Paragraph 1: The Genesis of the Dispute
The Federal High Court in Abuja dismissed a lawsuit filed by the Ginger Growers, Processors, and Marketers Association of Nigeria against Keystone Bank. The lawsuit centered on an alleged breach of contract concerning an agricultural loan under the Central Bank of Nigeria’s (CBN) Anchor Borrowers’ Programme (ABP). The association, representing over 31,000 ginger farmers, claimed Keystone Bank failed to disburse a substantial sum of N8.679 billion, part of an approved loan facility of N335.4 billion, meant to support their agricultural activities. The farmers sought over N370 billion in damages, including the unreleased loan amount and compensation for alleged losses and the bank’s purported breach of their banker-customer relationship.
Paragraph 2: The Farmers’ Claims and Allegations
The ginger farmers asserted they had duly applied to participate in the ABP and designated Keystone Bank as their Participating Financial Institution (PFI). Following established procedure, Keystone Bank applied to the CBN on the farmers’ behalf. The CBN approved and disbursed the requested loan facility to Keystone Bank in March 2020, with the stipulation that the funds be disbursed to the farmers within ten working days. However, the farmers claimed they received notification from Keystone Bank only in July 2020, with no explanation for the delay. They further alleged that Keystone Bank repatriated the funds to the CBN without their knowledge or consent, leading to significant financial hardship and jeopardizing their agricultural ventures.
Paragraph 3: Keystone Bank’s Defense and Counterarguments
Keystone Bank presented a different account of the events. The bank argued that the ABP guidelines lacked legal binding force, characterizing them as mere recommendations rather than contractual obligations. Keystone Bank asserted that it operated as the lender in the ABP framework, not merely a conduit for CBN funds. The bank claimed it offered the loan to the farmers via a formal offer letter in September 2020, which the farmers accepted. This offer letter, according to Keystone Bank, granted it discretionary power to withhold loan disbursement and repatriate the funds to the CBN upon request. The bank stated that it complied with the CBN’s request for repatriation in November 2020, acting within the terms agreed upon with the farmers.
Paragraph 4: Jurisdictional Challenge and Pre-Action Notice Requirement
A critical point of contention revolved around a pre-action notice, a formal notification required before initiating legal proceedings, as stipulated in the offer letter. Keystone Bank argued that the farmers failed to issue and serve this mandatory pre-action notice, rendering their lawsuit incompetent. The farmers countered that other correspondence with the bank sufficed and that the requirement was immaterial. The CBN, represented in court, confirmed the disbursement of funds to Keystone Bank and the subsequent repatriation request from the bank, stating it acted in accordance with its contractual obligations and its coordinating role within the ABP. The CBN’s confirmation of the transaction timeline and the repatriation process further complicated the legal proceedings.
Paragraph 5: The Court’s Ruling and Justification
Justice Obiora Egwuatu, presiding over the case, ruled in favor of Keystone Bank, dismissing the farmers’ lawsuit based on jurisdictional grounds. The court upheld the bank’s argument concerning the mandatory pre-action notice, emphasizing its importance as a precondition for a competent lawsuit. Justice Egwuatu acknowledged the possibility of waiving the pre-action notice requirement but noted that Keystone Bank insisted on its adherence and raised the objection promptly. The judge declared the farmers’ failure to provide the pre-action notice rendered their suit incompetent, effectively ending their legal challenge against Keystone Bank.
Paragraph 6: Implications of the Judgment and the ABP’s Challenges
The court’s decision underscores the legal intricacies surrounding the ABP and the importance of adhering to contractual stipulations, particularly those involving formal notices and dispute resolution mechanisms. The case also highlights the complex relationship between participating farmers, PFIs like Keystone Bank, and the CBN in the implementation of the ABP. The program, designed to bolster agricultural production and enhance financial inclusion for smallholder farmers, has faced challenges, including loan repayment difficulties and related litigations. This case exemplifies the legal hurdles that can arise and potentially hinder the effectiveness of the ABP in achieving its intended objectives. The dismissal of the lawsuit leaves the ginger farmers without the financial support they had anticipated, raising questions about their future prospects and the overall efficacy of the ABP in addressing the needs of smallholder farmers in Nigeria.
