The Court of Appeal in Lagos has upheld the right of the African Export Import Bank to recover a $25 million facility granted to Patnasonic Industries Limited in the currency specified in the loan agreement.
The dispute arose from a receivables backed facility provided under a 2012 agreement, with Sterling Bank acting as the local administration agent.
AFREXIM demanded repayment in United States dollars, while Patnasonic Industries and its chairman challenged that position before the Lagos State High Court.
The lower court ruled in favour of the borrowers in June 2024.
AFREXIM appealed, and the Court of Appeal resolved the issues raised by the bank in its favour.
The appellate court held that the parties were bound by their contractual choice of English law and the jurisdiction provisions contained in the agreement.
It also found that AFREXIM enjoyed applicable diplomatic immunity and that the original action was statute barred.
On the substantive loan dispute, the court held that the facility remained a dollar obligation and should therefore be repaid in dollars.
It ruled that AFREXIM’s demand for repayment in the contractual currency was a legitimate exercise of its rights.
The court also allowed a related appeal by Sterling Bank and rejected the lower court’s conclusion that the facility agreement was affected by illegality.
The judgment reinforces the importance of governing law, dispute resolution clauses and repayment currency in international financing agreements.
It may also provide greater certainty for lenders and Nigerian companies entering cross border financing arrangements governed by foreign law.
