Nigeria: The Role Of Legislations And The Courts In Protecting Foreign Investments In Nigeria

Under Section 6 (6) of the 1999 Nigerian Constitution, Nigerian legislations and powers of the courts extend to all matters between persons or between government and any person in Nigeria, and to all actions and proceedings for the determination of any question as to the civil rights and obligations of that person. This means a foreigner or foreign business may invoke the provisions of Nigerian legislations and the judicial powers of the court to protect its civil rights and investments whether against Nigerians, a Nigerian company or even the Nigerian government. 

Protection of foreign investments

(1) Stay of court proceedings subject to arbitration

Section 4 and 5 of the Arbitration and Conciliation Act empowers the court to stay court proceedings subject to both local and foreign arbitration. It does not matter whether the seat of arbitration is Nigeria or the arbitrators would be Nigerians or the Nigerian Arbitration and Conciliation Rules apply to the arbitration.

(2) Application of foreign law

If the parties to a contract agree that foreign law will apply in resolving their disputes, Section 69 of the Evidence Act, 2011 provides that the Nigerian court shall apply the foreign law once it has jurisdiction to hear the case. In such instance, the court shall admit the opinion of an expert who in in his profession is acquainted with the foreign law. The expert may produce to the court books which they declare to be works of authority upon the foreign law in question. Upon receipt of the book and necessary explanation from the expert, the court shall construe the information contained therein for itself in making its decision.

(3) Discretion to stay proceedings on foreign jurisdiction clause

Where parties to a contract entered in Nigeria agree that where dispute arise between them, a foreign court will have jurisdiction to hear the case, by the ratio in the case of Sonnar Ltd v Nordwind (1987) NWLR (Pt. 66) 520, the Nigerian court is not bound to stay proceedings and decline jurisdiction in face of the foreign jurisdiction clause. The court will exercise its discretion in line with the justice of the case.

(4) Waiver of in personam jurisdiction

A Nigerian party to an international contract who later becomes a debtor may move from its place of business to another jurisdiction in a bid to frustrate its creditors from commencing an action or executing a judgment against it. The creditors can sustain an action against the debtor in any jurisdiction in Nigeria if the debtor had waived his right to personal jurisdiction in the contract. This is because it is settled Nigerian law that though a person cannot waive subject matter jurisdiction, he can waive his personal jurisdiction.

(5) Enforcement of arbitral awards and foreign judgments in Nigeria

Under Section 57 of the Arbitration and Conciliation Act, Nigerian courts would uphold a foreigner or foreign business' right to enforce a local or foreign arbitral awards as well as enforce foreign judgments in Nigeria whether or not he is resident in Nigeria or carrying on business in Nigeria.

(6) Recognition and Enforcement of International Centre for Settlement of Investment Disputes ("ICSID") Awards

ICSID was established under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention). It has a limited scope and jurisdiction. The subject matter of the proceedings must be an 'investment matter" and one of the parties must be a contracting State or any constituent sub-division or agency thereof designated to the Centre by the State and the other party must be a national of another contracting party. The parties must agree to be bound by the ICSID Convention for it to apply to the exclusion of all other laws. The implication of this is that the national Courts of contracting States are restrained from interfering with the proceedings of the ICSID.

An award by ICSID is enforceable in Nigeria by virtue of Section 1 of the International Centre for Settlement of Investment Disputes Act which provides that; 

"Where for any reason it is necessary or expedient to enforce in Nigeria an award made by the International Centre for Settlement of Investment Disputes, a copy of the award duly certified by the Secretary-General of the Centre aforesaid, if filed in the Supreme Court by the party seeking its recognition for enforcement in Nigeria, shall for all purposes have effect as if it were an award contained in a final judgment of the Supreme Court, and the award shall be enforceable accordingly"

 

Once the ICSID award is registered at the Supreme Court, it ranks on the same level as a final judgment of Supreme Court of Nigeria.

(7) Right of action 

Under Section 60 (b) of the Companies and Allied Matters Act, a foreign company has a right of action against a Nigerian or a Nigerian company whether or not it is registered in Nigeria.

(8) Right of foreign creditors in insolvency proceedings in Nigeria

A foreign creditor can institute an action in court in its name or in the name of its attorney against a debtor for debt recovery in the same manner as a local creditor, as long as the debtor or its assets, or the underlying contract which gave rise to the debt was performed, within the jurisdiction of the court. The processes and remedies available to a local creditor also apply to a foreign creditor.

Under Section 238 of the Bankruptcy and Insolvency Act, where there is a bankruptcy, insolvency or reorganization order made against a debtor in a foreign proceeding, a certified copy of the order is, in the absence of contrary evidence, proof that the debtor is insolvent and a foreign representative has been appointed. In this instance, following an application of the foreign representative, the court can limit the property that the Nigerian trustee has power over.

In respect of a foreign proceeding commenced for the purposes of effecting a composition, extension of time or scheme of arrangement, on application by a foreign representative in a Nigerian court, the court may grant a stay of the proceeding against the debtor.

(9) Right against expropriation

Under Section 25 of the Nigerian Investment Promotion Commission Act, no person who owns, whether wholly or in part, the capital of any business shall be compelled by law to surrender his interest in the capital to any other person. There shall be no acquisition of an enterprise to which this Act applies by the Federal Government, unless the acquisition is in the national interest or for a public purpose and a fair and adequate compensation paid. The business has a right to go to court for the determination of its interest or the amount of compensation to which he is entitled. Any compensation payable under this section shall be paid without undue delay, and authorisation for its repatriation in convertible currency shall where applicable, be issued.

 

(10) Right to own land

Under Section 38 of the Companies and Allied Matters Act, a foreign company duly registered in Nigeria is a corporate person with a legal right to own land in Nigeria and other rights of a natural person.

(11) Tax exemptions and holidays

In order to encourage foreign investments, under Section 22 of the Nigerian Investment Promotion Commission Act, a foreign company is entitled to tax holidays for some startup businesses and investment in disadvantage areas.

(12)Right to invest and repatriate dividends

Under Section 17, 21 and 24 of the Nigerian Investment and Promotion Act, foreigners have a right to invest or acquire shares in any Nigerian company and are guaranteed unconditional transferability of funds through an authorised dealer, in freely convertible currency, of—

  1. dividends or profits (net of taxes) attributable to the investment;
  2. payments in respect of loan servicing where a foreign loan has been obtained; and
  3. the remittance of proceeds (net of all taxes), and other obligations in the event of a sale or liquidation of the enterprise or any interest attributable to the investment.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions