Appeal Court Rules Ecobank Acted Illegally in Freezing Customer’s Account

The Court of Appeal sitting in Owerri has delivered a landmark judgment declaring that Ecobank Nigeria Limited acted unlawfully when it restricted a customer’s account without obtaining a valid court order.

The court described the bank’s conduct as a gross violation of customer rights and a breach of fiduciary duty, stressing that no financial institution has the authority to unilaterally freeze an account based on internal policies or compliance procedures.

The judgment followed an appeal filed by Ecobank against an earlier ruling by a trial court, which had awarded N10 million in general damages to the affected customer.

Delivering the lead judgment, Justice Ntong Ntong upheld the trial court’s decision but reduced the compensation to N5 million, deeming the original award excessive given the evidence presented.

Justice Ntong ruled that no bank may freeze or restrict an account without a valid court order, regardless of the Central Bank of Nigeria’s Know Your Customer (KYC) regulations or other internal compliance measures.

The court noted that while Ecobank flagged a $65,000 deposit as suspicious, it failed to prove that its compliance obligations legally justified the account restriction.

Citing legal precedents, including FBN v. DKN Investments Ltd and GTB v. Joshua, the judge warned that banks must operate strictly within the law and cannot override constitutional rights using internal procedures.

The court also addressed Ecobank’s claim that it had exercised a right of lien over $10,000 in the customer’s account due to a dispute with a foreign trading partner, Unique International Trading Ltd. Ecobank argued it acted to protect itself from potential litigation.

However, the appellate court dismissed this defence, ruling that self-help has no place in modern legal systems and that there was no contractual or legal basis for the bank’s action.

While the court agreed that Ecobank breached its duty of care by unlawfully restricting access to funds and dishonouring cheques, it found insufficient evidence to prove the customer’s claims of lost business and goodwill.

The judgment reaffirms the principle that banks cannot hide behind internal policies to infringe on customer rights, and that any account restrictions must follow due legal process.