Justice Peter Lifu of the Federal High Court, Abuja, on Wednesday, ordered United Bank for Africa (UBA) to pay N30 million in damages for unlawful restriction of a company’s account for more than one year.

The court maintained that UBA’s actions were ultra vires its powers, “reckless and bereft of mercy.”

Delivering judgement in the suit number FHC/ABJ/CS/1412/2023, the court also directed the bank to immediately refund $163,592 wrongfully withheld from Micoz Bluelink Enterprise.

According to the court, the bank had no legal basis for freezing the firm’s domiciliary account or transferring funds without a court order or notifying the customer.

Lifu further held that the bank’s conduct is “a breach of the banker-customer’s relationship,”

He declared UBA’s actions “illegal, unconstitutional and a breach of banker-customer relationship,” citing the bank’s conduct, the applicant’s business standing, and “the continual depreciation of the naira” in awarding damages.

The case was filed by Akpasi Oziegbe, trading as Micoz Bluelink Enterprise, in suit number FHC/ABJ/CS/1412/2023, with UBA as the sole defendant.

In his argument, counsel to the plaintiff, Chikaosolu Ojukwu and Adeyemo Richard, submitted that the firm was incorporated on March 19, 2021, and subsequently opened a domiciliary account for trading operations. On July 20, 2022, the company discovered its account had been restricted with a balance of $163,592 meant for supply contracts.

“The applicant made several enquiries to the bank seeking reasons for the account restriction, but the bank failed to respond or unfreeze the account,” Ojukwu said.

Richard further alleged that on August 19, 2023, the bank transferred the funds without the company’s authorisation. In an affidavit, the plaintiff stated that “there is no mention of fraud in the call-back request presented by the bank, and the document lacks proper endorsement and authenticity.”

Responding, counsel to UBA, Kalat Jatau, admitted receiving the funds but claimed they were flagged as suspicious.

In his argument, the bank said it filed a Suspicious Transaction Report with the Nigerian Financial Intelligence Unit and restricted the account pending further due diligence.

The bank further alleged the applicant’s documents were inconsistent with the actual transaction amounts and that the funds were later recalled based on a SWIFT instruction from its correspondent bank, Citi Bank.

Delivering judgment, Lifu held that the financial institution breached its fiduciary duty and acted without court approval.

The court held that the bank failed to inform the applicant of reasons for the restriction and proceeded with unilateral withdrawal, thereby breaching the banker-customer contract,” he said.

The judge found UBA’s Exhibit ‘A’ defective: “There is no mention of ‘fraud’ or ‘fraudulent’ in the document, which only states ‘Possible Duplicate’ and does not justify a call back.”

He noted the significant economic loss and business disruption caused to the applicant, stating there was no proof the bank took appropriate steps before restricting the account or withdrawing the funds, nor did it disclose where the money was sent.

Lifu stressed that customer funds could only be withdrawn “pursuant to an unequivocal instruction by the customer or a court order,” neither of which was presented.