Court Restricts Osun Government Bank Accounts Over $13.9m Arbitration Award
E-ISSN: 2354-4481
By Grace Chidimma Ibe
The Federal High Court in Lagos has ordered commercial banks to place a “Post No Debit” restriction on bank accounts operated by the Osun State Government over an outstanding $13.9 million arbitration award in favour of Gamji Nigeria Company Limited.
Justice D.E. Osiagor issued the interim order following an application by Gamji seeking to preserve funds belonging to the state government up to the value of the award arising from a dispute over water infrastructure projects in Ilesa West Local Government Area of Osun State.
The amount being sought by Gamji includes $13,924,343.32 and ₦157.5 million awarded to the company following arbitration proceedings between the parties.
The banks affected by the order include Guaranty Trust Bank (GTBank), Access Bank, First Bank, Zenith Bank, United Bank for Africa (UBA), Ecobank, Fidelity Bank, Stanbic IBTC, Sterling Bank, Union Bank and Wema Bank, among others.
The dispute followed two contracts awarded by the Osun State Government to Gamji in June 2017 for the construction of water infrastructure in Ilesa West Local Government Area.
The projects involved the construction of transmission mains, booster pump stations and water reservoirs, among other infrastructure.
According to the company’s case, the original value of the first contract was approximately $15.98 million, while the second was valued at about $9.70 million.
Gamji subsequently claimed that design changes and variations introduced during the execution of the projects increased the contract values to approximately $20.24 million and $10.95 million, respectively.
The company maintained that it had substantially executed the projects, claiming that about 93 per cent of the work had been completed by October 2023.
The state government later issued a Substantial Completion Certificate in November 2024, according to the details presented before the court.
However, disagreements subsequently emerged between the parties over extensions of time, price adjustments and additional costs arising from increases in the prices of construction materials and labour.
Attempts to resolve the disagreement through mediation reportedly failed, leading the parties to arbitration.
Following the arbitration proceedings, the arbitral panel on July 24, 2026, ordered the Osun State Government to pay Gamji $13,924,343.32 and ₦157.5 million in reimbursable arbitration fees.
The panel also awarded an interest rate of 20 per cent per annum on any outstanding balance after the expiration of the period allowed for compliance with the award.
Gamji said the deadline for payment expired on August 24, 2026, without the Osun State Government settling the outstanding amount.
The company subsequently approached the Federal High Court in Lagos, seeking orders to preserve the funds in the state
government’s bank accounts pending the determination of its application concerning the enforcement of the arbitration award.
Following the application, Justice Osiagor granted an interim order directing the affected commercial banks to place a “Post No Debit” restriction on the accounts operated by the Osun State Government.
The order requires the banks to preserve funds in the accounts up to the value of the amounts awarded to Gamji, subject to the terms of the court’s order and further proceedings in the case.
The restriction is intended to prevent withdrawals or other transactions that could reduce the funds available in the affected accounts while the court considers the substantive application.
The court’s order does not constitute a final determination of all issues arising from the dispute, as the substantive application remains pending before the Federal High Court.
The case has been adjourned until October 22, 2026, for hearing.
The dispute highlights the financial consequences that can arise from disagreements over major public infrastructure contracts, particularly where variations, delays, cost increases and payment obligations become subjects of arbitration and subsequent court proceedings.
