The Supreme Court on Friday set aside a Court of Appeal decision that disqualified senior lawyers Wole Olanipekun and Muiz Banire from appearing for Nestoil Limited and Neconde Energy Limited in a $2 billion dispute over a contested receivership.
In a unanimous judgement delivered by Mohammed Idris, the court held that a receiver whose appointment is being challenged in court cannot, in the same proceedings, assume control over the company’s choice of legal representation, Vanguard newspaper reported.
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The court ruled that doing so would create a clear conflict of interest, especially where the validity of the receivership itself is the central issue before the court.
Mr Olanipekun can resume his role for Neconde Energy, while Mr Banire continues to represent Nestoil in the ongoing dispute involving a consortium of lenders led by FBNQuest Merchant Bank and First Trustees Limited.
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At the centre of the case is whether a receiver appointed by lenders can exclusively determine a company’s legal representation, even where the validity of that appointment is under judicial scrutiny.
The Supreme Court answered in the negative.
Mr Idris noted that the issues brought before the trial court sought interpretation on whether the lenders were entitled to enforce security, appoint a receiver, and whether such a receiver could lawfully exercise powers under the appointment.
According to the court, these questions go to the “very foundation” of the receivership rather than routine management or asset realisation.
“It would occasion a conflict of interest,” the court held, “for a receiver appointed by parties whose rights are being challenged to also determine the legal representation of the company in the same proceedings.”
The court emphasised that the receiver’s authority derives from the transaction under dispute, making it improper for such a receiver to control the company’s legal defence in a suit questioning that authority.
It further held that proceedings challenging the validity and scope of a receivership do not fall within the general powers granted to a receiver under Section 556(3) of the Companies and Allied Matters Act (CAMA) and its Eleventh Schedule.
In such circumstances, the court ruled, a company retains its residual powers to defend itself through its board of directors and counsel of its choice.
“The defence of the action through its directors and the counsel retained by them cannot be said to be incompetent merely because a receiver has been appointed,” Mr Idris said.
The court faulted the Court of Appeal’s 13 January decision, which had recognised the receiver as the sole authority to appoint a lawyer and consequently disqualified Messrs Olanipekun and Banire.
Describing that position as erroneous, the Supreme Court held that the lower court failed to appreciate the inherent conflict in allowing a receiver—whose appointment is under challenge—to control the company’s legal representation.
How the dispute started
The case began in October 2025 when the Federal High Court in Lagos granted a Mareva injunction in favour of First Trustees and its subsidiary, FBNQuest Merchant Bank, authorising them to take control of assets belonging to Nestoil and its affiliate, Neconde Energy.
The order was given by trial judge D. I. Dipeolu against Nestoil, Neconde Energy, and their promoter, Ernest Azudialu-Obiejesi, as well as Nnenna Obiejesi.
The court also restrained the defendants from dealing with funds alleged to total $1.01 billion and N430.01 billion, representing outstanding indebtedness as of September 2025.
Mr Azudialu-Obiejesi was also said to have provided personal guarantees for additional obligations running into hundreds of billions of naira and over $200 million across several commercial banks.
Following the order, the companies and their promoters approached the court seeking to set aside the injunction.
In its ruling, the Court of Appeal held that once a receiver was appointed, the powers of the board of directors to appoint legal counsel were effectively suspended.
On that basis, the court disqualified both Messrs Olanipekun and Banire from representing Nestoil and Neconde in the suit.
The court held that only the party that appointed the receiver could validly act in that capacity.
Earlier, the Supreme Court had directed the Court of Appeal to first determine the issue of legal representation as a preliminary question before proceeding with the substantive appeal.
That directive followed concerns over procedural disputes in the case and was aimed at clarifying who was properly authorised to appear for the parties.
The Supreme Court also cautioned against delays in debt recovery proceedings, warning against what it described as technical manoeuvres that could frustrate justice.
At the Supreme Court hearing, several senior lawyers appeared for the parties, including teams representing the lenders, the companies, and their promoters, as well as the court-appointed receiver-manager.
