Author: convergence

THE IMPLEMENTATION OF FINANCIAL AUTONOMY OF THE JUDICIARY IN NIGERIA 1

by convergence

1. Introduction: There are three (3) organs of Government through which a State carries out its governance duties, they are: (i) The Executive arm of Government, (ii) The Legislature and (iii) the Judiciary. While the Executive arm is the more prominent one, usually political and the face of governance, the legislature is responsible for making laws and regulations which would guide the business of governance in a State. The primary business of the Judiciary on the other hand is the adjudication of matters and the interpretation of Laws and Regulations of the State using same to evaluate issues which have been brought before it to adjudicate with the sole aim of ensuring that such adjudication and or interpretation maintains the rule of Law, without fear and or favor.

2. Baron de Montessquieu 2 , in his work titled “The Spirit of the Laws (1978)“ proposed that for these arms of Government to effectively discharge their duties, there must be independence between them. This proposition resulted in what is today known as “The Separation of Powers”. Over the years, the doctrine of separation of powers has become a fundamental concept in Global Governance Systems. In Nigeria, Sections 4, 5 and 6 of the 1999 Constitution Federal Republic of Nigeria (CFRN) as amended (2023) 3 entrenches the principle of separation of powers among the three arms of Government in the fabric of the Constitution of our Nation. But a pertinent question would be, “Are the arms of Government really independent in Nigeria.”? Can an arm of Government be independent if it clings to the apron of another arm for its funding and financial approvals? This
Article would seek to review the financial autonomy or absence of it, in the Nigerian Judiciary as an independent organ of Government in Nigeria.

3. The principle of separation of power as enshrined in Section 6 of the CFRN 4 vests the exclusive judicial powers of the Federal Republic of Nigeria in the Courts otherwise known as the Judiciary arm of Government. Per the financial autonomy of the Judiciary, Section 81 (3) of CFRN 5 provides that; “Any amount standing to the credit of the Independence National Electoral Commission, National Assembly and Judiciary in the Consolidated Revenue Fund of the Federation shall be paid directly to the said bodies respectively; in the case of the Judiciary, such amount shall be paid to the National Judicial Council for disbursement to the heads of the courts established for the Federation and the State under Section 6 of this Constitution.”While Section 121(3) (b) 6 of the CFRN provides that “Any amount standing to the credit of the Judiciary of a State in the Consolidated
Revenue Fund of the State shall be paid directly to the heads of the Courts concerned.” Sections 81(3) and 121(3) (b) of the CFRN leaves no one in doubt, that the intent of the draftsmen is that there should be a clear delineation of the Judiciary’s funds to the intent that they enjoy full autonomy.

4. Interestingly, Section 121 (4A) established a Disbursement Committee for each state of the Federation consisting of 11 members and 5 of those Committee Members are drawn from the Judiciary, 3 from the Executive Arm of Government and 3 from the Legislative Arm of Government.That again validates the assertion that Financial Autonomy of the Judiciary is considered a priority by the draftsmen of the CFRN. The reason for this Financial Autonomy is not far fetched, “It is often said
that he who pays the piper, dictates the tune.” Therefore, if any of the other 2 arms of Government are in control of the Finances of the Judiciary, it is reasonable to opine that they can continue to pull the strings of the Judiciary hence impeding the capacity of the Judiciary to discharge its functions without fear or favor. To underscore the importance of the Judiciary’s Financial Autonomy, Latimer’s House Guidelines of the Common Wealth 7 provides that, “Sufficient and sustainable funding should be provided to enable the Judiciary to perform its functions to the highest standards. Such funds, once voted for the Judiciary by the legislature, should be protected from alienation or misuse. The allocation or withholding of funding should not be used as a means of exercising improper control over the Judiciary.”The Courts have been vocal, and rightfully so, in advocating for the Financial Autonomy of the Judiciary. 8

5. The Law V Reality: While the position of the Law on the Financial Autonomy is very clear, the Executive Arm of Government in Nigeria across several states sometimes continue to insist that the budget of the Judiciary be subject to the approval of the Executive arm of Government. Oftentimes the sums contained in the Appropriation Act and or Law(s), are not paid directly to the Judiciary Accounts or the monies paid to the Judiciary is less that the amount appropriated in the Appropriation Law of the State(s) flagrant disregard to the provisions of Section 121 (4B) and (4C) of
the CFRN and in fact an illegal act.

6. Conclusion: In John Aikpokpo-Martins, Esq & Anor. V. Governor of Delta State & 5 Ors 9 ,Hon. Justice G.B. Briki Okolosi found that the State Judiciary must enjoy financial autonomy, same as the National Judiciary body as expressly provided for in the Constitution. This is a welcome victory for the Financial Autonomy of the Judiciary and one which will hope will be replicated across at the 36 States of the Federation.

 

1.This Article is authored by Gloria Igalawuye & Okwuchukwu Udebuani both Associates of the
Convergence Law Practice under the supervision of Kesi Seun-Adedamola, Partner Convergence Law
Practice. The authors can be reached on info@convergencelp.com
2.https://constitutioncenter.org/the-constitution/historic-document-library/detail/montesquieuthe-spirit-
of-the-laws-1748 accessed 21/12/2023 at 12:02pm.
3.1999 Constitution Federal Republic of Nigeria (CFRN) as amended (2023).
4. ibid.
5.ibid.

6. ibid.
7. https://www.cpahq.org/media/kafl4zuf/commonwealth_principles_cpa_sept_2023-v2_single.pdf
accessed 21/12/2023 at 01: 25pm.
8. A.G Abia State & 35 Ors, v. A.G Federation (2022). LPELR-57010 (SC)., Olisa Agbakoba v. A.G
Federation & 2 Ors (2012)14 NWLR (Pt 1320) 221 at 243.

9. Aikpokpo-Martins, Esq &anor. V. Governor of Delta State & 5 ors (2012) 14 NWLR(Pt 1320)221 at 243

 

THE DISSOLUTION OF BANKS BOARD BY THE CENTRAL BANK OF NIGERIA: ILLEGAL OR NOT?

by convergence

 

THE DISSOLUTION OF BANKS BOARD BY THE CENTRAL BANK OF NIGERIA: ILLEGAL OR NOT?[1]

  1. Introduction: On the 10th January 2024, the Central Bank of Nigeria (CBN) dissolved the Board and Management of Union Bank, Keystone Bank and Polaris Bank in Nigeria.[2] The CBN disclosed that “This action became necessary due to the non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of Banks and Other Financial Institutions Act, 2020. The Bank’s infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability, among others.”[3] This Article seeks to explore whether the dissolution of the Bank Boards and Management by the CBN is illegal or not?

 

  1. Who Regulates Nigerian Banks? The CBN’s has the primary responsibility for the regulation of Nigerian Banks and part of its statutory objective is to promote a sound financial system in Nigeria[4] and ensure a high standard of conduct and management throughout the banking systems[5]. The Banks and Other Financial Institutions Act, 2020 (BOFIA) also empowers the CBN to regulate and supervise Banking and the business of other Financial Institutions in Nigeria. While the CBN has regulatory oversight on Nigerian Banks as Financial Institutions, these Banks are primarily Companies and the chief statute for the operation of companies in Nigeria is the Companies and Allied Matters Act (CAMA) 2020 (as amended)[6].

 

  1. How must Directors be legally removed in Nigeria? 288 (1) of CAMA outlines the procedure for the removal of Directors of a company. It expressly states that a Director can only be removed through an ordinary resolution of the Company. It however outlines some condition precedents that must be fulfilled before such an ordinary resolution can be legally and validly passed. Section 288 (2) provides that the Company must issue a special notice convening the meeting and detailing that part of the agenda for the meeting is the removal of a Director(s). A copy of such notice must be sent to the concerned Director, whether he is a Member of the Company or not, and such Director is entitled to be heard on the resolution of his/her removal at the Meeting. Section 288 (3) of CAMA further provides that the concerned Director(s) shall have a right of representation to such removal notice, either written, oral or both.

 

  1. Removal of Directors outside of CAMA: While Section 288 of CAMA broadly details the process for the legal removal of Directors, Section 288(6) of CAMA acknowledges that Directors of a Company can be removed under other powers which may exist outside the provisions of Section 288 of CAMA. Underscoring this fact, Section 53 (2) of BOFIA provides that where any of the provisions of the Companies and Allied Matters Act are inconsistent with the provisions of BOFIA, the provisions of this BOFIA shall prevail. Hence, it would be perfectly legal for the CBN to remove a Bank Director(s) under BOFIA, even though such process may conflict with the provisions of Section 288 of CAMA.

 

  1. Was the removal of the Board and Management of Union Bank, Keystone Bank and Polaris Bank under BOFIA Legal? The CBN purportedly dissolved the Management and Board of the banks due to their non-compliance with the provisions of Section 12(c), (f), (g), (h) of BOFIA. Interestingly, Section 12 of BOFIA speaks specifically to the revocation of a Banking License and what must be done by CBN if a Financial Institution does not conform with its License obligations. Nowhere does Section 12 of BOFIA speak to the removal of a Director or the dissolution of Bank’s Board as the appropriate regulatory intervention for the contravention of Section 12 of BOFIA. It is however instructive that Section 34 (2) (e) and (f) (i) of BOFIA empowers the CBN Governor to remove, for reasons to be recorded in writing with effect from such date as may be set out in order, any manager, officer or Director of a Bank, where after a special examination under Section 33 of BOFIA, CBN is satisfied that the Bank is in grave situation based on the outcome of the special examination.

 

  1. CONCLUSION: Following from the above, it is our reasoned opinion that the recent dissolution of the Board and Management of Polaris Bank, Union Bank and Keystone Bank Boards by the CBN is legal, statutorily recognized and within the ambit of the powers of the CBN Governor as contained in BOFIA. We however further opine, that the Memorandum circularizing the Board dissolution should have been made sequel to the provisions of Sections 33 and 34 of BOFIA and not Section 12 as contained.  The powers of the CBN under Section 34 of BOFIA is quite enormous and would have been a better fit for purpose than Section 12 of BOFIA. For mischief, one can argue that the appropriate response for a contravention of Section 12 of BOFIA is revocation of the Bank’s license, which was not done in this case, and not the removal of the Directors or dissolution of the Board.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

[1] Kesi Seun-Adedamola (Partner, Convergence law Practice) and Gloria Igalawuye (Associate, Covergence Law Practice) can both be reached on info@convergencelp.com

[2] Via a circular on the CBN website https://www.cbn.gov.ng/ and accessed on 15.1.2024 at 15.08pm WAT

[3] Ibid

[4] Section 2 (d) of the Central Bank of Nigeria (CBN) Act 2007 Cap A66. N0.7. LFN

[5] Sec 42 (1) (b) of CBN Act

[6]. Companies and Allied Matters Act (CAMA) 2020.

Arbitration Clauses & Commercial Contractual Agreement1

by convergence

1. Introduction:

Arbitration Clauses in Commercial Contracts have become a generally acceptable practice. Unfortunately, Parties have been known to disregard Arbitration Clauses and swiftly resort to the traditional court system to enforce the terms and provisions of such contracts or the resolution of any dispute
arising from the contract. This Article seeks to probe the rationale behind the inclusion of Arbitration Clause in a Contract and the position of Nigerian Courts to the inclusion and the validity of Arbitration Clauses in Commercial Contracts.

2. What is an Arbitration Clause?:

An arbitration Clause is a written consensus embodying the Agreement of parties to resort to Arbitration should any dispute arise with regards to the obligations which both parties have undertaken to observe.
; it provides for compulsory arbitration in case of dispute as to rights and liabilities under such contract. This presupposes that Arbitration is the first procedure which the Parties to that Contract intend to adopt in settling their grievances.

3. Does an Arbitration Clause Oust the Jurisdiction of the Court?:

No, the
jurisdiction of courts is statutory and not a matter of consent of parties, an Arbitration
Clause therefore only seeks to temporarily suspend the intervention of the Court
while parties seek other means of dispute resolution as agreed by them.
.
4. Nigerian Courts and Arbitration Clauses:

Being a clause embedded in a contract between parties, the Court would ordinarily uphold an Arbitration Clause as contained in the agreement of parties; it is settled law that parties are bound by
the terms of their contracts and the Court would as much as possible uphold and
enforce the terms of the contract and not allow parties renege on their undertakings.

5. Arbitration:

Whether a Must for Every Contractual Agreement: The Courts have declared that arbitration is merely procedural for ascertaining the rights of parties with nothing in it to exclude a right of action on the contract itself, it merely allows the party against whom an action may be brought to apply to the court to stay proceedings in the action in order that the parties may resort to the procedure
which they agreed on. In essence, parties are not obligated to insert an Arbitration
Clause in their Contracts. A contract is therefore neither void nor voidable merely on
the ground that it does not contain an Arbitration Clause. No Court can lawfully
nullify a contract because it does not contain Arbitration Clause.

6. Is an Arbitral Award Absolute?

The disposition of the Nigerian Court is to
intervene with caution and within strict guidelines in the review of an Arbitral Award;
if at all. It is settled Law that an Applicant cannot ordinarily be heard complaining
against the findings of the Arbitral Tribunal which on the face of it is good8 but in
cases where there are allegations that the award is a result of corruption or that the
Arbitrator is guilty of misconduct, the Courts in these instances have handed out the
indices upon which it may be said that an Arbitrator misconducted himself, thereby
necessitating the setting aside of any award to wit:
a) An error of law on the face of an arbitral award: This means that one can find
in the Award or a document actually incorporated therein, some legal
proposition which is the basis of the award and which can be said to be
erroneous. Thus, where it is impossible to say, from what is shown on the face
of the award, what mistake, if any, the Arbitrator has made, or that the
Arbitrator has tied himself down, on the face of his award, to some special
legal proposition which is unusual, the award will not be disturbed.10
.
b) Even when there is an error of law on the face of the Arbitral Award, the party
seeking to set aside the award on such ground must show that the question(s)
of law were not the ones specifically submitted to the Tribunal for
determination but were unilaterally raised and determined by the Arbitral
Tribunal. “… and where the question referred for arbitration is a question of
construction, which is, generally speaking, a question of law, the arbitrator’s
decision cannot be set aside only because the court would itself have come
to a different conclusion; but if it appears on the face of the award that the
arbitrator has proceeded illegally, for instance, by deciding on evidence
which was not admissible, or on principles or construction which the law does not countenance, there is error in law which may be ground for setting aside
the award. But the court is not entitled to draw any inference as to the finding
by the arbitrator of facts supporting the award; it must take the award at its
face value.

7. Conclusion:

This Article seeks to show that Nigerian Courts have great regard
for the Arbitral agreement of Parties and would rarely intervene in reviewing a good
Arbitral Award. While Parties often chose Arbitration because it’s faster and devoid
of technicalities, Parties should be willing to be bound by the decision of the
Arbitration as same was what they agreed to when they signed the Contract with
the Arbitration Clause. Otherwise, since Arbitration Clauses are not compulsory in a
Commercial Contract, Parties may choose to omit it from their contracts.

ELECTRONIC SIGNATURES IN NIGERIA[1]

by convergence

INTRODUCTION

  1. The Nigerian Cybercrimes (Prohibition, Prevention, etc.) Act 2015 (“the Act”) provides an effective, unified and comprehensive legal, regulatory and institutional framework for the prohibition, prevention, detection, prosecution and punishment of cybercrimes in Nigeria.[2]Whilethe Act is often referenced in respect of its Part III which makes copious provisions on Offences and Penalties, mention must be made of the innovative introduction of Electronic Signature for commercial transactions in Nigeria, contained in Section 17 (1) (a) of the Act.
  • WHAT IS AN ELECTRONIC SIGNATURE IN NIGERIA? The Act does not provide a definition for electronic signature; however, the Court of Appeal recently defined a signature in INEMIEBI V. STATE (2022) LPELR-57020 (CA) as “simply someone’s name or writing expressed in a unique manner consistently to identify the person and signify his consent to a document.” In other instances, the Nigerian Courts have defined it in accordance with the Black’s Law Dictionary to mean a person’s name or mark written by that person or at the person’s direction.[3]It is therefore relatively clear, that an electronic signature may be defined as the electronic version of a person’s name, mark, unique identification etc. written or initialed by the person or at its direction to consent to the content of a document and or data.
  • ELECTRONIC SIGNATURE IN THE EUROPEAN UNION: The European Union has defined electronic signature as an electronic indication of a person’s intent to agree to the content of a document or a set of data to which the signature relates. Like its handwritten counterpart in the offline world, an electronic signature is a legal concept capturing the signatory’s intent to be bound by the terms of the signed document.[4]
  • ELECTRONIC SIGNATURE UNDER THE NIGERIAN CYBERCRIMES (PROHIBITION, PREVENTION, ETC.) ACT? Under Nigerian Law, electronic signatures in commercial transactions are generally binding[5], and forging an electronic signature with the intent to defraud and or misrepresent is a criminal offence punishable on conviction to imprisonment or a fine[6]. It is important to note that if there is a dispute about the validity of an electronic signature, the burden of proof is not on the author of the electronic signature but on the person disputing the authenticity of the electronic signature[7]. While electronic signatures are generally binding in commercial transactions in Nigeria, they are not acceptable as binding for such documents as wills, codicils, and other testamentary documents; death and birth certificates, matters of family law such as divorce, adoption; issuance of Court orders[8]; legal requirement in affixing a signature, etc[9].
  • It is therefore important to note that, electronic signatures are widely used for commercial transactions in Nigeria and has been embraced by the Judiciary (electronic filing is being daily embraced by the Courts) and more recently key institution of Government like the Corporate Affairs Commission (electronic filling under the Companies and Allies Matters Act 2020)[10], filings at the Ministry of Trade and Investments[11] amongst several other; but it must not be confused with digital signatures.
  • ELECTRONIC SIGNATURE vs DIGITAL SIGNATURES:  While electronic signature can broadly be defined as the signature of an individual/persons in an electronic format, usually reflective of the handwritten mark or signature of the author and an agreement to be bound by the terms of a document or as evidence that the content of document originated from an individual, a digital signature on the other hand often has no bearing or similarity between the handwritten mark or signature of the author; it is usually created by algorithms and software. It is more like a “tamper-proof” seal and are often used by certification authorities or trust service providers to authenticate a document. These are two very different terms which must not be confused and or used interchangeably.
  • CONCLUSION: In conclusion, electronic signature is largely utilized and recognized in Nigeria. The Nigerian Evidence Act and the Companies and Allied Matters Act are other Nigerian legislations that recognize and make provisions for electronic signatures.

[1] Mokesioluwa Seun-Adedamola (Partner, Convergence Law Practice) can be reached on kesi@convergencelp.com and O. A. Idehen, Esq (Associate, Convergence Law Practice) can be reached on info@convergencelp.com

[2] Explanatory Memorandum to the Act

[3] See the case of MOHAMMED VS. MARTINS ELECTRONICS COMPANY LTD (2009) LPELR – 3708 (CA); AKINSANYA & ANOR VS. FMFL (2010) LPELR – 3687 (CA).

[4] What is eSignature, accessed at https://ec.europa.eu/digital-building-blocks/wikis/display/DIGITAL/What+is+eSignature on 15th April 2023, at 6.55am WAT

[5] Sec 17(1)(a) of the Act

[6] Sec 17(1)(c) of the Act

[7] Sec 17(1)(b) of the Act

[8] There are some exceptions in that regard.

[9] Section 17 (2) of the Act

[10] https://www.cac.gov.ng/

[11] https://www.iponigeria.com/

JUDICIAL SALE IN NIGERIA- DAVID OGEBE (LLB, UNIBEN)

by convergence
  1. Introduction:

Judicial sale exists in every Jurisdiction globally. It is a forced sale conducted under the authority of a Court judgment or Court order[1]; this legal concept is applicable in almost every field of law. While there are many purposes for Judicial Sale in law, the most common is Debt Recovery. How this works is, if Mr. A owes Mr. B $5,000 and Mr. B has refused to pay, Mr. A can apply to the Court to sell a piece of land owned by Mr. B and the proceeds thereof used to satisfy the outstanding sum or part of the $5,000.

  • Types of Judicial Sale:

Judicial sales are ordered by way of an interlocutory order or executory judgment, either during Litigation or upon completion of the Matter when Judgement is given. When done pendente lite (during Litigation), it simply means that a Claimant/Plaintiff has made an Application for the sale of the Res before the Court makes its final decision in the Debt recovery suit. Otherwise, the Claimant may decide to be patient so that this Judicial Sale Order is made alongside the final determination of the debt recovery suit.

  • Judicial Sale Suo Motu:

This form of Judicial sale, although uncommon, is done without an application of the Claimant/Applicant, although still done pendente lite. The Court can during the pendency of the Litigation unilaterally order that the Res be sold as a Judicial Sale even though the Claimant/Applicant has not specifically applied for same. The power to order a Judicial Sale suo motu, is usually exercised where the Res is fast deteriorating or where the fact and circumstance warrants it.

  • What Next?

Where an Order for sale has been made, the next step is for the Res to be appraised, before being sold pursuant to the Order of Judicial Sale. Appraisement is the official valuation of the Res by a court appointed valuer so as to prevent the Res from being sold at too low a price. The Res would not be allowed to be sold for less than the appraised value without an order from the court.

  • Time Frame:

The time frame for judicial sale varies due to different reasons. One of such depends on the Judge and their schedule. The time frame could also vary based on the strategy and tactic of Counsel for and against the judicial sale application. The time frame for Judicial Sale action in Nigeria is between three to five (3 – 5) years.

  • Maritime Law:

In Maritime Law specifically, judicial sale is the most effective type of debt recovery. It is suitable for when the Debtor has no funds or has hidden funds or absconded with the Creditor’s money[2].

[1] Lord Simmonds: Halsbury’s Law of England 3rd Edn Vol 34, Pg. 13

[2] This aspect of Maritime Law shall be delved into later in our series on judicial sale.

THE EFFECT OF ARBITRATION CLAUSE ON THE JURISDICTION OF NIGERIAN COURTS – KESI SEUN-ADEDAMOLA, LLM ESSEX

by convergence

Introduction: Have you executed a Contract that has an Arbitration Clause with London or Kigali as the place of Arbitration? Yet the same Contract is subject to Nigerian Law and the Nigerian Courts? Now you’re wondering which clause has priority over the other? This Article would try to provide some clarification as follows:

  1. Nigerian Courts Respect Agreements: The Nigerian Courts have over the years strongly taken the position that parties must be bound by the Terms of their Agreement voluntarily entered into. Where such Agreement contains an Arbitration clause, the Nigerian Courts strictly enforce the Agreement to go to Arbitration where either of the parties insists on exercising that right. Where a Party to an Arbitration Agreement opts for and insists on the right to Arbitration before a trial Court, the Court will hold the Parties to the Agreement to their intention expressed clearly in the Arbitration Clause(s) which bind(s) them.
  2. Stay not Incapable: It is however important to clarify that the consistent position of the Nigerian Courts is that the existence of an Arbitration Clause in an Agreement does not render the Nigerian Court incompetent or incapable to act. What it does is to suspend the jurisdiction of the Court until the completion of Arbitration proceedings. Thus, the Nigerian Court would in such circumstances stay its proceedings and refer the parties to Arbitration in compliance with Section 5 of the Arbitration and Conciliation Act of Nigeria[1].
  3. Last Bus Stop: It is only when either party is dissatisfied with the arbitral award, that the Nigerian Courts would assume jurisdiction over the matter. It is important to note that this is applicable, irrespective of the location and jurisdiction of the Arbitration so long as the Contract states that Contract is subject to Nigerian Laws and the jurisdiction of Nigerian Courts.

[1] Per the Supreme Court’s decision in Mainstreet Bank Capital Limited v. Nig. RE (2018) 14 NWLR (Pt.1640) 423 SC.

Kesi Seun-Adedamola is a Partner in the Firm and can be reached on kesi@convergencelp.com