… awards N5m cost against FBN
The Supreme Court, Friday, set aside the Judgment of the Court of Appeal which ordered the seizure of an oil vessel and its cargo of crude oil belonging to General Hydrocarbons Limited (GHL ) to settle a dispute over alleged breach of contract with the First Bank of Nigeria.
The court slammed the FBN with a N5million fine.
The Apex court therefore, ordered the Chief Registrar of the Court of Appeal and the Admiralty Marshal to immediately hand over the crude oil aboard the FPSO Tamara Tokoni to General Hydrocarbons Limited (GHL).
In a unanimous judgment, the a five-member panel of the apex court ordered the return of the ceased vessel and the proceeds from the sale of its content back to its rightful owner, the GHL.
In setting aside the decision, the Apex Court said the Federal High Court was wrong to have assumed jurisdiction in a matter which is not a maritime dispute, stating it is purely financial and contract related.
The Court says the case is on breach of contract and therefore does not give the First Bank of Nigeria the right to cease the oil vessel and sell its content to recover a debt.
Recall that a three-member panel of the appellate court sitting in Abuja, had last year, set aside the ruling of Justice E.A Obile of the Federal High Court, Port Harcourt, which had in March last year, dismissed the case of FBN against GHL, in respect of the cargo of crude on board FPSO Tamara Tokoni.
The three-member panel led by Justice Hamma Barka, ordered that the crude be sold and that the proceeds be paid into a court-administered escrow account, pending the hearing and determination of the arbitration and other processes currently ongoing.
According to the justices, the order was made in the interest of justice and the need to preserve the “res” (subject matter) of the case, pending the determination of the case at the high court and before an arbitration panel.
Not satisfied by the verdict of the appeal court, GHL headed to the Supreme court, praying it to set aside the September 11, judgment of the Court of Appeal against its assets.
In their argument, GHL submitted that the lower court erred in law, when it made the orders against their assets, adding that the appellate court lacked the necessary jurisdiction to hear the case of FBN.
Delivering judgment in the appeal, the five-member panel of the apex court held that the suit instituted by First Bank of Nigeria was contractual in nature and not an admiralty matter.
“The cause of action is breach of the financing agreement by the appellant not paying the proceeds of the crude oil produced and lifted from OML120 into a collection account maintained by the appellant with 1st respondent and diverting same elsewhere.
“A dispute over the diversion of sale of proceeds of produced and lifted crude oil in breach of a financing agreement is fundamentally a banking and commercial dispute. It is not a dispute over ownership of the FSPO, the cargo of crude oil or a ship’s freight. The contractual promise to pay the sale proceeds into a designated account as a condition for financing the production of the crude oil creates, at most, a contractual right against the appellant not a proprietary right in the crude oil”, Justice Abiru held.
While emphasizing that FBN does not have any right to seize the crude cargo, the apex court explained that the fact that FBN financed the appellant’s production of the crude oil and was entitled to recover the facility from the proceeds of sale of the produced crude paid by the appellant into a designated account maintained with it, did not by itself gave FBN ownership of the crude oil or make the crude oil security for the financing of the crude oil production.
“The MoU and the further financing agreements did not create a legal or equitable mortgage or a fixed charge or security interest over the produced crude oil itself or constitute an assignment of title in the Crude by the appellant to the 1st respondent.
“The bare contractual obligation of the appellant to pay the proceeds of Sale of the produced and lifted crude oil from OML120 cannot give the 1st respondent the right to arrest and sell the cargo through an admiralty action. 1st Respondent’s Suit No. FHC/PH/CS/02/2025 being solely for breach of the proceeds domiciliation clause in the MoU and further financing agreements cannot be a valid basis for the arrest, take over and sale of the crude oil cargo at the instance of the 1st respondent as the financier of the production of the said cargo.
“Such a suit cannot be entertained and determined under the admiralty jurisdiction of the trial Federal High Court. The 1st respondent’s claim for diversion of the sale proceeds is ordinarily a contractual or debt recovery claim, not a maritime claim and falls outside the admiralty jurisdiction of the trial court”, the apex held.
Also, the Supreme court faulted the trial court for exercising admiralty jurisdiction over the suit on the grounds that the dispute is about the proceeds of sale of cargo stored on an FSPO at sea or that the underlying transaction relates to offshore oil production.
“It is clear from the above provisions that the admiralty jurisdiction of the trial court extends only to matters expressly recognized as maritime claims, which are either proprietary or general.
” Proprietary maritime claims relate to ownership or possession of a ship or mortgage over a ship or its freight or dispute between co-owners of a ship. A general maritime claim refers to a claim for loss of or damage to goods carried by a ship and a claim out of an agreement relating to the carriage of goods or persons by a ship or to the use or hire of a ship whether by charter party or otherwise.
“It is obvious that 1st Respondent’s Suit No. FHC/PH/CS/02/2025 is neither a general maritime claim nor a proprietary maritime claim. It is a claim for breach of contract to pay proceeds of sale of produced crude oil into a designated account and recovery of the diverted proceeds”, the apex court held.
The court maintained that the jurisdiction of the Federal High Court over contractual disputes is limited or confined to contracts on the matters expressly listed in Subsection(1) of Section 251 of the 1999 Constitution, the apex court held that the contract to pay proceeds of sale of produced crude oil into a designated account is not connected to any of the subject matters listed in Section 251(1) of the 1999 Constitution as constituting the subject matter jurisdiction of the Federal High Court.
“The trial Federal High Court lacked the subject matter jurisdiction to entertain the claim in Suit No. FHC/PH/CS/02/2025.
“Therefore its exercise of jurisdiction over the suit is a nullity, Equally, Appeal No. CA/PH/292/2025 arising from Suit No. FHC/PH/CS/02/2025 and the proceedings in the said appeal and all the decisions and orders made therein in exercise of jurisdiction in respect of Suit No. FHC/PH/CS/02/2025 are equally a nullity.
“Accordingly, the orders made by the Court of Appeal on 11-9-2025 for inter alia the arrest and sale of the cargo of crude oil on board FPSO Tamara Tokoni are hereby set aside.
“In the light of the foregoing, no useful purpose would be served determining all other issues raised for determination in this appeal.
“On the whole this appeal succeeds.
“It is hereby allowed. The judgment of the Court of Appeal delivered on September 11, 2025, in Appeal No. CA/PH/292/2025 and all the orders made therein are hereby set aside.
“It is hereby further ordered that the Chief Registrar of the Court of Appeal and the Admiralty Marshal forthwith release from their possession and control and hand over to the appellant the said cargo of crude oil on board FPSO Tamari Tokoni.
“The 1st respondent shall pay costs of 5 million naira to the appellant”, the court ordered
The FPSO has crude oil belonging to GHL, Conoil/NNPC and First Bank claimed that GHL owed it $19 million in debt.
Inits responds, GHL denied the claim, saying FBN has on several occasions breached the 2021, Subrogation Agreement and no payment was due.
GHL also accused FBN of abusing an ex parte freezing orders when it selectively released part of the crude in the FPSO to Conoil and NNPCL.
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