Supreme Court Strikes Out Osun LG Funds Suit for Lack of Jurisdiction—But Faults FG’s Actions

The Supreme Court of Nigeria today delivered a mixed ruling in the high-stakes legal battle between the Osun State Government and the Federal Government over allegedly withheld Local Government Council (LGC) statutory allocations.

In a split decision of six justices to one, the apex court struck out the suit filed by the Attorney General (AG) of Osun State, but in a strong rebuke, declared the Federal Government’s action of withholding the funds as unlawful and a “grave breach” of the Constitution.

The Ruling: Lack of Locus Standi

The primary reason for the dismissal was a fundamental issue of law: jurisdiction and locus standi (legal standing).

• Who can sue? Delivering the lead majority judgment, Justice Mohammed Idris held that the AG of Osun State lacked the legal right to institute the case on behalf of the 30 local government councils.
• LGAs are Autonomous: The court emphasized that its original jurisdiction is reserved strictly for disputes between the Federal Government and a State.

The LGCs, being legally recognized autonomous entities with the capacity to sue and be sued directly, were the proper parties to challenge the Federal Government’s action.

• No Briefing: Justice Idris noted that there was no evidence that the Osun AG had been formally briefed or mandated by the LGCs to file the action on their behalf.
  The ruling, therefore, upheld the preliminary objection raised by the Attorney General of the Federation, citing the incompetence of the suit.

A Strong Rebuke for the Federal Government

Despite dismissing the suit on a technicality, the Supreme Court did not mince words regarding the actions of the Federal Government.

• FG Acted Unlawfully: Justice Idris stated unequivocally that the Federal Government was wrong in withholding the local government funds, describing the action as a “grave breach” of the 1999 Constitution.
• Contempt Allegation Dismissed: The court dismissed the AGF’s counter-allegations of contempt against the Osun State Government, stating that the Federal Government was in “greater contempt” by failing to disburse the funds as required by law.
• Counsel to the FG: The court further admonished the Federal Government to ensure that allocations are directly channeled into the statutory accounts of the local government councils to fully effect the long-sought goal of financial autonomy for the third tier of government.

What Happens Next?

This ruling settles a legal argument about who should initiate such a suit, but leaves the substantive issue of the withheld funds unresolved.

1. LGAs Must Re-file: The judgment essentially mandates that the democratically elected local government officials in Osun State must now individually or collectively initiate a fresh suit to compel the Federal Government to release the seized allocations.
2. A Moral Victory: While the suit was dismissed, Osun State secured a moral victory, as the apex court affirmed the illegality of the funds’ seizure, setting a powerful legal precedent.

This development underscores the complex legal and political dynamics surrounding local government autonomy in Nigeria, demonstrating that while the courts uphold technical legal requirements, they are also committed to principles of fiscal federalism.

What steps do you think the Osun State Local Government Councils should take next to recover the withheld funds?