An arbitral tribunal has ordered General Hydrocarbons Limited to pay $112,100 (about N162 million) and N111.25 million in legal and arbitration costs to First Bank of Nigeria, marking a significant victory for the lender in one of its many legal battles with the oil firm.
On Monday, the sole arbitrator, Justice Kumai Akaah, granted the award, directing General Hydrocarbons to pay First Bank within 30 days of the decision.
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“Failure to do so would attract a 10 per cent annual interest rate until full settlement,” the judge ruled.
Over the past year, the oil firm and the lender have been locked in bitter and protracted legal battles, fought across courtrooms from Lagos to Port Harcourt.
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The dispute stemmed from credit facilities obtained by General Hydrocarbons, which First Bank alleges the company repeatedly failed to repay despite several reminders and restructuring efforts.
At the heart of the disagreement is the bank’s claim that General Hydrocarbons defaulted on the repayment of multiple loan facilities, prompting the lender to seek arbitration after failed attempts at recovery.
First Bank is claiming $225.8 million, which it says represents the outstanding indebtedness on General Hydrocarbons’ account as of 30 September 2024.
General Hydrocarbons, an oil servicing firm, is majorly owned by Nduka Obaigbena, who also serves as Chairman and Editor-in-Chief of THISDAY and ARISE Media Group.
The Tribunal case
General Hydrocarbons was the claimant in the arbitration, while First Bank was the respondent.
According to court documents seen by PREMIUM TIMES, both parties had entered into a Subrogation Agreement (SA) on 29 May 2021 to facilitate the financing and profitable development of Oil Mining Lease (OML) 120. The agreement was intended to ensure repayment of an “Outstanding Exposure” owed to First Bank, using proceeds from oil production.
The Outstanding Exposure, as defined in the agreement, referred to a matured and unsettled obligation of a third party due to First Bank, amounting to $718 million as of 31 December 2020.
The debt arose from the bank’s financing of production activities in OML 26, OML 42, OML 30, and OML 34 under various Strategic Alliance Agreements involving the Nigerian Petroleum Development Company Limited and Atlantic Energy Drilling Concept Nigeria Limited.
A dispute later arose after General Hydrocarbons accused First Bank of breaching its obligations under the Subrogation Agreement.
The company initiated arbitration proceedings through a Notice of Arbitration dated 28 October 2024, pursuant to Clause 12 of the agreement.
Tribunal Findings
The tribunal found that General Hydrocarbons failed to prove its claims against First Bank, including the bank’s alleged obligation to fund the exploration, development, and production of OML 120.
It ruled that the oil firm could not establish that First Bank breached any of its contractual obligations or that the Subrogation Agreement was terminated or invalidated by the bank’s actions or inactions.
The tribunal further held that General Hydrocarbons was not entitled to any monetary claims, damages, or expenses, including those linked to third-party contractors, unpaid salaries, or failed contracts such as the Noble Rig deal.
Similarly, the tribunal rejected the company’s request for declaratory and injunctive relief to prevent First Bank from enforcing its security or recovering its receivables and assets.
Tribunal award
In delivering the final award, the sole arbitrator, Justice Akaah, ordered General Hydrocarbons Limited to pay First Bank of Nigeria Limited a total of $112,100 and N111.25 million as reasonable legal and arbitration costs.
Justice Akaah directed that the payment be made within 30 days from the award date.
“All declaratory reliefs, orders for specific performance, and injunctions sought by the claimant against the respondent are refused and denied in their entirety,” the arbitrator ruled, dismissing the claimant’s case in its entirety.
Background and court battle
The arbitration ruling marks the latest development in the legal battle between First Bank, whose largest shareholder is now billionaire Femi Otedola, and Mr Obaigbena’s General Hydrocarbons Limited.
Earlier in January, the Federal High Court in Port Harcourt ordered the arrest and detention of crude oil cargo aboard the Floating Production Storage and Offloading (FPSO) vessel Tamara Tokoni.
Justice E.A. Obile granted the order pending the provision of a satisfactory bank guarantee of $19.7 million plus interest and costs.
The court directed agencies, including the Nigerian Navy, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian Maritime Administration and Safety Agency (NIMASA), and the Nigerian Ports Authority (NPA), to assist in enforcing the order.
First Bank had filed a debt recovery suit against Mr Obaigbena and family members, including Efe Obaigbena and Olabisi Obaigbena, alleging they used General Hydrocarbons Limited to amass millions of dollars in debt.
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The bank secured an order from the Federal High Court in Lagos blocking the accounts and assets of Mr Obaigbena, his company, and his daughters in all commercial banks across Nigeria.
In response, General Hydrocarbons, through its solicitors Abiodun Layonu & Co, described the order as an “abuse of court process,” citing an earlier ruling by Justice A. Lewis-Allagoa on 12 December 2024, which barred First Bank from obstructing the firm’s access to loan facilities needed for operations in OML 120.
According to a document seen by PREMIUM TIMES, General Hydrocarbons also obtained an injunction from the judge, restraining First Bank from hindering the company from “making any calls or demands, or taking any steps whatsoever to enforce any security, receivables, instrument, finance documents or assets of the applicant which have been charged as security for the facility agreements in respect of the applicant’s operation of OML 120.”
In their statement in January, General Hydrocarbons remarked that First Bank has persisted in ignoring and disobeying a persisting court judgement and has chosen to mislead the public.
But First Bank denied breaching any court order, saying the assets freezing order it obtained did not violate the court’s earlier ruling in favour of General Hydrocarbons.
