High court judges conclude seminar on new developments in handling failed bank litigation 

High court judges from Nigeria have concluded an annual week-long sensitisation seminar on new developments in handling complex failed bank litigation.

The seminar handled by The Nigeria Deposit Insurance Corporation (NDIC)  saw Justices of the Court of Appeal and Federal High Court judges on Monday and Wednesday, while Judges from the National Industrial Court and the Investments and Securities Tribunal concluded the financial literacy training on Friday.

The primary objective of the sensitisation seminar is to ensure that cases involving failed financial institutions are adjudicated in a manner that maintains macroeconomic stability while simultaneously safeguarding the interests of ordinary depositors.

Read also: NDIC sensitises judges on strengthening bank liquidation and depositor protection

The constitutional mandate of collective recovery

Reflecting on the systemic friction between the right of an individual judgment creditor to execute garnishee proceedings, and the statutory obligation to protect the wider banking ecosystem, Ernest Ojukwu, professor and Senior Advocate of Nigeria, observed:
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​”While the constitutional right of successful litigants to enjoy fruits of judgment must be respected, judicial enforcement powers must only be exercised in a manner that does not undermine the constitutional compliance, statutory liquidation priorities or the stability of the banking system.”

​Ojukwu also warned that banking insolvency cannot be treated like ordinary corporate insolvency, as a disorderly dissipation of assets creates preferential treatment for aggressive litigants at the expense of ordinary depositors, potentially triggering threatening macroeconomic stability.

Under the NDIC Act and the Banks and Other Financial Institutions Act (BOFIA), bank liquidation is designed as a collective, centralised process.

He explained that in this framework, the NDIC functions effectively as a delegate of the court, tasked with pooling assets and distributing them according to strict statutory priorities, starting with insured depositors.

Read also: Judges require knowledge of Nigeria’s financial sector

​Curtailing court abuse and frivolous claims

​Beyond structural liquidation, the seminar addressed the heavy burden placed on the judicial system by an ongoing proliferation of lawsuits and an institutional reluctance to award realistic litigation costs. In commercial disputes across foreign common-law jurisdictions, the losing party is routinely ordered to pay the actual costs of litigation, which naturally incentivises out-of-court settlements and deters bad-faith litigants.

Speaking on behalf of Thompson Sunday, the managing  director and chief executive officer of the NDIC, Emily Osuji, the executive director of Corporate Services, highlighted the legislative changes underpinning the training. She explained saying,

“This sensitization is actually to bring them to speed of the new development and indepth of the Act of 2023…you know that things are changing even at the global level. So when we interact we tell ourselves the truth, the processes are explained better, questions are answered. These are the only way that we can interact with them one-on-one.”

Managing the complexities of modern banking disputes

As the liquidation of distressed banks invariably generates intricate legal disputes, the NDIC and various judicial agencies are actively seeking closer cooperation to deepen institutional understanding. Officials emphasised that modern banking operations and the underlying factors leading to institutional failures have grown increasingly sophisticated.

In a similar vein, Benedict Kanyip, president, National Industrial Court, elaborated on the necessity of guiding the bench through these regulatory frameworks, stating:

“The whole idea about the seminar is to draw attention to what the law provides so that when these matters come to court you can appropriately see the issues. And I must make this point: banking business is complex today, and the issues or the things that make bank fail are themselves complex. Now, any dispute relating to this failed bank in terms of the issues will always be complex.”

Invariably, stakeholders noted that the overriding vision behind the yearly financial seminar is to ensure sustained, well-informed judgments that effectively penalize and deter various forms of financial malpractices across the domestic banking sector.