In a decisive legal development, the Federal High Court sitting in Lagos has ordered major commercial banks across the country to place an immediate “Post No Debit” (PND) restriction on all accounts operated by the state government.
The interim preservation order, issued by Justice D.E. Osiagor in suit marked FHC/L/CS/1233/2026, stems from an unresolved multi-million-dollar financial dispute involving an unliquidated arbitration award.
At the heart of this high-stakes legal showdown is Gamji Nigeria Company Limited, a private contractor that entered into business with the state government years prior.
The Projects: In June 2017, the Osun State Government awarded Gamji two major contracts focused on water infrastructure development in the Ilesa West Local Government Area. These included building transmission mains, a booster pump station, and complementary water supply works.
The Variations: According to court filings, subsequent alterations to engineering designs, scope adjustments, and fluctuating macroeconomic costs pushed the initial project valuations upward. Despite revisions and delays, a Substantial Completion Certificate was eventually issued to the state on November 14, 2024.
The Arbitration: Prolonged deadlocks over cost escalations, price adjustments, and extensions led both parties into arbitration proceedings. Ultimately, the arbitrator appointed via the government’s own nomination delivered a final award on July 24, 2026.
The panel ordered the Osun State Government to pay $13,924,343.32 alongside ₦157.5 million in reimbursable arbitration fees. Crucially, the ruling stipulated a compliance window that expired on August 24, 2026, alongside a steep 20 percent annual interest penalty on any outstanding balance.
Citing the state’s failure to meet the August deadline or service the debt, counsel to Gamji Nigeria Company Limited, Yunus AbdulSalam (SAN), approached the Federal High Court for an emergency preservation order.
Justice Osiagor granted the interim injunction, directing commercial banks—including major institutions like Access Bank, Guaranty Trust Bank, Zenith Bank, First Bank, United Bank for Africa (UBA), Wema Bank, and others where the state maintains domiciliary and local accounts—to lock down outward transactions.
A preservation order of interim injunction is granted directing the cited financial institutions in Nigeria to immediately place a Post No Debit restriction on the Respondent’s account domiciled with them for the preservation of the funds… towards the liquidation of the Arbitral Award dated 24th July, 2026 which has become due and enforceable, pending the hearing and determination of the motion on notice,” the court directed.
This development poses an immediate operational hurdle for Governor Ademola Adeleke’s administration, as a total freeze on state accounts typically threatens routine payments, civil service allocations, and execution of capital projects.
However, this order remains an interim measure pending the substantive hearing. The Federal High Court has already adjourned the case to October 22, 2026, to enable the hearing of the motion on notice, where the Osun State legal team will have the opportunity to present its defense.
Whether the state government will successfully negotiate an out-of-court settlement or manage to upturn the enforcement of the arbitral award remains to be seen as the legal clock ticks toward late October.
