counsel, Yunus AbdulSalam, SAN, in a suit marked FHC/L/CS/1233/2026. The company seeks to recover $13,924,343.32 and ₦157.5 million awarded to it following an arbitration concerning water infrastructure projects executed in the Ilesa West Local Government Area of Osun State. The financial institutions implicated in the court’s directive 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.
Justice Osiagor mandated that these banks preserve funds held for the state government, up to the value of the arbitral award, pending the determination of Gamji’s substantive application. The court’s ruling states: “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 ₦157,500,000.00 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 dispute originated from two contracts awarded to Gamji by the Osun State Government in June 2017 for the construction of water transmission mains, booster pump stations, and water reservoirs in Ilesa West. These projects were part of a larger water supply and sanitation initiative financed by an Islamic Development Bank loan. Gamji reported that initial contract values of $15.98 million and $9.70 million for the respective project slots were revised due to design changes and scope variations, increasing to $20.24 million and $10.95 million.
By October 2023, Gamji indicated that approximately 93 per cent of the projects were completed, with a Substantial Completion Certificate issued by the state government on November 14, 2024. However, disagreements arose over claims for extensions of time, contract price adjustments, and increased material and labour costs. After mediation efforts failed, Gamji initiated arbitration proceedings on April 3, 2025. The state government reportedly participated in the process, leading to a final award on July 24, 2026.
The arbitral panel ordered the Osun State Government to pay Gamji the specified sums, with a provision for a 20 per cent annual interest on any outstanding amount post-compliance period. Gamji informed the court that the compliance deadline of August 24, 2026, passed without payment, prompting the application to preserve state funds. The court has adjourned the matter to October 22, 2026, for the hearing of the motion on notice. This development underscores the critical importance of robust contract management and timely settlement of arbitral awards for state governments and their financial dealings.
