The Supreme Court has reaffirmed that defendant companies can appoint their own lawyers even when under receivership, rejecting attempts by a receiver to challenge legal representation. The landmark ruling, delivered on April 10, 2026, in the Nestoil dispute, has been hailed as a watershed moment for insolvency jurisprudence and adjectival law in Nigeria.
Judgment Details
Justice Emmanuel Akomaye Agim, who delivered the lead judgment, strongly condemned the application to disqualify the company's legal team, calling it a scandalous and despicable abuse of court process. The apex court held that the Court of Appeal had abdicated its judicial duty by granting such an application.
The court questioned the legal basis for a receiver or creditor-appointed manager to interfere in a defendant company's choice of counsel. Justice Agim noted that it was surprising that counsel for the respondents argued that the defendants could not appoint their own lawyer merely because a receiver had been appointed to recover debts.
Fair Hearing Principles
Justice Agim emphasized that allowing a receiver to control legal representation for an adverse party would violate fair hearing principles, as it creates an inherent conflict of interest. He stressed that receivership powers do not extend to determining who represents opposing parties in litigation.
The judge warned that such control would undermine the independence of legal representation and the integrity of adversarial proceedings. He added that these powers neither arise from nor are incidental to receivership.
Background of the Dispute
The case involved Nestoil Limited and Neconde Energy Limited, who challenged a Court of Appeal decision disqualifying their legal team. The application was brought by counsel appointed by a creditors' receiver. The companies argued that the receiver had no authority to determine their legal representation in proceedings against them.
Justice Mohammed Baba Idris, in a concurring opinion, held that where a dispute concerns the validity or scope of a receivership, a company retains residual authority to act through its board of directors to defend its corporate interests. The court ruled that legal representation chosen by directors cannot be rendered incompetent merely because a receiver has been appointed over certain assets.
This ruling reaffirms that receivership does not extinguish a company's capacity to defend itself in court through counsel of its choice.
