Publications

EXAMINING THE NATIONAL INDUSTRIAL COURT OF NIGERIA’S RECENT GRAVITATION ON THE POSITION OF NIGERIAN LABOUR LAW ON TERMINATION OF EMPLOYMENT WITHOUT REASON: A CRITICAL REVIEW

By Nelson C. Onuoha, Associate (Dispute Resolution & Corporate/Commercial), Solola & Akpana and Henry C.  Madukolu, Associate (Dispute Resolution), Solola & Akpana

  1. Introduction

In recent times, players in the Nigerian employment/industrial relations space have been at a cross-road as to whether modern Nigerian Labour Law still allows an employer to terminate the employment of an employee for good, bad or no reason at all provided that the employer complies with the conditions for termination provided in the Contract of Employment.

With the advent of the Third Alteration Act to the Constitution of the Federal Republic of Nigeria 1999 (as amended) creating Section 254C of the Constitution which, amongst other things, vested the National Industrial Court of Nigeria (“NICN”) with the jurisdiction to hear and determine matters bordering on the application and interpretation of International labour standards and international labour best practices, some Judges of the NICN in different divisions have been recently taking a rather activist approach to hold that, pursuant to international labour standards and best practices and contrary to the position of the law ‘as we used to know it’, an employer can no longer terminate the employment of an employee without giving a good reason.

This paper undertakes a critical examination of the propriety or otherwise of the recent position seemingly predominantly preferred by the NICN vis-à-vis the provisions of the Nigerian Constitution as well as Judicial Precedents, with a view to ascertaining whether or not the position of Nigerian Labour Law on the termination of employment without reason has indeed changed.

  • Jurisdiction versus Judicial Powers: Putting Section 254C(f) and (h)  of the Nigerian Constitution(as amended) in Proper Perspective

Jurisdiction connotes the authority of a court to exercise its judicial powers to determine a dispute submitted to it by contending parties in any proceeding.[1] It is the legitimacy which a court must possess to be able to exercise its judicial powers over matters litigated before it or take cognizance of matters presented for its decision[2]. Jurisdiction is fundamental to the adjudication as where a court lacks jurisdiction to entertain a matter before it, all proceedings and decisions made thereon will be rendered a nullity.[3]

Conversely, judicial powers are the powers which a court may exercise over any matter within its jurisdiction. Jurisdiction refers to the kind of actions, parties and territories over which a particular court may exercise its judicial powers.[4] In other words, a court must in the first instance possess jurisdiction over a matter or dispute before it can proceed to exercise its judicial powers over that matter or dispute. Thus, although closely connected, jurisdiction is quite different from judicial powers as without jurisdiction. 

Under Nigerian Law, Judicial powers are vested in the various Nigerian courts of record including the NICN by the provision of Section 6 (1) of the Constitution which reads thus, “the judicial powers of the Federation shall be vested in the courts to which this section relates, being courts established for the federation”

On the other hand, Section 254 C- (I) of the Nigerian Constitution provides for the jurisdiction of the NICN as follows;

“254 C- (I) Notwithstanding the provisions of sections 251, 257, 272 and anything contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the National Industrial Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters-

(a) relating to or connected with any labour, employment, trade unions, industrial relations and matters arising from workplace, the conditions of service, including health, safety of labour, employee, worker and matters incidental thereto or connected therewith;

 (b) relating to, connected with or arising from Factories Act, Trade Disputes Act, Trade Unions Act, Labour Act, Employees’ Compensation Act or any other Act or Law relating to labour, employment, industrial relations, workplace or any other enactment replacing the Acts or Laws;

(c) relating to or connected with the grant of any order restraining any person or body from taking part in any strike, lock-out or any industrial action, or any conduct in contemplation or in furtherance of a strike, lock-out or any industrial action and matters Connected therewith or related thereto;

(d) relating to or connected with any dispute over the interpretation and application of the provisions of Chapter IV of this Constitution as it relates to any employment, labour, industrial relations, trade unionism, employer’s association or any other matter which the Court has jurisdiction to hear and determine;

 (e) relating to or connected with any dispute arising from national minimum wage for the Federation or any part thereof and matters connected therewith or arising therefrom;

(f) relating to or connected with unfair labour practice or international best practices in labour, employment and industrial relation matters;

 (g) relating to or connected with any dispute arising from discrimination or sexual harassment at workplace;

(h) relating to, connected with or pertaining to the application or interpretation of international labour standards;

 (i) connected with or related to child labour, child abuse, human trafficking or any matter connected therewith or related thereto;

 (j) relating to the determination of any question as to the interpretation and application of any-

(i) collective agreement;

(ii) award or order made by an arbitral tribunal in respect of a trade dispute or a trade union dispute;

(iii) award or judgment of the Court;

(iv) term of settlement of any trade dispute;

(v) trade union dispute or employment dispute as may be recorded in a memorandum of settlement;

 (vi) trade union constitution, the constitution of an association of employers or any association relating to employment, labour, industrial relations or workplace;

(vii) dispute relating to or connected with any personnel matter arising from any free trade zone in the Federation or any part thereof;

(k) relating to or connected with disputes arising from payment or non- payment of salaries, wages, pensions, gratuities, allowances, benefits and any other entitlement of any employee, worker, political or public office holder, judicial officer or any civil or public servant in any part of the Federation and matters incidental thereto;

 (L) relating to-(i) appeals from the decisions of the Registrar of Trade Unions, or matters relating thereto or connected therewith; (ii) appeals from the decisions or recommendations of any administrative body or commission of enquiry, arising from or connected with employment, labour, trade unions or industrial relations; and (iii) such other jurisdiction, civil or criminal and whether to the exclusion of any other court or not, as may be conferred upon it by an Act of the National Assembly;

(m) relating to or connected with the registration of collective agreements”

The aspects of the NICN’s jurisdiction relevant to this discourse are those captured in paragraphs (f) and (h) emboldened above which clothe the NICN with the jurisdiction to hear and determine matters relating to unfair labour practice or international best practices in labour, employment and industrial relation matters and/or pertaining to the application or interpretation of international labour standards. It is clear that these provisions only empower or authorize the NICN to exercise its judicial powers over matters bordering on unfair labour practice and international labour best practices as well as matters bordering on the interpretation and application of international labour standards. These provisions do not give the NICN the powers to willy-nilly apply international labour practices and standards to matters before it.

Put rather markedly, the provisions of the Constitution under reference only imbue the NICN with the jurisdiction to hear and determine matters relating to or seeking the interpretation and application of international labour standards/practices. In exercising this jurisdiction, the NICN will determine whether or not to apply these international labour standards/ practices taking into consideration the circumstances of each case as well as the laws on the application of international laws/treaties; the Constitution does not give the NICN the powers to automatically apply all and any international labour practices/standards.

Under Nigerian law, it remains an unchanged rule of interpretation of statutory and constitutional provisions that where their wordings are clear and unambiguous, they must be given their plain and ordinary meaning by the Courts.  The guiding principle in the interpretation of constitutional or statutory provisions is that they should be construed according to the intention clearly expressed in the wordings of the statute themselves. Where the words used are unambiguous, no more is needed to expound the words in their natural and ordinary sense because the words of the Constitution or Statute alone best declare the intention of the lawmaker. See Cocacola Nig. Ltd. v. Akinsanya[5], A.G. Abia State v. A.G. Federation[6], Corporate Ideal Insurance Ltd. v. Ajaokuta Steel Co. Ltd.[7].

Markedly, many legal practitioners, writers, jurists and indeed learned Judges of the NICN appear to have misconceived the provisions of Section 254 C(I) (f) and (h) to presuppose that these provisions enable or require the NICN to apply all and any International Labour Treaty or Convention in all cases. This is clearly not the purport of those provisions. Those provisions are simply jurisdiction-conferring provisions, which grant the NICN the exclusive jurisdiction to hear and determine any matter involving the issue(s) of the applicability or otherwise of an International Labour Treaty or Convention. By those provisions, the NICN is merely exclusively authorized to hear and determine matters contending the applicability or otherwise of an International Labour Convention/Treaty or Labour practice, those provisions do not mandate or require the NICN to apply International Labour Treaties or Conventions as a matter of course.

  • Application of International Treaties and Conventions in Nigeria – Appraising the Decisions of the NICN applying the ILO Termination of Employment Convention, 1982(No. 158)

The need for international relation, trade and co-existence amongst States has no doubt necessitated the presence of laws, treaties, protocols, conventions et cetera that will guide the communal affairs of  countries in the international sphere.

However, these treaties do not become automatically binding and applicable by the member States. It is in recognition of this that the Treaty of Treaties[8] states that where a signature is subject to ratification, acceptance or approval, the signature does not establish the consent to be bound. At most, the signature is an indication of the willingness of the signatory State to continue the treaty-making process to wit; ratification, acceptance and approval (i.e. domestication). This is the precise position of Nigeria Law in the implementation and application of international treaties.

 It becomes apposite at this point to reproduce the provision of the Nigerian Constitution on the conditions precedent for the applicability of an International Convention/Treaty in Nigeria as follows –

“12 (1) – No treaty between the Federation and any other country shall have the force of law to the extent to which any such treaty has been enacted by the National Assembly.

(2) – the National Assembly may make laws for the Federation or any part thereof with respect to matters not included in the exclusive Legislative list for the purpose of implementing a treaty.

(3) – A bill for an Act of the National Assembly passed pursuant to the provisions of subsection (2) of this section shall not be presented to the president for assent, and shall not be enacted unless it is ratified by a majority of all the House of Assembly in the Federation[9]

A combined reading of the above provision reveals that no treaty shall have the force of law save it has been enacted by the Nigerian National Assembly. In other words, the legislative process must be completed from ratification to domestic enactment.

Thus, assuming without conceding that Section 254C(I) (f) and (h) of the Nigerian Constitution requires the NICN to apply all and any International Labour Treaty or Convention in all cases, that provision must be read together with Section 12 of the Nigerian Constitution which mandatorily provides that no international treaty or convention shall be applied or given the force of Law in Nigeria unless same is ratified and domesticated by an enactment of the National Assembly. It follows that the NICN can neither, under the guise of Section 254 C(I) (f) and (h) of the Nigerian Constitution, apply an International Labour Convention or Treaty that has not been ratified by Nigeria and domesticated via an enactment of the National Assembly, nor apply any International Labour practice that stems from such non-ratified and undomesticated International Labour Convention or Treaty.  

The sacred need to ensure that International Conventions or Treaties are ratified and domesticated before they are applicable in Nigeria has been reiterated by  Nigerian Appellate Courts in a plethora of cases. In Tolani v. Kwara State Judicial Service Commission & Ors[10] the Court of Appeal held as follows;

“The controversy whether an international treaty [by whatever name it is called] has the force of law in Nigeria before its enactment into law by the National Assembly has long been laid to rest. The cases are many, so many indeed, that it would serve no useful purpose rehearsing them here. Thus, it may just suffice to cite the illustrative decision of the Supreme Court in Abacha and Ors v Fawehinmi (2001) 51 WRN 29 and one decision of this Court on the matter, M. H. W. U. N v. H. M L. P. (2005) 28 WRN 127. The rationale of these decisions is that treaties which have not been domesticated cannot form part of Nigerian Law, afortiori they cannot be invoked to afford remedies to litigants.”[11]

Recently, some divisions of the NICN have, in apparently misinterpreting Section 254 C(I) (f) and (h) of the Nigerian Constitution, relied on Article 4 of International Labour Organization’s Termination of Employment Convention (“the ILO Termination of Employment Convention”)[12] to hold that in Nigeria an employer cannot terminate the employment of an employee without good reason. Article 4 of the ILO Termination of Employment Convention states that “the employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service”[13].

One popular example of the NICN relying on Article 4 of the ILO Termination of Employment Convention to hold that a person’s employment can only be terminated for good reason is the decision of the NICN in Mr. Ebere Onyekachi Aloysius v. Diamond Bank Plc[14], wherein the Court held thus:

 “The court can now move away from the harsh and common law posture of allowing an employer to terminate its employee for bad or no reason…it is now contrary to international labour standard and international best practice, and, therefore unfair for an employer to terminate the employment of an employee without any reason or justifiable reason that is connected with the performance of the employee’s work…I further hold that the reason given by the defendant for determining the claimant’s employment in the instant case, which is that his ‘service was no longer required’ is not a valid one connected with the capacity or conduct of the claimant’s duties in the defendant bank. In addition, I hold that it is no longer conventional in this twenty 1st century labour law practice and industrial relations for an employer to terminate the employment of its employee without any reason even in private employment.”

This was the same position taken by the Abuja Division of the NICN in Bello Ibrahim v Ecobank Plc[15] wherein the Court held as follows:

“The Termination of Employment Convention of 1982, No. 158 and Recommendation 166 of ILO, have set standard to guide employer on termination and dismissal of employees from service. Therefore, to terminate or dismiss employee without giving justifiable reason will tantamount to unfair termination, more particularly when as in this case the employee was not found wanting in carrying out his duties. The requirement of valid justifiable reason for termination is a procedural safeguard to guard against mischief.”

It is worthy to mention that Nigeria is yet to ratify the ILO Termination of Employment Convention.[16] Consequently, Nigeria has also not domesticated the ILO Termination of Employment Convention. The ultimate implication, therefore, is that the ILO Termination of Employment Convention, as well as any labour practice codified therein, is completely inapplicable and unenforceable in Nigeria. It, therefore, defeats reason that in Mr. Ebere Onyekachi Aloysius v. Diamond Bank Plc (supra) and Bello Ibrahim v Ecobank Plc, the NICN applied the labour practice codified in Article 4 of the ILO Termination of Employment Convention requiring the employer to advance good reason to validly terminate an employment when the said Convention has no force of law or applicability in Nigeria. It was completely remiss of the NICN to neglect the mandatory provisions of Section 12 of the Nigerian Constitution and proceed to apply the provisions of a Convention that has no binding force of law in Nigeria by reason of its non-ratification and non-domestication.

It is settled Nigerian law that the provisions of the Constitution are supreme and binding over all persons and authorities in Nigeria.[17] No person or authority has the powers or vires to do any act or take a decision that is inconsistent with the provisions of the Nigerian Constitution or else same will amount to a nullity to the extent of the inconsistency.[18]

Thus, to apply a non-ratified and undomesticated International Labour Convention/Treaty, such as the ILO Convention on Termination of Employment, is patently inconsistent with the mandatory provisions of Section 12 of the Nigerian Constitution. The ultimate implication, therefore, is that since the decisions of the NICN in Mr. Ebere Onyekachi Aloysius v. Diamond Bank Plc(supra) and other cases wherein the NICN applied (or more appropriately, misapplied) the provisions of Article 4 of the ILO Termination of Employment Convention requiring the employer to advance good reason to validly terminate an employment, is inconsistent with Section 12 of the Nigerian Constitution, those decisions are susceptible to be declared null and void to the extent of their inconsistency.  

The above will still remain the correct position even when Section 7(1)(6) of the National Industrial Court Act, 2006(”the NICN Act”) is considered. Section 7(1)(6) of the NICN Act provides thus:

“The court shall, in exercising its jurisdiction or any of the powers conferred upon it by this Act or any other enactment or law, have due regard to good or international best practices in labour or industrial relations and what amounts to good or international best practices in labour or industrial relations shall be a question of fact.”

Clearly, the above provision merely directs the NICN to consider good or international best labour practices when exercising its jurisdiction over any matter before it. That provision cannot be brandished as an authority enabling the NICN to apply all and any international labour practice codified in an International Labour Convention/Treaty that has not been ratified or domesticated by Nigeria as strictly required by Section 12 of the Nigerian Constitution.

In Bello Ibrahim v Ecobank Plc(supra), the NICN was, with respect, wrong to have interpreted Section 7(1)(6) of the NICN Act as giving the NICN powers to apply all or any International Labour Convention/Treaty without taking into consideration the strict constitutional requirements for applying International Conventions/Treaties as prescribed in Section 12 of the Nigerian Constitution.   

To stretch Section 7(1)(6) of the NICN Act as giving the NICN mandate to whimsically apply non-ratified or undomesticated international labour conventions/treaties is to imply that the said provision is inconsistent with Section 12 of the Nigerian Constitution; if that be the case, Section 7(1)(6) of the NICN Act would then have to suffer the fate of being a nullity to the extent of that inconsistency.

  • Doctrine of Stare decisis et non quela movera

In literal translation, this doctrine means standing by what has been decided. It is a common law principle that has been deeply embedded as an immutable position of Nigerian Law to ensure consistency and certainty in adjudication. By this principle, in deciding current cases, courts are completely bound to apply the decision of a superior court in the judicial hierarchy in an earlier case where the facts and law in contention in both cases are similar[19] A lower court is completely obligated to follow the decision of a superior court in an earlier case no matter how wrong or unsuitable the lower court considers that decision of the superior court to be.[20]

In PDP v. Oranezi & Ors[21], the Supreme Court aptly captured the essence of the hallowed doctrine of stare decisis and its applicability under Nigerian law as follows:

“It is a cardinal principle of law under the doctrine of stare decisis that an inferior Court is bound by a decision of a superior Court, however sure it may be that it has been wrongly decided.”

The sanctity of this doctrine is further captured in the following words of Nweze, JCA(as he then was):

One impregnable canon which has evolved as ubiquitous corollary to the doctrine of stare decisis is the postulation that all other Courts in Nigeria may loosely be compared to the Biblical Centurion at Capernaum, who described himself as a man under authority. The difference, however, is that the said Courts are under a different kind of authority: the irreproachable authority of the rationes decidendi of the judgments of the Supreme Court. Hence, no other Court is permitted the indulgence or allowed the liberty to arrive at decisions that have the effect of nibbling at or denigrating the magisterial prescriptions of the apex Court.”[22]

The significance of the sacred doctrine of stare decisis in Nigerian law cannot be overemphasized. It is in keeping with this doctrine that all lower courts in Nigeria, including the NICN, are bound by the earlier decisions of the Nigerian Supreme Court or any other superior court when these lower courts are faced with the same issues decided by the superior court.

It is commonplace that the age-long position adopted by the Supreme Court and the Court of Appeal – both of which are superior to the NICN, is that an employer can validly terminate the employment of his employee with or without reason provided that the termination is in accordance with the terms of the Contract of Employment.[23]This has remained the position of the Court of Appeal and the Supreme Court even after the advent of the Third Alteration Act (which created Section 254C of the Nigerian Constitution) in 2010.

Recently in Obanye v. U.B.N. Plc[24], the Supreme Court reiterated the above position as follows:

“Under the common law and Nigerian laws, the position is that, ordinarily, a master has the right to terminate his servant’s employment for good or bad reasons or for no reason at all. The basic principle considered normally is in the resolution of a dispute between a master and his servant where the former terminates the latter’s appointment is the determination of whether the contract of service between the two of them is one with statutory colouration/flavour”

Also recently in Oforishe v. Nigerian Gas Co. Limited[25], the Supreme similarly held as follows:

“In an ordinary contract of master and servant, i.e. a contract without statutory flavour, a master can terminate the appointment of the servant without giving any reasons and his motive is an irrelevant consideration.”

Clearly, since the position adopted by the Supreme Court and the Court of Appeal pre and post the inception of Section 254C of the Nigerian Constitution is that an employer has the right to terminate the employment of his employee without reason, it follows that the NICN cannot be taking a different position to hold that an employer can only terminate the employment of his employee for good reason; to do so will amount to judicial rascality.

Given the sacrosanct doctrine of stare decisis, the NICN is unauthorized in law to take a different position from the extant position of the Appellate Courts. The decisions of the NICN such as those in Ebere Onyekachi Aloysius v. Diamond Bank Plc and Bello Ibrahim v Ecobank Plc holding that an employment can only be validly terminated for good reason, cannot stand in the light of the superior decisions of the Court of Appeal and the Supreme Court that an employment can be validly terminated without reason. 

Conclusion

Wrongful termination Claims are so common in Nigeria that it would be completely unpleasant to have any uncertainty about the position of Nigerian law in that regard. No doubt, the move by the NICN to adopt progressive international labour practices and standards is a laudable one, but the NICN cannot be doing so in disregard of the provisions of the Nigerian Constitution as well as the hallowed principle of abiding by judicial precedent.

Ensuring the emergence and application of best international labour practices and standards in Nigeria requires that Nigeria ratify and domesticate the International Conventions/Treaties codifying these best international labour practices/standards. This would give them the force of law in Nigeria and allow their applicability in Nigerian Courts. The interpretation of Section 254C(f) and (h) of the Nigerian Constitution(as amended) by some Judges of the NICN to hold that it allows the willy-nilly application of international labour best practices and Conventions, is, with respect, wrong; that section of the Nigerian Constitution makes no such provision.  

It is only upon the ratification and domestication of the ILO Convention on Termination of Employment that the NICN can rely on that Convention and validly hold that an employment cannot be terminated without good reason. Until then, the correct extant position of Nigerian Labour Law, as consecrated by the Nigerian Supreme Court and Court of Appeal, still remains (with all due respect to the judges of the NICN) that a person’s employment can be validly terminated without any reason at all provided that same is done in accordance with the terms of the Contract of Employment.


[1] Federal University of Technology Akure v. BMA Ventures (Nig.) Limited (2018) 17 NWLR [Pt.1649] 477

[2] Enyadike v. Omehia (2010) 11 NWLR [Pt. 1204] 92

[3] FUTA v. BMA Ventures (Nig.) Limited (supra)

[4] Abacha v. F.R.N. (2014) 8 NWLR [1402] 43

[5] (2017) 17 NWLR (Pt. 1593) 74

[6] (2005) 12 NWLR (Pt. 940) 452

[7] (2014) 7 NWLR (Pt. 1405) 165

[8] Article 12 (2) (b) the Vienna Convention on the law of Treaties, 1969

[9] Section 12 Constitution of the Federal Republic of Nigeria 1999 (as amended), on the implementation of treaties

[10] (2009) LPELR-8375(CA) ( Pp. 59-66, para. F )

[11] Tolani v. Kwara State Judicial Service Commission & Ors (2009) LPELR-8375(CA) ( Pp. 59-66, para. F )

[12] C158 – Termination of Employment Convention, 1982 (No. 158), by the General Conference of the International Labour Organization having convened at Geneva by the Governing body of the International Labour Office, and having met in its sixty-eighth session on June 2, 1982.

[13] https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:C158> accessed on February 3, 2021

[14] [2015] 58 N.L.L.R 92

[15] (Unreported) Suit No. NICN/ABJ/144/2018, delivered on December 17, 2019

[16] <https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:11200:0::NO::P11200_COUNTRY_ID:103259>  accessed on February 3, 2021

[17] Section 1(1) of the Constitution of the Federal Republic of Nigeria, 1999(as amended); EFCC v. Agbele (2018) LPELR-44677(CA); Amechi v. I.N.E.C. (2007) 9 NWLR (Pt. 1040) 504

[18] Section 1(3) of the Constitution of the Federal Republic of Nigeria, 1999(as amended)

[19] A.G Lagos State v. Eko Hotels Limited (2018) 7NWLR [1649] (P.539, para C-E); Ardo v. Nyako (2014) LPELR-22878 (SC) (2014) 10 NWLR (Pt.1416) 591 at p.626, paras D-E

[20] NEPA V. Onah (1997) LPELR-1959 (SC); CBN & Ors V. Okojie (2015) LPELR-24740 (SC)

[21] (2017) LPELR-43471(SC)

[22] Tolani v. Kwara State Judicial Service Commission & Ors (supra)

[23] Daodu v. UBA PLC. (2003) LPELR-5634(CA) ; IDONIBOYE – OBU V. N.N.P.C. (2003) LPELR – 1426 (SC); Ibama V. Shell Pet. Dev. Co. (Nig.) Ltd (1998) 3 N.W.L.R. (pt. 542) 493; Warri Refining and Petrochemical Company Ltd V. Onwo (1999) 12 N.W.L.R. (Pt. 630) 312, NITEL PLC. V. Ocholi (2001) F.W.L.R. (Pt. 74) 254

[24]  (2018) LPELR-44702(SC)

[25] (2017) LPELR-42766(SC) ( P. 21, paras. E-F )

Publications

The Legal Effect of Documenting Contractual Arrangements through a Memorandum of Understanding in Nigeria: Much Ado about Nothing?

– Nelson Onuoha

Introduction

Recently, concerns have been raised about whether capturing contractual or commercial arrangements in a document titled “Memorandum of Understanding” (“MoU”) would create on parties binding obligations capable of being enforced upon breach. This brief piece seeks to address this commercial conundrum in the simplest and shortest way possible.

Is an MoU capable of creating a Binding Contract in Nigeria?

To appropriately answer this poser, it is pertinent to explore the elements that make up a valid and binding contract in Nigeria. Under Nigerian Contract law, certain elements must be present in an accord or arrangement for it to constitute a binding and enforceable contract. These elements are as follows:

1. An Offer: For a Contract to be validly created between two or more parties, there must be a proposal of terms presented by one or more of the parties for the other to accede to. This proposal is referred to as an Offer and it must be positive, direct and unambiguous so that the party or parties to whom it is presented are capable of understanding the terms proposed to them and therefore capable of accepting them.

2. Acceptance: this is where the party or parties to whom an offer has been made agrees to or accedes to that offer. Upon this agreement, that party is deemed to have accepted the terms proposed and agrees to be bound or obligated by them. Acceptance must be unequivocal; there must be a plain indication of concurrence with the terms of the offer.

3. Consideration: This simply means what one party is giving or has agreed to give in return for what the other party is giving or has agreed to give. For instance, in a sale of goods contract; the purchase price a buyer is paying is his consideration in return for the goods the seller is transferring. The purchase price is the buyer’s consideration while the goods being transferred are the Seller’s consideration.

Consideration need not always be monetary or indeed tangible. It can be a forbearance, an undertaking or whatever valuable and adequate recompense in exchange for what the other party is offering. But Consideration must not be vague; it must be clearly ascertainable from the parties’ agreement.

4. Capacity to Contract: Under Nigerian law, save for some exceptions, only persons who are of contractual age and mental capacity are legally recognized as able to enter into a valid contract. Except for some variances in respective State Contract Laws, the contractual age in Nigeria is 21 years, any person below 21 is deemed a minor who is unable to legally enter into a contract for himself/herself except through his/her guardian or next friend who is of contractual age.

5. Intention to enter into legal relations: It must be clear from the parties’ agreement that they intend to be bound by the terms of the agreement either immediately, at a certain date or upon the occurrence of a contingency or event. Furthermore, a mere social or domestic arrangement may not pass for a valid contract if it is not clear that the parties intended to be obligated by the terms of their arrangement.

Where all of the foregoing elements are present in any arrangement, written or unwritten, same amounts to a valid contract which is binding on the parties and enforceable[1] (Orient Bank of Nigeria Plc v. Bilante International Ltd (1997) 8 NWLR (Pt. 515) 37 at 76; Ojo v. ABT Associates Incorporated & Anor (2014) LPELR-22860(CA) )

Thus, where parties enter into any arrangement in which all the foregoing elements are present and they decide to document this arrangement and tag or title the documentation an MoU or any other appellation whatsoever, it does not change the character of that arrangement as it remains a valid and binding contract. Once all the elements of a valid contract are present in a transaction it suffices as a valid and binding contract under Nigerian law irrespective of what the parties chose to name or call the transaction.

Many non-lawyers always bring up the bother that from their search on google, they read legal articles wherein it was opined that MoUs do not create binding and enforceable contracts in Nigeria. This is very incorrect. Perhaps these articles misconceived the decision of the Nigerian Supreme Court in BPS CONSTRUCTION & ENGINEERING COMPANY LIMITED v. FEDERAL CAPITAL DEVELOPMENT AUTHORITY (2017) LPELR-42516(SC).

In that case, a party had entered into an MoU with another party wherein both parties stated that the terms of the MoU would be “subject to contract“. Now this means that the terms of the MoU would only become binding on the parties when they execute a formal contract. The Supreme Court, therefore, held that given the manner in which the MoU, in that case, was couched, same did not create a binding and enforceable contract between the parties as the parties clearly intended only to be bound by its terms upon subsequently executing a formal contract which they never did. The “subject to contract” feature in the MoU in that case clearly excluded the required contractual element of  “Intention to enter into legal relations” as discussed above.

Hence, it is clear that the Supreme Court’s decision was premised on the facts of that case, principally with regard to the peculiar terms of that particular MoU which was in dispute between the parties in that case. The Supreme Court did not in any way make any blanket decision or one-size-fits-all pronouncement that an MoU cannot create a binding and enforceable contract or agreement.

Indeed, under Nigerian Law, a pronouncement or decision of a Court in once case can only be relied on in the context of the peculiar facts and law that were considered in that case[2]

A Court’s decision in one case cannot be stretched across the board to apply to other cases with dissimilar or different facts. An earlier decision of a superior court will only bind that court and the courts below it in a subsequent case if the facts and law which informed the earlier decision are the same or similar to those in the subsequent case. Where the facts which are to inform the decision in the subsequent case differ from those which informed the court’s earlier decision, the earlier decision cannot serve as a precedent for determining the subsequent case[3]

Therefore, where the parties express their intention to be bound by the terms of an MoU and all of the other elements of a valid contract are present, the terms of the MoU will create a valid, binding and enforceable contract; the decision of the Supreme Court in BPS Construction & Engineering Ltd’s case would not be applicable.

Conclusion

Under Nigerian Law, parties are given the wide latitude to contract as they deem fit in so far as same is done within the bounds of the law. Parties are therefore free to call/tag their contractual arrangement whatever name they so please provided that the arrangement comprises all the elements of a valid contract under Nigerian Law. Accordingly, where the contractual or commercial arrangement is documented in an MoU fulfills the 5 contractual requirements discussed above, it creates a valid, binding and Contract/Agreement in Nigeria; it is that simple.


[1] Orient Bank of Nigeria Plc v. Bilante International Ltd (1997) 8 NWLR (Pt. 515) 37 at 76; Ojo v. ABT Associates Incorporated & Anor (2014) LPELR-22860(CA)

[2] Emeka v. Okadigbo (2012) 18 NWLR (Pt. 1331) 55 at 95 para. H; Interdrill (Nig.) Ltd. v. U.B.A. Plc (2017) 13 NWLR (Pt. 1581) 52 at 66; Akeredolu v. Abraham (2018) LPELR-44067 at p. 34 (SC).

[3] Godwin Ugwuanyi v. NICON Insurance Plc (2013) 11 NWLR (Pt.1366) 546 at 604 paras. C-D, Dangtoe v. Civil Service Commission, Plateau State (2001) 9 NWLR (Pt. 717) 132 at 155, para. G.

Publications

THE FUTURE OF TAX LEGISLATION IN NIGERIA: A REVIEW OF THE COURT OF APPEAL DECISION IN UYO LOCAL GOVERNMENT V. AKWA IBOM STATE GOVERNMENT & ANOR, NULLIFYING THE TAXES AND LEVIES APPROVED LIST FOR COLLECTION ACT

By Francis Igho Erhiakporeh1

Introduction

On May 22, 2020, the Calabar Division of the Court of Appeal delivered what, arguably, is the most far-reaching decision relating to tax legislation in Nigeria in recent times. By its decision in the case of Uyo Local Government v. Akwa Ibom State Government & Anor2, the Court of Appeal nullified the Taxes and Levies Approved List for Collection Act, Cap T2, LFN, 2004 (“The Taxes and Levies Act”), for being inconsistent with the provision of the Constitution of the Federal Republic of Nigeria, 1999 as amended (“the Constitution”). 

This decision of the Court of Appeal came days after the Federal High Court sitting in Lagos in the case of the Registered Trustees of Hotel Owners and Managers Association of Lagos (“HOMAL”) v. Attorney-General of the Federation & Anor.3, declared the Taxes and Levies (Approved List for Collection) Act (Amendment) Order, 2015 (“ the Amendment Order”) null and void, on the ground that the powers of the Minister of Finance under the Taxes and Levies Act to amend the Schedule to the Act amounts to a usurpation of the powers of the National Assembly (“NASS’) to make laws and is therefore unconstitutional.

Prior to the decision of the Court of Appeal4, the Taxes and Levies Act was somewhat the litmus test for determining the validity of tax laws enacted by both the NASS and States’ House of Assembly (“House of Assembly”).5    

This article seeks to appraise the said decision of the Court of Appeal6 whilst postulating other reasons why the decision should be affirmed by the Apex Court, if there is an appeal. The article will conclude with a forecast on the future of tax legislation in Nigeria, if the Apex Court affirms the decision under review.

The Decision in Uyo Local Government v. Akwa Ibom State Government & Anor.

By an amended originating summons filed at the High Court of Uyo on October 12, 2015, the Claimant ( now Appellant) sought the determination of the following questions to wit:  (i) Whether by the provisions of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the Taxes and Levies (Approved List for Collection) Act, 2004, the Road Traffic Law Cap 115 Laws of Akwa Ibom State, Local Government (Administration) Law 2007 (as amended), the Defendants ( now Respondents) or any of their agents has the legal right to regulate, charge and collect motor park fees/levies from commercial vehicles in Akwa Ibom State and for their sole benefit? (ii) Whether by the provisions of the Constitution of the Federal Republic of Nigeria 1999 (as amended), the Taxes and Levies (Approved List for Collection) Act, 2014, the Road Traffic Law Cap 115 Laws of Akwa Ibom State and the Akwa Ibom State Local Government (Administration) Law, 2007 (as amended), the Defendants and/or any of their agents has the legal right to control and or charge daily park fees/levies from commercial tricycles and other commercial vehicles other than as regulated in the Road Traffic Law Cap 115 Vol. 5 of Akwa Ibom State?

The Respondent on the other hand contended inter alia that the Taxies and Levies Act is unconstitutional.  At the conclusion of the hearing, the trial Judge dismissed the Appellant’s claims and nullified the Taxes and Levies Act for being unconstitutional. Dissatisfied, the Appellant appealed to the Court of Appeal and formulated 8 issues. Particularly, by its Issue 3, the Appellant sought the verdict of the Court of Appeal on whether the entire provisions of the Taxes and Levies (Approved List for Collection) Act 2004, were ultra vires the Constitution and therefore null and void by reason of the ouster clause at the beginning of the said Taxes and Levies Act.

In dismissing the Appeal in its entirety and affirming the decision of the lower Court, the Court of Appeal per Muhammed Lawal Shuaibu ,J.C.A @ 31-36, Paras. D-B, held resolving the Appellant’s Issue 3:

“The gravamen of the appellant’s complaint on issues 3 and 5 are that the trial Court lacked jurisdiction to have considered the issue relating to the constitutionality of the Taxes and Levies (Approved List for Collection) Act for failure to specifically raise the objection in their pleadings (counter affidavit). The appellant also contended that the entire provision of the Taxes and Levies (Approved List for Collection) Act is not null and void by reason of the ouster clause at the beginning of the Act. I need to stress that the appellant had approached the trial Court by means of originating summons for the interpretation of certain sections of the Taxes and Levies (Approved List for Collection) Act wherein issue on it was joined by the parties. In particular, the respondents’ position was that the commencement clause to wit – “Notwithstanding anything contained in the Constitution of the Federal Republic of Nigeria, 1979” undermines the supremacy of the Constitution. That being the case, the respondents have submitted and I entirely agree with the said submission that they do not require any filing of an objection in a formal way to raise such an issue. Turning back to the issue of the constitutionality of the said Taxes and Levies (Approved List for Collection) Act Cap. T2 of 2004, Section 1(1) of the law provides as follows:- “(1) Notwithstanding anything contained in the Constitution of the Federal Republic of Nigeria, 1979, as amended or in any other enactment or law, the Federal Government, State Government and Local Government shall be responsible for collecting taxes and levies listed in Part I, Part II and Part III of the Schedule to this Act, respectively.” When the term “Notwithstanding” is used in a section of a statute, it is meant to exclude an impinging or impending effect of any other provision of the statute or other subordinate legislation so that the said section may fulfil itself. The Supreme Court in the case of NDIC vs Okem Enterprises Ltd also reported in (2004) 4 SC (Prt 11) 77 at 111 interpreted Section 251 (1) of the 1999 Constitution which begins with the same phrase “Notwithstanding anything contained in this Constitution” and held that the use of the word “Notwithstanding” means that no provision of that Constitution shall be capable of undermining the said Section. In Fescum & Co Ltd Vs F.A.A.N (2015) 14 NWLR (Pt 1480) 491 at 506-507 the apex Court also held that the opening phrase “Notwithstanding anything in any other enactment” in Section 20 of the FAAN Act is a phrase of exclusion which accords the said statutory provision pre-eminence and having precedence over and above other provisions of any other enactments. ?The appellant in this case is not contesting the overriding effect of the phrase “Notwithstanding” but argued that it is only the ouster clause that is a nullity by reason of the provisions of Section 1(3) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended). The supremacy of the Constitution is never in doubt and Section 1(3) above is to the effect that if any other law is inconsistent with the provisions of the Constitution, the Constitution shall prevail and that other law shall to the extent of its inconsistency be void. I am also of the view that having commenced its provisions with a clause that undermines the supremacy of the Constitution, there is nothing that can operate to save any part of that law. Thus, the virus in the introductory clause of the Act has infested the entire Act and thereby rendering it unconstitutional. I have considered the decision of this Court in Eti-osa Local Government Vs Jegede (supra) being relied by the Learned Counsel for the appellant. The crux of the matter, in that case, is whether the appellant has the authority to impose corporate outfit Bye-laws outside the provisions of Part III of the Taxes and Levies (Approved List for Collection) Decree No. 21 of 1998 and without reference to the Joint Tax Board provided for in Section 1(2) of Decree No. 21 of 1998. In affirming the ruling of the trial Court, this Court per Dongban – Mensen, JCA (as he then was) agreed that the powers of the Local Government to make Bye-laws are subject to the enabling law which gives the Local government power to collect taxes. In other words, the Local Government has no inherent powers to legislate nor create and impose taxes outside the scope of Decree No. 21 of 1998 nor the 4th Schedule of the 1999 Constitution. That being the case, this Court held that there is nothing unconstitutional with the requirement of the Local Government, the third tier of Government to root its taxes through the Joint Tax Board. The issue in contention here is not that of rooting the taxes of Uyo Local Government through the Joint Tax Board, but whether in view of the supremacy of the Constitution, the provision of Taxes and Levies (Approved List for Collection) Act which commenced with the phrase “Notwithstanding” anything contained in the Constitution is void by reason of Section 1(3) of the 1999 Constitution. I dare say that the facts and circumstances of the two cases are not mutually the same. Had the issue of hierarchical positions of the Taxes and Levies (Approved List for Collection) and the 1999 Constitution been canvassed in the case of Eti-Osa Local Government Vs Jegede (Supra), this Court would have arrived at the conclusion that in so far as the provisions of the Constitution are made subordinate to that of the Act, such provisions of the Act are to the extent of its inconsistency be void.”

From the reasoning of the Court reproduced above, it is evident that the Court nullified the Taxies and Levies Act on the ground that Section 1(1) of the Act is ultra vires the Constitution For ease of reference, the provision of Section 1(1) of the Taxies and Levies Act and Section 1(1) & (3) of the Constitution is reproduced below:

Section 1(1) of Taxies & Levies Act

Notwithstanding anything contained in the Constitution of the Federal Republic of Nigeria, 1979, (now 1999) as amended, or in any other enactment or law, the Federal Government and local Government shall be responsible for collecting the taxes and levies listed in Part I, Part Ii and Part II of the Schedule to this Act, respectively.7

Section 1(1) & (3) of the Constitution

  1. This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federal Republic of Nigeria.
  2. If any law is inconsistent with the provisions of this Constitution, this Constitution shall prevail, and that other law shall to the extent of the inconsistency be void.

Juxtaposing the said Section 1 (1) of the Taxies and Levies Act with Section 1 (1) & (3) of the Constitution, it is difficult if not impossible, to arrive at a conclusion different from that reached by the Court of Appeal.

Why the Decision should be upheld by the Supreme Court

Other than the reasons adduced by the Court of Appeal, it is argued that the decision ought to be affirmed by the Supreme Court on the following grounds.

  1. The Taxes and Levies Act did not pass the test of Section 315 of the Constitution and cannot continue to be relevant as an existing law.

The Taxies and Levies Act (then Decree No. 21 of 1998) was promulgated in 1998 by the then Federal Military Government in response to the complaints of “multiple taxations” by taxpayers, especially businesses. The complaints ranged from the numbers, types, and rates of taxes and levies imposed by states and local government councils, to the manner of collection of these taxes. At the material time, the aim of the Act was to restrain the perceived excesses of state governments and local government councils in the exercise of their taxing powers. The Taxies and Levies Act then specifically allocated the power to collect specified taxes among the federal government, the state governments and the local government councils; and, in some cases, went further to fix the amount of tax to be collected.8

Upon the coming into effect of 1999 Constitution, the Act was deemed to have survived as an existing law by virtue of Section 315 of the Constitution and became the Taxes and Levies (Approved List for Collection) Act without compliance with the provisions of the said section which prescribes the necessary “rituals” and conditions for the continued existence of such law an existing law.

For ease of reference, the relevant subsection of Section 315 of the Constitution is reproduced below:

Section 315

(1)- Subject to the provisions of this Constitution, an existing law shall have effect with such modifications as may be necessary to bring it in conformity with the provisions of the Constitution and shall be deemed to be-

  • an Act of the National Assembly to the extent that it is a law with respect to any matter on which the National Assembly is empowered by this Constitution to make laws; and
  • a Law made by a House of Assembly to the extent that it is a law with respect to any matter on which a House of Assembly is empowered by this Constitution to make laws.

(2)- The appropriate authority may at any time by order make such modifications in the text of any existing law as the appropriate authority considers necessary or expedient to bring that law in conformity with the provisions of this Constitution.

(3)- Nothing in this Constitution shall be considered as affecting the power of a court of law or any tribunal established by law to declare invalid and provision of an existing law on the ground of inconsistency with the provision of any other law that is to say-

(d) any provision of the Constitution.

(4)- In this section, the following expressions have the meaning assigned to them, respectively-

(b) ‘existing law” means any law and includes any rule of law or any enactment or instrument whatsoever which is in force immediately before the date when this section comes into force or which having been passed or made before that date come into force after that date; and

(c) “modification” includes addition, omission or repeal.

From the provision of the Constitution reproduced above, it is clear that the continuous existence of existing law is dependent on whether it qualifies as an Act of the NASS or a Law of the House of Assembly. However, the Taxes and Levies Act does not qualify either as an Act of the NASS or a Law of the House of Assembly because neither have the sole power to legislate on all heads of tax contained in the Act. The Constitution does not contemplate a hybrid legislative power wherein a law can be enacted by both the NASS and the House of Assembly. To put things in perspective, the following are true of the Taxes and Levies Act:

  1. The Taxes and Levies Act is an existing Law having been promulgated and in force prior to the effective date of the 1999 constitution;
  • The Taxes and Levies Act can neither be deemed as an Act of the NASS nor a Law of a House of Assembly. This is because neither the NASS nor the State House of Assembly has the power to legislate on sundry taxies (all forms of taxies) which is the subject matter of the taxies and Levies Act, since the power of both Houses to legislate on tax matters are prescribed in the Constitution. In effect, the subject, objective and entire provisions of the Taxies and Levies Act as it were, cannot be conveniently situated under the Exclusive Legislative List or Concurrent Legislative List.9
  • The appropriate authority has failed to modify the Taxes and Levies Act for the purpose of bringing same in conformity with the Constitution.

Consequently, the Taxes and Levies Act ought not to be accorded the force of law in view of the clear and unambiguous provision of the Constitution.

  • The 1999 Constitution has covered the Field

Assuming but without conceding that the Taxes and Levies Act indeed passed the test of Section 315 of the Constitution and can therefore continue to have the force of law as existing law, a careful perusal of the entire provisions of the Taxes and Levies Act will reveal that the powers sought to be allocated to the different levels of government therein have been adequately addressed by the Constitution. 

In Attorney-General Lagos State v. Eko Hotels Limited & Anor10, the circumstances in which the doctrine of covering the field might arise were explained by the Apex Court thus: “The doctrine of covering the field can arise in two distinct situations. First, wherein the purported exercise of the legislative powers of the National Assembly or a State House of Assembly, a law is enacted in which the Constitution has already made provisions covering the subject matter of the Federal Act or the State law. Second, where a State House of Assembly, by the purported exercise of its legislative powers, enacted a law which an Act of the National Assembly, has already made provisions covering the subject matter of the State law. In both situations, the doctrine of covering the field will apply because of the “Federal might” which relevantly are the Constitution and the Act”.11

In the instant case, the subject matter of the Taxies and Levies Act and indeed the heads of tax prescribed in Part I & II therein12 as collectable by the Federal and State Government, have been adequately addressed by Section 4 of the Constitution and Part I & II of the Second Schedule to the 1999 Constitution. Also, the heads of tax prescribed in Part III in the Schedule to the Taxes and Levies Act13 have all been addressed by Section 7 of the Constitution, Items 9 & 10 of the Concurrent Legislative List and the Fourth Schedule to the Constitution. Consequently, the NASS, as well as the House of Assembly, can enact laws subject to the provisions of the Constitution, imposing taxies and/or for the collection of taxies without recourse to the Taxes and Levies Act.

The implication of the foregoing is that, since the Constitution has made copious provisions addressing the subject matter of the Taxes and Levies Act, the doctrine of covering the field will ordinarily operate to render the Constitution predominant, being the paramount legislation, while the Taxes and Levies Act, being the subordinate legislation, remains inoperative so long as the Constitution remains operative. However, in view of its palpable inconsistencies with the provisions of the Constitution, the Taxes and Levies Act ought to be declared void.14

Conclusion

Extrapolating from the foregoing, it would appear that the Constitution has finally caught up with the Taxes and Levies Act. Indeed, it has been suggested and I agree, that the Taxes and Levies Act should not have survived to date, but should have been (i) actively abrogated as part of the undertaking that gave rise to the 2004 edition of the Laws of the Federation of Nigeria, (ii) ignored as having impliedly ceased to have any force or effect upon the coming into force of the Constitution, or (iii) struck down as unconstitutional by the courts on the occasions that they were invited to pronounce upon the constitutionality of the Act.15 It would appear the third option has finally prevailed.

However, one cannot shy away from the likely consequences of this decision on the future of tax legislation in Nigeria, in the event that same is not appealed against or where the decision is affirmed by the Supreme Court on appeal. Paramount amongst the conceivable consequences is the fact that all Tax Legislations enacted pursuant to the Taxes and Levies Act, have all been rendered otiose and no demand for a tax can be founded on same.16 The Law is trite that one cannot place something on nothing and expect it to stand.17 The Taxes and Levies Act having been declared unconstitutional and voided by the Court, it invariably implies that all legislations that draw breathe therefrom have ceased to have any force of law. 

Also, there is the likelihood that taxpayers will be inundated with series of tax legislation especially from the States Houses of Assembly whose powers to impose tax now appear unrestricted. There is also the possibility of double taxation arising from the seeming unrestricted power to impose tax and the consequent litigation that will ensue, in the event that taxpayers decide to challenge such legislation in Court.

Until then, the pertinent question is, will the Supreme Court affirm the decision of the Court of Appeal which will result in the entombment of the Taxes and Levies Act, or breathe life to its dry bones that it may rise again? Fingers crossed.     

Endnote

1. Francis Igho Erhiakporeh is an Associate with Solola & Akpana.

2.  (2020) LPELR-49691(CA)

3. Suit No: FHC/L/CS/1082/2019, delivered on May 8, 2020.

4. As well as the decision of the Federal High Court

5. See the cases of Abuja Electricity Distribution Company v. Abuja Municipal Area Council (2018) 35 TLRN 35.

6Without prejudice to the two school of thoughts that emerged thereafter. On the one hand, is the school of thought applauding the decision and commending the Court of Appeal for “taken the bull by the horn”. On the other hand, however, is the school of thought who believes that the Court should have merely nullified the section of the Act which contravenes the provision of the Constitution, rather than “throwing the baby away with the bathwater”.

7. Similar provision is contained in Section 2 of the Taxies and Levies Act.

8. N. Ikeyi & S. Orji “How Much Force is Still Left in the Taxes and Levies Approved List for Collection) Act?” – The Nigerian Juridical Review Vol. 10 (2011 – 2012).

9For instance, the NASS lacks the legislative competence to legislate for a Local Government as contained in Part III of the Act and the House of Assembly lacks the competence to legislate for the whole Nation. 

10.  (2017) LPELR-43713(SC)

 11. See also INEC v. Musa (2003) 3 NWLR (Pt.806) 72 @ 204 – 205, Para. H –B.

12. E.g. Stamp Duties, Valued Added Tax, Personal Income Tax, Companies Income Tax etc.

13. E.g. Shops and kiosk rates, Tenement rates, Motor park levels, Radio & Television licence, etc

14. See A. G Abia v. A. G, Federation (2002) 6 NWLR (Pt. 763) 264 at 435

15. See N. Ikeyi & S. Orji, note 8

16. This does not affect any legislation that draws breath directly from the Constitution as such enactment will still be valid whether or not same deals with taxies enumerated in the Taxies and Levies Act.

17. UAC v Macfoy (1961) 3 All ER 1169; Re: Apeh & Ors v. PDP & Ors (2017) LPELR-42035(SC); Mohammed v. Gbugbu & Ors (2018) LPELR-44494(CA)

Publications

Ending Gas Flaring in the Niger Delta — Why is the Nigerian Government Continually Shifting the Goal Post?

By Francis Igho Erhiakporeh

The debate on gas flaring in Nigeria dates as far back as when the Nation joined the ranks of oil producing Countries in 1958, when its first oil field came on stream, producing 5,100 barrels per day. As far back as 1960, there were already concerns expressed about the dangers of flaring gas, and the need to put same in check. Following these concerns, the Government fixed the initial deadline for ending gas flaring for January 1984. That target was never achieved and over the years, it has been shifted successively to 2007, 2008, 2010 and 2020. Here we are now, midway into the 2020 deadline and nowhere near achieving conclusion.

Data from the Nigeria Ministry of Environment indicate that oil companies in Nigeria flare over 313.0m scf of gas annually, which results in about 16.5m tonnes of CO2 emitted into the atmosphere. This is without prejudice to the effort of the Nigerian LNG Limited which is the Nation’s arrowhead in the attempt to curb gas flaring, as it is reported to have helped reduce Nigeria’s gas flaring profile from 65.0% to below 25.0%. However, Nigeria remains among the top gas flaring countries in the World. The World Bank’s Global Gas Flaring Reduction Partnership recently ranked Nigeria as the 6th largest gas flaring country globally.

It is arguable that gas flaring is inevitable in any oil field that has gas associated with the crude extracts from those oil fields. Under such circumstances, the associated gas is usually vented or flared in order to avoid uncontrollable buildup of pressure within such platforms. It is common practice for flares from oil fields to be lit occasionally and then put off until the pressure mounts again, during expropriation activities. However, it has been reported that the gas furnaces that have ravaged the Niger Delta are not out to relieve pressure from the oil fields in the affected areas. They are simply lit to waste the gas, because no one cares to complain over the waste or poisonous fumes emanating from such oil fields.

Some oil companies, rather than flare the gas way up into the atmosphere to prevent the pollution of the air directly inhaled by inhabitants of host communities and environs, negligently flare the gas into the earth surface confined only by concrete earthing perimeter built to contain the fire from spreading beyond the perimeter. The implication is that these inhabitants, in addition to the destruction of their source of livelihood, inhale air already contaminated by uncontrolled gas flaring. Apart from the negative impact of gas flaring on host communities, gas flaring is also a source of major economic loss to Nigeria. Nigeria is reported to have lost potential income estimated at US$ 770.0m (#281.1bn) to gas flaring in 2016 alone.
The Federal Government in its usual ostrich-with-its-head-buried-in-sand approach, signed into law the Flare Gas (Prevention of Waste and Pollution) Regulation, 2018. This Regulation, in a classic give-with-one-hand-and-take-back-with-the-other, purports to prohibit gas flaring. However, the Regulation allows for gas to be flared, provided a permit is obtained from the President who doubles as the Minister of Petroleum, and a fine not exceeding $2.0 (approximately #700 depending on the prevailing exchange rate) per 1000 scf of gas flared is paid, in the case of an oil company producing more than 10,000 bpd. Whilst a company producing less than 10,000 bpd shall be liable to a flare payment of $0.5 (less than #200) per 1000 scf of gas flared.

Curiously, the relevant government agencies are unable to ascertain the level of gas being flared by the oil companies. The oil companies are the determinants of the volume of gas flared by them. In effect, it is what the oil companies report that qualifies as the volume of gas flared.
The 2018 Regulations provide penalties for failure to disclose the exact quantity of gas flared. However, because these companies make outrageous amounts of money from oil exploration, it will be foolhardy for them to under-report the amount of gas flared by them, when they can easily pay the paltry fine attached to gas flared by them without ever having to under-report same.

Given the very obvious dangers to the environment and human health occasioned by gas flaring, the question that begs for answer is: why is the Nigerian government continually shifting the deadline to end gas flaring in Nigeria since 1984?

The question becomes even more agitating when you realize that expropriation of crude oil is achievable with minimal flaring of gas or without flaring gas at all. The only reason it would seem most of the oil companies continuously flare gas rather than toe the path of reinjecting same or channelling it into more productive use, is down to the cost of acquiring the needed equipment and/or facility to trap the gas with a view to using same for more productive venture.

Apparently, the cost of acquiring the needed equipment/facilities to trap gas rather than flare it is too much of a sacrifice to make even after over 60 years of oil exploration. The opportunity cost seems to be the welfare and wellbeing of the millions of people in host communities whose lives and means of livelihood are being destroyed by the constant flaring of gas.
Perhaps, it makes sense to keep flaring the gas so long as the monies keep flowing in and the wheel of the economy is constantly greased, regardless of the cost to lives and the environment being devastated. If there were ever any doubts, it is now obvious that the 2020 deadline set by the Federal Government to end gas flaring in Nigeria was merely hot air not backed by political will. Whilst it is hoped that the Nigerian Government, being a signatory to the Global Gas Flaring Partnership (GGFP) principles aiming at a flare-out date of 2030, will not in its shifting spree, shift the deadline to end gas flaring in Nigeria beyond 2030, however, going by the antecedent of previous unachieved deadlines, it is safe to say that gas flaring will not be over in Nigeria until the gas flaring actually stops.

References
Gas Flaring: A never ending dark tunnel – published on Nairametrics on February 18, 2020, by CSL Stockbrokers.

Nigeria: 35 years After Gas Flare Ban, Nigeria 2020 Deadline unattainable. Published on Daily Trust on November 27, 2019 by Nnimmo Bassey.

Publications

Navigating Attendance of Annual General Meetings in the Time of COVID-19

by Oluwajoba Odefemi

As mid-year 2020 approaches, many companies are stepping into the end of Annual General Meeting (AGM) season – the period of time between March and June when limited liability companies would typically meet to discuss developments over the course of the previous fiscal year, approve dividends as may have been advised by the directors, ponder on ways to make progress and generally cater for the ordinary businesses of an AGM[1] as provided under the Companies and Allied Matters Act (CAMA).

However, these are no ordinary times. The outbreak of the novel Coronavirus (COVID-19) and its subsequent spread across the world has altered how different aspects of society are organized, particularly the business world. Companies have had to adopt novel means of carrying on their usual activities, or in some cases, putting a total stop to business, in the wake of various governments’ lockdown of non-essential movement and introduction of social distancing measures.

While public companies registered in Nigeria are required to hold their AGM within nine (9) months from the end of their financial year[2] or within such extended period as may be approved by the Corporate Affairs Commission (CAC), no such rule applies to private companies save that a maximum period of 15 months is allowed between one AGM and the next.

In the wake of the global pandemic, Companies have the primary responsibility to map out ways to organise their AGMs for the year 2020. However, this must be within the bounds of the law, CAMA in particular. Failure to organize AGMs within the confines of the law may expose a company to possible court actions by disgruntled shareholders, which will invariably render the AGM (and the resolutions therefrom) void.

Section 216 of CAMA makes it mandatory for all statutory and general meetings (in this case AGMs) of companies registered in Nigeria to be held in Nigeria. However,  there is currently in place a restriction on movement of international flights into Nigeria in line with the directives of the Nigerian Civil Aviation Authority (NCAA)[3] with the exception of emergency and essential flights. This restriction was extended from April 23 to May 7, 2020, via a Circular issued by the NCAA on April 20, 2020[4].

On May 6, 2020, the Federal Government further extended the closure of Nigeria’s airspace and ban on all commercial flight operations for an additional period of four (4) weeks[5]. Clearly, companies whose shareholders were outside the country at the time the restriction was placed will not be able to comply with the provisions of Section 216 of CAMA as shareholders cannot return to the country.

There is also the restriction on intestate movement imposed by the Federal Government in March 2020[6]. The effect of this on shareholders who are potential attendees of AGMs is the inability to be physically present at such AGMs, except they are resident within the State where the AGM is being held.

The foregoing has raised questions on the best way(s) to comply with the mandatory requirement of holding AGMs while ensuring that the rights of shareholders and all stakeholders (to attend and participate) are protected.

Appointment of Proxy

One available option is provided explicitly in CAMA-appointment of proxy. Section 230 of CAMA provides that shareholders of a company unable to attend meetings may appoint other persons to attend and vote on their behalf. The said provision vests on proxies all the rights ordinarily exercisable by a shareholder entitled to attend a meeting, including voting and speaking at meetings. So long as a quorum is duly formed in line with the Articles of Association of the company or Section 232 of CAMA, any business deliberated upon and resolutions reached at such meeting is valid.

The foregoing provisions of Section 230 of CAMA have been further emphasized by regulatory agencies during this period of uncertainties. CAC[7] and the Securities and Exchange Commission have published advisories  emphasizing the provisions of Section 230 of CAMA while providing further guidance on compliance.

It would appear that the above provision of CAMA and the Guidelines issued by CAC solve two challenges confronting shareholders at this time- the inability to attend AGM owing to travel restrictions (both international and local travels) and complying with government directive on social gatherings[8].

Deferring the AGMs

Another option is for companies to apply to CAC for an extension of time to hold their AGMs. While CAMA provides a maximum period of fifteen (15) months between one AGM and the next, CAMA gives CAC power to extend the time for the holding of AGM, by a period of not more than three (3) months9.

Companies exploring this option will be doing so with the hope that the pandemic would have become a thing of the past and normalcy restored to the world has returned to normal.

Other Options- Virtual Meetings

The advancement in modern technology brought in its wake, a new normal for businesses, particularly in developed climes. The world has since moved with the advancement in technology in the last decade. Meetings in developed countries that would otherwise have required long-distance travel are being held remotely with the aid of video conferencing facilities. This global pandemic presented an opportunity for Nigeria to go the way of the developed nations in this regard; unfortunately, this was not explored/considered by CAC in the Guidelines issued. Perhaps, this can be included in the draft CAMA Bill.

It is instructive to note that neither Section 216 nor any other section of CAMA requires that company meetings to be held in Nigeria must be physical meetings. Section 216 simply reads

“All statutory and general meetings shall be held in Nigeria”.

A liberal and most innovative approach to interpreting the provision of the aforementioned section of CAMA would allow for the virtual holding of meetings. It is, therefore, safe to say that while CAMA does not provide for the holding of virtual meetings, it also does not prohibit the holding of same.

Taking advantage of this gap, several companies have already held general meetings remotely on various virtual platforms (such as Zoom, Skype, Microsoft Teams), with some attendees participating from their various locations within the country through dial-in video and audio devices and being recorded as present.

Indeed, this approach accords with recommendations from several corporate associations such as the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN). In its recent Guidance Note issued on April 24, 2020, ICSAN emphasized the preference for virtual meetings at this time, adding that same is set to become an entrenched practice in Nigeria. It then recommended that companies consider amending their Articles of Association to include provisions for holding of virtual meetings where physical meetings would be impossible. It concluded by recommending that for uniformity, the CAMA Amendment Bill should accommodate the present reality of holding meetings virtually.

While waiting for the amendment of CAMA, perhaps, it is now left for the courts to give judicial backing to the virtual holding of meetings of companies in the event the validity of such virtual meetings convened is challenged by an aggrieved shareholder of a company.


References

[1]Section 214 of CAMA (CAP C20 Laws of the Federation of Nigeria 2004) lists the ordinary business of an Annual General Meeting as declaring a dividend, presentation of the financial statements and the reports of the directors and auditors, the election of directors in the place of those retiring, the appointment and fixing of the remuneration of the auditors and the appointment of members of the audit committee. All other businesses conducted at an AGM are deemed to be special.

[2]Rule 19.4 (d), Responsibility of the Directors/Trustees in Relation to General Meetings, Rulebook of the Exchange, 2015 (Issuers’ Rules)

[3] See Circular issued on March 21, 2020: “Update on Flight Restriction into Nigeria” [Online] Available:  https://ncaa.gov.ng/documents/advisory-circulars/covid-19-advisory/update-on-clarification-on-flight-restriction-into-nigeria-due-to-covid-19-pandemic/

[4] See “Update on Clarification on Flight Restriction” [Online] Available: https://ncaa.gov.ng/media-center/news/update-on-clarification-on-flight-restriction-into-nigeria-due-to-covid-19-pandemic/

[5]See FG extends suspension of flight operations by another 4 weeks Available:https://nairametrics.com/2020/05/06/fg-extends-suspension-of-flight-operations-by-another-4-weeks/

[6]Aljazeera: Nigeria announces lockdown of major cities to curb coronavirushttps://www.aljazeera.com/news/2020/03/nigeria-announces-lockdown-major-cities-curb-coronavirus-200330095100706.html?utm_source=website&utm_medium=article_page&utm_campaign=read_more_links?utm_source=website&utm_medium=article_page&utm_campaign=read_more_links

[7] Guidelines on holding of Annual General Meetings of Public Companies Using Proxies Available: https://www.cac.gov.ng/3956-2/

[8] Premium Times: Coronavirus: Stay at home, Nigerian govt advises Lagos, Abuja residents

https://www.premiumtimesng.com/coronavirus/383490-coronavirus-stay-at-home-nigerian-govt-tells-lagos-abuja-residents.html
Publications

The Guarantors’ Prayers — Why a Contract of Guarantee is not a Mere Formality

– Francis Igho  Erhiakporeh

Do not be one who shakes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.” Proverbs 22, Verses 26-27.

It is often the general rule, rather than the exception, that most people who hold themselves out as guarantors are ignorant of the implication of signing a guarantee form/contract. Most people’s perception of a guarantee is that it is merely a formality incidental to the consummation of a contractual agreement. While there may be few with actual knowledge of the implication of holding oneself out as a guarantor, such persons, however, do so with the belief that their liability will never crystallize.

People who hold themselves out as guarantors either in a loan agreement or for the performance of an obligation under a contract, see it as doing a favour for a friend or family member, without any idea of the consequences and the liabilities that could arise therefrom. Some obligees are equally ignorant as they, more often than not, go after the obligor without recourse to the guarantor who had committed to performing the obligation in the event of failure by the principal obligor, or undertook to compensate the obligee accordingly.

The outbreak of COVID-19 has made the performance of some contractual obligations impossible. Also, some contractual agreements which, but for the pandemic, would have enjoyed seamless performance, may be breached and thus trigger the liability of guarantors.

As the world cautiously attempts a return to some form of normalcy, legal hatchets hitherto buried are likely to be exhumed and contractual agreements excavated with a view to determining the likely exposures arising from the non-performance of obligations arising from such contracts.

This article discusses the liability of a guarantor who, though not a party to a contract, may nonetheless bear eventual liability for the breach of any obligation under such contract, the performance of which he guaranteed, and when the liability of such guarantor arises.

Liability of a Guarantor for Breach of a Guaranteed Contractual Obligation
A guarantor is a person who guarantees or gives assurance for the performance of an obligation. By guaranteeing the performance of a contractual obligation, a guarantor takes the position of the principal obligor where the principal obligor fails in the performance of his/her obligation under a contract. In effect, a guarantor becomes the secondary obligor whose liability to the obligee arises immediately the principal obligor fails in the performance of his obligation under the contract.

It is common practice in contractual agreements (especially where monies are to exchange hands) for the performance of an obligation, for the party advancing the money to require that monies advanced be secured by a guarantee issued, in most cases, by a financial institution . In the event of breach by the principal obligor of its obligation under such contract or failure to perform a duty as stipulated under the contract for which the monies were advanced, the financial institution, being the guarantor, will be liable to pay the obligee, subject to the terms of the guarantee, the amount so guaranteed by the financial institution.

It is also common practice in the grant of loans by financial institutions or money lenders (both individuals and corporate bodies) for the party advancing the loan to request that the repayment of such loan be secured either by the borrower’s property/chattel or guaranteed by a third party who, by such guarantee, undertakes to pay the total sum repayable where the borrower fails to repay by the due date.

Furthermore, it is also common to have inserted in a contract involving the provision of services, a clause that the party who guarantees the provision of certain services under the contract, shall be liable to the obligee for an agreed sum in the event of a breach by the party whose obligation under such contract was guaranteed.

In the above instances, the liability of the guarantor to the obligee in the event of failure by an obligor to perform his obligation under such contracts forms the basis of another contract distinct from the contract wherefrom the obligor’s obligation arose. In most cases, there is a different body of agreement between the guarantor and the obligee which may be written or parole; while in some other cases, the agreement is embodied in the contract from which the obligor’s obligation arose.

Therefore, where an obligor fails in the performance of his obligation under a contract after the due date stipulated under the contract, a breach of that contract has occurred, and the liability of the guarantor is triggered. When this happens, especially in cases involving payment of money or repayment of loan, the guarantor becomes the debtor while the obligor becomes the creditor by virtue of the guarantee.

The liability of a guarantor and when same arises were well-captured by the Supreme Court of Nigeria in the case of C.B.N. v. Interstella Comm. Ltd. wherein the Apex Court held thus:

“A guarantor is technically a debtor because where the principal debtor fails to pay his debt, the guarantor will be called upon to pay the money owed. However, the fact that the obligations of the guarantor arises only when the principal debtor has defaulted in his obligations to the creditor does not mean that the creditor has to demand payment from the principal debtor or from the guarantor or give notice to the guarantor before the creditor can proceed against the guarantor; nor does the creditor have to commence proceedings, whether criminal or civil, against the principal debtor unless there is an express term in the contract requiring him to do so.”

From the forgoing, an obligee can, without recourse to the obligor and/or without a demand issued to the guarantor , proceed to file a law suit against the guarantor for the fulfillment of his obligation under the guarantee agreement. As a matter of law, the obligee need not commence legal proceedings against the obligor for failing to perform his obligation under the contract before proceeding against the guarantor for the fulfillment of his obligation as guaranteed.

The implication of the foregoing is that an obligee is ordinarily expected to proceed against the guarantor, who, by the guarantee agreement, has held himself out as a person of better means than the obligor.

Thus, where there exists a contractual agreement between two or more parties before the advent of COVID-19 and the duration of the execution of such contract or the performance of any obligation under such contract crystallizes during the ensuing lockdown period without the contract being executed or the obligation performed, a breach of the contractual agreement has occurred. Consequently, and subject to the terms of the guarantee, the obligee may choose to proceed against the guarantor for the performance of his obligation under the guarantee agreement.

However, and without prejudice to the foregoing, where an action is brought against a guarantor to enforce a guarantee, the guarantor can invoke the defences available to the principal obligor under the principal contract. For instance, where the non-performance of a guaranteed contract was due to the outbreak of the pandemic, the obligor may plead force majeure or the common law doctrine of frustration as the reason for the non-performance. Thus, the guarantor can invoke the defences referenced above, even where same is not inserted in the contract, as the guarantor is not by law, restricted only to the defences available to the principal obligor, since a contract of guarantee is distinct from the principal contract.

Furthermore, where an obligee proceeds against the guarantor and succeeds, the guarantor may exercise his right of subrogation against the obligor, by instituting an action to recover the monies expended in satisfaction of his obligation to the obligee.

Conclusion
The non-performance of a contractual obligation is a foreseeable event in every contractual agreement, hence the requirement of a guarantor to shoulder the associated liability that may arise therefrom.

A guarantee is therefore not a mere formality. It is a commitment by the guarantor to the obligee, that he, the guarantor, is willing to perform the guaranteed obligation in the event of failure by the obligor to fulfill the obligation owed the obligee under the contract on or before the due date. Where the obligor fails to perform the guaranteed obligation, the obligee can immediately proceed against the guarantor without recourse to the obligor under the principal contract, for the performance of the guaranteed obligation.

Where the obligee proceeds against the guarantor, the guarantor can invoke all the defences available to the principal obligor under the contract. The guarantor may also exercise his right of subrogation by proceeding against the principal obligor to recover what was paid the obligee, where the obligee succeeds in enforcing the guarantee against the guarantor.
So, when next you are called to act as a guarantor to any party in a contract/agreement, don’t just put pen to paper. Read the document and be sure you can bear the liability that might arise therefrom in the event that the obligor fails in the performance of his obligation under the contract.

Endnotes

1 As defined by the Merriam-Webster Dictionary.
2 The person originally responsible for the performance of an obligation under a contract.
3 One to whom another is obligated under a contract.
4 After the due date for the performance of such obligation
5 Usually between two corporate entities
6 Advanced Payment Guarantees.
7 Be it the provision of services, performance of an act, repayment of loan or even payment of a judgment debt.
8 (2018) 7 NWLR (Pt. 1618) 294 @ 338, para. B
9 Once the due date for the performance of the obligation has lapsed
10 The obligor may however not proceed against both the obligor and guarantor simultaneously
11 if inserted in the contract
12 By taking the position of the obligee under the principal agreement.
13 or whatever was forfeited in satisfaction of the guarantee
14 including those not so contemplated under the contract

Publications

THE ROLE OF DATA PROTECTION COMPLIANCE ORGANIZATIONS UNDER THE NIGERIAN DATA PROTECTION REGULATION

– Abraham Omoufoma Aigba

Introduction

With advancement in technology came a manual-to-digital shift in the collation and processing of personal data by data controllers. Whilst this may have eased the burden on data controllers, it has made data subjects more susceptible to abuse and breach of privacy by unauthorized persons.It therefore became necessary that appropriate mechanism be put in place to regulate the handling of data subjects’ personal information.

Following global trend, the National Information Technology Development Agency (the NITDA), pursuant to the powers conferred on it by the National Information Technology Development Agency Act (the NITDA Act) issued the NigeriaData Protection Regulation, 2019 (the Regulation) to safeguard the rights of natural persons to data privacy, foster safe conduct of transactions involving the exchange of personal data, prevent manipulation of personal data as well as ensure that Nigerian businesses remain competitive in international trade through the safeguards afforded by a just and equitable legal regulatory framework.

Personal data means “any information relating to an identified or identifiable natural person….such as a name, an identification number, location data, an online identifier…address, a photo, an email address, bank details, posts on social networking websites, medical information, and other unique identifier such as, but not limited to MAC address, IP address, IMEI number, IMSI number, SIM, Personal Identification Information (PII) and others” See Section 1.3 of the Regulation.

The Regulation applies, in the main, to data subjects, data controllers and data administrators. It also applies to any transaction in which the personal data of natural persons residing in Nigeria, or residing outside Nigeria but of Nigerian descent is intended to be processed by whatever means.

Section 1.3of the Regulation defines a “data subject” as “any person, who can be identified, directly, or indirectly, by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity”.

“Data Controller” is defined as “a person who either alone, jointly with other persons or in common with other persons or a statutory body determines the purposes for and the manner in which personal data is processed or is to be processed”. See Section 1.3 of the Regulation.
“Data Administrator” on the other hand is defined as “a person or organization that processes data” See Section 1.3 of the Regulation.

Data Protection Compliance Organizations

As one of the mechanisms for the implementation of the Regulation, provisions were made for the registration and licensing of Data Protection Compliance Organizations (DPCOs) by NITDA to perform certain duties.

Who is a DPCO?

A DPCO is defined by Section 1.3 of the Regulation to mean “any entity duly licensed by NITDA for the purpose of training, auditing, consulting and rendering services and products for the purpose of compliance with this Regulation or any foreign Data Protection law or regulation having effect in Nigeria”

Who needs a DPCO?

The Regulation requires Data Controllers to designate Data Protection Officers(DPO) to ensure adherence to the Regulation.Under the Regulation and the Data Protection Implementation Framework (issued pursuant to the Regulation by the NITDA), Data Controllers may outsource the role of the DPO to a verifiably competent DPCO. Organizations whomust designate a DPO are Government organs, ministries, departments, institutions or agencies, organizations whose core activities involve the processing of large sets of personal and sensitive personal data and organizations processing critical national databases consisting of personal data. Rather than appoint a DPO, these organizations may outsource data protection to a verifiably competent firm or person (DPCO).

The list of organizations that must designate a DPCO is not exhaustive. Any organization that is required to comply with the provisions of the Regulation requires a DPCO. This can be deciphered from the provisions of Section 3(1)(5) of the Regulation which require an organization to conduct and submit to the NITDA a detailed audit of its privacy and data protection practices within 6 months of the issuance of the Regulation; Section 3 (1) (6)&(7), which require data controllers processing the personal data of more than 1000 and 2000 data subjects within a period of six months and twelve months respectively to audit itself and submit to the NITDA a summary of its data protection audit.

There is no doubt that the expertise needed in data auditing which most data controllers may not be familiar with or accustomed to,informed the inclusion of DPCOs under the Regulation. A DPCO may be any of: professional service consultancy firm, IT service provider, audit firm or law firm with requisite data processing certification or experience in data protection services.

Given the broad definition of personal data and the requirement of auditing the number of personal data processed within a specific period, Data Controllers such asfinancial institutions, telecommunication companies, hospitals, airlines, airport authorities, transport companies, many private/public companies/firms,crowd funding platforms, churches, schools, websites/blogs, etc. will most certainly require the services ofDPCOs, depending on the amount of data processed within the specified period.

The Roles of DPCOs

By Section 3(1)&(4) of the Regulation, a DPCO shall on behalf of the NITDA monitor compliance with the Regulation byData Controllers so as to ensure that Data Controllers do not breach the provisions of the Regulation.

The Data Protection Implementation Framework sets out clearly the role of a DPCO as follows:

a) Data protection regulations compliance and breach services for Data Controllers and Data Administrators;
b) Data protection and privacy advisory services;
c) Data protection training and awareness services;
d) Data Regulations Contracts drafting and advisory;
e) Data protection and privacy breach remediation planning and support  services;
f) Information privacy audit;
g) Data privacy breach impact assessment;
h) Data Protection and Privacy Due Diligence Investigation;
i) Outsourced Data Protection Officer etc.

Risk Associated with Non-appointment of DPCOs

As it is with every system, international best practice dictates that qualified and experienced professionals (preferably independent of the engaging entity) are engaged to provide specific professional services and not look in-house for such role. This will save the organization needless financial and negative exposure in the long run.

Organizations who attempt to undertake the functions of DPCOs run the risk of breach of the Regulation and where this happens, such organizationsstand the risk of being prosecuted.

Also, a Data Controller which processes the data of more than 10,000 data subjects, shall be liable to a fine of 2% of the Annual Gross Revenue of the preceding year or payment of the sum of 10 million naira whichever is greater, while a Data Controller which processes the data of less than 10,000 data subjects, shall pay a fine of 1% of the Annual Gross Revenue of the preceding year or payment of the sum of 2 million naira whichever is greater for breach of data privacy rights of data subjects.

There have been instances where the NITDA threatened to issue noncompliance notices to organizations in breach of the Regulation. This does not only put such organizations in bad light to the general public and investors (both local and foreign), but also makes them susceptible to enforcement actions by NITDA.

Conclusion

The role of DPCOs cannot be overemphasized. From personal data auditing, to filing, to training of personnel, consultancy services, to general compliance with applicable legislation and ultimately attracting investors, the DPCO is a necessary companion in this business of protecting personal information.

Publications

A REVIEW OF THE NATIONAL JUDICIAL COUNCIL GUIDELINES FOR COURT SITTINGS AND RELATED MATTERS IN THE PANDEMIC PERIOD (Part One)

– Abraham Aigba & Henry Madukolu

Covid-19 pandemic continues to disrupt traditional modes of doing things the world over; thereby bringing about a new normal. Following the need to adapt to the challenges posed by the pandemic and prevent a total shutdown of the nation’s administration of justice, the Nigerian judiciary has introduced a complementary procedural regime.

On May 7, 2020, the National Judicial Council (the NJC) released Guidelines for Court Sittings and Related Matters in the Covid-19 Period (the Guidelines). The Guidelines are intended to aid the various courts conduct proceedings remotely in order to meet the ends of justice, particularly with respect to time bound cases, matters not requiring oral evidence (except where those of extremely urgent nature)and matters ripe for judgment, whilst ensuring the safety of judicial officers and workers, legal practitioners, litigants and the general public.

However, the Guidelines do not stand alone and are not in any way meant to replace the Rules of Court or existing Practice Directions but to complement same. The Guidelines can also be modified by Heads of Court to fit the needs of particular courts. Whilst part one of this article looks at pertinent provisions of the Guidelines relating to remote sittings (or virtual sittings) and some issues that may arise therefrom, Part two will subsequently examine the provisions of the Guidelines relating to the conduct of physical court sittings.

Filing and Service of Court Processes

Filing of court processes is the life wire of litigation, without which a suit cannot be commenced or any application or response made thereto. While the Guidelines have not dispensed with the traditional hardcopy filing of processes, the Guidelines envisage that court processes, including Hearing Notices should only be filed traditionally “where there is no electronic filing system and pending the institution of such electronic filing system”. Hence, as much as it is practicable, filing of court processes are required to be done electronically using the Legal Mail, emails, WhatsApp enabled phone numbers amongst others.

To achieve the above, the Nigerian Bar Association is to liaise with Heads of Court for the publication of counsel directory which shall contain counsel’s addresses, emails and telephone numbers (including WhatsApp enabled telephone numbers) for service. Respective counsel are also required to indicate their email addresses (where counsel has no Legal Mail, any functioning email address will suffice) and WhatsApp enabled phone numbers on all filed processes.

Where for want of electronic filing system hardcopy of processes are to be filed, Item B of the Guidelines stipulate that such processes should be sanitized with alcohol-based hand sanitizer by dedicated court officials and be further subjected to a 96-hour quarantine period in a secured facility before the processes are processed. Parties are enjoined to monitor the process up to completion.

Upon filing of processes, the party filing is obligated to scan and send the filed processes in PDF form to the other party. The court reserves the right to direct parties to send the filed processes in PDF form to the court via email. By Item D.6 of the Guidelines, it shall be unprofessional and deserving of disciplinary proceedings for counsel to variously send different versions of the filed processes to the court and the other party.

Whilst these provisions are commendable and seem to take care of the potentiality of the spread of Covid-19, there is however the concern of the sustainability of the recommended/prescribed safety regime in all our courts, particularly regarding sanitizing hardcopy of processes to be filed. This is in light of the fact that the foregoing requires increased funding to all courts, whereas one constant complaint of the judiciary has been lack of adequate funds.

Moreover, to ensure the long term safety of hardcopy of processes, particularly in line with the provisions of Item D(a)(ii) of the Guidelines admonishing utmost care in handling these processes, it is important to avail the designated staff the relevant and necessary training to forestall the potential of a compromise of the nature, quality and substance of processes due to exposure to chemical/alcohol based sanitizers.

Content and Service of Hearing Notices

With respect to hearing notices for virtual proceedings, Item E.8 (a-c) of the Guidelines stipulates that the notices expressly state that hearing shall be virtual, indicate the time of hearing and relevant details (such as passwords, links, IDs, etc.) that would enable the parties join in the sitting as well as the details of the platform through which the court’s sitting would be streamed to the public.

The court shall also publish on a weekly basis, matters to be heard remotely and shall ensure a live streaming of all court remote sittings through whatever website or platform which shall be publicized in order to satisfy the constitutional requirement of public hearing of proceedings.

Apparently, this is quite laudable. Thus, to avoid any confusion on the part of counsel or the parties, there should be strict adherence to the weekly publication of the cause list. This will afford both counsel and the parties a window to resolve issues of omission of matters scheduled for a certain day during the week and misrepresentation as to the business of the day, amongst other associated issues.

E-Payment of Filing Fees

Under Item C of the Guidelines, while assessments of filing fees are still to be done by designated court officials, parties are to send electronic copies of their processes to the registry for assessment of fees payable. Upon payment of fees, evidence of payment shall be sent to court nominated officials.

It is the duty of the court to encourage electronic payment of filing fees as well as publish acceptable method of sending evidence of payment of filing fees.

Remote Sittings

The court shall hear remotely those matters which are time bound or urgent as may be determined by the head of that court in a list to be published to the judicial officers of that court, litigants and their counsel and to the general public. Only judgments, rulings, applications and other matters that do not require taking of evidence are to be heard remotely in the immediate, until proficiency is attained in remote court sittings, by which time evidence of witnesses may be taken virtually, save that extremely urgent and time bound matters which requires calling of witnesses may be heard remotely.

While conducting remote hearings, only judicial officers and security personnel shall be allowed into the courtroom except where the court grants leave for parties whose matter is being heard virtually to be in the courtroom. Virtual proceedings may also be conducted in Chambers with approval of the head of court.

In consideration of judges with time bound judgments and/or rulings to deliver but are isolated from the location of their courts due to government imposed lockdown, the Guidelines permits such judges to conduct virtual proceedings from their location and where impossible, deliver such judgment or ruling in the courtroom of any of the divisions of his court closest to him, upon obtaining a fiat from the head of his court.
Under Item E6 of the Guidelines, the courts shall ensure that the respective locations where the judicial officers and court officials are located are provided with fast-speed electronic internet, electronic devices like desktops, ‘collaborative platform’ such as MS365, Zoom, etc., and other ancillary equipment during the course of the hearing.

Here lies the major challenge this attempt (or rather a quest) to go virtual with court proceedings will face in Nigeria. Internet connectivity is a major challenge in Nigeria even in our big cities. Virtual proceedings may be made tedious and wearisome by this fact alone. A number of our High Courts are located in remote places, some counsel also reside in remote places with worsened connectivity. In other instances, an unprepared counsel may decide to be unscrupulous and feign poor connectivity thereby stalling proceedings.

Akin to the issue of connectivity is the restrictive capacity of some of the recommended/prescribed collaborative platforms. Thus, there may be situations where litigants and/or their counsel are unable to attend/participate in these proceedings owing to the collaborative platform reaching its capacity. Furthermore, electricity continues to be a major challenge in Nigeria.

Beside the hurdle of connectivity and electricity, there is also the aforementioned issue of funding or lack of adequate funding. The conduct of virtual proceedings comes with its additional cost. We hope that there will be increased budgeting for the judiciary by the different tiers of government to cater for the extra costs that are attendant with these innovations.

Meanwhile, we think that in the circumstance, it would be helpful to dispense with the need/requirement for the court to sit particularly with respect to innocuous and unchallenged applications. We think that it would make mockery of the intentions of the NJC where hearing of an application is stalled because counsel who is unopposed to an application is unable to connect with the court. In this light, we propose that applications properly filed and served on the adverse party, and to which application no opposition was filed (as contemplated by the relevant rules of court) should be heard and granted in Chambers without the necessity of the court ‘sitting’ or the presence of counsel or the parties. In this instance, the Court is only obligated to communicate its ruling/decision to the respective counsel. The underlining principle of the foregoing is akin to that behind Item G.2 of the Guidelines wherein the courts are encouraged to dispense with physical or remote court sittings for adoption of addresses proceedings, where the respective addresses have been filed and the relevant rules allow for the deeming of such addresses by the court.

Proceedings at Remote Sittings

The court shall be fully in control of proceedings notwithstanding that it is conducted remotely and the assistance of IT experts is employed. Proceedings of the court shall be recorded using the features of the collaborative platforms and the records shall be given to the parties upon application. This is without prejudice to any other means of recording a particular court may wish to deploy.

Although counsel may with leave of court record proceedings conducted remotely, as with physical court sittings, the records of the court is superior under the Guidelines. The Guidelines deem leave given to a party to record proceedings as leave given to all other parties in the proceeding to record same.

Interestingly, Item E (10)(h) makes it mandatory for counsel to be fully robed and address the court on his feet in virtual sittings except with leave of court.

While we appreciate the intention to make virtual sittings retain the seeming seriousness and sobriety of physical court sittings, we find this provision rather impracticable, particularly in light of the peculiarities of these gadgets driven proceedings/sittings. Usually, users of these collaborative platforms are required to take a rather defined physical position vis-à-vis their enabling gadgets throughout the session, because of the need to always remain visible to the participants. Moreover, many will adjudge Item E (10)(h) as a miss of a rare opportunity to jettison the vestiges and antique of the colonial legal system we inherited. Clearly, being fully robed have no practical effect have on the proceedings. It is hoped that courts would exercise their discretion in this regard in consideration of peculiar circumstances, for example – counsel marooned from their wigs as a result of the lockdown.

Publications

Validity of Virtual Marriages Under Nigerian Law- Another View

by Francis Igho Erhiakporeh

Introduction

One of the many consequences of the COVID-19 pandemic and the lockdown measures that attended it is the indefinite postponement of previously scheduled wedding plans.  However, there are optimists amongst those whose marital plans were affected who chose to make lemonade from the lemons of the pandemic.  

To get around the challenges posed by the lockdown, some intending couples took advantage of the alternative provided by virtual platforms to contract their marriages. This alternative came with an added cost-cutting bonus as they were able to avoid the associated expenses that would have attended the traditional forms of contracting marriages.  

In the wake of this development,  views have been expressed  on the propriety or otherwise of celebrating a marriage via online platforms. In one of such views, Dennis Real Daniel, Esq.1 opined that such virtual marriages may be invalid under Nigerian law in the absence of a license issued by the Minister in accordance with the provisions of the Marriage Act, authorizing the solemnization of such marriages on virtual platforms.

He  also posited that such marriages may, however, remain valid in the absence of a license issued by the Minster in the manner aforementioned, if, and only if, the parties can establish that they were ignorant that such online celebration is not recognized by law.2  He concluded that pending an amendment to the Act with a view to giving legality to marriages solemnized via online platforms in Nigeria, the Minister may issue licenses for the solemnization of marriages on  virtual  platforms.   

In response to this view,  this article aims at providing a different perspective on the subject of discourse  vis a vis the provision of the Marriage Act. The article will outline the condition for a valid solemnization of marriage properly so called under the Act, and will posit that whilst virtual/online solemnization of marriages may be alien to Nigerian law, and may not (save for  an outright amendment to the Act) have any semblance of legality by any means under our current legal framework, the validity or otherwise of such marriages will depend on the circumstance of their  solemnization. The article will conclude with an advice to intending couples to consider deferring their marriages until after  the restrictions on public gatherings are lifted, where it is impracticable to have the marriage celebrated within the confines spelt out in  the Marriage Act.

Solemnization/Celebration of Marriage under the Marriage Act

Without prejudice to the provision of the Act with respect to  preliminaries steps before the celebration of a marriage2,  the solemnization of marriage under Nigeria law is directly governed by Sections 21-29 of the Act. These Sections center on the place/venue and manner of the solemnization of marriages under the Act, which is the subject of discourse in this article. The combined implication of Sections 21-29 of the Act is that marriages can only be celebrated:

  • In a licensed place of worship by a recognized minister of a Church, denomination or body to which such licensed place of worship belongs; provided the marriage is celebrated with open doors between the hours of eight o’clock in the forenoon and Six o’clock in the afternoon, in the presence of two or more witnesses besides the officiating minister. 4
  • Before the Registrar of marriage, in the presence of two witnesses in his office, with open doors, between the hours of ten o’clock in the forenoon and four o’clock in the afternoon.5
  • In any other place as may be licensed by the Minister (other than a licensed place of worship or a registrar’s office), by a minister or registrar.6

Section 23 of the Act prohibits a minister from celebrating any marriage except in a building which has been duly licensed by the Minister, or in such place as the license issued under Section 137 of the Act, may direct. It is also the requirement of the Act that immediately after the celebration of any marriage by a minister/registrar, a certificate shall then be signed in duplicate by the officiating minister/registrar, by the parties, and by two or more witnesses to the marriage.8 

From the foregoing provisions of the Act, it is apt to say the following are the indicators of a marriage validly celebrated under the Act:

  • It must be celebrated by a recognized minister or registrar;
  • It must be celebrated in a licensed place of worship, or in the registrar’s office, or in a place9 authorized by the Minister under a license (other than a licensed place of worship or the registrar’s office);
  • The doors of the venue must be opened and the celebration must be done during day time;
  • The minister/registrar, parties and witnesses must all be physically present at the place where the marriage is to be celebrated;
  • The signing of the marriage certificate by the minister/registrar, the parties and witnesses must be done immediately after the celebration of the marriage;
  • In the case of a marriage celebrated by a minster, the duplicate copy of the marriage certificate must be delivered to the registrar within Seven days after the celebration of the marriage.

Extrapolating from the foregoing, any marriage so celebrated in the absence of any of the stipulations of the Act  listed above, except where excused by the Act, is  void or voidable.

Moreso, from the provisions of the Act, it is without doubt that one of the fundamental determinants of a valid marriage is the place of celebration. As a matter of law, the place of celebration is so fundamental that failure to adhere to the provisions of the law in that regard renders the marriage void ab initio, except the parties can, as a matter of fact, establish that they were not aware that the place was not so licensed for the celebration of  marriage.

Section 33 of the Act provides thus:

33 (2)- “A marriage shall be null and void if both parties knowingly and willfully acquiesce in its celebration-

(a) in any place other than the office of a registrar of marriage or a licensed place of worship (except where authorized by the license issued under section 13 of this Act);

Section 33 (3)- But no marriage shall, after celebration, be deemed invalid by reason that any provision of this Act other than the foregoing has not been complied with”.

It should be noted that in the provisions of the Act dealing with solemnization of marriage10, the requirement that the solemnization be done in a licensed place/building/offices also contemplates the physical presence of the minister/registrar, the parties and witnesses at the licensed place of the celebration. A place11 is a building or area that is used for a particular purpose; or a building, part of a building, or area that is used for shelter. It is therefore submitted that “place” as used under the Act, contemplates a building or a structure with doors for easy ingress and egress.

In effect, the Minister in exercise of his power under the Act, can only issue a license for the celebration of a marriage in a place where people can physically converge with doors for ingress and egress. Thus, the Minister may, in the exercise of his power to issue license for the celebration of a marriages other than in a licensed place of worship or registrar’s office, issue a license for a marriage to be celebrated in the intending couples living room or the pastor’s living room, provided the parties and the witnesses are physically present there, and in such instance, the power would have been validly exercised. However, the Minster cannot, in exercising his power, issue a license for the celebration of marriage in cyberspace, even where same is practicable. If he so does, such exercise of power will be illegal, because  cyberspace is not a “place” as contemplated by the Act.

Are Virtual Marriages valid under the Act?

The question of validity or otherwise of virtual celebration of marriages may depend12 on the physical location of the minister/registrar, the parties and the witnesses13at the time of such celebration. Most church services are now conducted online with the pastors/ministers and few members of the choristers/instrumentalist physically present in the church building while other members of the congregation participate in the service by watching on television or on various online platforms.14  

The question then is; in light of the provisions of the Act, do  marriages contracted via online platforms such as Zoom, Instalive, Webex meeting, etc meet the requirement of the Act with respect to “place of celebration” for same to be valid? It is submitted that the answer to the above question depends on the physical location of the necessary parties at the time of the solemnization.

The referenced online platforms are merely virtual mediums of communication and do not literarily house people. Instead,  people are required to be physically present at a particular location/place. With this in mind and taking into consideration the requirement of the Act with respect to the physical presence of the necessary parties at the licensed place for the celebration, the validity or otherwise of such marriages will depend on the ability of the necessary parties to the marriage to converge at the licensed place for the celebration.

As it is the case with church services conducted online, a marriage may also be celebrated online with the necessary parties physically present at the licensed place of worship, while family, friends and well-wishers may join in the celebration from the comfort of their homes or wherever they are, other than the place of celebration. Where this is the case, the celebration of the marriage will be valid as same would have complied with the requirement of the law with respect to the physical presence of the necessary parties at a licensed place.

However, a virtual marriage will be invalid if celebrated under any of the following circumstances:

  • Where the minister/registrar is physically present in a licensed place while  the parties and witnesses are in another location (it does not matter if the other location is also a licensed place), the marriage will be void.
  • Where the minister/registrar and the parties are in a licensed place whereas the witnesses are in another location, the marriage will be  void.
  • Where the parties and witnesses are in a licensed place while the minister/registrar is in another location, the marriage will be  void
  • Where the necessary parties are not  in a licensed place but merely connect via online platform from different locations, the marriage will be  void.

The marriages celebrated under the foregoing circumstances will be void for failing to meet the requirement as to the physical presence of the necessary parties at the licensed place during the celebration. It should be noted that the requirement that the necessary parties sign the marriage certificate immediately after the celebration of the marriage, is also impracticable under any of the circumstances listed above.15

The provision of Section 33(2)(a) which operates to save an otherwise void marriage on account of ignorance of the fact that the place where the marriage was celebrated was not licensed, may not avail parties who sit in their house while the minister joins them via Zoom or Instalive.  It is a question of fact, and each case will be treated on the basis of its  peculiar  circumstance. In all the cases where the courts declined to void  marriages premised on the provision of Section 33 (2) (a) of the Act, such marriages were solemnized in an unlicensed place with the necessary parties physically present during celebration,16 they were not celebrated via online platforms.

Conclusion

There are calls for amendment of the Marriage Act to accommodate the celebration of marriages without strict compliance with the requirement as to the physical presence of the necessary parties at the licensed place of celebration. However, virtual marriages, though alien to Nigerian law, could be validly contracted within the confines of the law.

It is understandable that most Nigerians will prefer contracting their marriages with crowds in attendance. However, the need to consider virtual celebration of marriage may be informed by diverse reasons other the conditions imposed by the outbreak of COVID-19, and same may still be a viable option post COVID-19.  

Until an amendment is made to the Act, intending couples desirous of celebrating their marriages despite the current realities, may explore the only valid virtual celebration option which involves the presence of the necessary parties at the licensed place while other persons may join in via any of the online platforms. Where this is impracticable, it is advised that intending couples wait until after the restrictions on public gatherings are lifted before contracting their marriages. To do otherwise will render void such marriages contracted via any of the online platforms in violation of the provisions of the Act.

Endnote

1. In his article titled “Validity of Virtual Marriages under the Nigerian Law” published on the NigeriaLawyer.com on April 29, 2020

2.  Section 33(2) of the Marriage Act is an exception to the general rule that ignorance of the law is not an excuse.

3 Section 7-14 of the Act

4. Section 21 of the Act

5. Section 27 of the Act

6. Section 29 of the Act.

7. This section deals with the issuance of license by the Minister authorizing the celebration of marriage by a minister or registrar in a place other than the a licensed place of worship or the registrar’s office.

8. See section 25 & 28 of the Act

9. Hereinafter generally referred to as licensed place.

10. Including marriage involving Nigerians in foreign land under Sections 49 & 50 of the Act

11. According to the Meriam-Webster Dictionary 

12. without prejudice to other formalities stated under the Act

13. hereinafter jointly referred to as the necessary parties.

14. There are also virtual lectures and virtual court sittings.

15. There is no provision either on e-marriage certificate or on e-signature by celebrants.

16. Obiekwe v Obiekwe (1963) ENLR 196