Commercial litigation is a means of resolving a commercial dispute in Nigeria through instituting an action in court with its origin rooted in English Common Law. A commercial dispute can arise between Nigerian parties to a transaction or between international parties where there is the existence of a connecting Nigerian factor which could be as a result of the location of the contract, place of performance, or domicile of parties to the transaction.
Commercial litigations in Nigeria are commenced in the State High Courts or the Federal High Court of the Federal Capital Territory (FCT) through Writ of Summons or an Originating Summons depending on the nature of the suit. These courts have the unlimited general jurisdiction to hear and determine any commercial litigation instituted before it regardless of the value, other than those commercial disputes that are within the exclusive jurisdiction of the Federal High Court such as disputes relating to securities, admiralty, intellectual properties, operation of companies among others as stipulated in Section 249 of the Constitution.
Commercial litigation in Nigeria is regulated and governed by various sources of laws such as;
- Constitution of the Federal Republic of Nigeria 1999 (as amended), which created the various courts in Section 230(1), 237(1), 249(1), 270(1) and jurisdictions of each court.
- Various statues
- Judicial precedents,
- Rules of courts and practice directions.
Jurisdiction of Court in Commercial Litigation
The jurisdiction of a court is the power of the court to decide a commercial dispute between parties. Every court in Nigeria is established by laws and it usually the law establishing the court that also defines the jurisdiction of such a court. In the case of Madukolu & Ors Vs. Nkemdili 1962 2 SCNLR, 341, the Supreme court laid down the conditions that determine the jurisdiction of a court as follows:
- The court must be properly constituted with regards to the number and qualification of its members.
- The subject matter of the dispute must be within the jurisdiction of the court and no feature in the case which prevents the court from exercising its jurisdiction.
- The case must have been brought to court by the due process after satisfaction of relevant provisions on condition precedents.
Capacity to institute commercial litigation in Nigeria
In any cause of action, after determining the nature of the commercial claim, the jurisdiction of the court, and proper advice on any of the Alternative Dispute Resolution mechanism and the next matter should be the likely parties to the litigation. The appropriate parties to the commercial litigation are important because a court can only resolve a dispute if the right parties are before it. Once the relevance of parties is not determined, it goes to the root of the matter. For the commercial litigation to be competent before the Nigerian courts, both parties must be legal persons (either natural or juristic). If the competence of any of the parties is challenged, the onus lies before the party to establish his competence, as lack of competence on the part of either party to the action will lead to the action being struck out by the court.
Before commencing commercial litigation for a claim in court, there are certain factors to be considered by the parties. Some of them will be mentioned below.
- The existence of a limitation period for commencing the litigation. The limitation period for commercial claims is dependent on the nature of the claim. For example, the limitation period for instituting an action for a simple contract is six (6) years as provided by Section 8 of the Limitation Law of Lagos State, 2003.
- The court that has competent jurisdiction to determine the litigation.
- The issuance of pre-action notices or letter of demands where applicable.
- The appropriate names of parties and where the parties or a party is a company, the names as registered with the Corporate Affairs Commission (CAC).
- The remedies that are available to the litigant.
- The civil procedure rules of the court.
- Whether there must be recourse to any form of alternative dispute resolution mechanism before commencing the litigation.
- The cost of the litigation process.
Alternative Dispute Resolution
Although litigation is the most common form of resolving commercial disputes in Nigeria, it could be an unwieldy process because of factors such as delay in adjudication, overflow of cases before the court, or delay caused by an unwilling party to the suit. As a result of this, it is advisable and encouraged to resolve commercial disputes through any of the alternative dispute resolution mechanisms. The following are the methods of alternative dispute resolution in Nigeria:
However, it is noteworthy to state that unlike litigation, which involves a summon of court, alternative dispute resolution option is voluntary unless parties have had a prior agreement to have recourse to it.
Finally, before commencing commercial litigation in Nigeria, one must consider the subject matter of the claim, the location of parties, the place where the dispute occurred, or where the course of action arose, among others. All these factors will determine the appropriate court to institute the action and the procedure to follow.
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.