Nestoil Limited & Neconde Energy Limited v. FBNQuest Merchant Bank Limited & First Trustees Limited

Background & Parties

This landmark decision by the Supreme Court of Nigeria addresses the contentious use of ex parte orders in high-stakes corporate debt recovery proceedings. The Appellants, Nestoil Limited and Neconde Energy Limited (part of a major indigenous energy group), challenged interlocutory orders obtained by a consortium of lenders, the Respondents, led by FBNQuest Merchant Bank Limited and First Trustees Limited. The dispute originates from an alleged debt of over $1.1 billion related to financing for oil assets, a claim that remains contested and is yet to be determined on its merits at the Federal High Court.

Material Facts

• In October 2025, the lenders obtained a sweeping ex parte Mareva injunction from the Federal High Court, freezing the assets and bank accounts of Nestoil and Neconde and appointing a receiver/manager.
• The companies challenged the order, and on November 20, 2025, the Federal High Court (per Justice Osiagor) ruled that the ex parte order had lapsed by operation of law.
• Dissatisfied, the lenders approached the Court of Appeal and, on November 29, 2025, obtained what was termed a "restorative injunction" on an ex parte basis. This order reversed the Federal High Court's ruling, reinstated the asset freeze, and stayed further proceedings at the trial court, effectively returning control to the receiver/manager without hearing the Appellants.
• Nestoil and Neconde appealed this decision to the Supreme Court, arguing that the Court of Appeal acted without jurisdiction and fundamentally breached their right to a fair hearing.

Real Issue

The central tension was not the existence of the underlying debt, but whether the judiciary, specifically an appellate court, can deploy the extreme and urgent remedy of an ex parte injunction to effectively grant a final relief—the seizure of corporate control and assets—before the substantive matter is heard, thereby bypassing the fundamental principle of audi alteram partem (hear the other side).

Legal Issues

1. Whether the Court of Appeal had the jurisdiction to grant a restorative ex parte injunction over a matter not substantively before it and after a trial court had ruled the initial injunction had lapsed.
2. Whether the grant of such a sweeping ex parte order, which effectively paralyzed the Appellants' business operations, constituted a breach of the right to fair hearing.
3. Whether an ex parte order, designed for temporary preservation, can be used to achieve a substantive outcome, such as the takeover of a company by a receiver/manager.

Court's Analysis

The five-member panel of the Supreme Court delivered a scathing critique of the Court of Appeal's actions, describing them as a "judicial tragedy." The Court's analysis balanced the creditors' right to secure alleged debts against a debtor's fundamental right to operate its business and be heard in court. It found that the Court of Appeal had prioritized the former to a degree that annihilated the latter.

The Court reasoned that the appellate court exceeded its powers by assuming jurisdiction to grant the injunction when the substantive appeal was not yet ripe for hearing. It held that the "restorative" order was, in substance, an interlocutory injunction that should never have been granted without putting the other party on notice. The judgment emphasized that ex parte orders are a tool of last resort for preserving the res (subject matter) from imminent destruction, not a strategic weapon for corporate takeovers.

Decision & Outcome

The Supreme Court unanimously allowed the appeal. It set aside all orders made by the Court of Appeal on November 29, 2025, including the restorative injunction, the asset freeze, and the stay of proceedings at the Federal High Court. This decision restored control of the companies and their assets to their management, pending the final determination of the substantive debt recovery suit at the Federal High Court.

Ratio Decidendi

The binding principle established is that an appellate court exceeds its jurisdiction and engages in a misuse of the judicial process when it grants a sweeping ex parte injunction that substantively determines the rights of parties and paralyzes a business, especially when the initial ex parte order at the trial court had been declared lapsed. Such an order fundamentally violates the constitutional right to a fair hearing.

Significance

This judgment serves as a powerful judicial censure against the growing trend of using ex parte orders as a primary tool for corporate debt recovery in Nigeria. It reinforces the sanctity of the audi alteram partem rule and clarifies the limited and temporary nature of ex parte remedies. The decision is expected to reshape how lenders enforce debt claims, forcing a move away from aggressive, pre-emptive seizures towards adjudication on the merits, thereby providing greater protection for Nigerian enterprises against premature paralysis by creditors.