By Emeka Amaefula
INSIDE THE PAULAZANDA – POLARIS BANK LEGAL WAR: HOW A LETTER OF CREDIT DISPUTE SNOWBALLED INTO A ₦1.4 BILLION JUDGMENT AND A BATTLE OVER ENFORCEMENT
The commercial dispute between Paulazanda Nigeria Limited and Polaris Bank Limited has escalated into a high-stakes legal battle now before the Court of Appeal, raising far-reaching questions about banking practice, fiduciary responsibility, letters of credit, and the strict procedural rules governing stay of execution in Nigeria. The controversy stems from Suit No. PHC/1856/CS/2025, which culminated in a ₦1.4 billion judgment delivered on 4 November 2025 by Hon. Justice Fubara of the Rivers State High Court, Port Harcourt Judicial Division, in favour of Paulazanda Nigeria Ltd.
Paulazanda traces the origin of the dispute to 2019, when it opened a Form M and a Letter of Credit valued at $1,050,000 through Polaris Bank for the importation of a steel manufacturing line from India. The transaction initially progressed smoothly with FBN UK as the correspondent bank. However, complications arose after FBN UK withdrew and Polaris Bank appointed Banque Libano-Française of Lebanon as the new correspondent bank, a move the company alleges resulted in excessive and unexplained charges.
According to Paulazanda’s representative, Mr. Thomas Ossai, the Indian supplier soon began raising serious complaints over mounting charges linked to the new correspondent bank arrangement. Despite multiple warning letters to Polaris Bank dated 20 March and 5 June 2023, the situation deteriorated further, with the supplier allegedly bearing charges ranging between 20 and 34 per cent of the shipment value. In a bid to salvage the project, Paulazanda wrote Polaris Bank on 22 June 2023, offering to bear all LC-related charges, but the effort proved unsuccessful.
The breakdown eventually led the Indian supplier to abandon the transaction, leaving an unutilized balance of $863,088 under the Letter of Credit. Paulazanda subsequently sourced a new supplier in China and requested Polaris Bank to transfer the unutilised funds into a new LC under a new Form M. The bank, however, allegedly rejected the request and instead opted to repurchase the foreign currency and remit its naira equivalent—an action Paulazanda describes as a clear departure from established international trade and LC practice.
On 25 April 2025, Paulazanda received ₦296,253,008, which Polaris Bank said represented the naira value of the unused foreign currency. Paulazanda insists that this unilateral action gravely disrupted its manufacturing plans and caused substantial financial losses, prompting the legal action that resulted in the ₦1.4 billion damages award.
Mr. Ossai maintains that rather than comply with the judgment, Polaris Bank has chosen to challenge it in the media. He insists that the transaction involved the same steel mill production line, with identical HS Codes under both Form Ms, and that the company never requested cash payment of the dollar balance but merely sought its transfer into a new Letter of Credit to complete the project.
Beyond the immediate dispute, Paulazanda highlights the broader economic implications, noting that its planned factory—covering 50,000 square metres—has the potential to generate over 1,000 direct and indirect jobs and contribute meaningfully to Nigeria’s GDP. The company argues that the bank’s conduct sends negative signals to investors and runs counter to the Federal Government’s ambition of growing Nigeria’s economy to one trillion dollars by 2030.
Polaris Bank, on its part, has questioned the jurisdiction of the Rivers State High Court, insisting that the matter properly falls within the exclusive jurisdiction of the Federal High Court. The bank claims it raised a jurisdictional objection which, according to it, was overruled before judgment was entered on 4 November 2025. It further alleges that the judgment was enrolled and a writ of execution issued on the same day, a step it argues undermined its constitutional right of appeal.
Central to the ongoing controversy is the issue of stay of execution. While Polaris Bank filed a Notice of Appeal on 25 November 2025, Paulazanda insists that no application for stay of execution has been filed or granted. The company argues that under settled Nigerian appellate authorities—such as Vaswani v. Savalakh, Kigo (Nig.) Ltd v. Holman Bros., SPDC v. Amadi, and UBA v. Nnadozie—a stay of execution is not granted as of right and is typically conditional upon the provision of adequate security for the judgment sum. In this case, Paulazanda maintains that no such security has been deposited or offered, leaving the ₦1.4 billion judgment fully enforceable.
The dispute has also spilled into allegations of obstruction. While Polaris Bank claims that individuals linked to Paulazanda are interfering with its branch operations in Rivers State, the company has dismissed the allegation as unfounded and challenged the bank to produce evidence. Paulazanda, in turn, accuses Polaris Bank of obstructing the enforcement of the court’s judgment, alleging that court officials were prevented from executing the judgment on 5 November 2025, with police intervention allegedly used to halt the process.
As both parties prepare to ventilate their grievances before the Court of Appeal, the case is shaping up as a significant test of Nigeria’s legal framework on letters of credit, bank liability, enforcement of judgments, and the balance between the right of appeal and obedience to court orders. Paulazanda insists it is ready to meet Polaris Bank at the appellate court, as the outcome is expected to have lasting implications for banking discipline, investor confidence, and respect for judicial authority in Nigeria.
——Emeka Amaefula ——-+234(0)8111813069—
