What areas of law have you been predominantly working on over the past12 months?
During this period, we advised various clients on the effect of force majeure caused by the COVID-19 pandemic lockdown (“the lockdown”) on existing commercial obligations. We also advised our foreign clients on the legal framework of business opportunities which theCOVID-19 pandemic (“the pandemic”) has sprang up in Nigeria.
Our clients benefit from our experience on ways to renegotiate terms of their contracts which have insulated them from litigation risks and prevent them from running at a loss as a result of the shutdown of their businesses during the lockdown period that inhibited them from carrying on business and fulfilling their obligations under such contracts.
Litigants are now more willing to settle out of court. We have negotiated with counsels of adverse parties who commenced various litigations against our clients and reached amicable settlement with them. The terms of settlement were adopted by the parties and entered as consent judgment.
Ailing businesses are looking for ways to inject fresh capital. This has led to a growth of our debt collection portfolio. International clients retain our services to collect business, hospital and school debts against Nigerians and Nigerian businesses. We have also collaborated with our foreign partners to recover outstanding debts for Nigerians and Nigerian businesses against foreign debtors abroad.
Inevitably, the pandemic has led to many foreign businesses rebuilding by seeking new markets abroad, including the huge Nigerian market. We advised firms – especially in Europe and Asia – onthe most suitable business entities to form and the permits and certificationsthey require in order to carry on business in Nigeria. We have registered moretrademarks, patents, designs and franchise within this period.
How do you determine which method of litigation or dispute resolutionis most suitable on a case by case basis?
Business disputes are inevitable.Dispute may arise from the interpretation of the provisions of a contract,ascertaining the obligations of the parties, failure to fulfil obligationsunder the contract, or even breach of the contract itself. In order for theparties to settle their dispute and possibly continue their businessrelationship, it is important to ascertain when to litigate a matter atconventional courts or employ other disputes resolution mechanisms such asnegotiation, mediation and arbitration or a blend of the mechanisms.
In recent times, both legalpractitioners and judicial officers have come to appreciate the role whichmediation play in the dispute resolution process. For instance, in franchiselaw, mediation is increasingly becoming popular. Parties agree to settle theirfranchise disputes by mediation by including mediation provisions in theircontracts. Mediation offers both parties the opportunity to resolve theirconflict in a non-adversarial way so as to maintain their relationship infuture.
As a result of the acrimony andthe delay in resolving commercial disputes by litigation, it is better fordisputes in sectors such as construction, maritime, telecommunications,manufacturing, oil and gas, finance, where time is of essence to be resolved byarbitration.
What strategies, techniques or conflict management tools can beemployed in order to achieve consistent results?
Conflicts can either arise as aresult of scarce resources, personal and cultural differences,underperformance, unrealistic expectations, stress, ambiguous work roles, poorcommunication amongst other human factors.
Conflicts must be timeouslymanaged so as not to impact negatively on an organisation and result in poorresults. The management of any organisation should employ the following goodconflict resolution techniques:
Proper communication: Every organisation should encourageproper communication across different cadres of its set-up. There should beincreased dialogue among groups and sharing of information. This will help thegroup know more about each other, eliminate suspicion and encourage teamwork.
Prompt resolution of conflicts: Management must endeavour toimmediately address conflicts because postponing conflict resolution wouldescalate the issue and affect performance. However, the issues resulting in theconflict should not be addressed too quickly without careful consideration asmanagement’s decisions will directly affect the demeanour and performance ofstaff.
Emphasis organisational goals: Management should emphasiseorganisation goals and objectives which should prevent conflicts. If largergoals are emphasised, employees are more likely to see the big picture and worktogether to achieve corporate goals.
Impartiality:Management must be impartial and be seen to be impartial. Situations should beaccessed from all sides for the purpose of arriving at a fair and reasonablesolution.
What measures can a company enact to help minimise the cost, damage anddisruption of litigation to their business?
The main aim of any business isfor profits and not to engage in endless litigations. This is becauselitigation is time consuming, distracting, expensive and sometimes may be costlierthan the amount in dispute. Time spent preparing staff as witnesses takes awaybusiness time. The company pays its counsel from its scarce resources torepresent the company in court. Disputes can also dampen staff morale and ruinthe company’s business reputation. This is why a company should observe thefollowing measures to avoid and minimise the risk and cost of litigation:
Retain the services of a company secretary: In the 21stcentury, a company secretary is no longer a mere clerical officer but animportant member of the board who advises the company on modern due diligencematters, corporate and governance issues and ensures that the company’spractices are in line with extant legislations and international bestpractices. This will reduce the company’s exposure to litigation.
Proper documentation: A company should engage the servicesof a solicitor to ensure that all its agreements with other companies, itsstaff, suppliers, business partners, etc., are properly documented and franked.Variations to the original agreement should be properly documented, approvedand executed. Having an agreement which clearly sets out rights, obligationsand dispute resolution clause of partnership or business relationship when itbreaks down can minimise the cost of resolving disputes.
Proper communication: In order to avoid conflicts which mayresult in litigation, a company should ensure its clients, customers orassociates are well informed about their activities and send timely updates.This could be by informing them about increase in cost, budgets and scheduling.Respecting its customers and keeping them well informed can go a long way tomake a company avoid litigation.
Effectivecustomer care service: A company should maintain an effective customercare service which will pacify and attempt to resolve disputes between thecompany and its customers or business partners. If actions are taken promptlyto deal with conflicts as they arise, a company would be able to prevent suchconflicts from developing into a major problem. It is not advisable to ignore aproblem or complaint hoping that it will go away by itself.
Study profile of potential partners: A company should doproper study and search on their potential clients, customers, employees andsuppliers. The company should ensure that they know the individuals orcompanies which they want to do business with. Some individuals andorganisations have a tendency to attract trouble. Businesses should avoidcompanies or individuals with such profiles.
Being objective: Persons in management positions shouldthink and act objectively for both the short and long time gain of the company.They should, put themselves in the shoes of others and identify the motivationfor litigation against the company and negotiate towards an amicablesettlement. They should be able to determine if it is simply animosity or theother party has a genuine reason for commencing litigation against the company.
How has COVID-19 impacted the litigation & dispute resolutionlandscape?
Courts across the globe haverapidly adapted to COVID-19 protocols. The have found new ways to hear casesbefore them. As restrictions are relaxed in Nigeria, litigants are now facedwith a significantly altered dispute resolution landscape. In order todecongest the courts and maintain social distancing, access to courtrooms inmost States of the Federation is restricted to one counsel per litigant. Thecounsels must maintain social distancing in their sitting arrangement.
Many courts now conduct fullyvirtual hearings, in which the Judge and some parties are present in thecourtroom while others attend virtually. The courts provide parties, the publicand the media with login details for virtual hearings. This is a drastic changefrom the requirement that parties and counsels must be physically present atcourt proceedings.
Electronic processes have beenwidely adopted and used as a means of filing and serving processes of court.Before now only the National Industrial Act and its rules make provision forthis technology. However, the High Courts of some states started test runningelectronic filing system in their jurisdiction, but the COVID-19 restrictionhas sped up the process. Electronic filing and service is now an integral partof the justice delivery system in many jurisdictions in Nigeria.
There has been an increasedawareness in settling commercial disputes amicably. Financial pressure causedby the pandemic has made many litigants to be more willing to settle disputesto avoid long and expensive court proceedings. Settlements are currently beingachieved through virtual meetings, mediation and informal discussions betweencounsels and the litigants.
Nevertheless, in spite of theincreased use of technology in court proceedings, in many jurisdictions, courtsare yet to embrace this innovation. This has increased the backlog of cases inthose jurisdictions and made litigants to believe more in ADR mechanisms,especially, mediation and arbitration to promptly resolve their disputes.
What new challenges have emerged as a result of COVID-19 and what stepsshould companies take to remediate these risks?
The pandemic has tested theresilience of most businesses and challenged their financial, operational andcommercial framework. In order to survive the rough tides, companies should beready to adapt to the current strains and market conditions caused by thepandemic. As the situation evolves, companies should expect to see a shift infocus and a reprioritisation of operational and conduct risks as they come toterms with the harsh reality of managing their dispersed workforces. In orderto grapple with these challenges, companies must be ready to engage in thefollowing:
Conduct readiness assessments: A readiness assessment is agood place to start when companies don’t know what their business continuityprogramme should be. Industry and role readiness templates as well aspandemic-specific templates allow a company to evaluate their businesscontinuity programme against a best practice standard and identify where gapsmay exist. These readiness libraries break down standards and best practicesinto actionable pieces so that companies can track progress and adherence.
Have a risk management plan: Companies should complete a riskassessment on their core business processes to identify and prioritise any newrisks or gaps in their existing controls for new scenarios like pandemics,recession, and geopolitical conditions risks.
Conduct business impact analysis: Not all risks withinprocesses or functions within a company should be treated the same way. Abusiness impact analysis allows companies to identify which parts of thebusiness are most critical to its operations.
Have a management policy: As the pandemic lingers and newinformation arises, policies will need to be revisited, updated andcommunicated. For example, reviewing and revising a work-from-home policy willbe effective only if dissemination of that revised policy is made withgovernance tracking for adoption across the company. Ascertain staff redundancybenefits: As the pandemic lingers and revenue dwindles, some companies may haveto terminate the employment of redundant staff. It is therefore important forthe company to ascertain the severance package for its redundant staff so thatit does not expose itself to the risk of litigation and other labour relatedissues.
Have there been any recent regulatory changes or interestingdevelopments?
One of the key provisions is therecently passed Bank and Other Financial Institution Act, (“the BOFIA 2020Act”) which makes bank staff personally liable for contraventions of the termsof a banking license. This will improve compliance and reduce recklessness byforcing bank management to be more vigilant. The new regulation hopes to avoidevents like the toxic asset crisis of 2009, which many people believed thatNigerian banks contributed towards.
These changes have far-reachingimplications in the areas of monitoring, and enforcement of safer lendingpractices. For example, the BOFIA 2020 Act provides that loans in excess ofthree million naira without collateral will require the Central Bank ofNigeria (“the CBN”) approval. Many small and medium businesses that relyheavily on revenue-based financing will now face an extra hurdle which willfurther slow allocation of credit in Nigeria’s economy. The increased powersgiven to the CBN potentially mean that the regulatory bank could become moreobstructive in coming weeks.
The BOFIA 2020 Act even gives theCBN authority over the opening or shutting down of bank branches. The lawgives immunity to the CBN which limits the redress banks can seek if they feelthey have a case concerning any action taken by the regulator. On one hand, thenew legislation will certainly make the sector more robust, due to the higherpenalties for recklessness. However, the range of things requiring CBN approvalmay stifle growth, and make banks slower to respond to changes in the bankingindustry and Nigerian economy.
The BOFIA 2020 Act providesopportunities for Fintech investors to support meaningful innovation infinancial services that improves the lives of people. Generally, certainaspects of the Act will be advantageous to local Fintechs, partly becausea slight barrier was incorporated to ensure foreign Fintechs localisetheir operations, giving a degree of protection to home-grown players, and alsobecause the CBN’s powers have been broadened, to the extent of having tosanction even some of the most rudimentary moves by banks.
Furthermore, the Companies andAllied Matters Act, 2020 introduces some new provisions for the purpose of entrenchingthe ease of doing business in Nigeria and to ensure that the practice ofbusiness entities meets international standards and modern corporate governanceprinciples. The new provisions will indeed improve the management andproductivity of Nigerian businesses in the coming years.
Are you noticing any trends in industry-specific litigation?
As a result of the numerousproblems in resolving international commercial disputes through litigation indomestic courts, in the last few years, international arbitration has grown tobecome the preferred dispute resolution mechanism for disputes arising frominternational contracts and investments agreements. In particular,international arbitration has been used to resolve an increasing number oftechnology and IP disputes. In order to keep up with the explosion oftechnology investments overseas, companies have spent considerable timedrafting arbitration clauses to protect the confidentiality and proprietarynature of the technology and IP they share with foreign partners,manufacturers, and distributors.
Financial market pressures areforcing companies to rely more heavily on ADR mechanisms in an attempt to limitlitigation exposure while expanding business interests globally. Companies havebecome more sophisticated in utilising international arbitration, particularlyin emerging markets. This additional corporate sophistication has provided asuitable ground for accelerated competition among various arbitrationinstitutions.
This has led to the developmentof a variety of driving trends in international arbitration, including newexpectations of parties to arbitrations and new competition-driven featuresoffered by international arbitration institutions. Companies chooseinternational arbitration over pursuing judgment in domestic courts for avariety of reasons such as the elimination of perceived bias by domesticcourts.
However, a primary and perhapsunderappreciated advantage is the flexibility offered by internationalarbitration. Parties can choose the applicable law, the seat of arbitration,the arbitration institution, the arbitrators, the jurisdictional scope, and thegeneral procedure and conduct of the arbitration, all of which can provideefficiency advantages over domestic courts as well as important legal andtactical advantages customized to the subject matter of the dispute.
A majority of parties who havebeen involved in international arbitration in the past, however, believe thatany negative impact of choosing a particular governing law can be limited bycarefully drafting either the original contract or a subsequent agreement toenter into arbitrations with this in mind, businesses can draft an arbitrationclause that allows for negotiation of the choice of law provision in order togain contractual advantages elsewhere in a particular agreement. Thisflexibility, therefore, increases stability and predictability when resolvingdisputes internationally.
Have there been any noteworthy case studies or examples of new case lawprecedent in the past year?
Enforcement of money judgment inNigeria is regulated by the provisions of the Sheriffs and Civil Process Act,CAP S LFN 2004 (“the SCPA”) and the Judgments Enforcement Rules, a subsidiarylegislation to the SCPA. The SCPA sets out, amongst other things, the variousmethods by which successful litigants may enforce money judgments. These are bywrit of fieri facias, (“writ of fifa”) garnishee proceedings, a charging order,a writ of sequestration or an order of committal on judgment debtor summons.However, writ of fifa and garnishee proceedings are the most commonly usedmethod.
One major obstacle often faced byjudgment creditors seeking to enforce judgments against governments and theiragencies is the requirement under the SCPA that a judgment creditor must obtainconsent of the Attorney General of the Federation or Attorney General of aState as the case may be, before such judgments can be enforced by garnisheeproceedings.
Interestingly, in CBN vInterstella Communications Ltd (2017) All FWLR (Pt 930) 442, the court providedsome clarification on the requirement for the consent of the Attorney General.The court stated that the rationale behind this decision is that seeking theAttorney General’s consent is to avoid any embarrassment to the government thatmay arise from making attachment orders against public funds in the custody ofa public officer which has been appropriated for a purpose without notice tothe government.
This means a judgment creditordoes not require the consent of the Attorney General to attach and secureprivate funds in the hand of a public officer. It is the owner of the fundsthat determines whether the holder of the funds is a public officer and not thestatus of the person who is in custody of the funds.
Looking beyond COVID-19, how is the current litigation & disputeresolution landscape comprised in your jurisdiction?
The year 2020 was undoubtedly achallenging year for many businesses and individuals. The pandemic made partiesto a dispute more interested in employing ADR mechanisms to resolve theirdisputes.
Mediation involves theappointment of a neutral middleman to facilitate a discussion between theparties and their legal representatives. It offers partiesthe chance to put their respective positions privately to each other in aconfidential and conciliatory manner away from the public, so that the mediatorcan try to settle the dispute. Often, the mediator has a more specialistbackground befitting of the technical dispute than a Judge at conventionalcourts.
Parties are bound by the CivilProcedure Rules (“CPR”) to consider taking part in ADR as a way ofresolving a dispute and this obligation continues even after court proceedingshave begun. This is why mediation is offered at the Multi-door Court Houseattached to some courts in Nigeria. The social distance protocol occasioned bythe pandemic has led both litigation and ADR mechanism practitioners toconsider virtual proceedings as a veritable platform to conduct hearings tomeet the end of justice.
Virtual mediation will become themainstay of resolving disputes even when things return to normal. This isbecause virtual mediations have led to improved efficiencies and preventsparties from needing to travel long hours to attend proceedings. This reducesstress and anxiety for participants. Whilst there was a general reluctance toengage in anything “virtual” in the pre-COVID era, there will be a markedchange in how dispute resolution is dealt with in a post-COVID world.
How do judicial shortages pose a threat to the court system?
Lack of or inadequateinfrastructures such as deteriorating and ill-equipped physical facilities insome courts severely undermine fair and speedy administration of justice inNigeria. Justice can hardly be speedy when Judges lack adequate facilities toenable them to function effectively and efficiently. In most cases, the courtfacilities are overcrowded, badly equipped, and under-funded.
Some litigants do not understandEnglish, the language of the court in Nigeria. Most courts have fewinterpreters to interpret court proceedings to the litigants. In some cases theinterpreters are poorly trained. Court libraries are inadequate. There are fewfunctional computers, photocopiers, or other modern equipment. Judges may evenhave to supply their own paper and pen to record proceedings in longhand. Iflitigants need a transcript of proceedings, they would have to pay for thetranscript themselves. This encourages corruption which impugns the justicesystem in many ways.
Also, records of courtproceedings and judgments are not stored in satisfactory conditions. This makesthem susceptible to damage or intentional destruction by unscrupulous courtstaff. Absence of modern facilities provides an enabling environment forcorrupt and unethical court staff to tamper with evidence and even courtrecords.
Parties are limited in the kindsof technological and visual aids available throughout litigation. Thecourtrooms are not equipped to handle audio, slide and other visualpresentations that assist fact-finding in understanding a case in order toreach a just decision. Where a litigant is unable to present technical evidencebecause of inadequate infrastructure, he is significantly disadvantaged andleft to suffer his fate.
Also, inadequate facilities,especially erratic power supply, contribute to delays as court proceedings areoften interrupted or adjourned due to power outages. All these erode publicconfidence in the court system. This is why the Chief Judge of the 36 statesand the Chief Justice of the Federation have taken various steps and madepractice directions to address these anomalies in Nigeria’s judicial system.
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