The Supreme Court of Nigeria has ruled in favour of Neconde Energy Limited and Nestoil Limited in a judgment that addresses the scope of powers exercised under receivership.

The decision followed an appeal arising from a dispute between Neconde Energy and FBNQuest Trustees and other parties. At the outset, the respondents had challenged the competence of the appeal, arguing that it raised issues of mixed law and fact which required prior leave of court.

The Supreme Court dismissed that objection, holding that the questions before it were matters of law. This allowed the court to proceed to consider the substantive issues raised in the appeal.

Central to the case was whether a receiver or manager appointed over a company has exclusive authority to act on its behalf, including the power to appoint legal representation, and whether the company itself retains any residual powers during the period of receivership.

In its ruling, the court held that where the validity of a receiver or manager’s appointment is being contested, the company, acting through its board of directors, retains the authority to take necessary steps to defend its interests. This includes the right to appoint its own legal counsel.

The court reasoned that denying a company this capacity would effectively prevent it from challenging the legality of the receivership itself. Such a situation, the justices noted, could raise concerns about fairness, particularly where the receiver is in control of the company’s affairs.

On that basis, the apex court allowed the appeal and set aside the earlier decision of the Court of Appeal of Nigeria, which had disqualified the legal representation engaged by the company. The judgment was unanimous.

The ruling also extends to Nestoil Limited, whose appeal was linked to the outcome of the Neconde case by prior agreement between the parties.

Legal analysts say the decision provides further clarity on the balance of powers between a company’s management and a receiver. It affirms that receivership does not entirely remove a company’s ability to act, particularly in matters relating to the legitimacy of the process itself.

The case is likely to influence future disputes involving corporate control and insolvency proceedings, especially where questions arise over the extent of authority exercised by appointed receivers.

For companies operating under receivership, the judgment reinforces the principle that certain rights remain intact, even in periods of financial or legal constraint.