A Nigerian tribunal sitting in Lagos has ordered General Hydrocarbons Limited (GHL) to pay First Bank of Nigeria Limited (FirstBank) $112,100 and N111 million as costs over a dispute related to Oil Mining Lease (OML) 120.
Justice Kumai Bayang Akaahs gave the order on Tuesday while ruling on a Notice of Arbitration filed by GHL against First Bank.
Justice Akaahs held that GHL failed to substantiate its claims against First Bank regarding the alleged “absolute obligation” of the bank to fund the optimal exploration, development, and production of OML 120 under a purported Subrogation Agreement dated May 29, 2021.
Facts of the Proceedings
Arbitration documents seen by Nairametrics revealed that GHL and First Bank entered into a Subrogation Agreement (SA) dated May 29, 2021, to establish a working arrangement for the financing and profitable development of OML 120.
The agreement was intended to ensure the payment of financial obligations associated with exploration and production activities, as well as to support the business objectives of the parties involved.
GHL later accused the bank of breaching the agreement and subsequently approached the tribunal for redress.
GHL’s lead counsel, Paul Usoro, SAN, urged the tribunal to declare that the Subrogation Agreement imposed an “absolute obligation on First Bank” to fund the optimal exploration, development, and production of OML 120 to facilitate agreed payments.
In addition, Usoro and his legal team sought orders restraining the bank from publishing that GHL was indebted to it in the sum of US$718 million.
They also requested that the tribunal compel First Bank to pay GHL £1,350,000, $14,433,222.38, and N5.2 billion, among other claims, as refunds for amounts allegedly spent on third-party contractors due to the bank’s purported failure to meet its funding obligations under the Subrogation Agreement.
On its part, the bank’s legal team, led by Prof. Gbolahan Elias, SAN, and Babajide Koku, SAN, argued that the relevant clauses of the Subrogation Agreement clearly showed that there was no absolute, unqualified, or unconditional obligation on the bank to fund GHL.
They contended that GHL’s position contradicted global best practices and the Prudential Guidelines for Deposit Money Banks in Nigeria issued by the Central Bank of Nigeria (CBN) in August 2019.
They further emphasized that the agreement merely established a traditional lender–borrower relationship between the parties and that the bank had not underfunded the OML 120 development project.
What the Tribunal Said
In his verdict, Justice Akaahs held that while Clause 2(b) of the agreement stipulates that First Bank has a contractual obligation to finance the development, operation, and optimal exploration and production of OML 120, such an obligation “is not absolute.”
The tribunal found that, in line with the bank’s conditional funding obligation under the agreement, First Bank had advanced several loans to GHL, totaling US$185 million, at various times between June 25, 2021, and January 4, 2024. These included:
- US$10,000,000 (Ten Million US Dollars)
- US$110,000,000 (One Hundred and Ten Million US Dollars)
- US$40,000,000 (Forty Million US Dollars)
- US$25,000,000 (Twenty-Five Million US Dollars)
Justice Akaahs agreed with the bank’s argument that it was entitled to review, evaluate, and approve each funding request from GHL.
“As earlier found in this award, the respondent did not fail, delay, or breach its obligations under the Subrogation Agreement. The respondent’s funding obligation is conditional. The respondent has so far provided funding to the claimant in the cumulative sum of $185,000,000 (One Hundred and Eighty-Five Million US Dollars),” Akaahs ruled.
He further held that the bank was not responsible for any losses or unproductive time allegedly suffered by GHL.
Consequently, the tribunal ordered GHL to pay First Bank $112,100 and N111 million as total costs.
The tribunal also held that should GHL fail to remit the total sum within the specified thirty (30) days, the outstanding amount shall accrue simple interest at the rate of 10% (ten per cent) per annum from the date immediately following the expiry of the 30-day compliance period until the date of full and final payment.
Backstory
Recall that the Court of Appeal had, in September 2025, allowed an appeal filed by First Bank of Nigeria, setting aside an earlier decision of the Federal High Court in Port Harcourt in its OML-linked case against GHL, a company linked to media entrepreneur Nduka Obiagbena.
The appellate court reportedly upheld arguments advanced by the bank’s legal team, led by Babajide Koku (SAN) and Victor Ogude (SAN), that proceeds from the sale of crude oil cargo aboard the FPSO Tamara Tokoni had been improperly diverted.
The cargo had been pledged as security for loan facilities granted to GHL.
In its judgment, the Court of Appeal overturned Justice E.A. Obile’s ruling of March 2025, which had vacated enforcement orders obtained by the bank in January.
The court further directed the Chief Registrar of the Court of Appeal, in conjunction with the Admiralty Marshal, to assume control of the crude cargo on the vessel to prevent dissipation or disposal pending resolution of the substantive dispute by court of competent jurisdiction and the arbitrary tribunal.
The development signals a major legal blow to GHL’s dispute with the bank over the OML 120 issue.
