Court Freezes Osun Government Accounts Over $13.9m Arbitration Award

A Federal High Court in Lagos has ordered commercial banks to restrict withdrawals from accounts belonging to the Osun State Government over an outstanding $13.9 million arbitration award in favour of Gamji Nigeria Company Limited.

The interim order was issued by Justice D.E. Osiagor following an application filed by Gamji through its counsel, Yunus AbdulSalam, SAN, in suit number FHC/L/CS/1233/2026.

The company is seeking to recover $13,924,343.32 and N157.5 million, which it said were awarded to it by an arbitration panel over disputes arising from water infrastructure projects executed in Ilesa West Local Government Area of Osun State.

According to an affidavit filed in support of the application, the dispute originated from two contracts awarded to Gamji by the state government in June 2017 for water infrastructure development.

The projects involved the construction of transmission mains and booster pump stations under Slot One, as well as water reservoirs under Slot Two. The projects formed part of a broader water supply and sanitation scheme in Ilesa West.

Gamji stated that the projects were expected to be financed through a loan from the Islamic Development Bank, facilitated by the Federal Ministry of Finance.

The company disclosed that the original contract sum for Slot One was approximately $15.98 million, while Slot Two was valued at about $9.70 million.

However, it alleged that changes to engineering designs, variations in the scope of work and additional variation orders resulted in delays and increases in the contract sums.

According to the affidavit, subsequent amendments raised the value of Slot One to approximately $20.24 million and Slot Two to about $10.95 million.

Gamji further claimed that it had completed about 93 per cent of the projects as of October 2023, adding that the Osun State Government issued a Substantial Completion Certificate on November 14, 2024.

The company said disagreements subsequently emerged over claims relating to extensions of time, price adjustments and rising costs of materials, labour and other project inputs.

It stated that several claims submitted to the state government were rejected, prompting efforts by both parties to resolve the dispute through mediation.

Following the unsuccessful resolution efforts, Gamji said it issued a notice of arbitration on April 3, 2025. The state government reportedly accepted the arbitration process and nominated its own arbitrator.

The arbitration panel commenced proceedings, with a preliminary meeting held in Lagos on May 15, 2025.

According to the company, the panel delivered its final award on July 24, 2026, directing the Osun State Government to pay $13,924,343.32 and N157.5 million as reimbursable arbitration fees.

Gamji also stated that the award provided for interest at the rate of 20 per cent per annum on any outstanding portion of the debt after the expiration of the stipulated compliance period.

The company maintained that the deadline for compliance elapsed on August 24, 2026, but the awarded sums remained unpaid, prompting it to approach the court for an interim preservation order.

In granting the application, Justice Osiagor directed the listed financial institutions to place a “Post No Debit” restriction on the accounts maintained by the Osun State Government with them.

The judge further ordered the preservation of funds up to the value of $13,924,343.32 and N157.5 million towards the satisfaction of the arbitration award, pending the hearing and determination of the motion on notice.

The order is an interim measure pending further proceedings in the case.