- Honeywell Sues Ecobank N72bn for Damages after Failed Ex-parte
The Supreme Court has upheld decision of the Court of Appeal, which dismissed the asset-freezing ex-parte order filed by Ecobank Plc against Honeywell Group at the Federal High Court in Lagos.
The apex court said the ex-parte order was unduly obtained and a clear breach of the provisions of the winding up rules.
Armed with the victory, Honeywell has filed a suit claiming the sum of N72 billion in damages from the bank for reputational losses suffered as a result of the asset-freezing ex-parte order.
The legal battle between Honeywell and Ecobank commenced in 2015 as a result of a dispute between the two companies over the terms of settlement of a debt, which the company owed the bank.
Honeywell had claimed that it had settled its outstanding debt to Ecobank having fulfilled its part of an agreement with the bank to pay the sum of N3.5 billion as full and final payment of the company’s obligation to the bank.
Ecobank, meanwhile, claimed that this agreement was not binding on the bank as its Board of Directors had not ratified the agreement, which was communicated to Honeywell by the Managing Director of the bank.
The bank also claimed that the payment was not made within the stipulated timeline.
Seeking a resolution to the issue, Honeywell sought the intervention of the Chartered Institute of Bankers of Nigeria’s (CIBN) Sub-Committee on Ethics and Professionalism (Bankers’ Committee), being the industry accepted dispute resolution mechanism for resolving disputes between bankers and their customers.
The Bankers’ Committee is an organ made up of representatives from the Central Bank of Nigeria (CBN), CIBN, Nigeria Deposit Insurance Corporation (NDIC) and Managing Directors of Banks.
It is charged with the responsibility of sanitising the practice of banking in Nigeria and promotion of discipline among practitioners, with part of its duties being the resolution of issues emanating from normal banker-customer relationships.
At the end of the review of the arguments adduced by Honeywell and Ecobank, the Bankers’ Committee ruled in Honeywell’s favour by resolving that the payment of N3.5 billion by Honeywell was indeed full and final settlement of its obligations to Ecobank and Honeywell was not indebted to Ecobank.
Not satisfied with this judgment, Ecobank asserted, through correspondence with the company, that the company was still indebted to the bank and also maintained the company’s name in the CBN’s CRMS portal for non-performing loan accounts.
Honeywell Group, therefore, sought the intervention of the courts to give effect to the decision reached at the Bankers’ Committee.
Rather than allowing the case to go to trial, Ecobank, through its lawyers sought an ex-parte order from the same Federal High Court.
The bank, through its lawyer, went on to institute several suits against Honeywell before multiple judges of the same Federal High Court, Lagos Judicial Division with all primarily being in respect of the same subject matter, seeking an order to freeze all the accounts of the company and deny the company access to all its funds with banks in Nigeria.
Asides from Justice Mohammed Yunusa, who eventually granted the order, all the courts approached, requested the bank to put Honeywell on notice regarding the ex-parte order, which was applied for.
However, Justice Yunusa eventually granted the ex-parte injunction against Honeywell.
Following an appeal by Honeywell Group seeking a discharge of the order granted by Justice Yunusa, the Court of Appeal, based on Honeywell’s application dismissed the ex-parte injunction and even described the decision as “exercise of discretion too extreme and injudicious to be allowed to subsist.”
This position was further re-emphasised by the Supreme Court in the final judgment, stating that the grant of the asset freezing order was a clear breach of the provisions of the extant laws.
Honeywell is now claiming damages based on the losses it suffered as a result of the ex-parte order, which the Supreme Court has now ruled was wrongly obtained by Ecobank.
Honeywell’s claim is that the order granted by Justice Yunusa to the bank was designed primarily to injure its business and cause significant embarrassment to principals and officials of the company.
The company has also put forward evidence to the court to support its application for damages it suffered as a result of the, now proven, wrong order, which was in place for nearly six months until it was lifted by the Court of Appeal.
Oil Prices Drop on Stronger U.S Dollar
The strong U.S Dollar pressured global crude oil prices on Thursday despite the big drop in U.S crude oil inventories.
The Brent crude oil, against which Nigerian oil is priced, dropped by 74 cents or 1 percent to settle at $73.65 a barrel at 4.03 am Nigerian time on Thursday.
The U.S West Texas Intermediate crude oil depreciated by 69 cents or 1 percent to $71.46 a barrel after reaching its highest since October 2018 on Wednesday.
“Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.
“The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.”
The U.S. dollar boasted its strongest single day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.
A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.
Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling continued improvement in demand.
Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.
“This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.
Oil Rises as Threat of Immediate Iran Supply Recedes
Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.
Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union.
A U.S. return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.
It is “looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian Presidential Elections later this week,” ING Economics said in a note.
Other members of the Organization of Petroleum Exporting Countries (OPEC) along with major producers including Russia — a group known as OPEC+ — have been withholding output to support prices amid the pandemic.
“Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery,” ING said.
To meet rising demand, U.S. drillers are also increasing output.
U.S. crude production from seven major shale formations is forecast to rise by about 38,000 barrels per day (bpd) in July to around 7.8 million bpd, the highest since November, the U.S. Energy Information Administration said in its monthly outlook.
Oil Prices Rise as Demand Improves, Supplies Tighten
Oil prices rose on Monday, hitting their highest levels in more than two years supported by economic recovery and the prospect of fuel demand growth as vaccination campaigns in developed countries accelerate.
Brent was up 53 cents, or 0.7%, at $73.22 a barrel by 1050 GMT, its highest since May 2019.
U.S. West Texas Intermediate gained 44 cents, or 0.6%, to $71.35 a barrel, its highest since October 2018.
“The two leading crude markers are trading at (almost) two-and-a-half-year highs amid a potent bullish cocktail of demand optimism and OPEC+ supply cuts,” said Stephen Brennock of oil broker PVM.
“This backdrop of strengthening oil fundamentals have helped underpin heightened levels of trading activity.”
Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks.
The mood was also buoyed by the G7 summit where the world’s wealthiest Western countries sought to project an image of cooperation on key issues such as recovery from the COVID-19 pandemic and the donation of 1 billion vaccine doses to poor nations.
“If the inoculation of the global population accelerates further, that could mean an even faster return of the demand that is still missing to meet pre-Covid levels,” said Rystad Energy analyst Louise Dickson.
The International Energy Agency (IEA) said on Friday that it expected global demand to return to pre-pandemic levels at the end of 2022, more quickly than previously anticipated.
IEA urged the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, to increase output to meet the rising demand.
The OPEC+ group has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May.
On the supply side, heavy maintenance seasons in Canada and the North Sea also helped prices stay high, Dickson said.
U.S. oil rigs in operation rose by six to 365, the highest since April 2020, energy services company Baker Hughes Co said in its weekly report.
It was the biggest weekly increase of oil rigs in a month, as drilling companies sought to benefit from rising demand.
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