The stability of a nation’s financial system rests not only on the shoulders of regulators but also on the strength and efficiency of its legal framework.
- +Judges require knowledge of Nigeria’s financial sector- Justice Adejumo
Justice Babatunde Adejumo, emphasised this, noting that the complexity of modern banking requires judges to be well-versed in the mechanics of the financial sector.
Justice Babatunde Adejumo, emphasised this, noting that the complexity of modern banking requires judges to be well-versed in the mechanics of the financial sector.
He noted this during the recent sensitisation seminar hosted by the Nigeria Deposit Insurance Corporation (NDIC) for Justices of the Court of Appeal, legal and financial experts to discuss the evolving challenges of bank liquidation and the rising tide of digital crime.
The seminar opened with a call for deeper collaboration between financial regulators and the bench. While the NDIC manages the fallout of bank failures, the judiciary ensures the legal process remains fair and expeditious. This partnership is vital for maintaining the “financial sanity” required to protect the economy from systemic shocks. Highlighting the gravity of this relationship, Adejumo stated,
“The role of the judiciary in the bank liquidation process cannot be overstated, as the timely resolution of disputes is fundamental to the stability of our financial system. We must remain committed to an in-depth understanding of the laws governing this sector to ensure that our decisions reflect both the letter of the law and the economic reality of protecting depositors’ hard-earned money.”
Ernest Ojukwu, professor of Law and senior advocate of Nigeria, further expanded on this by challenging the traditional view of financial litigation in his presentation, “Financial Sector Litigation and Systemic Risk: When Private Disputes Have Public Consequences”.
While banking and insolvency disputes often appear as “ordinary private contests,” Ojukwu argued they are frequently “public law events in disguise”. He emphasised that judicial decisions in this sector are never isolated; they directly influence depositor confidence, liquidity, and credit availability.
”Financial systems are interconnected,” Ojukwu noted, warning that “legal decisions travel quickly through markets”.
Because of this interconnectedness, the Court of Appeal must function as a “stability anchor,” translating harsh economic realities into sound legal doctrine.
Prof. Ojukwu also highlighted the tangible economic damage caused by procedural bottlenecks, noting that prolonged litigation has contributed significantly to the surge in non-performing loans (NPLs), which exceeded N1.57 trillion in 2025.
The consequences of these delays result in the erosion of capital buffers: Major Nigerian banks reported massive impairment charges in 2025, reaching N748bn for one and N707.5bn for another.
Also, lending rates have reportedly climbed as high as 60 percent stifling manufacturers and small businesses.
He explained that to avoid the “litigation trap,” the Central Bank of Nigeria has introduced mechanisms like the Global Standing Instruction (GSI) to recover debts without court action. While innovative, this raises concerns regarding due process.
Ojukwu clarified that “systemic awareness” is not a license for “judicial policymaking”. Instead, he urged judges to use existing legal tools, such as contextual interpretation, phased compliance orders, and deference to specialised regulators like the NDIC, to manage risks.
He posed critical questions for the bench to consider: Does the dispute involve a systemically important institution? Could enforcement destabilise the wider market?
As the financial landscape shifts toward digital assets, the legal system faces unprecedented hurdles. The seminar highlighted the complexities of virtual currencies, which operate outside traditional regulatory boundaries, often providing a veil for cybercriminal activities.
Addressing the urgent need for judicial awareness, Moses Faya, founder and policy lead, Tech Policy Advisory, argued that the law must move in tandem with technological advancements to remain relevant in his presentation, “Legal Issues on Virtual Currency and Cybercrime”.
“The emergence of virtual currency has created a borderless frontier for financial transactions, which unfortunately includes the facilitation of cybercrime,” Faya remarked. “It is imperative that our judicial officers are equipped with the technical knowledge to navigate these digital waters, ensuring that justice is served in a world where evidence is often encrypted and intangible.”
The discourse also centred on the practicalities of bank liquidation. Justice Muhammad Shuaibu contributed to this theme by addressing the necessity of “Technical Agility” within the judiciary to handle the intricate processes involved when a financial institution fails. He observed that the efficiency of the NDIC’s mandate is largely dependent on the judiciary’s ability to interpret and apply banking laws with precision and speed.
Shuaibu pointed out that the judiciary must be proactive in tackling the bottlenecks that arise during the recovery of assets, ensuring that the liquidation process does not become an endless cycle of litigation.
“The effectiveness of bank liquidation is the litmus test for our financial legal framework; if the courts do not act with the necessary expertise and urgency, the very essence of deposit insurance is undermined,” he asserted.
“We must align our judicial processes with the goal of rapid resolution, as any delay in liquidating a failed bank directly translates into a loss of value for the depositors and a decline in public trust.”
