A tribunal sitting in Lagos has ordered General Hydrocarbons Limited (GHL) to pay FirstBank of Nigeria Limited $112,100 and N111,250,000 as costs following the dismissal of its claims against the bank in a dispute concerning the development of Oil Mining Lease (OML) 120.
The Final Award, delivered by sole arbitrator Justice Kumai Akaahs on Tuesday, dismissed GHL’s claims in their entirety, affirming that FirstBank’s financing obligations under the Subrogation Agreement between both parties were conditional.
The arbitration arose from a Subrogation Agreement dated May 29, 2021, under which GHL undertook to repay an outstanding debt of $718 million, while FirstBank was to provide additional loans for the development of OML 120.
GHL accused the bank of breaching the agreement by failing to provide full and timely funding, sabotaging alternative financing efforts and causing financial losses.
Represented by Paul Usoro and Abiodun Layonu, GHL sought declarations that FirstBank was under an absolute obligation to fund OML 120 and requested various monetary reliefs, including $14.4 million, £1.35 million and N5.2 billion as refunds for contractor payments.
FirstBank, represented by Gbolahan Elias, Babajide Koku and Victor Ogude, argued that its obligation was conditional and subject to internal and regulatory reviews.
The bank said it had disbursed several tranches totaling $185 million between June 2021 and January 2024 for the project.
In his ruling, Justice Akaahs held that the bank’s financing obligation was not absolute and that GHL failed to prove any breach.
He found that the bank acted within the terms of the agreement and was entitled to review and approve each financing request.
The arbitrator also ruled that the introduction of an Independent Asset Manager as part of the financing conditions did not amount to a breach and that GHL’s claims of sabotage were unsubstantiated.
All reliefs sought by GHL were dismissed and the company was ordered to bear the arbitration costs.
Justice Akaahs further ordered that if the sum awarded is not paid within 30 days, it shall attract 10% annual interest until full payment.
The tribunal’s decision follows an earlier ruling by the Court of Appeal in September, which set aside a Federal High Court judgement in Port Harcourt that had favoured GHL in a related dispute.
The appellate court directed that proceeds from a crude cargo aboard the FPSO Tamara Tokoni, pledged as loan security, be secured under court supervision pending final resolution of the matter.
