Nigeria: Looking To Resolve That Dispute

Last Updated: 20 February 2014
Article by Folabi Kuti

I. Trade and Commercial Disputes: Procedure for Settlement

More often than not, disputes are inevitable in business relationships and commercial transactions. It is open to the parties to choose whether to follow the normal channel for determination of controversy through the machinery of the courts or submit the matter to alternative dispute resolution methods (ADR). Where the latter is the case, a dispute resolution clause is inserted beforehand in the contractual document be-tween parties that in the event of a dispute, par-ties would explore opportunities for amicable settlement. The clause is often drafted to make reference to alternative dispute resolution methods (negotiation, mediation, arbitration) a condition precedent to the institution of a court action (in the event that the dispute cannot be otherwise resolved through ADR). Where parties have inserted arbitration clauses in their agreements, any dispute that falls within the scope of the arbitration clause is accordingly referred to arbitration ac-cording to the provisions of the clause. Arbitral tribunals are made up of private individuals and their jurisdictions depend on the agreement or consent of the disputing parties before them. The Arbitration and Conciliation Act (Cap A18, Laws of Nigeria 2004) applies to all arbitrations in Nigeria. It was promulgated with the declared intention of providing a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and conciliation, and it is modeled on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration 1985 (Model Arbitration Law), with modifications. The Act also makes the Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention) applicable to any award in Nigeria or any contracting state, arising out of international commercial arbitration. Unlike the private consensual arrangement for resolving dispute under arbitration, the power or competence of the courts to resolve dispute is expressly stipulated for by the Constitution of the Federal Re-public of Nigeria, 1999. Under the Constitution, the judicial powers of the Federation and States are vested in the regular courts listed in Section 6 paragraph (5) of the 1999 Constitution. The nature of the dispute that the courts can look into is specified by the Constitution. Thus, the jurisdiction of the regular courts are, in some instances, expressly stipulated to be limited or restricted to specific areas of law or subject-matter; and, at other times specified to be unlimited. For instance, the jurisdiction of the Federal High Court is exclusive over items listed in section 251 (1) of the Constitution; and, in those items where its jurisdiction is precluded, the State High Courts are clothed with unlimited jurisdiction. There is also the adjudicatory process before Tribunals (which the Constitution recognizes can be set up by the National Assembly and the State Houses of Assembly), and the appellate system for the review of decisions of the lower courts. The High Court plays a major role in the administration of the justice system in every state and to ease the problems of congestion or long-gestation hearing of matters, new Civil Procedure Rules have been introduced in the various State High Courts. These Rules emphasize the importance of the need for economy, expedition, and achieving equality between the par-ties. They also provide for speedier conclusion of cases by requiring counsel to front-load their cases, the Judge to operate a more proactive case management system and the substitution of written arguments for oral addresses in many cases. The Rules generally provide time limits within which lawyers must take steps in the litigation process. In a further effort to speed up the hearing process, Lagos State has created a commercial division of its High Court specifically for the hearing of commercial matters.

II. Right of actions of unincorporated foreign companies in Nigeria

The Companies and Allied Matters Act (Cap C20, Laws of Nigeria 2004) is one of the principal statutes regulating operations of companies in Nigeria. It stipulates, in mandatory language, that every foreign company desirous of carrying on business in Nigeria shall take steps to incorporate the company as a separate entity in Nigeria. This serves as the general rule. There are however some exceptions to the above rule, one of which is where the foreign company merely seeks to enforce its right in Nigeria. In what –without doubt- is a clear departure from the general rule, Section 60(b) of the same law provides that "Nothing in this chapter shall be construed as affecting the rights or liabilities of a foreign company to sue or be sued in its name or in the name of its agents." The intendment of the provision is clear and unambiguous and cannot be construed in any other manner than that a foreign company can sue or be sued in its name or in the name of its agent. The jurisprudential underpinning has been aptly expressed in the reported case of Nigeria Bank for Commerce & Industry Limited v Europa Traders (U.K.) Ltd (1990) 6 NWLR (Pt. 154) 36/41 where the Court of Appeal, Nigeria held: "In as much as a Nigerian who goes to Harrods to buy goods on credit can be sued by Harrods in Nigerian courts, so also can a British company from whom a Nigerian has bought goods and has not paid be sued in Nigerian courts. There is basis for reciprocity in international relations and no nationalistic feelings or thoughts should destroy these fundamental rules in international relations." (Underlining supplied). Suffice to say that a foreign company not registered in Nigeria can sue and be sued in Nigeria courts.

III. Dispute Resolution: Taking benefits of a successful outcome.

The enforcement of judgments is the stage at which the Court exercises its power and authority to enforce the law as expressed in its orders and judgments; and in relation to an arbitral award, the enforcement of rights of the successful party after the arbitral proceedings. A court judgment (or, an arbitral award) does not automatically afford a judgment creditor a guarantee that the terms of the judgment or award will be voluntarily complied with by the party against whom it is made. By all means, the party who is dissatisfied with the judgment or award may well decide to challenge same by filing an appeal against the judgment or commencing legal proceedings to challenge the award. The inevitable result is that the judgment creditor is denied the immediacy of the fruits of his judgment, or in some cases, the arbitral award. Be the above as it may, the cheering news is that the overriding function of the judicial process of enforcement is consistently being geared towards ensuring that the judgment creditor is not perpetually denied the fruits of its judgment. In this wise, there are legal frameworks such as preemptory interim remedies designed to ensure that the enforcement process is capable of reaching out to all the income assets and property of the judgment debtor, and to control the credit of the judgment debtor so that same is not frittered away to frustrate the execution process. All said, making an informed choice as to the various procedures available in should there-fore always be made at the outset, before proceedings are even issued.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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