The Role Of The Nigerian Lawyer In The Metaverse – Ani Freedolyn Chinechere

Role Of The Nigerian Lawyer In The Metaverse

ABSTRACT

Technology, instead of diminishing the legal profession, actually reinforces it and makes lawyers more germane amid expeditiously changing times. The impact of technology on the legal world is indisputable, especially given the context of the Metaverse.

The metaverse which is considered the next horizon of a digitalized world is the conglomeration of cyberspace and physical reality. It aims to give a far more immersive experience to individuals through an alternative reality that may soon become integrated with their everyday lives just like the internet.

Although the Metaverse is still constantly being developed, it is predicted that the Metaverse could accommodate nearly every kind of lawful or unlawful human activity and as a result, give rise to the emergence of an array of novel legal issues that will need to be addressed by lawyers. It is pertinent to note that Nigerian lawyers are not exempted from this call of duty as the Metaverse will impact the Nigerian legal space. It becomes important for Nigerian lawyers to understand the whole concept of the Metaverse and their roles in the Metaverse to enable them to address these legal issues whenever they arise.

Keywords: Metaverse, Non-fungible token (NFT), Smart Contract, Block-Chain, Avatar, Technology, Augmented Reality (AR), Virtual Reality, Mixed Reality, Nigerian Lawyer

Definition of words

Non-Fungible Token (NFT)

Non-fungible tokens often referred to as NFTs, are blockchain-based tokens that each represent a unique asset like a piece of art, digital content, or media1. An NFT can be thought of as an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or physical2

Smart Contract

Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met3. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss4.

Block Chain

A blockchain is a digital ledger or database where encrypted blocks of digital asset data are stored and chained together, forming a chronological single-source-of-truth for the data5.

Avatar

According to the Cambridge dictionary, an avatar is an image that represents one in online games, chat rooms, e.t.c and that one can move around the screen.

Introduction

The Metaverse is an emerging cyberspace realm where people and entities (and various forms of algorithms and artificial intelligence) will interact , engage in games , sports, and entertainment , buy and sell “real world” and “in the Metaverse” goods and services, and otherwise get into legal disputes just like IRL (in Real Life) persons and entities6. As the Metaverse evolves and expands, so too will the number of legal and regulatory issues which will arise that lawyers must help their clients navigate7. A profound understanding of the concept of the Metaverse and the role of lawyers in the Metaverse will enable lawyers with reference to Nigerian lawyers, to properly address these legal and regulatory issues.

This essay focuses on the Conceptual analysis of the Metaverse and how it works, Possible legal issues that may arise in the Metaverse and the Role of a Nigerian lawyer in the Metaverse.

What is the Metaverse and How Does It Work?

The term “Metaverse”, a combination of the prefix “meta” ( beyond) and “universe”, is commonly used to describe communal and interactive cyberspace where content , commerce and networking exist with increasing permeability to the real world8.

Metaverse was created in 1992 by Neal Stephenson and is based on blockchain technology, using digital assets called “Smart Contracts”9. These Smart Contracts are stored on the blockchain and can be used in other virtual worlds and the real world10.

It is a shared virtual-reality space where people can interact with the digital world and engage with one another through custom avatars11.As Matthew Ball, the former head of content at Amazon, stated, “The metaverse is a persistent, synchronous and live universe that spans both the digital and physical worlds with total inclusion”.12 As a result, users can buy and sell products, assets and real estate using cryptocurrency, attend various events and business meetings, play games, and socialize with others just like in the physical world13. What makes transactions carried out on Metaverse more real is the fact that ownership of a 100% virtual good can be proven and has authority via code on an immutable ledger14. In simpler words, a person is able to purchase land, a house, a car, or any other assets using a Non-Fungible Token (NFT) on a virtual platform and prove them to be their own15.

While the metaverse can take numerous forms, Presence and Interoperability are two fundamental features16. The first and most important factor is Presence, which refers to the sensation of actually being in a virtual world with others17. Decades of research have demonstrated that having a sense of embodiment — which may be obtained with virtual reality technologies like head-mounted displays, increases the quality of online interactions.18

Second, interoperability refers to the capacity to move freely across virtual places while using the same virtual assets, such as avatars and digital objects19. For example, ReadyPlayerMe allows users to build an avatar that they can utilize in a variety of virtual worlds, including Zoom meetings via apps like Animaze20. At the same time, blockchain-based technologies like cryptocurrencies and non-fungible tokens can make it easier to move digital assets across virtual borders21.

The Metaverse has three (3) dimensions; Virtual Reality (VR), Augmented Reality (AR) and Mixed Reality (MR). For VR, one is transported into the virtual space via hardware devices like the VR headset22. In AR, the virtual space or content is projected into one’s physical environment. It overlays visual elements, sounds and other sensory input into real world settings to enhance the user experience while XR is a combination of both23.

It is pertinent to note that the Metaverse and the internet do not mean the same thing. The Metaverse is not the same as the internet neither does it compete with it—it builds on it24. In the Metaverse, users traverse a virtual world that mimics aspects of the physical world using technologies such as virtual reality (VR), AR, AI, social media and digital currencies while the internet is a worldwide system of computer networks25.

What Legal Issues May Arise in the Metaverse?

As with any groundbreaking technological development, the Metaverse will raise novel and complex legal issues26. As the practical applications of the Metaverse continue to broaden and evolve with improvements in technology, so too will the legal and regulatory challenges27. It must be noted that the metaverse as it stands is currently under-regulated, which could pose a problem for clients if they want to start investing in the companies that are running it and the digital assets it produces28.

Any Nigerian lawyer looking to participate in Metaverse should consider the laws in the following areas and determine possible regulatory parameters instead of waiting for these issues to emerge before doing so;

Intellectual Property Rights (IP)

Intellectual property law preserves the right of creators against their inventions, trademarks, or other creations29. The use of virtual images and virtual performances may lead to concerns over the use of image rights and copyright, and dealing with different approaches in different jurisdictions30.

An important aspect of the virtual landscape that a Nigerian lawyer should take cognizance of as it relates to Intellectual Property is Trademark. A trademark is a word, phrase, slogan, design, or logo that acts as a source indicator for goods or services.31 Trademark law protects against unauthorized third-party use of a trademark, in a way that would lead a reasonable consumer to believe that the trademark owner was either the source of the goods/services, endorsed, or sponsored such goods/services, or in a way that would dilute the trademark32. While mixed and augmented reality has allowed brands to reach out to developing new industries and consumer base, it has also generated challenges for trademark owners and users, particularly in the gaming industry.33

Brands have filed trademark dilution and infringement cases involving metaverse goods and services34. For example, Hermes sued Mason Rothschild for trademark infringement for his creation and sale of “Metabirkins,” NFTs attached to digital images depicting bags resembling Hermes’ Birkin bags35. The case is still pending in the Southern District of New York36.

Among the questions a Nigerian lawyer should endeavour to seek an answer to is , “Can a company take legal action against users who infringe their intellectual property rights in the metaverse?37 A Nigerian lawyer will need to assist in identifying IP rights that will be appropriate in the Metaverse and ensure appropriate consents and licenses are put in place.

In the same vein, it is suggested that a Nigerian lawyer venturing into the metaverse should also take cognizance of copyright risks and patent risks. A copyright is a legal protection given to the creators or originators of creative expressions, whether they are literary, musical, artistic, or cinematographic works, or adaptations of any of these works38. It gives the creator of the work an exclusive and assignable right, that while exclusive to the author, is subject to the recognized legal rights of others39. It is not enough for an idea or concept to be created in the mind of the creator; it must also be expressed or fixed in some media, such as paper, diskettes, flash drives, CD-Rom, VCD, DVD, and so on, in order to be protected40.

A patent is a government authority or licence conferring an exclusive right or title for a set period, especially the sole right to exclude others from making, using, or selling an invention in the country it is obtained without permission or consent during the lifespan of the patent41. Patent use in the metaverse, like other intellectual property, presents both opportunities and risks.42

Data Security and Privacy

Digital security and privacy will be among the most significant legal issues facing platform owners43. It is pertinent to note that data in the metaverse will become exponentially more valuable than it already is, and technologies will become increasingly integrated into multiple aspects of users’ lives44. This developing technology will stress-test existing laws and put even greater pressure on regulators to match the sophistication of the technology45.

Most countries in the European Union (EU) are benefitting from relatively effective, though rather restricting data privacy laws and regulations46. Unfortunately, Nigeria is still lagging. That said, the metaverse environment has no national or geographic boundaries47. Users from Nigeria and certain countries may not be as protected as the countries in the European Union (EU)48. How will the companies in the Metaverse communicate these differences? How will they deal with international law and regulations? 49 . This must be critically examined.

Behaviour in the metaverse can reveal extensive information about people’s interests, behaviours, and even biometric data that otherwise would not be available50. This raises concerns about what data companies can collect, who owns it and how it can be used51. Existing privacy and consumer protection laws may not adequately address these issues and data collection in the metaverse raises jurisdictional questions that make it difficult to know which data protection laws apply52. A Nigerian lawyer who wants to venture into Metaverse will need to reevaluate consent and data protection mechanisms to minimize risks associated with improper data collection of his prospective clients.

Criminal Law

There have already been allegations of criminal acts in the metaverse, including crimes associated with the physical body such as sexual harassment, assault and even rape, among others53. Meta (formerly known as Facebook) responded by adding a safety feature to its Horizons World metaverse that prevents an avatar from coming within a certain proximity of another’s avatar54.

The metaverse environment will extrapolate the issues and challenges that exist in real life. As a result, crimes such as impersonation, obtaining by false pretences, cyberbullying and other cyber crimes are likely to ensue. It is probable that the greater human interaction in the metaverse will lead to crimes, requiring a redefinition of some crimes and new ideas about the prosecution of metaverse criminal activity55.

Insurance and Contractual Agreements

Due to the complex and novel issues that may arise in these areas, it is suggested these areas be scrutinized. For instance: “Can avatars enter a legally binding contract?” “Can an avatar be insured?” “Can the real person be held responsible for the actions of their avatar?”56 “How will contracts be designed and executed?”57. Lawyers will need to start thinking of possible answers to these questions instead waiting for these issues to emerge before proffering solutions to them.

The Role of a Nigerian Lawyer in the Metaverse

The Metaverse is an exciting space that presents many business opportunities and a fundamental shift in the economy58. But it also poses a challenge for lawyers in that one can not necessarily apply traditional methods of legal thinking, frameworks and regulations that have existed for hundreds of years in this new environment59. In line with this, a Nigerian lawyer venturing into the metaverse is required to be “forward-looking” with the sole responsibility of mitigating and guarding against potential liabilities and risks of his clients within the metaverse platform.

As novel legal, regulatory and technical problems emerge within the metaverse, lawyers are responsible for figuring out how existing regulations will apply to the platform and ensuring that developers, tech companies, and avatars work within the ecosystem and prioritize privacy in products60. A Nigerian lawyer needs to be able to understand these technologies and anticipate the potential problems their clients may have and help to implement mitigation strategies.

A Nigerian lawyer venturing into the metaverse may need to figure out potential employment issues within the metaverse. It is unclear how employment law would work within the metaverse61. For instance, “could avatars have distinct employment rights?”62 Having a good business and technical understanding of the product or activity operating within the metaverse is a starting point to understanding how to analyze and understand the legal issues flowing from the metaverse.63

The Metaverse will extrapolate all the problems, issues, benefits, and challenges we have currently in real life64. The exact complexities of the metaverse are unforeseeable, but having the growth mindset as a lawyer and not a very outdated perspective on legal issues, risks and limitations are crucial65.

The role of a Nigerian lawyer—mitigating and guarding against potential liabilities and risks cuts across but is not limited to the following;

  • Proffering legal advice to companies that want to purchase digital real estate assets on Decentraland or develop their digital branding presence66.
  • Drafting of contractual agreements and “Smart contracts” between parties.
  • Determination of which jurisdiction or country’s law applies to a client’s activity on metaverse.
  • Helping clients to capitalize on opportunities in the Metaverse.
  • Protection and enforcement of the Intellectual Property rights of clients.
  • Institution of defamation lawsuits and other lawsuits for clients.
  • Keeping a close tab on the client’s account(s) on metaverse through user activity monitoring software to prevent fraudulent activities on the account(s)67.
  • Mediation of disputes between parties
  • Exercise due diligence on virtual land or business purchases in the Metaverse.

Conclusion

The unfolding of the metaverse will bring along with it several business opportunities and novel legal issues bordering on Intellectual property rights, Data Security and Privacy, among others. As these novel legal and regulatory problems emerge within the metaverse, lawyers are responsible for figuring out how existing laws and regulations will apply to the platform68. In February this year, ArentFox Schiff announced that it had become the first major US law firm to “join the Metaverse” by acquiring a land site in Decentraland, a fact that underscored how seriously lawyers are taking one of the latest technology trends69.

While the metaverse holds great promise for merchants and investors alike, without a system for design, promulgation, and enforcement of rules, it could be dangerous70. Critical scrutiny of the Nigerian legal system reveals that applying the various existing provisions of the law under the Nigerian legal system in the Metaverse environment could be frustrating.

For instance, Sections 1 and 2 of the Land Use Act 1978 vest ownership, administration and control of all lands in a state on the Governor of the state with no provision for Virtual lands or its ownership71. Also, none of the laws in Nigeria makes any provision(s) for Avatar because this reality had not been contemplated at the time of drafting the various laws in operation today. Thus, how can a Nigerian lawyer determine how an avatar may be made liable for action in the metaverse when there are no corresponding laws dealing with that and what court has the jurisdiction over disputes that may ensue in the metaverse? There is an urgent need for regulators to be abreast with the reality of virtual real estate, and other issues and enact relevant laws to govern them.72

Also, The Labour Act 2004 makes no provision for the digital world of work as it exists in the metaverse73. There is therefore a need for such situations to be contemplated and necessary reviews made to fit the reality of today’s digital world of work74.

If the metaverse will deliver on the promises of the benefits it proffers , a commensurate apt legal response to the possible novel legal issues is required75 to enable lawyers effectively tackle them whenever they arise.

Recommendation

To enable Nigerian lawyers effectively accomplish their roles and responsibilities within the Metaverse whenever the need arises, the following are recommended;

  • Laws and Regulations should be enacted to combat possible novel legal issues that may emerge within the metaverse. Existing laws and regulations should also be amended to accommodate these possible legal issues. For instance, The Nigerian Data Protection Bill 2020 and other germane data and privacy regulations should be amended. Applying old provisions of the law to new technology like the Metaverse can be likened to trying to put a square peg into a round hole.
  • The government should properly monitor and regulate the sale and ownership of virtual real estate in the metaverse76.
  • Legal professionals in Nigeria need to adapt to offer a broader range of expertise to clients. The way to do this is to redefine the services that they offer by applying legal knowledge within modern contexts and advancing their technological abilities.77
  • Laudable Investments in research and formulation of effective policies by the Government
  • Sensitization and education of Lawyers and Law students on what the Metaverse is and the role of a lawyer in the metaverse. This is important as this will help them to understand, prepare and anticipate potential problems that may emerge within the metaverse and proffer solutions to them.
  • Lawyers and law students should have a good understanding of Technology law {Tech law).

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17 “Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications. (2022) . Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

18 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications. (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

19 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications. (2022) . Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

20 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications. (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

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29 Charlotte Lear, “What Laws Govern the Metaverse?”. Retrieved from https://www.dlapiper.com

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32 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications” (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

33 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications” (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

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39 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications” (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

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41 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications” (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

42 Oyetola Muyiwa Atoyebi, SAN, FCIArb, “What is the Metaverse? Coming to Terms With Its Legal Implications” (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

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47 Alex Siryi , “A Role and Place for Lawyers in a Metaverse Explained” (2022).https://catware.io/blog/a-role-and-place-for-lawyers-in-a-metaverse-explained/

48 Alex Siryi “A Role and Place for Lawyers in a Metaverse Explained”,(2022). https://catware.io/blog/a-role-and-place-for-lawyers-in-a-metaverse-explained/

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59 Brightflag COO Alex Kelly , “The Critical Role of Lawyers in the Metaverse” (2022). https://www.canadianlawyermag.com/resources/legal-technology/brightflag-coo-alex-kelly-discusses-the-critical-role-of-lawyers-in-themetaverse/367102

60 Brightflag COO Alex Kelly, “The Critical Role of Lawyers in the Metaverse.” (2022). https://www.canadianlawyermag.com/resources/legal-technology/brightflag-coo-alex-kelly-discusses-the-critical-role-of-lawyers-in-themetaverse/367102.

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69 Joseph Raczynski , “Lawyers & the Metaverse”. (2022). Published in Thomson Reuters Asian Legal Business

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75 “What is the Metaverse? Coming to Terms with Its Legal Implications (2022). Retrieved from https://thelawyer.ng/what-is-the-metaverse-coming-to-terms-with-its-legal-implications/

76 Omoniyi Edoigiawerie, ESQ, “Doing Business in the Metaverse: Legal Risks and Opportunities” (2022)

77 The Future of the Professions by Susskind and Susskind. Destefano (n2) pt, Ch1; margo(n1) 83.


Photo Credit: CNET


About Author

Ani Freedolyn is a 400-level law student at the Obafemi Awolowo University, Ile-Ife, Nigeria. She loves to write about contemporary issues confronting her society and the legal profession with a view to proffering solutions to them. She believes that writing is a weapon one can use to change the world and make it a better place to live.

Difference between Criminal Code and Penal Code in Nigeria – Inioluwa Olaposi

Criminal Code and Penal Code in Nigeria

The most striking difference between the Criminal Code and the Penal Code in Nigeria is the scope of their operation. The Criminal code is applicable to the Southern region, while the Penal code is applicable to the Northern region of Nigeria.

Thus, Northern states in Nigeria operate by the provisions of the Penal Code in the determination of criminal conducts, trial and punishment of convicts. While the states in the Southern region follow the provisions of the Criminal Code. And yes, the provisions of the two codes are not the same.

How did we get here?

The Nigerian Corpus juris is inseparable from its customary and colonial heritage. Given the difference in customary practices, different parts of Nigeria operated different criminal legal systems prior to colonisation.

Majorly, the southern region operated under customary law which defined criminal conducts and attending punishments. While the Islamic legal system or Sharia law obtained in the North, particularly that of the Maliki school.

Advent of Colonialism

With the advent of the British came the application of English Criminal Legal system to the territories that is now known as Nigeria. In 1863, the Common Criminal Laws were introduced to the Colony of Lagos.

In 1904, Lord Frederick Lugard introduced the Criminal Code to the Northern region of Nigeria. Thus, a tripartite criminal law system obtained in the country. That is, the English Criminal Law obtained in Lagos, the Criminal Code in the North, and indigenous rules in the South.

The Criminal code became applicable to the whole of Nigeria in 1916, after the Northern and Southern Protectorates were amalgamated in 1914. However, even then, customary laws of different regions were still applicable, applied in Native courts.

Conflict of Systems

The conflict emerged in 1957, when the court held in Maizabo v. Sokoto N.A. [1957] NLR 133 (FSC) that though native courts could try criminal cases, punishment of offenders are not to be given in excess of the provisions of the criminal code. That is, the customary criminal punishments were outlawed and rendered inapplicable, if they are not compatible with those of the Criminal code.

This situation was unacceptable to the Native communities, particularly the Northern region. This is because the Criminal Code was modelled on the Queensland Code of Australia, drafted by Sir James Fitzsteven in 1878. This model does not suit the moslem society.

And this led to the introduction of the Penal Code to the Northern region in 1959. The Penal code was modelled on a Sudanese code that had successfully operated as suiting a Muslim community.

Abolishment of Customary Criminal System

Notably, in a constitutional conference in 1958, the decision was taken to eradicate the use of customary laws from the Nigerian Criminal Law System.

A section of the 1959 Bill of Rights, which became section 22(10) of the Nigerian Constitution, 1963, provides – “No person shall be convicted of a criminal offence unless that offence is defined and the penalty therefor is prescribed in a written law.” This is now provided in Section 36 (12) of the Constitution, 1999, as amended.

Also, Section 8(3) of the Administration of Criminal Justice Act, 2015, provides, “A suspect shall be brought before the court as prescribed by this Act or any other written law or otherwise released conditionally or unconditionally.”

This is how Nigeria ended up operating the Criminal and Penal Codes in the administration of its Criminal legal system, simpliciter.


Image credit: ResearchGate


About Author:

Inioluwa Olaposi is a Law Student at Obafemi Awolowo Univerisity, Ile-Ife. He is an entrepreneur and loves to provide information. Inioluwa founded LawGlobal Hub in December, 2021.

Ownership under Nigerian Land Law – Aanuoluwa Oluwapelumi OLA

Ownership under Land Law

Ownership entails the total control, which a person has over his property. He has overriding right over his property is subject to no control. He is the owner and omega of his property.

Ownership and Title are synonymous, and can be used interchangeably. The mere fact that you are the owner of a property does not confer on you the possessory right over the property. In other words, you may be an owner of a property, but not in possession (e.g. The case of a Landlord and Tenant).

The possessory right of a Tenant in possession is superior to the Right of the owner of the property. The possessory right is protected by law, and by such, the land law has the given right to seek for protection where he desires such.

The Rent Control and Recovery of Residential Premises Laws of each state makes provisions for the recovery of premises for the Tenant. However, the possessory right of a Tenant in possession cannot lead him to ownership, no matter how long the tenant stays in possession.

JOTS: (Ownership does not confer possession, and possession does not confer ownership)

Under the English common law, the ownership of land is vested in the crown as the absolute and supreme owner. Any citizen acquiring land, will only be granted such land for a specific period by the crown.

The right to use and occupy land granted by the crown is known as ESTATE. While under the customary law, land is early owned by an individual. Rather, ownership is vested on the community as a corporate entity or family as the case may be.

Also under the land use act, ownership does not lie on individual or on the community, rather it is vested on the governor of the state.

Section 1 of the Land Use Act provides:

“Subject to the provisions of this Act, all land comprised in the territory of each State in the Federation are hereby vested in the Governor of that State and such land shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provisions of this Act.”

The right granted under Section 5 & 6 is only a right to occupy and use the land for a period (of 99 years subject to renewal). In other words, the provisions of S 5 & 6, does not grant absolute ownership. See S 1, 5& 6.

See Abraham v Olorunfemi. 1991, 1 NWLR PT 165 @ 53 where the court in explaining the term ownership held as follows: “ownership connotes a complete and total right over a property.

It is not subject to the right of another person because he is the owner. He has the full and final right of alienation or disposition of the property and he can exercise his right of disposition or alienation without the consent of another person because as a matter of law and fact, there is no other parties right over the property that is higher than his own right.”

Coownership under Land Law

Co ownership exist either in terms of tenancy or joint tenancy. A tenancy is a form of ownership of property where two or more ownership have a separate but individual interest in the property.

Each of the owner has a right to possess the entire property but cannot exclude the other, the right of ownership. For instance, where one sibling inherits a quarter portion of the land, each of the siblings has one quarter interest on the entire land. That one quarter can only exist by court order of partition.

And such a court order – each of the sibling will be entitled to the one quarter as his private property. But where such partition hasn’t been ordered by the court, each of the sibling will have the entire quarter as a joint ownership.

Also, there is Legal or Equitable ownership.

Legal Ownership

Legal Ownership is recognized by law and the law sees the owner of such land especially as someone who owns the property for the benefit of the other. This also connotes a registered title owner;

Equitable Ownership

Equitable Ownership exists where the owner of the property has only a beneficial interest in the property. Eg, a Mortgagee in a mortgaged property only has an equitable right over the mortgaged property which upon resumption of mortgage debt.

In other words, where you have your property mortgage for a loan and you have your document of tittle for a collateral of collecting of that loan. Here, the mortgagee is only entitled to an equitable ownership.

However, a fundamental distinction exists between a legal ownership and an equitable ownership.in a legal ownership, the owner is entitled to possession, the right to use and the right to convey either by way of sale or assignment,

While an equitable ownership is like a trustee, entrusted with the property for the beneficial interest of the beneficiary. The beneficiary, received all the benefit of that property or land while the trustee is in a fiduciary duty to account to the beneficial owner. But where he fails to account, the court may compel him to account to the beneficiary where in extreme cases he may be removed as a legal owner. And be substituted.


Credit:

  • Law Lecturer – Mr Agbana, Obafemi Awolowo University.
  • Wikipedia

About Author:

Aanuoluwa Oluwapelumi OLA Esq. AKA LAPONISM is a former Public Relation Officer of the Law Student Society, Obafemi Awolowo University, Ile-Ife. He loves to impact people.

Legal protection of Intellectual Property, Rational? – Francis A. Wayo

Francis A. Wayo is a Law Student and WIPO Academy alumnus. He has keen interests in intellectual property and Human Rights.
Phone: +234 810 687 7966
Email: wayofrancisaondongu@gmail.com

How rational is the rationale for the legal protection of Intellectual Property?

Abstract

This essay examines the rationale behind the rationality for the legal protection of Intellectual Property (IP) through a discussion on how the protection of IP via copyright, patents, traditional knowledge, traditional cultural expressions, et al. benefits the society. Particularly, the recognition of the role of IP as an instrument of societal development is considered with reference to the National Intellectual Property Policy and Strategy which portrays the justification for the legal protection. Also, a theoretical exposition is made vis-à-vis a practical application and examination of the various theories underlying the justification for IP protection with reference to judicial authorities, scholarly opinions and facts. The conclusion drawn from the discussion supports IP protection notwithstanding the many criticisms which are rebutted therein.

Introduction

World over, Intellectual Property (IP) has become a buzzword due to the recognition of creativity and innovation as drivers of development. As it is said that “you do not bite the hand that feeds you,” the protection of intellectual works becomes a categorical imperative to drive change and development. However, this legal protection exacerbates concerns as can been seen in the recent case of Google LLC v Oracle American Inc1 wherein Justice Breyer observed as follows:

Copyright and patents, the Constitution says, are to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries…” At the same time, copyright has negative features. Protection can raise prices to consumers. It can impose special costs, such as the cost of contacting owners to obtain reproduction permission. And the exclusive rights it awards can sometimes stand in the way of others exercising their own creative powers.

In light of the foregoing background, this paper shall address the question on how rational is the rationality for the legal protection of IP.

Conceptual Clarification

Basically, IP refers to creations of the mind, that is, everything from works of art to inventions, computer programs to trade mark, designs, and other commercial signs.2 According to Sodipo, “IP protects the products of human intellect including artistic and technological creations and inventions.”3 This protection creates legal rights resulting from intellectual activity in the scientific, literary and artistic works as contained in Article 2 (vii)of the Convention Establishing the World Intellectual Property Organization 1967 (Wipo Convention).

By virtue of Article 2 (vii) of the WIPO Convention, Articles 1, 2, and Part II of the Convention for the Protection of Industrial Property 1883, Convention for the International Protection of Literary and Artistic Works 1886, and the World Trade Organization Agreement onTrade-Related Aspects ofIntellectual Property (TRIPS) 1994 respectively, IP covers copyright, neighbouring rights, patents, utility models, trade marks, geographical indications/appellations of origins, trade secrets, new plant variety, traditional knowledge (TK) and traditional cultural expressions (TCEs).

The Rationality for the Legal Protection of IP

The justification for the protection of IP hinges on two basic propositions: the recognition of the right of creators/inventors and the promotion of public interest4 as creativity and innovation form the bedrock of civilisation. In ascertaining the rationality for IP protection, these twin objectives are prevalent in every argument as balancing the interest of the individual creator/inventor versus the public is considered tantamount. How rationale this reason for IP protection is can be viewed from both consequentialist and categorical imperative perspectives. Based on the former, the result of IP protection makes it rational due to the fact that it encourages creativity and innovation which are the means by which society advances. The legal protection becomes imperative based on the moral obligation of giving labourers their due and for the fact that it drives development in all facets of human life.

Worth noting, all the various forms of IP benefit the society, hence the justification for their protection. With respect to copyright, the US Supreme Court held inter alia in Feist Publication Inc. v. Rural Television Services Co,5 that copyright benefits society as the author’s reward merely secures the benefit. It is this protection that sustains the knowledge economy as well as the entertainment sector as creatives are encouraged to do more. Similarly, the grant of patent is very important as technological solutions proffered by inventors are necessary for human development. An example is the pharmaceutical industry which provides for all kinds of medicines. Notably, it is through IP protection that this sector survives as drug patents enables patent holders to recoup resources spent in coming up with products. This protection encourages research and development which in turn produce outcomes for the benefit of the society.

As an instrument of development, various types of IP like TK, TCEs, geographical indications (GIs) and appelllations of origins have the potentials of moving a society forward and this is well considered in the Nigeria’s National Intellectual Property Policy and Strategy (NIPPS) which has the mission to promote a comprehensive and conducive IP ecosystem as a catalyst for harnessing the full potential of IP for socio-cultural development and economic sustainability. Already, Nigeria is blessed with abundant TK, TCEs and Gis. An example of a TK and TCEs is the Tiv Kwagh-hiir, which has been inscribed by the United Nations Educational, Social and Cultural Organisation on the “Representative List of Intangible Cultural Heritage of Humanity.”6 With IP protection, the Kwaghir-hir and other traditional assets likes dodo Ikire, Kunu aya, Garri Ijebu, kilishi, amongst others will be harnessed to give maximum economic benefits by using TK, TCEs and Gis. Particularly, NIPPS emphasises the potential of commercialising traditional medicine (TM). All these facts undoubtedly make the legal protection of IP a reasonable thing to cherish and strive for.

Aside the economic impacts, the protection is reasonable because it is a way of protecting the rich cultural values of a nation. With adequate IP protection, misappropriation of African traditional cultures will be limited. Notably, traditional African societies stand to gain from IP protection as this is evident in the rise of Afro music and Nollywood. IP projects a nation and society to the international community, and this attracts investment and economic progress.

Although the protection of IP is often criticised on many grounds like morality and the fact that the monopoly granted limits access to vital information and resources, it is nevertheless irrational. IP laws recognise the essence of promoting common good as public policy is at the heart of protection with fair dealing, compulsory licensing, and other conditions for protection are used as means of achieving the public policy objective. Although moral concerns about IP are heavy, some property law scholars hold that morality and property rights are undeniably interconnected and that one could not functionally exist without the other.7 Under trade mark and patent, for instance, registration can be rejected for a mark or invention which is contrary to morality and public policy. Even under copyright law, which is considered not to care about morality, jurisdictions like America allow for a defence of obscenity, and the courts are reluctant in protecting obscene contents. For example, an order of seizure was rejected by the US court in Devils Films, Inc. v. Nectar Video8 on the basis that the purported copyrightable work consisted a core hard ponorgraphy bereft of any plot. In addition, even trade secrets are considered to be based on commercial morality as the misappropriation of trade secrets is deemed immoral under certain moral theories such as Kantian formalism.9

Gleaning from the foregoing, it can be well said that the legal protection of IP is indeed rational, notwithstanding the criticisms. In furthering this discussion, various theories shall be considered in a bid to acssertain several other justifications of the rationality for the protection of IP. Worth noting, the theories are not without pitfalls as balancing the private versus public interest is not always easy as this is analogous to a sword: serving as a protective shield for one party while cutting through the flesh of another.

Natural Rights (Labour) Theory

The natural rights or natural law theory, which is traced to John Locke,10 justifies the protection of IP on the basis that creators and inventors have a right over their creations and inventions just as a man who cultivates a yam farm would have right over it as his property. The theory posits that a labourer has a natural right to their works and to “enjoy the fruits of their labours, even where the labours are intellectual.”11 The fact that a person spent time, energy and other resources in coming up with an invention or creative work is rational to give him/her right over it to bar others from stealing or abusing it.

Notably, this theory leans towards a moral justification as Sodipo noted that the development of IP rights is rooted in natural law, human rights and fairness,12 and this is recognised by Article 27 of the Universal Declaration of Human Rights 1948 and Article 15(3) of the International Convention on Economic, Social and Cultural Rights 1966. Article 27 thereof provides that “everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.” Judicially, Belgore J has averred in Yemitan v. Daily Times Nigeria Ltd13 that “the right of a man to that which he had originally made… must be protected.”

A major backdrop of this theory is the position that intellectual works are not created from a vacuum. Every supposed new creation is inspired by a pre-existing work. For example, Chinua Achebe’s celebrated novel, “Things Fall Apart” derived its title from William Butler Yeats’ poem, “The Second Coming.” Also, inventors rely on pre-existing inventions to create new ones as Isaac Newton said that “If I have seen further, it is only because I stand on the shoulders of giants.”14 Thus, granting an exclusive right to a person over what he has obtained from others may seem not rational for common good.

The challenge with the above rebuttal is that labour does not necessarily mean creating something out of nothing. Even in intangible property, people rely on others. For example, the making of a table by a carpenter requires relying on the knowledge of prior carpenters. Thus, if IP is not to be protected because creators and inventors rely on pre-existing knowledge, the conclusion will be that a carpenter has no property right in the table he makes.

Another area where this theory raises eyebrows is the ownership in cases of TK, TCEs, traditional medicine and genetic resources which originally belong to a community. In such cases, granting IP protection to a person to the exclusion of others does not meet up with the objective of promoting the public interest. However, the protection of TK and TCEs recognises communal ownership and is a way of protecting indigenous cultural assets from misappropriation.

The Economic Theory

The justification for the protection of IP under this theory is premised on the position that protecting the rights of the creators/inventors will foster economic development. To this end, the theory takes a consequentialist approach as the effects of protecting IP makes it rational. For instance, the United States Chamber of Commerce 2022 Global IP Index shows that countries that make a conscious policy decision to invest in more effective IP protection reap the economic benefits.15

Also, as a catalyst of economic development, IP protection drives foreign direct investment (FDI), promotes research and development (R&D) and technology transfer and acquisition. For instance, 412 billion was staked by foreign investors on 35 Nigerian tech startups in 2021.16 In addendum, it enables the development and growth of Small and Medium-scale Enterprises (SMEs), which are vital to economic growth and rely heavily on IP protection.

Conversely, the absence of legal protection gives rise to free riding and piracy which in turn deter investment, creativity, invention, and innovation, thus hampering economic development. For example, the Director General of the Nigerian Copyright Commission said in 2019 that Nigeria loses N918 trillion annually to piracy,17 which is partly the result of ineffective IP protection.

While the theory is laudable, it can be criticised on many grounds. First, IP protection benefits advanced nations to the detriment of poor nations which is the reason why nations like the US have been at the vanguard of this cause.18 Another challenge is that the legal protection of IP stifles economic development through the granting of monopolistic rights19 to people who create market scarcity by hiking prices and hoarding information. For example, AT &AT, a US company collected patents in order to ensure its monopoly on telephones.20 This act slowed down the introduction of radio for some twenty years. Thus, it suffices to note that excluding others from enjoying from such works is not beneficial to the overall economic well-being of the society.

Notwithstanding the foregoing criticisms, it is my humble submission that IP remains a driver of economic development, and it can only drive the economy forward when there is legal protection. The recognition of this necessity is evident in the draft Nigeria’s National Intellectual Property Policy and Strategy with the vision of “utilising intellectual property for sustainable national prosperity.” Perhaps, IP laws are not silent on the interest of the public as exceptions like fair use and compulsory licensing are created towards meeting the public policy objective amidst the protection of IP right holders.

The Reward Theory

Under this theory, the legal protection of IP is rational because it is a means of rewarding creative and inventive activities.21 This was aptly stated by Justice Reed in Mazer v Stein that “sacrificial days devoted to… creative activities deserve rewards commensurate with services rendered.

As stated earlier that every justification for the protection of IP is weighed by striking a balance between the individual interest versus public interest, it has been observed with respect to this theory that the reward system benefits both the IP right holder and the society. Thus, the court postulated in the case of William T. Graham v. John Deere Co. of Kan City22 that the patent monopoly was not designed to secure the inventor his natural right in his discoveries: instead, it was a reward, an inducement, to bring forth new knowledge. A more elaborate justification of IP protection by this theory can be gleaned from the words of Lord Mansfield in Sayre v Moore23 when he gave the rationale behind copyright protection that:

We must take care to guard against two extremes equally prejudicial: the one, that men of the ability may not be deprived of their just merits, and the rewards of their ingenuity and labour; the other, that the world may not be deprived of improvements, nor the progress of the arts retarded.

A major argument against this theory is that the conferment of property rights in itself, and without more, offer at best, a potential reward hence there is no need for granting exclusive rights. Also, commentators like Fisher argued that even without IP protection, the natural inclination and love for creativity and innovation; the prestige enjoyed by artistic and scientific innovators, and academic tenure would be sufficient to sustain current levels of production.24

Although creators and inventors are naturally predisposed to doing what they love, it is my submission that without a reward system, many will go to the grave with their talents, denying the society great benefits. For instance, it is the absence of a good reward system in Nigeria that is fueling brain drain as creators, inventors and scholars are keen to migrate or “japa” (as fondly called) to countries where there is better reward system. On the flip side, the booming of the Nigerian entertainment industry is due to the reward system, and this justifies IP protection.

Incentive Theory

As stated thereof, creative and inventive works are considered invaluable assets to the advancement of society. Therefore, the legal protection of IP is rational on the basis that it serves as a way of incentivising creatives and inventors. This is firmly captured in the preamble to the WIPO Convention which reads inter alia that in “desiring, in order to encourage creative activity, to promote the protection of intellectual property throughout the world…” By serving as incentives, people are able to recoup their expenditures through royalty systems, licensing, and assignment of IP assets. Notably, without this protection, society will stand to lose the benefits of new inventions. In the case of patents, people disclose their inventions on the condition that they will be protected hence the incentive to disclose theory.

The challenge with this theory is that the monopoly may hamper development as IP protection may be used to conceal useful information and inventions. This is the case with trade secrets as the public is barred from accessing them. Mark Lemy considers the incentive story as a necessary evil as the grant of exclusive rights permits creators to charge supra-competitive prices, thereby depressing consumption. However, the IP system makes provisions wherein information must be disclosed to the public.25 Every protection has a duration after which the work falls in the public domain. Notably, the incentive that IP protection gives to creators stimulates and encourages them to do more, and the more creativity and innovation, the more society progresses.

Social Theory/ Development Theory

IP protection serves as a form of social contract between society and the creator. Just like the incentive to disclose theory, the grant of the monopoly of rights ensures that the invention is not hidden. Therefore, this social relationship ensures that society benefits from a person’s creations and inventions, and they are not lost with a person when he dies.

For the development theory which is an emerging one, the protection of IP is considered a means to the desired socio-economic and technological development. This is justified on the basis that society receives commensurate value from the grant, and IP laws as drivers of socioeconomic development and the realisation of human rights should be designed and implemented as such.26

Conclusion

Based on the above discussion, the legal protection of IP is necessary for societal development, and there can be no better justification than the position that creativity and innovation are the fons et origo of every civilisation and development. Thus, protecting this source is pivotal while ensuring that the twin objectives are met. Like the earlier dictum of Justice Breyer in Google LLC v Oracle American Inc (supra), IP protection can be like a two-edged sword, hence protection must be well guarded in encouraging creators and promoting public welfare at the same time so as to curtail the misuse of the rights at the detriment of the society.

References

1 593 U. S. _ (2021)

2 WIPO, ‘What is Intellectual Property?’ (WIPO, n.d) < https://www.wipo.int/about-ip/en/ >accessed 27 December 2022

3 Bankole Sodipo, The Oracle, Intellectual Property & Allied Rights, The Knowledge Economy and the Development Agenda (Inaugural Lecture, Babcock University 2015) 2

4 Adejoke Oyewunmi, Nigerian Law of Intellectual Property (University of Lagos Press 2015) 8–14

5 499 U.S. 340–349–50 (1991)

6 UNESCO, “Kwagh-Hir Theatrical Performance” <https://ich.unesco.org/en/RL/kwagh-hir-theatrical-performance-00683 > accessed 28 December 2022

7 Carol M. Rose, The Moral Subject of Property (2007) 48 Wm. & Mary L. Rev. 1897, 1902–03

8 29 F. Supp. 2d 174 (S.D.N.Y. 1988).

9 Christine Haight Farley, “A Research Framework on Intellectual Property and Morality” In Handbook on Intellectual Property Research. Edited by: Irene Calboli, Maria Lillà Montagnani (Oxford University Press)

10 Oyewunmi (n 4)

11 Douglas Baird, “Common Law Intellectual Property and the Legacy of International News Service v. Associated Press (1983) 50 U. Ch. L. Rev 411 at 413

12 Sodipo (n 3)

13 [1980] FHCR 186 at 190

14 Sticky Wickett, “The Weight of Giants” (2004) 117 J Cell Sci, 5711 <https://journals.biologists.com/jcs/article/117/24/5711/27983/The-weight-of-giants > accessed 27 December 2022

15 Kelly Anderson, ‘5 lessons from the 2022 International IP Index” <https://www.uschamber.com/intellectual-property/5-lessons-from-the-2022-international-ip-index > accessed 27 December 2022

16 Yinka Kolawole, ‘Foreign investors stake N412 billions on 35 Nigerian startups’ (Guardian, November 2021) < https://www.vanguardngr.com/2021/11/foreign-investors-stake-n412bn-on-35-nigerian-startustarup/amp/ > accessed 27 December 2022

17 This Day, ‘NCC: Nigeria Loses $3bn Annually to Piracy’ (2019) < https://www.thisdaylive.com/index.php/2019/04/26/ncc-nigeria-loses-3bn-annually-to-piracy/ > accessed 27 December 2022

18 Brian Martins, “Against Intellectual Property” (1996) 1 JIPR, 257 <https://documents.uow.edu.au/~/bmartin/pubs/95psa.html > accessed 27 December 2022

19 Mark A. Lemy, “Ex Ante versus Ex Post Justifications for Intellectual Property” (2004) U.C.L.R, 129

20 Brian Martins (n 18)

21 Harunrashid Kadri, “Understanding the Theories of Intellectual Property in the Contemporary World – An Overview” (2020) 6 C.W.L.R, 467

22 383 U.S.1 (1996)

23 (1785) 1 East. 36In 102 ER

24 William Fisher, “Theories of Intellectual Property” <https://www.google.com/url?q=https://cyber.harvard.edu/people/tfisher/iptheory.pdf&sa=U&ved=2ahUKEwiWgcvg8Zn8AhUV7rsIHYDnDHMQFnoECAgQAw&usg=AOvVaw28nwmUHiBfBc-PoUSQNyy5 > accessed 27 December 2022

25 Lemy (n 19)

26 Oyewunmi (n 4)

Rationalising the Legal Protection of Intellectual Property – Tunmise Adesina

Tunmise Adesina is a penultimate Law Student at the Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria. He is a Human Rights and Intellectual Property Law enthusiast.
Email: taadesina@student.oauife.edu.ng

How Rational is the Rationale for the Legal Protection of Intellectual Property?

The Legal Rights of intellectual property is a branch of legal studies that has engendered several debates over the years. On the international fora, the protection of intellectual property rights spearheaded by the World Intellectual Property Organization (WIPO) has never been more challenging, given the most obvious challenge of the implementation of intellectual property laws across the board, both in the developed countries, developing countries and the least developed countries are like.1

However, the legal protection of Intellectual Property rights is confronted by a much more fundamental question; fundamental in the sense that the question goes down to the root of the field itself. The question, “how rational is the rationale for the legal protection of intellectual property” does not examine a branch of intellectual property, ( copyright, trademarks e.t.c) but it consists of a critical examination of the raison d’etre for the existence of Legal Protection of Intellectual Property Rights in the first place.

Thus, this work will briefly consider the concept of intellectual property rights, and also it will look into the justifications for the legal protection of Intellectual Property rights; arguments for and against these justifications. In the end, this work would have drawn out its very essence– the extent to which the rationale for the legal Protection of Intellectual Property is justifiable.

The Concept of Intellectual Property

Various attempts have been made by scholars in the field of intellectual property to find a definition of the term, intellectual property. It has been defined as “legal rights which result from the intellectual activity in the industrial, scientific, literary and artistic fields”2 Brainbridge and David3 have defined “IP” as that area of law which concerns the legal rights associated with creative effort or commercial reputation and goodwill”. Adejoke O. Oyewunmi4 found that Intellectual Property may be defined as Legal rights conferred on those who engage in creative, inventive, and promotional activities which have resulted in original, useful, or other beneficial output.

In essence, ‘Intellectual Property’ tacitly imposes a proprietary interest in works produced by the exertion of man’s intellect. Intellectual Property Law is a step further to canonize these interests as having the legal effect needed to ensure their enforceability.

According to the Convention Establishing the World Intellectual Property Organization,5 intellectual property shall include rights relating to literary, artistic, and scientific works; performances of performing artists; phonograms and broadcasts; inventions in all fields of human endeavour; scientific discoveries; industrial designs; trademarks, service marks, commercial names, and designations; protection against unfair competition; and other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.6

These rights are generally bifurcated into two categories: Copyright and neighbouring rights on the one hand, and industrial property rights on the other hand.

Justifications for the Legal Protection of Intellectual Property Rights

The morality of giving makers of intellectual property the legal authority to exclude others from the substance of their works is a hotly debated topic in information ethics, law, legal theory, philosophy, and policy. This argument seems to be supported by the question of why exclusive rights should be granted in a free market with relatively high levels of competition.7 While it appears that there is a consensus of acceptance in the case of tangible assets like chattels and land, the consensus breaks down with regard to works of purely intellectual form.

In practical terms, it is considered that the economic justifications for copyrights and patents differ from those for trademarks.8 The necessity to offer a financial incentive for the creation of public goods like inventions and expressive works is the foundation for copyrights and patents. Since creative works and innovations often contain information, which is fundamentally good for the public. Copying such intellectual property would result in less expense for competitors than for the creator, which would lessen the required incentive for the creation of creative works and have a negative impact on society as a whole.

Inventors operate in a highly uncertain environment and cannot predict ex-ante if the research and development process will produce the desired outcome.9 They also don’t know how the invention will fare in the marketplace. However, subsequent copiers face no such dangers because they enjoy the benefit of being able to reproduce only those inventions with a track record of commercial success are risk-free.

In contrast to copyrights and patents, trademark protection aims to increase competition among manufacturers and service providers. Trademarks foster competition in two related ways by indicating the source of goods and services. First, trademarks give businesses the opportunity to notify customers about the quality level of their goods and services, lowering the cost of the search.10 In the case of “experience goods,” products whose characteristics customers cannot identify before acquiring them, where consumers rely on prior experience to decide between competing brands, this informative role of trademarks is particularly valuable.

Second, trademarks give customers the opportunity to link certain characteristics of goods and services to certain businesses and then make purchasing decisions on this linkage. Because of this, trademark protection encourages businesses to uphold and enhance the quality of their goods and services on the supply side.11

It is perhaps from these practical advantages that a number of theories underlying them have been developed. Some of these theories are; The economic theory, the natural rights theory, the reward/incentive theory, and the development theory.12 We will consider this in seratim:

The Economic Theory

As a component of the innovation system, the intellectual property regime seeks to promote innovation by enabling inventors to limit the use of knowledge created by enforcing benefits in exchange for its use and so gives the possibility of a return on investment. This hypothesis, according to Adejoke Oyewunmi, holds that if everyone were permitted to exploit the outcomes of innovative and creative activity without restriction, intellectual work creators might not be able to repay their investment due to the actions of free riders like copiers and mimics.13

Creatives must undoubtedly be compensated in a market, profit-driven economy, in order to be encouraged to innovate. The processes of innovation, research, and development are expensive. Investments in “R & D” and innovation outcomes will therefore require further protection to give businesses time to recoup their costs and remain motivated to make additional investments. Also, the decrease in the time and effort required by consumers to find the specific brand of product they want is an additional economic benefit to consumers, which ensures that consumers can be assured of getting the quality products alone14

The Natural Rights (Labour) Theory

John Locke’s labour theory, sometimes known as the “Lockean theory,” is one of the theories that has had a considerable impact on how states have protected intellectual property rights.15 The theory contends that since humans can utilize labour to secure their ownership rights over natural resources, others have a moral duty to uphold such rights. Locke observed that: “The labour of his body and the work of his hands, we may say, are strictly his. So when he takes something from the state that nature has provided and left it in, he mixes his labour with it, thus joining to it something that is his own; and in that way, he makes it his property.”16Because many resources cannot be used in their natural states, people must put effort into them to turn them into private property and increase their worth.17

However, inherent in this labour right is the duty owed to society that such labour would be made available for others to share in times of great need.18

It should however be stated that this theory has certain limitations stated clearly in the proviso as “Labour being the unquestionable Property of the Labourer, no Man but he can have a right to what that is once joyned to, at least where there is enough and as good left in common for others.” These clauses aid in establishing a distinction between the public’s claim to common property and the labourers’ entitlement to property in civil society. Aravind19 has aptly captured these limitations in three different parts:

  1. The Waste Limitation: A property owner who has the right to use the resources should not waste them or use more than is necessary. Since the property owner is required to take only what is necessary, this restriction appears to ensure that there is essential equality that is granted to all. No owner is permitted to wastefully depreciate their property in the condition of nature.20 As a result, the proviso, for instance, might prevent a misanthropic cancer cure inventor from erasing her notes.21
  2. Limited Protection to the Public: This proviso emphasizes that the public is only afforded a certain amount of protection. If the owners’ property rights do not infringe on the rights of the consumers using the common area, then these consumers would not have a claim against the owner, and the owner might enforce their property rights against them without any burden.
  3. The enough-and-as-good-proviso: According to Locke, appropriation is acceptable, “at least where there is enough, and as good left in common for others”. The concept behind this clause is that the owners will only have the right to that property provided the grant of that property does not interfere with the public’s or others’ ability to use or consume any property in the public domain.

The Natural Rights theory as evinced by the great philosopher can only be inexhaustibly discussed here, but it suffices to state that the essence as it applies to Intellectual Property rights is to ensure that makers of intellectual works benefit from the exertion of their intellectual work and that a free-riders do not “reap where he has not sown.”22

Reward/Incentive Theory

According to the traditional interpretation of incentive theory, the author or inventor of creative or innovative work or invention should be rewarded in order to motivate them to produce additional creations or innovations. It also encourages the disclosure or spread of knowledge in order to inspire others to create new discoveries or contributions that will ultimately benefit society through the advancement of science and the arts. According to conventional thinking, incentives in intellectual property law provide the inventor with a financial benefit to promote socially beneficial artistic, scientific, or technological innovation.23

Critics, however, have questioned whether people were incentivized to develop in the pre-copyright and pre-patent eras. Additionally, who is actually being incentivized today—the entrepreneur, the investor, or the industry? Thus, it is concluded that the encouragement of more and more inventions is not always provided by the issuance of IP but rather depends on other circumstances.24 Also, critics are of the further opinion that creators are not necessarily in need of rewards and incentives to do what they do. This view considers that the development of intellectual works such as artistic designs, and literary or industrial works by creatives are only a way of escape, thus truly talented people will always, as of necessity create. This view, respectfully, is not correct, while one may concede that talented creatives are serial creators, it is doubtful that creators of IP works can commit great effort, conscientiousness, and financial inputs to developing ideas without any assurance of protection for their works. Some of history’s greatest inventors such as Thomas Edison, Nikola Tesla, and Henry Ford could possibly not have been able to pioneer some of the World’s greatest inventions if they never had some sort of legal shield in the form of exclusive benefit from the product of the exertion of their intellect.

Development Theory

Scholars have also considered the framework of IP as a means to develop the socioeconomic and technological well-being of society.25 It has been observed in the multilateral agreement which culminated in the TRIPS agreement as follows:

Undoubtedly, the requirement for large volumes of commerce as a stimulant to achieve greater levels of growth and development remains the primary motivation behind developing countries’ interest in participating in the multilateral trade system… Intellectual Property as enshrined in the TRIPS agreement directly implicates a vital and consistent demand by developing countries, namely, the freedom to use trans-border technology flows to accomplish socio-economic objectives. The merger of trade and intellectual property under the Uruguay Round is thus for developing countries a matter of means rather than ends26

Thus, proponents of this view have held that the protection of Intellectual property would be justified if a commensurate value is enjoyed by the society. This again seems to be in line with Locke’s view that makers of intellectual works should, to a certain reasonable degree, enjoy exclusive rights to their intellectual works, “at least where there is enough, and as good left in common for others.”

Conclusively, while some socialist and radical critics have advanced counterarguments upon the premise that the idea of authorship and inventorship is so malleable, contingent, and “socially constructed,” and thus, we should be cautious about associating a creative work with a specific person or entity in a way that is overly close to them;27 and their democratic theorist counterparts offering a post-modernist critique of intellectual property law, argue that the power of people to express themselves is limited by the developing field of intellectual property protection,28 we may safely submit that in practice, it is within the bounds of logic and rationality that intellectual property rights be recognized, not only because of the reward for makers of intellectual works but also because it seeks to ensure economic stability and a level playing field for fair competition in a fast developing technologically and commercially driven world.

References

1 See H. Chang and I. Grabel, Reclaiming Development: An Alternative Economic Policy Manual (New York, USA: Zed Books, 2004) 38, advocating inter alia, a relaxed approach to intellectual property law by governments seeking development.

2 WIPO Intellectual Property Handbook (2nd Ed. WIPO Publication No 489) Geneva. 200

3 Brainbridgee and David, intellectual (6th edition. Essex: Pearson 2007)

4 Nigerian law of Intellectual Property, Adejoke O. Oyewumi LL.B (ife), LL.M (Lagos), LL.M.I.P/ (Pierce Law USA) Ph.D. (Ife)

5 Conferencing Establishing the World Intellectual Property Organization (WIPO) of 1967

6 Article 2 (viii) of the WIPO Convention.

7 Neil Natanel (1996) “Copyright in a Democratic Civil Society”, 106 Yale L.J 283; Oyewunmi A.O Nigerian Law of Intellectual Property

8 Towards an Integrated Theory of Intellectual Property Gideon Parchomovsky University of Pennsylvania Carey Law School Peter Siegelman University of Connecticut School of Law

9 Supra

10 Phillip Nelson, Advertising as Information, 82 J. Pol Econ. 729. 730 ( 1974)

11 Trademark Law: An Economic Perspective William M. Landes; Richard A. Posner Journal of Law and Economics, Vol. 30, No. 2 (Oct. 1987), 265-309

12 Oyewunmi A.O Nigerian Law of Intellectual Property

13 Supra

14 Intellectual Property Rights: An Economic Approach Livia Iliea,* a Lucian Blaga University of Sibiu, Faculty of Economic Sciences, 17 Dumbrăvii Avenue, Sibiu 550324, Romaniz

15 JOHN LOCKE’S LABOUR THEORY: A JUSTIFICATION OF IPRS by Aravind Prasanna

16 John Locke, SECOND TREATISE OF GOVERNMENT, (Jonathan Bennett ed., 3rd edn., 2008

17 Oyewunmi A.O supra

18 Wendy Gordon, “A Property Right in Self Expression: Equality and Individualism in the Natural of Intellectual Property”, (1993) 102 Yale Law Journal, 1533 at 1543

19 JOHN LOCKE’S LABOUR THEORY: A JUSTIFICATION OF IPRS by Aravind Prasanna

20 “[H]e wasted not the common stock; destroyed no part of the portion of the Goods that belonged to others, so long as nothing perished uselessly in his hands.” Second Treatise of Civil Government John Locke (1690) at 299-300

21 Wendy J. Gordon, A Property Right in Self-Expression: Equality and Individualism in the Natural Law of Intellectual Property, 102 Yale L.J. 1533, (1993)

22 International News Services v. Associated Press, (1918) 248 U.S 215 at 239

23 Jessica Silbey, Creative Culture, Innovating Ways, and Intellectual Property Law note 7, at 34-40.

24 Oyewunmi A.O supra

25 Ruth L. Gana “Prospects of developing countries under the Trips Agreement” [1996] Vanderbilt Journal of Transnational La, Vol 29 No 4 p. 735 at 737

26 Aoki, Keith (1993-1994), ‘Authors, Inventors and Trademark Owners: Private Intellectual Property and the Public Domain (parts 1 and 2)’, 18 Columbia – VLA Journal of Law and the Arts, 197-267

27 Netanel, Neil W. (1996), ‘Copyright and a Democratic Civil Society’, 106 Yale Law Journal, 283-287

28 INCENTIVE THEORY JUSTIFICATION FOR INTELLECTUAL PROPERTY RIGHTS IN USA: JUDICIAL TREND Sulok S K

Shruti Vora v. SEBI: Case Comment – Jatan Singh

Case Comment Shruti Vora v. SEBI

Introduction

For the wholesome management and functioning of a corporate organisation, transparency, openness and disclosure are its fundamentals. And to achieve these qualities, it is essential to keep a fiduciary relationship among the members, managers, and stakeholders of the organisation. Good governance attracts the investors and increases their reliance on the companies. The directors of a company are its care taker and the future of the company is dependent upon the decisions of the directors. Therefore, the meetings and decisions of the company amount to extra sensitive information. Confidential information is only shared, when; either is benefits the company or is essential to do so. Hence, the internal information is to be kept in isolation, until disclosed in public. It has been observed since years that for gaining undue advantage over others, the ‘insiders’ manages to slip the private information and thus, engages in unfair trade.

In 1978, the Sachar Committee recommended to make stringent laws to acknowledge and tackle the details of those involved in trade of unpublished price sensitive information.

What is Insider Trading?

In 1986, the term ‘Insider Trading’ was defined by the G.S. Patel Committee as “trading by the persons who are in the management of the company or are close to the management of company, on the basis of price sensitive information of the company, which they possesses but is not available to others”1.

In 1989, the Abid Hussain Committee weighted to include the practice of insider trading as civil and criminal offence and to further lay stricter regulations by Security Exchange Board of India (herein after referred as SEBI).

The SEBI (Prohibition of Insider Trading) Regulation, 1992, defines it as a, “breach of duty of trust, by the, officers of the company towards the shareholders. It is a practice of using companies unpublished price sensitive information to deal with the companies’ securities. The Unpublished Price Sensitive Information (herein after referred as UPSI) is not known to public as it is connected with the decision making of the directors of the company. And the manipulation of such information for causing loss or gain is termed as insider trading.

What is Un-published Price Sensitive Information?

Unpublished price sensitive information is defined in Section 2(1) (n) of SEBI (Prohibition of Insider Trading) Regulations, 2015.

Information is referred to as price sensitive when it is not made public, is related to the internal decision of the company and if fired can affects the market value of the shares of the company and hence called as ‘price sensitive information’.

Who is an Insider?

Section 2(1) (g) of SEBI (Prohibition of Insider Trading) Regulations, 2015 defines an insider, as a person who is:

I. Connected person, or

II. In capacity of or having access to unpublished price sensitive information.

Facts of the Case

1. In November 2017, certain articles were in circulation in print media, wherein, it was alleged that the quarterly Unpublished Price Sensitive Information of various companies were in circulation in various private WhatsApp groups, before their official announcement. Against this, the SEBI conducted a preliminary examination in respect of circulation through WhatsApp groups and during these investigations 26 entities of Market Chatter Groups were searched and consequently, 190 electronic devices, records etc., were confiscated. The seized devices and records were further kept under observation and it was found that information in respect to 12 companies were allegedly leaked on WhatsApp, the alleged information relates to the earnings and other financial statements of the companies. Apart from the names of firms published in the aforesaid news articles, while investigation, SEBI further found out 11 firms whose UPSI was in circulation. Wipro Limited was one of them, about whom chat was retrieved from the WhatsApp of Shruti Vora, a participant of the alleged group. Based on further search and evidences one Govind Aggrawal was listed out, who communicated the information to Shruti Vora and then she to some Aditya Gaggar through WhatsApp.

2. Correspondingly, SEBI carried out a separate investigation in respect to Wipro Ltd., to specify any possible breach of the provisions of SEBI Act, 1992, and SEBI (Prohibition of Insider Trading) regulation, 2015 (Herein after referred as SEBI ‘PIT’ Regulations). On 25th January 2017, Wipro made announcement in respect to its quarter end financial statements. Therefore January 25th 2017 was the date when the company made its aforesaid price sensitive information public.

The SEBI asked the company to provide detailed chronology of the events with respect to the announcement of quarterly result published on January 2017.

And the following were observed, from the information provided by Wipro Ltd.:

  • The data, figures of Wipro Ltd., which were being circulated through WhatsApp prior to the official announcement on stock exchange.
  • The deviation in the alleged information being communicated and the one released by the company was miniscule that is, it was closely matching with the figures officially announced and was within the range of 0.03% to 0.47%.
  • Similar pattern was also seen in respect to other companies for different quarterly period.

3. The definition of ‘Unpublished Price Sensitive Information’ is provided under Regulation 2(1) (n) of SEBI(PIT) Regulation, 2015 as :

‘UPSI’ means any information, in respect to the company or its securities, directly or indirectly, that is usually not available to the public and which upon becoming public has the capacity to affect the price of securities etc.

4. In view of the above stated provision, the aforesaid WhatsApp messages related to the Wipro Ltd. was held to be the unpublished price sensitive information and such circulation of information through WhatsApp relating to financial figures of the company was observed as the transmission of the UPSI. The Noticees in the instant case viz. Prathiv Dalal and Shruti Vora were therefore accused of having possession of UPSI. And thereafter it was opined that Prathiv Dalal and Shruti Vora were ‘Insiders’ as according to the Regulation 2(1) (g) of SEBI (PIT), 2015 which is stated below:

‘INSIDER’ means any person who is:

  • A connected person or
  • In possession of or having access to unpublished price sensitive information.

5. In light of the above provision, it was contended that Prathiv Dalal and Shruti Vora have contravened the Section 12A(d) and (e) of SEBI Act, 1992 and Regulation 3(1) of SEBI (PIT) Regulations,2015, which states that “ no insider shall transmit, provide, allow access to any unpublished price sensitive information, relating to a company or securities listed..2

6. The companies in issue under the instant case were Bajaj Auto Ltd., Bata India Ltd., Ambuja Cements Ltd., Asian Paints Ltd., Mindtree Ltd., Wipro Ltd., wherein apart from Shruti Vora, Neeeraj Aggrawal, Aditya Gagar, Prathiv Dalal, (referred as ‘Appellants’ collectively) were charged for the offence of Insider Trading and a penalty of INR15, 00,000 was levied, under Section 15G of PIT regulation, 2015, in each matter by the Adjudicating Officer.

Consequently, the appellants approached the Honourable Securities Appellate Tribunal (herein after referred as SAT), against the order of Adjudicating Officer.

Assertion of The Adjudicating Officer

I. All the appellants either were employees or engaged in the securities market, and they were duty bound to abstain from sending any such information or message to any client or some entities to whom the information were forwarded were not even client.

II. The intended receivers of the messages were not the clients even; hence the recipients were capable to affect the market value of shares of the various companies.

III. Further, the proximity between the messages communicated through WhatsApp and the official announcement of the financial results, striking close resemblance of figures transmitted via message and actual output declared by the companies, also lead to the reasoning by the learned Adjudicating Officer to come to the conclusion that the messages were nothing but communication of unpublished price sensitive information in contravention of the SEBI (PIT) Regulations, 2015.

IV. During the course of investigation by the SEBI no proof of leakage of information could be traced from the concerned teams related to the respective companies.

V. It was further contended that the figures stated in the messages were not even in any approximate range but were in definite value. Therefore the reason put forth for denying the defence of appellants citing example of Bloomberg was that in case of estimates enumerated in Bloomberg were widely differing from the actual statements of the company.

Claims of the Appellants

All of the appellants raised the more or less same pleas, as follows:

  • They all asserted that the messages taken cognizance of by the respondent, SEBI, from their devices would show that none of the appellants were the generator of the messages but they had merely received and forwarded them to others. Further contended that, several other messages predicting inadequately the figures were in circulation, even though, no cognizance of them were taken during investigation.
  • The appellants were unable to trace the originator, owing to the lapse of the reasonable time, to show as to from whom they got the alleged messages. Also, asserted that even the respondent SEBI could not find the originator due to the limitation of end to end encryption and privacy policy of the messenger app.
  • The appellant further contented that making speculation ahead of the official disclosure or announcement of the final results in the market is in vogue these days. And this is known as ‘Heard on Street’, a popular practice within trade markets and such unsubstantiated information is widely circulated.

The appellants cited the example of the twitter handle managed by the Wall Street Journal in USA, particularly for the circulation of the Heard on Street.

Also of the forecast done by the Research Analysts, Bloomberg is a reputed organisation working in this regards, regularly publishing the estimates of various reputed entities as expected result.

  • The data mined by the respondent SEBI from the devices also showed that beside the messages taken forth as question numerous other messages relating to financial results were in circulation which substantially varied from the final results of the companies. However, only those messages were taken up closely matching with the results with the intention to launch the ongoing proceedings.
  • The appellants for further making their contention strong submitted that in the case of Wipro Ltd., the guidance issued by the company precisely matched with the evaluation given in the WhatsApp message which later on almost matched with the final disclosed statement with some minor deviation

    And on these assertions the appellants submitted that the proceedings against them shall be called off.

The learned Adjudicating Officer however, rejected the submission of appellants. And concluded that each of the appellant is guilty of violating the Section 12 of the SEBI Act, 1992 and of regulation 3(1) of the SEBI (PIT) Regulation, 2015, which run under as:

I. Section 12A(d) of SEBI Act, 1992

‘No person shall directly or indirectly engage in insider trading’.

II. Section 12A(e) of SEBI Act, 1992

‘No insider shall communicate, provide, or allow access to any unpublished price sensitive information, relating to a company or securities listed or proposed to be listed, to any person including other insider except where such communication is in furtherance of legitimate purpose, performance of duties or discharge of legal obligations’.3

Issue Involved In The Case

I. Whether a message ‘received and forwarded’ on WhatsApp regarding quarterly monetary results of a company closely resembling to the vital statistics, released after the in house finalisation by the company, before any public disclosure of the same by the concerned company, would amount to an unpublished price sensitive information under the provisions of the SEBI(PIT) Regulation, 2015?

Observations of the Securities Appellate Tribunal

The honourable tribunal was chaired by Justice, Tarun Aggrawal, Dr.C.K.G. Nair as a member and Justice M.T.Joshi as a judicial member, the bench held that the orders of the Adjudicating Officer were meritless and hence the appeals were allowed. And following observations were made by the bench:

  • It is worth to be noted that the respondent SEBI despite all efforts could not locate the source of the information or find out leakage, if any, from the side of companies internal management teams. And the same contention has been expressed by the Adjudicating Officer time and again.
  • In respect of the estimates of the broker which subsequently matched the with the final statement of the company, the Adjudicating Officer (herein after referred as AO) justified that, appellants never claimed that impugned messages had arisen from the market research similar to that of brokerage houses.

    The honourable bench of SAT, thus, observed that the AO failed to entertain the appellant’s plea that the WhatsApp message in issue would have been originated from such brokerage houses or from the speculations available on the platform of Bloomberg which were floating in public domain. Apart from this, learned AO also failed to took notice of several other messages of same nature received and forwarded by the appellant which were totally aloof from the published financial results. Moreover, the plea of the appellant Shruti Vora pointing out that similar message regarding the Axis Bank has also reached her which she had also forwarded. The published result, however, in this case was widely different and no weight-age was attached to the same by the AO. Therefore, it was observed by the honourable bench that on the conjoint reading of the Section 2(1) (n) and (g) of the PIT Regulation, 2015 the information contained in the WhatsApp message did not amount to the unpublished price sensitive information.
  • The definitions as stated above of ‘UPSI’ and ‘Insider’, shows that generally available information can not constitute the subject matter of price sensitive information.
  • Bench contended that, information can be labelled as unpublished price sensitive information only when the person getting the information had prior acknowledgement of it being price sensitive information. Intention or knowledge being mental element can be proved on the merit of preponderance of probability on attending circumstances4. And in the instant case there were no such circumstances except those possibilities advanced by the AO. Closeness of time and proximity between the information were the only two elements weighed by the learned AO to regard it as the UPSI. Therefore, element of prior knowledge must be there in case of insider trader.
  • The honourable bench in the instant case placed reliance on an earlier judgement of the Samir Arora v. SEBI5, wherein the tribunal rejected the viewpoint of SEBI that there is no need to establish any connection between the potential source of the UPSI and the person alleged to have possession of such price sensitive information.

For the above mentioned reasons the honourable bench withheld the reasoning and order of the learned AO, imposing a penal liability of INR15, 00,000 for each case.

The SEBI appealed against the order of the SAT in honourable Supreme Court; however, the apex court prima facie rejected the appeal.

Analysis of the Judgement

1. Determining what is UPSI?

‘UPSI’ means any information, in respect to the company or its securities, directly or indirectly, that is usually not available to the public and which upon becoming public has the capacity to affect the price of securities, means and includes the following6:

  • Financial results
  • Dividends
  • Change in capital structure etc.

It must be kept in mind that the messages being circulated through WhatsApp in the instant case, meet the requirements of as laid down in the definition mentioned above. However, for two reasons the tribunal has held that information not to be a UPSI, which are as follows:

a. The information could have originated in public domain prior to appellant sharing it and therefore it falls under the ambit of ‘generally available information7’, which means accessible to the public at large. This implies that only that information, which is on such front to be accessed by the public, would qualify for this definition.

However, in the present case the appellant do not have anything to put on record, specifying the availability of the alleged information to the public prior to their sharing it. Their assertion in this regard was solely based on the presumption of having origin from the brokerage houses or Bloomberg estimates which were circulated widely.

Thus, concluding we can say that tribunal proceeded on mere possibility of existence of such information in public domain.

b. The appellant were unaware of the fact that the impugned information was UPSI. The tribunal observed that only that information would be branded as UPSI, possessor of which had knowledge that it was a UPSI.

Even the rough reading of the definition of UPSI nowhere shows that ‘knowledge of the possessor’ is an essential of the UPSI. The objective behind it would have been to give it a broader perspective with the view of protecting investors’ interest. A UPSI whether share intentionally or unintentional is going to harm either directly or indirectly the investors. So, tribunal was supposed to deal with the matter instead deviated from its judicial function into the legislative one.

2. Relevance of tracing the source of UPSI

In the instant case tribunal has relied heavily on the fact that the source of origin could not be identified by the investigation team. Hence, appellant could not be held liable for committing insider trading.

However, the note provided in the Regulation 2(g) of PIT, 2015, states that, anyone having in possession the UPSI regardless of how he got it or accessed it, is to be considered as an ‘insider’. Therefore, the intent was to bring in ambit any person who is in possession or has access to UPSI. The onus of proving the fact is on the party asserting the fact while the other party would defend it by producing effective evidences.

A combine reading of the two provisions discussed above reflects that appellant were very well within the ambit of insider, since they were in possession of UPSI. And even the end note categorically states that anyone in possession of UPSI is insider regardless of how he/she acquired it.

But, on the contrary, the honourable tribunal relied upon the judgement of Samir Aroracase wherein it was observed that the establishment of connection between the source of information and the person possessing information is sine qua non for fixing liability under insider trading provisions.

Conclusion

Insider trading is still perceived as one of the white collar crimes in India. However, the global scenario is relatively different. Many a countries across the globe managed to curb the insider trading by implementing and executing stringent laws. Although, many regulations and laws in India the accused somehow, manages to free themselves from the clutches of the law.

In respect to the judgement discussed above, one can conclude that the tribunal has just gone the opposite of the legislative intend, a narrower interpretation was done by the bench which failed to meet the essence of the PIT regulation. Instead of sticking to the provisions laid down by the statutes, the tribunal went on to assume legislative function.

Therefore, this order of the tribunal has opened up the scope for the offenders to take up undue advantage over the investors and thus can easily evade from law. Therefore, there is a need to again re-examine the contentions of the bench, whether they were in consonance of the provisions of the statute or not.

Bibliography

BOOKS REFERRED:

  • C.G. Bhuwneshwar Mishra, Law Relating to Insider Trading, Taxmann, 11th edition 2018.
  • Eshwar Sabapathy, Case Digest on Insider Trading, Bloomsbury Professional India, 2022 edition.

STATUTORY PROVISIONS REFFERED:

  • Security Exchange Board of India Act, 1992 (Act no.15 of 1992)
  • Security Exchange Board of India (Prohibition of Insider Trading) Regulation, 2015 (as amended in 2021)

WEBSITES REFFERED:

  • Samir Arora vs. SEBI, available at, https://advance.lexis.com/document/?pdmfid=1523890&crid=e92adfc0-9bd14ab8- 9879, last visited on 7th December 2022.
  • Shruti Vora vs. SEBI, available at, https://sat.gov.in/english/pdf/E2021_JO2020313_.25.PDF , last visited on 7th December 2022.
  • Blog available at, https://www.taxmann.com/post/blog/key corporate law rulings of the year 2021/?amp, unknown author, last visited on 7th December 2022.
  • Judgement of Shruti Vora case available at, https://www.argus- p.com/uploads/km_updates/download/1591982258_order_no_7823-7824.pdf , last visited on 7th December 2022.

About the author

Jatan Singh is a 3 Year Student of the Faculty of Law, Aligarh Muslim University, Aligarh, India.

  1. Report of the, high powered committee on Stock Exchange Reform, available at http://indianculture.gov.in. Accessed on 6thDecember 2022. []
  2. Available at, https://sebi.gov.in/legal/regulations/…-august-05-2021-_41717.html. ( last accessed on 6th December 2022) []
  3. Statute available at, https://www.sebi.gov.in/acts/act15ac.html (accessed on 6th December 2022). []
  4. Para 16, Shruti Vora vs. SEBI Appeal No. 308 of 2020 []
  5. (2005) 59 SCL 96 SAT Mumbai []
  6. Defined in, regulation 2(1) (n) of SEBI (PIT), 2015 []
  7. Defined in, regulation 2(e) of PIT, 2015. []

Section 175 of the 1999 Constitution: an Antagonist of Judicial Powers

Section 175 of the 1999 Constitution and Judicial Powers

This article is particular to Nigeria!

The bedrock of the governance of every society ready to live a long throw from the arms of a dictator is the doctrine of separation of powers. Simply put, separation of powers is a constitutional division of the powers of the government of a state among ‘three’ distinct arms of government. Since power corrupts, this splitting of power help to diffuse the powers of a state over separate institutions. Recognisably, the term ‘Separation of Powers’ was coined by Baron de Montesquieu, an 18th century political philosopher. And the heartbeat of this doctrine is the principle of Checks and Balances.

Checks and balances works at its best in a strictly monitored milieu of separation of powers. Thus, clearly spelt out obligations of each arm of government is needed for an efficient dispensation of their constitutional duties. An iota drop in the independence of one arm of government as regards the exercise of its constitutional powers would be simply repugnant to the principle of checks and balances and kill the rationale for separation of powers. Aside from the arguably overstretched doctrine of immunity, interference of the executive in the appointment of Judges, and others, one noticeable downtrend in the administration of separation of powers is the doctrine of ‘Prerogative of mercy’.

Prerogative of Mercy

Prerogative of mercy refers to the power of a president (or governor) to grant pardons, whether conditional or total, to persons who have been convicted of crimes. In other words, the executive is inferably granted the power to upset the judgment of the judiciary – or the execution of it, irrespective of how well the judgment was reached or the gravity of the crime committed. From jail terms to the capital punishment, none is left an exception to the pardoning powers of the president or the governor.

Historically, the royal prerogative of mercy was one of the prerogatives of the British monarch, which meant the Crown had the power to grant royal pardons to convicted persons. As old as the 17th century, the monarch could withdraw a capital punishment and give alternatives. In 1717, King George I proclaimed, promising to generally pardon pirates who surrendered to the authorities, in a bid suppress piracy.

Flowing from historical perspective and contemporary realities, the practice of the granting of pardon to convicted persons is not out of place in the development of an honourable and considerate legal system. The reconsideration and possible justification of certain offenders, whom might have immensely contributed to the development of the state, and whose pardon would not put the society at unrest is quite understandable and should be encouraged. However, the administration of the prerogative of mercy must be channeled through the right routes of justice in consonance with the spirit of the law and fundamental principles of the republican democratic society.

Separation of Powers in Nigeria

The Constitution of the Federal Republic of Nigeria, 1999 as amended, clearly enshrines the doctrine of separation of powers in the Nigerian legal system, by sharing the governmental powers that exist in the state among the three arms of government, i.e. the executive, the legislature, and the judiciary. Section 4, 5, and 6 of the Constitution provides for the powers of the legislature, executive and judiciary, respectively.

Specifically, section 5 (1) (b) and (2) (b) vests the power for the execution and maintenance of the Constitution, as well as other laws made by the legislature, in the president and governor respectively, as holders of the executive power of the federation and the state. While section 6 (6) (a) vests all powers of a court of law in the judiciary, notwithstanding anything to the contrary in the constitution. It explicitly provides thus:

The judicial powers vested in accordance with the foregoing provisions of this section-

(a) shall extend, notwithstanding anything to the contrary in this constitution, to all inherent powers and sanctions of a court of law.”

Without casting any shadow of doubt, the constitution is clear in its separation of powers among the three arms of government. The legislature to make the laws, to be executed and maintained by the executive, and interpreted and administered by the judiciary. Any break in this transition would amount to an arm leaving its duty post to spy or take into its hands the affairs of another. Moreover, the confidence of the citizenry is always firm in the commitment to an independent and conclusive judicial system facilitated by law courts, administering free and fair trails. Whether in criminal or civil proceedings, the court has the exclusive constitutional right to determine conviction and give appropriate sentences.

Nevertheless, Section 175 of the Constitution provides for the presidents’ power to pardon offenders convicted of laws prohibited by federal laws, alleviating or withdrawing in part or in whole their sentences. Notably, this is similar to the provision of Section 212, which confers on a governor the same right to be exercised within the spheres of a state. The granting of presidential pardon shall be exercised upon consultation with the Council of State.

Significantly, Section 36 (10) of the Constitution provides that no person who shows that he has been pardoned for a criminal offence shall again be tried for that offence. In other words, a pardoned person is totally free from the grips of any court sentence and cannot be retried for the same offence.

Without much ado, it is evidently clear that the prerogative of mercy is an obstruction in the wheel of holistic judicial processes and SHOULD be administered with a nonadjustable involvement of the judiciary itself. But this power is currently vested in the head of the executive arm in consultation with the Council of State.

The composition of the Council of State is provided under Part I (5) of the Third Schedule to the constitution. It states that the Council of State shall comprise of the President, Vice-President, all former Presidents and Heads of the Government of the Federation, former Chief Justices of Nigeria, the President of the Senate, Speaker of the House of Representative, all Governors and the Attorney-general of the federation.

Critically, Section 175 leaves the power to pardon convicted offenders in the hands of the President without any procedural approval or process by the judiciary. This ipso facto has created an antagonism to the ‘exclusive’ judicial powers of interpreting the law and punishing offenders.

Presidential Pardon in Nigeria

Statistically, about 301 convicted offenders in Nigeria have been pardoned by the federal government since the begin of the forth republic, with the highest number of 208 pardoned in the incumbent (President Buhari’s) administration. These statistics were gathered and published by Dataphte on May 6, 2022.

Flowing from the foregoing, it is legally nauseating to account that an ‘independent’ arm of government is exclusively granted power to administer a function, and another is granted an eraser to abolish its ruling. Prima facie, Section 175 of the 1999 Constitution is antagonistic to powers conferred on the judiciary by Section 6 of the same constitution.

Recommendation

In furtherance of the granting of prerogative of mercy, as it may be deemed necessary in certain instances, this author recommends that jurisdiction be granted to the Federal High Court to receive the recommendation of the President for the granting of presidential pardon and decide, although not adversarially, the fate of convicted offenders. This way, the power to pardon convicted persons is initiated by the President, but decided by the Judiciary. Similarly, a Magistrate Court should exercise such jurisdiction in a state.

Recognition and Enforcement of International Commercial Arbitration Awards in Nigeria – Abiola Orekoya

The Legal Regimes for the Recognition and Enforcement of International Commercial Arbitration Awards in Nigeria: The Unresolved Question of whether the Provisions of Rules of Court can Override the Provisions of a Statute and International Convention

Abstract

The question of whether the provisions of rules of court in Nigeria can trump the provision of a statute and international convention in relation to the twin subjects of recognition and enforcement of international commercial arbitration awards in Nigeria viz-a-viz the legal regimes that govern the subject-matter is one that deserves special consideration. The question is even more deserving of scholarly attention given that there is no single academic work or judicial authorities that have addressed this issue. Against this backdrop, this paper attempts to analyze the different legal regimes that govern the recognition and enforcement of international commercial arbitration awards in Nigeria with the ultimate purpose of showcasing Nigeria as bedrock of sustainable resolution of cross-border and transnational commercial disputes through the mechanism of arbitration. In addition, this paper also examines the unresolved question of whether the provisions of rules of court can override the provisions of a statute and international convention.

Keywords:

Recognition of Awards, Enforcement of Awards, International Commercial Arbitration, Rules of Court, Statute, International Convention.

A. INTRODUCTION

There is no gainsaying that enforcement of international commercial arbitration awards is very important in the scheme of international commercial arbitration practice. It goes without saying that the whole purpose of parties resorting to arbitration to resolve cross-border or transnational disputes is defeated if after an arbitral tribunal has rendered a decision in the form of an award and the party that emerged at the seat of arbitration cannot enforce the award. It suffices to say that such an arbitral award is valueless and consequently, it is of no relevance whatsoever. As a matter of fact, the importance of enforcement of international commercial arbitration awards in Nigeria was succinctly captured in the words of one of the leading scholars of arbitration in Nigeria as follows:

One reason business people enter into arbitration agreement or may insist on inserting arbitration clause in contract is to hope for a binding and an enforceable award should one be rendered. An arbitration agreement or award without an effective mechanism may, in practice, be valueless. If an agreement or award which is not voluntarily carried out cannot be coercively enforced against a recalcitrant party, then the rationale for arbitration is eroded and confidence in the arbitral process would be shaken

Amazu A. Asouzu, “The Adoption of the UNCITRAL Model Law in Nigeria, Implication of the Recognition and Enforcement of Arbitral Awards” (1999), Journal of Business Law, 185.

Where there is voluntary compliance in terms of carrying out the terms of a foreign arbitral award, then the issue of recognition and enforcement of an arbitral award becomes moot and irrelevant. Sadly, in practice, this is usually not the case. This is because the unsuccessful party may either not voluntarily comply with the terms of the award or may even be recalcitrant and go as far as challenging the award on numerous grounds. Unfortunately, the arbitral process cannot by itself enforce its own award because an award simplicita does not have the force of a judgment of court.1 As such, it often means that the successful party may have won the battle but is yet to win the war.2

Against this backdrop, there is the need for an award-creditor who having obtained an award to take the necessary steps to have the award recognized by a Nigerian court so that the instrumentality of the court process can be invoked to enforce it. In view of this, the award-creditor must decide which of the enforcement regime he intends to adopt for the enforcement of the award. In Nigeria, an applicant seeking to enforce a foreign arbitral award may do so through any of the following enforcement systems: enforcement by court action upon the award; enforcement under the Reciprocal Enforcement of Judgment Statutes, (which comprises the Reciprocal Enforcement of Foreign Judgment Ordinance and Foreign Judgments (Reciprocal Enforcement) Act; enforcement under the Arbitration and Conciliation Act; enforcement under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards; and lastly, enforcement under the International Centre for the Settlement of Investment Disputes (ICSID) Convention. The question that needs to be answered is: to what extent are these systems of enforcement effective and progressive in expediting the enforcement of international commercial arbitration awards in Nigeria? This paper shall provide an answer to the above-raised question later in this paper. In addition, it also briefly examines the prospect as well the challenges of each of these systems of enforcement.

This paper thus interrogates the extent to which the above-mentioned legal regimes are receptive towards the enforcement of international commercial arbitration awards in Nigeria. In the same connection, this paper examines these different legal regimes with the sole aim of identifying the grey areas as well the need for law reform. Additionally, this paper also demonstrates that Nigeria has a pro-enforcement bias towards arbitral awards rendered in a foreign jurisdiction by acknowledging commercial parties’ autonomy regarding dispute resolution.

B. ENFORCEMENT OF ICA AWARDS IN NIGERIA

This section of the paper discusses the enforcement of international commercial arbitration under the various legislations and conventions which are applicable to Nigeria. It is worth mentioning again that there are five different methods for the enforcement of international commercial arbitration awards in Nigeria. These methods of enforcement include: enforcement by common law action upon the award; enforcement under the Reciprocal Enforcement of Judgement Statutes; enforcement under Section 51 of the Arbitration and Conciliation Act of Nigeria; enforcement under Section 54 of the Arbitration and Conciliation Act of Nigeria (New York Convention enforcement); and lastly, enforcement under the ICSID Convention. This paper now discusses these five different methods of enforcement below.

1. By Common Law Action upon the Award

As mentioned earlier, there are five different systems of enforcement of international commercial arbitration awards in Nigeria. One of such systems of enforcement, which is open to an award-creditor who wishes to enforce his foreign arbitral award in Nigeria is to bring a common law action upon the award. The rule at common law is that an award-creditor, having prevailed at the seat of arbitration and wishes to enforce an award can do this by suing upon the award itself as proof of debt owed to him by the award-debtor. In other words, the award-creditor can bring a court action on the award. This method of enforcement of international commercial arbitration is premised on the fact that international commercial arbitration agreement like any other agreement is enforceable in law and the breach of the same will be a ground for action at law.3

There are certain salient features of this method of enforcement of awards. An award-creditor who seeks to adopt this system of enforcement must, however, establish three basic elements, which are: first, the existence of the arbitration agreement. That is, he must plead and prove that the arbitration agreement, which is the evidence of the contract between the parties exists. Second, the award-creditor must also prove that the arbitral proceedings was proper and conducted in accordance with the arbitration agreement. Under this second element, the enforcing court will examine whether the principles of natural justice and fair hearing, such as notice of the appointment of arbitrators and services of arbitral processes were observed by the arbitral tribunal. Where there is a breach of this fundamental principles of natural justice and fair hearing, the enforcing court may decline to enforce the award. Third, the award-creditor must also plead and prove the validity of the award. Based on the peculiar nature of this system of enforcement, the method of initiating the court action for enforcement of the award is by writ of summons in the High Court. This is because enforcement by common law action upon the award is similar to the same way an action for recovery of debt is instituted, which is also by writ of summons.

Scholars have posited that the above common law rule is based on a few principles. First, they opine that this system of enforcement of foreign arbitral awards is based on the implied undertaking that by agreeing to submit their disputes to arbitration, the parties agree to comply with the decision of the arbitral tribunal, even if they are not satisfied with it.4 So, where the unsuccessful party fails to carry out the award, this would constitute a breach of that undertaking which would entitle the prevailing party to initiate proceedings in court for the enforcement of the award.5 Second, the rule is also based on the doctrine of obligation- which prescribes that where a foreign court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, the liability to pay the same becomes a legal obligation that may be enforced by an action of debt.6

It is important to note that under this system of enforcement, there is no need for reciprocity of awards. What this means is that there is no need for reciprocal treatment of awards in the country where the award was rendered. Thus, an award-creditor seeking to enforce a foreign arbitral award under this system of enforcement in Nigeria does not need to bother whether the country of origin (that is, where the foreign arbitral award was obtained) has a reciprocal treatment with the enforcing court. The Supreme Court of Nigeria eminently stated this principle of non-reciprocity of awards in the case of Topher Inc. of New York v. Edokpolor (Trading as John Edokpolor & Sons).7 The facts of the case were that the plaintiffs sued for a certain sum awarded in its favor by arbitrators in New York, and the Defendant applied to the High Court to set aside the award on the ground that it was “founded on a Foreign Arbitration governed by the laws of the State of New York, United States of America.” The trial court held that “for a foreign arbitral award to be recognized in Nigeria, there must be a treaty guaranteeing reciprocal treatment or an order in Council to that effect.”

The plaintiffs were dissatisfied with the decision of the trial court and appealed up to the apex court in Nigeria- the Supreme Court which held inter alia that a party is not prevented from suing upon a foreign judgment regardless of whether there is a reciprocal treatment in the country where it is obtained if no order is made under section 128 to modify that position. The court further noted the point that a suit brought upon a foreign award ought not to be struck out merely on the ground that there must be a treaty guaranteeing reciprocal treatment in the country where it was made or an Order in Council to that effect.

This paper observes that while the decision of the Supreme Court is logical, highly commendable, and of course, good law; the decision of the trial court is not good law because the law is that there is no need for reciprocal treatment of awards in the country where it was obtained. It must be borne in mind that the Supreme Court’s decision in the case under review made reference to section 12 of the Foreign Judgment (Reciprocal Enforcement) Act, which is another legal regime for the enforcement of international commercial arbitration awards in Nigeria. This piece of legislation is important for an award-creditor who seeks to enforce a foreign arbitral award in Nigeria. It is examined later in this paper. However, before examining it, this paper considers it apt to discuss the relevance or otherwise of the Supreme Court’s allusion to section 12 of the Act and what effect or bearing that particular section has on reciprocal treatment of awards under the legal regime of enforcement by action upon the award. Section 12(1) of the Foreign Judgment (Reciprocal Enforcement) Act provides that:

If it appears to the Minister of Justice that the treatment in respect of recognition and enforcement accorded by the courts of any foreign country to judgments given in the superior courts of Nigeria is substantially less favorable than that accorded by the courts of Nigeria to judgments of the superior courts of that country, the Minister of Justice may by order apply this section to that country.9

The literal interpretation of the above-reproduced provision of the Foreign Judgment (Reciprocal Enforcement) Act is that if the Minister of Justice of Nigeria is of the view that a foreign country does not treat the judgment of a superior court of Nigeria as favorable as Nigeria does to its own judgment, the Minister of Justice has the discretion to order that the superior courts in Nigeria refuse to entertain any proceedings in respect of enforcement of any sum of money due to be payable under a judgment rendered in a court of such a foreign country.10 The implication this provision has on the principle of non-reciprocity available under the legal regime of enforcement by action upon the award is that until the Minister of Justice invokes his power under Section 12 of the Foreign Judgment (Reciprocal Enforcement) Act, the position is still that there is no need for reciprocity under enforcement by action upon the award at common law.

Despite the relative strength of this regime, it is not without its own shortcomings. To that end, even though an award-creditor does not have to worry about the issue of reciprocity, this method of enforcement is not recommended to an applicant seeking to enforce a foreign arbitral award in Nigeria, because it is cumbersome, slow, and time-consuming. Conventional wisdom tells us that one of the principal reasons why parties to international business, commerce and transactions choose international commercial arbitration to settle their disputes is because of its relative ease and expeditious method of settling commercial disputes. On the contrary, this method would achieve the very opposite because it gives room for an award debtor to re-open, by way of defense, some, if not all the issues that have been disposed of by the arbitral tribunal. The corollary of this is that an award creditor using this method of enforcement may sometimes be put to the task of proving afresh the substantive merits of a case they have already won at the seat of arbitration, thereby undermining the sanctity of the doctrine of res judicata which is an integral feature of an arbitral award.11

2. By Registration under the Reciprocal Enforcement of Judgment Statutes

The enforcement of international commercial arbitration awards in Nigeria is also governed by two reciprocal enforcement statutes: The Reciprocal Enforcement of Foreign Judgments Ordinance of 192212 and The Foreign Judgments (Reciprocal Enforcement) Act of 1961.13 Thus, an award-creditor can enforce an international commercial arbitration awards in Nigeria under either of the two-mentioned reciprocal enforcement statutes as if it were a foreign judgment,14 albeit, depending on the country in which the foreign arbitral awards was rendered. For example, the former (Reciprocal Enforcement of Foreign Judgment Ordinance) was enacted to deal with the issue of the registration of judgments (which includes awards) obtained in Nigeria and the United Kingdom and other parts of Her Majesty’s dominions and territories. While the latter (Foreign Judgments (Reciprocal Enforcement) Act) is an Act which provides for the enforcement in Nigeria of judgments given in foreign countries which accord reciprocal treatment to judgments given in Nigeria, for facilitating the enforcement in foreign countries of judgments given in Nigeria, and for other purposes in connection with matters aforesaid.15

For ease of better comprehension, this paper discusses these two reciprocal enforcement statutes one after the other- the paper begins with the Reciprocal Enforcement of Foreign Judgment Ordinance and thereafter, considers the corresponding statute- the Foreign Judgment (Reciprocal Enforcement) Act. In the same connection, the paper also discusses their strengths and weaknesses and recommend which is suitable for an award-creditor who seeks to enforce a foreign arbitral in Nigeria. In light of this, this paper entertains the question: which of these two legal regimes is the governing law in Nigeria as far as the recognition and enforcement of foreign judgments is concerned? This paper provides an answer to this question below.

With respect to the Reciprocal Enforcement of Foreign Judgment Ordinance, as mentioned earlier, the Ordinance was enacted to deal with enforcement of foreign judgments obtained in the UK and “other parts of Her Majesty’s Dominions and Territories under Her Majesty’s protection.”16 Some of these Territories are today referred to as the Commonwealth countries. The Ordinance was enacted during the British colonization of Nigeria and despite Nigeria’s independence since 1960, the statute is still applicable till date.

Under this legal regime, the method of instituting an action for the registration and enforcement of foreign arbitral awards is by originating summons. By virtue of Section 3(1) of the Reciprocal Enforcement of Foreign Judgment Ordinance, a foreign arbitral award obtained in the United Kingdom and other Commonwealth countries can be registered and enforced in Nigeria within 12 months of the date the award was rendered.17 The courts strictly construe the twelve months timeframe, which an award-creditor has to register and enforce a foreign arbitral award in Nigeria. In Andrew Mark Macaulay v. Raiffeisen Zentral Bank (RZB) Austria,18 the court held that any application for enforcement of foreign arbitral award in Nigeria which is made outside the twelve months timeframe is statute barred.

The Reciprocal Enforcement of Foreign Judgment Ordinance is fraught with the challenge of being behind the times. Therefore, this paper is of the considered view that the Ordinance is not in tune with the realities of modern day international commercial dispute resolution because it is outdated.

With respect to the Foreign Judgment (Reciprocal Enforcement) Act, a foreign arbitral award may be enforced in Nigeria within six years from the time the award was rendered. Under this legal regime, the method of enforcement of a foreign arbitral award is by application to the enforcing court for registration of the award. The application for the registration of the award is by originating summons and it must be brought within six years from the time the award was rendered or where there have been proceedings by way of appeal against the judgment, after date of the last judgment given in those appeal.19 If the award-creditor’s application for registration of the award is successful, he can then immediately use the ordinary writ of execution to execute the award.

It must be borne in mind that enforcement of foreign arbitral award under this legal regime is not automatic. In other words, an award-creditor seeking to enforce an award pursuant to the Foreign Judgment (Reciprocal Enforcement) Act must satisfy certain conditions before which such an award rendered in a foreign country can be enforced in Nigeria. These conditions are briefly discussed below:

First, such a foreign arbitral award must have been capable of enforcement in the country where it was rendered.20 Second, for such a foreign arbitral award to be capable of enforcement in Nigeria, it must first have been registered and thus, acquired the status of a judgment of that original court.21 Third, by virtue of the Act, reciprocity is a pre-condition for the enforcement of foreign arbitral awards in Nigeria.22 Thus, for a foreign arbitral award to be enforced pursuant to the Foreign Judgment (Reciprocal Enforcement) Act, there must be evidence of reciprocity showing that the country from where the award originated treats Nigerian judgments and arbitral awards favorably.23

Under the Foreign Judgment (Reciprocal Enforcement Act), there are certain grounds upon which an enforcing court may refuse to enforce a foreign arbitral award. By virtue of Section 6 of the Act, an application for the enforcement of a foreign arbitral award may be set aside based on the following grounds: first, the arbitral tribunal had no jurisdiction in the circumstances of the case to deal with the matter,24 second, if the successful party or the arbitral tribunal failed to serve notice of its proceedings to the defendant,25 third, if the award was obtained by fraud, and lastly, if the enforcement of the award will be contrary to the public policy of Nigeria.26

With regard to the above-mentioned reciprocal enforcement of judgment statutes, this paper considers a fundamental question which has generated a lot of controversies before delving into the other legal regime for the enforcement of foreign arbitral awards in Nigeria. The question remains: between the Reciprocal Enforcement of Foreign Judgement Ordinance and the Foreign Judgment (Reciprocal Enforcement) Act, which of these two legal regimes govern the enforcement of foreign arbitral awards in Nigeria? The confusion created by this question has led not only to two different schools of thought but also conflicting court decisions. Two court decisions with almost similar fact patterns would be used to illustrate this point.

The first case is Dale Power Systems Plc v. Witt & Busch Ltd.27 The brief facts of the case were that the Appellant obtained a money judgment from the Queen’s Bench Division of the High Court of Justice in England. In order to enforce the judgment in Nigeria against the Respondent, the Appellant applied to the High Court to have it registered. The Respondent filed an objection to the registration. In determining the objection, the trial court applied the provisions of the Foreign Judgment (Reciprocal Enforcement) Act. The Appellant was dissatisfied was the decision of the trial court and therefore appealed to the Court of Appeal. The Appellant contended inter alia that the Reciprocal Enforcement of Foreign Judgment Ordinance (the 1958 Ordinance) was the applicable statute that governs the case. The Court of Appeal, per Honorable Justice Oguntade, JCA (as he then was) held that the lower court was in error in applying the Foreign Judgment (Reciprocal Enforcement) Act. He stated further that the applicable legislation was the Reciprocal Enforcement of Foreign Judgment Ordinance.

This paper submits that the above-case law authority is a good law. The reason why the decision of the Court of Appeal is correct is because this case has to do with the Commonwealth and the Queen and Her Majesty- the foreign arbitral award in question was obtained in England.

The second case is the case of Halaoui v. Grosvenor Casinos Ltd-28 a case which came up for determination by the same Court of Appeal barely two years after the above case was decided. In this case, the Respondent having obtained judgment at the High Court of England applied ex parte to have it registered in the High Court of Oyo State Nigeria under Section 4(1) of the Foreign Judgment (Reciprocal Enforcement) Act for the purpose of enforcement against the Respondent who was resident in Oyo State. The Appellant applied to set aside the registration for non-compliance with section 6(2) of the Foreign Judgments (Reciprocal Enforcement) Act. The lower court declined jurisdiction relying on sections 73, 74(1)(m) and 135(2) of the Evidence Act. On appeal, the Court of Appeal set aside the lower court’s judgment and held that the relevant statute was the 1990 Act and that the Evidence Act and the common law were inapplicable for the enforcement of foreign judgments in Nigeria. The Court of Appeal was silent on the 1958 Ordinance as it was not canvassed by either of the parties.

The Court of Appeal was clearly mistaken and thus, its decision in the above case was wrong and not supported by law. It is an elementary principle of law that ‘it is for the court to know the law’29 and the corollary of this is the principle that the ‘ignorance of the court is the calamity of the innocent.’30 Against this backdrop, this paper takes the view that in line with the principle of law that it is for the court to know the law, it is no excuse that because the parties did not canvass the 1958 Ordinance, so the court should be silent on it and make a decision that is not supported by law. In addition, given the fact that the Respondent obtained the judgment in question at the High Court of England, the necessary implication of this is that the relevant statute that should have governed the case was the Reciprocal Enforcement of Foreign Judgement Ordinance because the case had to do with the Commonwealth and the Queen and Her Majesty- the judgment was obtained in England. It is therefore suggested as one of the recommendations of this paper that there should be a coherent body of judicial precedent and more so, if Nigeria is going to be a hub for the enforcement of international commercial arbitration awards where parties to international business transactions would like to enforce their awards, then there is a corresponding obligations on the part of her courts to get things rights and avoid conflicting decisions so as to create certainty in the law.

Luckily, the Supreme Court of Nigeria has laid this intellectual polemics to rest in cases that came after the above-mentioned cases. The court has pronounced the 1958 Ordinance as the relevant statute that governs reciprocity of foreign arbitral awards between Nigeria and the United Kingdom.31 In Andrew Mark Macaulay v. Raiffeisen Zentral Bank (RZB) Austria,32 the Supreme Court stated the law correctly thus:

“The Reciprocal Enforcement of Judgment Act 1922, Cap 175 Laws of the Federation and Lagos 1958 which was promulgated to deal with issues of registration of judgments obtained in Nigeria and the United Kingdom and other parts of Her Majesty’s dominions and territories was not specifically repealed by the Foreign Judgments (Reciprocal Enforcement) Act 1961, Cap 152 Laws of the Federation of Nigeria 1990 and so it still applies to the United Kingdom and to parts of Her Majesty’s dominion to which it was extended by proclamation under section 5 of the Ordinance before the coming into force of the 1990 Act.”33

The above quoted dictum of the Supreme Court is highly supportive of the position that it is the Reciprocal Enforcement of Foreign Judgment Ordinance that governs the enforcement of foreign arbitral awards in Nigeria, albeit cases dealing with reciprocity of foreign arbitral awards between Nigeria and the United Kingdom and other Commonwealth countries. More apt to this position is the powerful dictum of his Lordship, Honorable Justice Kalgo, JSC (as he then was)

“The 1958 Ordinance was promulgated as No. 8 of 1922 to facilitate the reciprocal enforcement of judgments obtained in Nigeria and in the United Kingdom and other parts of Her Majesty’s protection. It came into operation on the 19th of January 1922. There is no doubt therefore that it applies to all judgements of the superior courts obtained in the United Kingdom and its application can be extended to other territory administered by the United Kingdom and any other foreign country. This can be done by proclamations pursuant to section 5 of the Ordinance. Therefore the 1958 Ordinance having not been repealed by the 1990 Act still applies to the United Kingdom. There is no doubt that the judgment in question was given by the High Court in the United Kingdom. Therefore, the provisions of the 1958 Ordinance fully apply to it.”

3. By an Application under Section 51 of the Arbitration & Conciliation Act, 1988.

The principal legislation that governs the conduct of arbitration in Nigeria is the Arbitration and Conciliation Act of Nigeria. The Act makes provision for the recognition and enforcement of arbitral awards in Nigeria. Section 31 of the Act has provisions that deal with the recognition and enforcement of domestic awards in Nigeria while section 51 of the same Act deals with the recognition and enforcement of foreign arbitral awards in Nigeria. This section of the paper restricts itself to section 51 of the Act which deals with the recognition and enforcement of foreign arbitral awards in Nigeria. However, before analyzing this legal regime for the enforcement of foreign arbitral awards under Section 51 of the Act, it is instructive to briefly discuss the historical facts as well as the purpose of the Arbitration and Conciliation Act in order to have a thorough understanding of the workings of the statute with a view to appraising its strengths and weaknesses and proffer practical solutions to the latter.

The earliest attempt at consolidating the laws on arbitration in Nigeria was in 1914 when the first statute was enacted- the Arbitration Ordinance of 191434 which applied to all the parts of the country. The nature and provisions of the Arbitration Ordinance of Nigeria reveals that it was modelled after the English Arbitration Act of 1889. This is rather not surprising given Nigeria’s colonial history and her political affiliation with Britain. Later in 1914, the Arbitration Ordinance was later repealed and replaced by an Act, which became known as the Arbitration Ordinance Act of 1914. One innovation brought by the Arbitration Ordinance Act was that in 1954,35 its application was extended to all the regions in Nigeria.36

The Arbitration Ordinance Act in that year took a progressive step further in terms of its scope and application. The Act not only governed the conduct of domestic arbitration in Nigeria but was also made applicable to international arbitration and in the view of the author of this paper, this arguably is the developmental origin of international commercial arbitration in Nigeria.

Some decades after the Arbitration Ordinance Act, the Arbitration and Conciliation Act was enacted in 1988.37 The purpose of the Act is to provide a unified legal framework for the fair and efficient settlement of commercial38 disputes by arbitration and conciliation; and to make applicable the Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention) to any award made in Nigeria or in any Contracting States arising out of international commercial arbitration.39 Section 51(1) of the Arbitration and Conciliation Act provides:

An arbitral award shall, irrespective of the country in which it is made, be recognized as binding and subject to this section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.40

The above-quoted provision of the ACA gives an endorsement that a foreign arbitral award may be enforced in Nigeria regardless of the country in which the award was made. Section 51(1) of the Act used the term “…irrespective of the country where the award was made…” It is therefore important to interrogate what implication the usage of that term would have on the jurisprudence of recognition and enforcement of international commercial arbitration awards in Nigeria. Does it mean that the doors of the Nigerian courts are open to all manners of foreign arbitral awards, or they are limited only to awards emanating from Contracting States? Could it also be that the usage of that term gives the impression that the requirement of reciprocity as contained in the provisions of the Reciprocal Enforcement of Foreign Judgment Ordinance and the Foreign Judgment (Reciprocal Enforcement) Act had been jettisoned and hence, not a requirement under Section 51 of the ACA? These are issues of foremost consideration, which this paper strives to resolve. In resolving these questions, this paper posits that Nigeria has not jettisoned the reciprocity reservation requirement because of the ACA’s incorporation of the provisions of the New York Convention), which hitherto provides for the reciprocity reservation. The position of this paper is further reinforced by the Supreme Court of Nigeria’s articulation of this point in M.S.S. v. Kano Oil Millers41 that reciprocity of treatment is required in the enforcement of foreign award in Nigeria pursuant to section 51 of the ACA.42

This paper takes the view that the decision of the Supreme Court in the above case is partly and not entirely correct. In this regard, the Supreme Court missed the point when it held that reciprocity of treatment is required in the enforcement of foreign awards in Nigeria pursuant to section 51 of the ACA. The wordings of the ACA in Section 51(1) are clear and do not leave room for any ambiguity. The section employs the word “irrespective of the country in which the award was made.” This, without more means that it does not matter where the award was made- whether it was made in a Contracting State to the New York Convention or not, there is no need for reciprocity. At best, the Supreme Court could have been entirely correct if it had not added pursuant to the provision of Section 51 of the ACA but had just said under the Arbitration and Conciliation Act.

On the flip side of the coin, it could be argued that, although there is need for reciprocity of awards generally under the ACA, however, an award-creditor seeking to enforce a foreign arbitral award pursuant to Section 51(1) of the Arbitration and Conciliation Act does not need to fulfil the reciprocity requirement. This is because a literal interpretation of the phrase “irrespective of the country in which it was made,” is indicative of the fact that there is no requirement for reciprocal treatment of awards under the legal regime for the enforcement of foreign arbitral awards pursuant to Section 51(1) of the ACA. Thus, a foreign arbitral award, regardless of whatever country it was rendered, can be enforced in Nigeria under the provision of Section 51(1) of the ACA.

There is no gainsaying that the above creates a problem of interpretation, which is further complicated by the Supreme Court’s decision in the Kano Oil Millers’ case, which to a degree is erroneous. In order to avoid falling into the same pit which the award-creditor in the extant case fell, it is suggested that an award-creditor seeking to enforce a foreign arbitral award which was made in a country that does have any reciprocal treatment with Nigeria should come under Section 51(1) of the ACA because on the face of that provision, there is no requirement of reciprocity.

Section 51(2) of the Arbitration and Conciliation Act provides for the documents which an applicant seeking to enforce a foreign arbitral award in Nigeria must furnish to the enforcing court. It provides that the party relying on an award or applying for its enforcement shall supply the following documents for enforcement:43

(a) the duly authenticated original award or a duly certified copy thereof;
(b) the original arbitration agreement or a duly certified copy thereof; and
(c) where the award or arbitration agreement is not made in the English language, a duly certified translation thereof into the English language.

Under the legal regime of the ACA, the method of initiating an action to enforce a foreign arbitral award in Nigeria is by an originating application (Motion on Notice), which is brought before the appropriate court.44 In Imani & Sons Ltd. v. BIL Construction Co. Ltd.,45 he Court of Appeal not only emphasized this point, but further stated that there are other simple requirements which a party seeking to enforce a foreign arbitral award must meet. These requirements are: first, the applicant must produce the arbitration agreement which evidences the contractual agreement between the parties. Second, the applicant must also produce the original arbitral award. The third requirement is that the applicant must furnish the enforcing court with the name and last place of business of the person against whom the award is intended to be enforced. The last requirement which the applicant must meet is that he must prove that the arbitral award has not been complied with or complied with only in parts.

It must be noted that although the ACA does not stipulate the third and fourth requirements, however, it is the considered view of this paper that the Nigerian court was pro-active in this regard. The reason for this is not farfetched. Courts guard their jurisdiction jealously and would not want their judgments to be given without any effect; hence, they want to verify whether the party against whom the award is to be enforced, if a company for instance, is still a going concern.46

4. By an Application under Section 54 of the Arbitration & Conciliation Act, 1988 (New York Convention Enforcement)

The fourth legal regime that governs the enforcement of international commercial arbitration awards in Nigeria is the New York Convention. The New York Convention is one of the international conventions regulating international commercial arbitration globally and this paper is of the view that it is the most important international legal instrument on international commercial arbitration, with a particular reference to the recognition and enforcement of international commercial arbitration awards. As a matter of fact, the Convention has been eulogized as ‘the single most important pillar on which the edifice of international arbitration rests.’47 In view of this, this paper discusses the enforcement of international commercial arbitration awards in Nigeria pursuant to the New York Convention.

The New York Convention is one of the international treaties which has been domesticated and incorporated into the body of laws in Nigeria.48 The Convention applies to Nigeria by virtue of Section 54(1) of the ACA, which provides that:

Without prejudice to sections 51 and 52 of this Act, where the recognition and enforcement of any award arising out of an international commercial arbitration are sought, the Convention on the Recognition and Enforcement of Foreign Award (hereafter referred to as “the Convention” set out in the second schedule to this Act shall apply to any award made in Nigeria or in any contracting State.49

The Convention further states in paragraphs (a) and (b) of sub-section (1) thus:

(a) provided that such contracting state has reciprocal legislation recognizing the enforcement of arbitral awards made in Nigeria in accordance with the provisions of the Convention.50

(b) That the Convention shall apply only to differences arising out of legal relationship which is contractual.51

Paragraph (a) clearly reinforces the position that Nigeria subscribes to the reciprocity reservation by virtue of her domestication of the New York Convention. This is unlike the legal regime pursuant to Section 51 of the ACA under which the reciprocity reservation can be dispensed with. The implication of the foregoing is that for a foreign arbitral award to be enforced under the New York Convention enforcement regime, it must be shown to the enforcing court in Nigeria that such a contracting state has a reciprocal law or arrangement whereby foreign arbitral awards made in Nigeria are also recognized and enforced in the forum of the contracting state. Therefore, foreign arbitral awards made in a country which does not subscribe to the New York Convention or does not accord reciprocal treatment to foreign arbitral awards emanating from Nigeria cannot in return enjoy the recognition and enforcement benefits provided under Section 54 of the ACA- which by necessary implication is the New York Convention provision of recognition and enforcement of foreign arbitral awards.

One of the provisions of the New York Convention that is directly relevant to the recognition and enforcement of foreign arbitral awards is the provision of Article III. The said provision provides in pertinent part:

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.52

The second leg of the above provision “… there shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards” is a clarion call on Contracting States not to place onerous responsibilities on parties seeking to recognize and enforce arbitral awards. However, the Nigerian court in Ebokam v. Ekwenibe & Sons Trading Company53 contravened this statutory requirement. In that case, the Nigerian Court of Appeal listed additional requirements which an applicant seeking to enforce a foreign arbitral award under the New York Convention must satisfy. These requirements are as follows: first, that there was an arbitration agreement. Second, that the dispute in question arose within the terms of the submission to arbitration. Third, that the arbitrators were appointed in accordance with the clause which contains submission. Fourth, that there was rendition of the arbitral award. Lastly, that the amount awarded by the arbitral tribunal has not been paid by the award-debtor, hence the institution of an action to enforce the award.

This paper humbly submits that these requirements are not only onerous, but also serve as a clog in the wheel of an award-creditor seeking to enforce an award in Nigeria. This is because the above-mentioned requirements vary the statutory provision enshrined in Article III of the New York Convention to which Nigeria has acceded to, and the concomitant effect of this is that those requirements being a further elongation of the requirements under Article III run afoul of the pro-enforcement bias philosophy advocated by the New York Convention.54 Additionally, if Nigeria is going to portray the image of an arbitration-friendly country which is more disposed to enforcing foreign arbitral awards, the Ebokam’s case should be reviewed and the Court of Appeal or better still, the Nigerian Supreme Court should reconsider the decision given in that case so that it won’t serve as a bad precedent for future cases.

5. By Filing under the International Centre for Settlement of Investment Disputes (Enforcement of Awards) Act, (“ICSID Act”)

The fifth and last method of enforcing an arbitral award in Nigeria is by filing under the International Centre for Settlement of Investment Disputes Act (hereinafter referred to as the ICSID Convention). It is important to note that unlike the other enforcement regimes previously discussed above, the enforcement regime under the ICSID Convention is limited only to disputes arising out of an investment between Contracting States to the Convention and investors who are nationals of other Contracting States.55

Article 54(1) of the ICSID Convention provides thus:

Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State. A Contracting State with a federal constitution may enforce such an award in or through its federal courts and may provide that such courts shall treat the award as if it were a final judgement of the courts of a constituent state.56

The equivalent provision of the above is contained in Section 1 of the Nigerian International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act. However, before considering the provision of that Act, this paper finds it instructive to consider the brainbox behind the enactment of that legislation. By virtue of Section 12 of the Constitution of the Federal Republic of Nigeria,57 which provides that 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 into law by the National Assembly. This section deals with the implementation of international treaties by the Nigerian National Assembly- which is the highest law-making body in Nigeria. In the same connection, Article 69 of the ICSID Convention provides that each Contracting State shall take such legislative or other measures as may be necessary for making the provisions of this Convention effective in its territories.58 The Federal Republic of Nigeria through its National Law-making body- the National Assembly acted upon these specific provisions of the law and enacted the International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act.59 This Act has only two sections and Section 1 of the Act, which has been alluded to in the preceding paragraph provides that:

Where for any reason it is necessary or expedient to enforce in Nigeria an award made by the International Centre for the Settlement of Investment Disputes, a copy of the award duly certified by the Secretary General of the Centre aforesaid, if filed in the Supreme Court, by the party seeking its recognition for enforcement in Nigeria, shall for all purposes have effect as if it were an award contained in a final judgment of the Supreme Court, and the award shall be enforced accordingly.60

The above provision of the ICSID Convention is interpreted to mean that an ICSID award shall be enforced in Nigeria as if it were an award contained in a final judgment of the Supreme Court provided a copy of such an award, duly certified by the Secretary General of the Centre is filed in the Supreme Court by the party seeking its recognition and enforcement.2

Article 54(2) of the ICSID Convention on the other hand provides that:

A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation.61

The purport of this provision is that it prescribes the procedural paperwork which a party seeking recognition and enforcement of an ICSID award in the territory of the Contracting State must comply with. Additionally, the said provision mandates Contracting States to designate a court of competent jurisdiction or other authority which is saddled with the responsibility of handling requests for enforcement of ICSID awards and the Secretary-General of ICSID must be notified of such designation. It must be borne in mind that the competent court or other authority referred to in section 54(2) of the ICSID Convention is the Supreme Court of Nigeria.

The challenge which an award-creditor seeking to enforce an ICSID award in Nigeria may encounter is the absence of a clear-cut rules of procedure for the enforcement of ICSID awards in Nigeria. Without doubt, Nigeria has shown a manifest commitment to execute the international obligations placed upon ICSID member states under the Convention, which is to recognize and enforce an award rendered pursuant to the Convention by enacting the International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act; it is however unfortunate that the Act did not specifically make any provision regarding the procedure for the enforcement of ICSID awards in Nigeria. At best, it only proclaims in Section 1(2) of the Act that the Chief Justice of Nigeria shall make such provisions necessary for the enforcement of ICSID awards in Nigeria without more.62 Unfortunately, the Chief Justice of Nigeria has not made or adopted any rules of procedure for the enforcement of ICSID awards at the Supreme Court of Nigeria as at today.23

This paper humbly advocates that there be in place a clear-cut rules of procedure for the enforcement of ICSID awards in Nigeria, just like we have them in the other systems of enforcement of international commercial arbitration awards which have been discussed above. In light of this, the paper also suggests that the Chief Justice of Nigeria should be pro-active and take the necessary steps towards making provisions regarding the procedure for the enforcement of ICSID awards in Nigeria. Where these are in place, investors and other Contracting States to the Convention would be more readily disposed towards enforcing ICSID awards in Nigeria because they will see it as a fertile ground for enforcement.

C. REGISTRATION OF ICA AWARDS- IS IT REQUIRED UNDER THE ACA?

1. Unreality of Registration as a Basis of Enforcement under Order 52 Rule 17 FHC Rules

No doubt, the Federal High Court (Civil Procedures) Rules 200963is one of the legal frameworks for international commercial arbitration awards in Nigeria. Order 52 of the FHC Rules generally provides for arbitration.64 In addition, Order 52 Rule 16 provides for the enforcement of arbitral awards.65 However, the heading of Order 52 Rule 17 is couched thus ‘Registration of Foreign Arbitral Awards.’ The said Order 52 Rule 17 of the FHC Rules provides:

Where an award is made in proceedings on an arbitration in a foreign territory to which the Foreign Judgment (Reciprocal Enforcement) Act extends, if the award was in pursuance of the law in force in the place where it was made; it shall become enforceable in the same manner as a judgment given by a Court in that place and the proceedings of the Foreign Judgments (Reciprocal Enforcement) Act shall apply in relation to the award as it applies in relation to a judgment given by that Court.66

The simple interpretation of the above-quoted provision of the Rules of the Federal High Court is that it places an unnecessary task on an award-creditor seeking to enforce a foreign arbitral award in the Federal High Court. The purport of that provision is that it underscores the need for registration of foreign arbitral awards before such awards can be enforced. The provision of Order 52 Rule 17 has generated some debates in the arbitration community as to whether the requirement for registration of a foreign arbitral award under the FHC Rules is a sine qua non to enforcement under the ACA and New York Convention enforcement regimes? This debate has further ignited connected questions. First, in view of the provision of Order 52 Rule 17 of the FHC (Civil Procedures) Rules, does the provision of rules of court override that of a statute on a subject-matter? Flowing from that question, secondly, does the provision of rules of court override that of an international convention on a subject-matter?

Before attempting to answer the questions raised above, this paper considers it necessary to briefly examine the hierarchy of laws in Nigeria so that the readers can have a background of how the system of laws works in Nigeria. Nigeria has a well-structured system of courts and laws. As a matter of fact, Nigeria operates a hierarchical classification of Laws. In other words, laws are applied in Nigeria in order of their superiority and supremacy. In the hierarchy of Laws in Nigeria, the Constitution of the Federal Republic of Nigeria67 is the number one and most superior Laws in the land.

In line with the Pure Theory of Law developed by Hans Kelsen,68 the Constitution of Nigeria is the supreme law of the land. It is the primary norm in the country and in that regard, every other norm traces their validity to the Constitution. Thus, the validity of every other law in Nigeria is derived from the Constitution. In view of this, Section 1(3) of the Nigerian Constitution provides that “if any other 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.”69 The Supreme Court of Nigeria gave judicial fortification to that provision in Attorney-General of Lagos State v Attorney-General of the Federation70 wherein it held that if any other law is inconsistent with the provisions of this Constitution, such other law shall to the extent of its inconsistency be declared null and void. To that end, it suffices to say that the Constitution of Nigeria is the fons et origo.71 and the organic law of the land.

Next in the hierarchy of classification of Laws in Nigeria is Legislation. Legislation is a generic term for laws such as Ordinances, Acts, laws, decrees, edicts and bye-laws. After Legislation are Judicial precedents; Customary law; Islamic law; Received English law (common law, equitable doctrines and statutes of general application that were in force in England on 1 January 1900) before it gets to Act and State Laws establishing the various Courts and the Rules of Courts in Nigeria.

Therefore, between an Act of the National Assembly and Rules of Court made pursuant to an Act establishing the Court, the former is superior. Ditto to an international convention. In this context, between the Arbitration and Conciliation Act of Nigeria and the Federal High Court (Civil Procedure) Rules, the former is superior to the latter. Thus, where there is a conflict between the provisions of the ACA and the FHC Rules, those of the ACA will prevail and trump the latter.

After a careful study and examination of the ACA, there is nowhere ‘registration’ was mentioned as a pre-requisite for the enforcement of foreign arbitral awards in Nigeria. On its own part, the New York Convention which is the primary instrument for the recognition and enforcement of foreign arbitral awards too does not prescribe registration as one of the bases for the enforcement of foreign arbitral awards. On the other hand, as mentioned above, Order 52 Rule 17 of the FHC Rules introduces registration of foreign arbitral awards into the enforcement jurisprudence. From the foregoing points made, this paper therefore queries thus: does Order 52 Rule 17 apply to all foreign arbitral awards? Conversely, does Order 52 Rule 17 apply only to awards rendered in non-New York Convention countries? If all these questions are answered in the affirmative, does it mean that all award-creditors seeking to enforce a foreign arbitral award made pursuant to the New York Convention must first submit themselves to the provision of the rules of court and go through the process of registration, as required by Order 52 Rule 17 of the FHC Rules? Although these issues remain moot and consequently, are a mere academic exercise, as they have not been adjudicated by any court in Nigeria.

In relation to the above, the law is that the provisions of rules of court cannot trump the provisions of a statute and international convention on a subject-matter. The court reiterated this principle of law in Nwanezie v. Idris, where his Lordship Okoro, J.C.A. held that where the provisions of rules of court conflict or disagree with those of a statute or international convention, the provisions of the statute and convention shall prevail because they are superior.

In relating the above background and judicial pronouncements to the core questions raised in this paper, this paper submits that one, the requirement for registration of foreign arbitral awards under Order 52 Rule 17 cannot be sustained in view of the provisions of the ACA and the New York Convention to the contrary. Second, an applicant seeking to enforce a foreign arbitral award at the Federal High Court only needs to apply to the court for an order to recognize and enforce the award either under Section 51(1) of the ACA or Section 54 of the ACA (Enforcement under the New York Convention) without more. More importantly, the applicant must comply with the documentary evidence requirements enshrined under Article IV of the New York Convention.

D. CONCLUSION

This paper has exhaustively examined the various legal regimes that govern the recognition and enforcement of international commercial arbitration in Nigeria. In the same connection, it has also provided an answer to the question which was raised at the preliminary part of this paper, which is to the effect that to what extent are these systems of enforcement effective and progressive in expediting the enforcement of international commercial arbitration awards in Nigeria? In addition, this paper has briefly examined the prospect as well the challenges of each of these systems of enforcement. After a careful examination of each of these systems of enforcement, this paper was able to proffer solutions to some of the problems inherent in these legal regimes and made some recommendations thereof.

This paper respectfully submits that of all these legal regimes that govern the recognition and enforcement of international commercial arbitration in Nigeria, there is no one which is entirely better or better still, more advantageous than the other. Nonetheless, this paper concedes the fact that the award creditor should appraise the peculiar facts of his case and determine which of these systems of enforcement that is best suited for his case.

Against this background, this paper counsels that it is important for an award-creditor seeking to recognize and enforce a foreign arbitral award in Nigeria to have a background and thorough understanding of the legal framework for the recognition and enforcement of international commercial arbitration in Nigeria. This is so important because not only will it help such a party to know under which of the legal regimes he should bring an application for the recognition and enforcement of the award; but it will also prevent it from pitfalls, thereby avoiding the technical challenges inherent in the systems of enforcement which do not serve his best interest.

More so, this paper suggests that there is the need for the Nigerian courts to uphold the pro-enforcement philosophy of the New York Convention when considering applications for the recognition and enforcement of foreign arbitral awards in Nigeria. This point is crucial because there have been instances where the courts contravened the second leg of the provision of Article III, which is to the effect that Contracting States should not place onerous responsibilities on parties seeking to recognize and enforce arbitral awards.52 In that regard, this paper concludes that if Nigeria is going to portray the image of an arbitration-friendly country which is more disposed to recognizing and enforcing foreign arbitral awards, the Ebokam’s case72 should be reviewed and the Court of Appeal or better still, the apex court- the Nigerian Supreme Court should reconsider the decision given in that case so that it won’t serve as a bad precedent for future cases.

Fundamentally, this paper concludes that registration of foreign arbitral awards, as required under Order 52 Rule 17 of the Federal High Court (Civil Procedure) Rules is not a sine qua non to enforcement under the Arbitration and Conciliation Act. Therefore, applicants seeking to recognize and enforce foreign arbitral awards only need to apply under either Section 51 or Section 54 of the ACA without more and supply the documentary evidence listed in Article IV of the New York Convention.

BIBLOGRAPHY

STATUTES

Arbitration and Conciliation Act of 1988.

Constitution of the Federal Republic of Nigeria, (as amended) 1999.

Federal High Court (Civil Procedure) Rules 2009.

ICSID (Enforcement of Awards) Act LFN 1990

The Arbitration Ordinance Act of 1954.

The Foreign Judgments (Reciprocal Enforcement) Act.

The Reciprocal Enforcement of Foreign Judgments Ordinance.

The 1914 Nigerian Ordinance, Orders and Regulations, 199.

CONVENTIONS

ICSID CONVENTION

NEW YORK CONVENTION

CASES

A.C. Toepter Inc. of New York v. John Edokpolor, (1965) All NLR 292.

Andrew Mark Macaulay v. Raiffeisen Zentral Bank (RZB) Austria, (2003) 18 NWLR (Part 852) 282.

Attorney-General of Lagos State v Attorney-General of the Federation (SC 70 of 2004) [2004] NGSC 19 (10 December 2004).

Dale Power Systems Plc v. Witt & Busch Ltd, (2001) 8 NWLR (PT 716).

Ebokam v. Ekwenibe & Sons Trading Company [2001] 2 NWLR (Pt. 696) 32.

Halaoui v. Grosvenor Casinos Ltd, (2002) 17 NWLR (PT. 795).

Imani & Sons Ltd. v. BIL Construction Co. Ltd., [1999] 12 NWLR [Pt. 630] at p. 263.

Marine and General Assurance Co Plc v. Overseas Union & 7 Others.

M.S.S. v. Kano Oil Millers, (1974) NNLR 1

Topher Inc. of New York v. Edokpolor (Trading as John Edokpolor & Sons) (1965) All NLR 307.

Tulip (Nig.) Ltd. v. Noleggioe Transport Maritime S.A.S (2011) 4 NWLR (Pt. 1237) 254.

Andrew Mark Macaulay v. Raiffeisen Zentral Bank (RZB) Austria, (2003) 18 NWLR (Part 852) 282.

ARTICLES

Amazu A. Asouzu, “The Adoption of the UNCITRAL Model Law in Nigeria, Implication of the Recognition and Enforcement of Arbitral Awards” (1999), Journal of Business Law, 185.

Charles Nwalimu & Peter Lang, The Nigerian Legal System, 2009, 646, 658).

Constitution of the Federal Republic of Nigeria (as amended), 1999.

D.S. Sutton, J. Gill & M. Gearing, Russell on Arbitration, para. 8-020 (24th ed., 2015). See also Lord Hodhouse in Associated Electric and Gas Insurance Services Ltd. v. European Reinsurance Co of Zurich (2003) 1 WLR 1041.

Emilia Onyema, Enforcement of Arbitral Awards in Sub-Sahara Africa (2010) LCIA, 26(1).

J.G. Wetter, ‘The Present Status of the International Court of Arbitration of the ICC: An Appraisal’ (1990) 1 AM Rev Intl Arb 91.

Moneke, E., Strengthening The Legal Regime for the Recognition and Enforcement of Arbitral Awards in Nigeria, p. 18-42, The Gravitas Review of Business and Property Law. 9 (3).

Nwanezie V. Idris (1993) 3 N.W.L.R. (pt. 279) 1 at paras B-C. Per Okoro, J.C.A. (p. 17, paras E-G).

Nwakoby & Aduaka, The Recognition and Enforcement of International Arbitral Awards in Nigeria: The Issue of Time Limitation, Journal of Law, Policy and Globalization Vol. 37 (2015).

Olushola Abiloye & Jamiu Akolade, Challenges in the Recognition and Enforcement of Foreign Arbitral Awards in Nigeria (2016), being a paper presented at the 1st International Chamber of Commerce (ICC) Africa Regional Arbitration Conference held in Lagos, Nigeria.


About Author

Abiola Orekoya73 is a Doctoral Candidate at the Delaware Law School. He obtained his LL.M. (Admiralty Law) from Tulane University Law School. His research interests cut across Maritime/Admiralty Law, International Arbitration, International Business Transaction, International Trade, International Human Rights Law and Advocacy, Business & Corporate Law, Jurisprudence & Legal Theory, just to mention but a few.

  1. Olushola Abiloye & Jamiu Akolade, Challenges in the Recognition and Enforcement of Foreign Arbitral Awards in Nigeria (2016), being a paper presented at the 1st International Chamber of Commerce (ICC) Africa Regional Arbitration Conference held in Lagos, Nigeria. []
  2. Id. [] []
  3. Nwakoby & Aduaka, The Recognition and Enforcement of International Arbitral Awards in Nigeria: The Issue of Time Limitation, Journal of Law, Policy and Globalization Vol. 37 (2015). []
  4. Moneke, E., Strengthening The Legal Regime for the Recognition and Enforcement of Arbitral Awards in Nigeria, p. 18-42, The Gravitas Review of Business and Property Law. 9 (3). []
  5. D.S. Sutton, J. Gill & M. Gearing, Russell on Arbitration, para. 8-020 (24 th ed., 2015). See also Lord Hodhouse in Associated Electric and Gas Insurance Services Ltd. v. European Reinsurance Co of Zurich (2003) 1 WLR 1041. []
  6. Abiloye & Akolade, supra note 3. See also Emilia Onyema, Enforcement of Arbitral Awards in Sub-Sahara Africa (2010) LCIA, 26(1). []
  7. Topher Inc. of New York v. Edokpolor (Trading as John Edokpolor & Sons) (1965) All NLR 307. []
  8. See Foreign Judgment (Reciprocal Enforcement) Act, 1990. []
  9. Foreign Judgment (Reciprocal enforcement) Act, Section 12(1). []
  10. By virtue of Section 2 of the Foreign Judgment (Reciprocal Enforcement) Act, which is the Interpretation Section, “judgment” means a judgment or order given or made by a court in any civil proceedings and shall include an award in proceedings on an arbitration if the award has in pursuance of the law in force in the place where it was made become enforceable in the same manner as a judgment given by a court in that place, or a judgment or order given or made by a court in any criminal proceedings for the payment of a sum of money in respect of compensation or damages to an injured party. []
  11. Moneke, supra note 6. []
  12. See The Reciprocal Enforcement of Foreign Judgments Ordinance, Cap 175, Laws of the Federation of Nigeria and Lagos, 1958, hereinafter referred to as (“the 1958 REFJ Ordinance”) [This Ordinance was enacted in 1922 as L.N.8., 1922] []
  13. See The Foreign Judgments (Reciprocal Enforcement) Act, Cap 152, Laws of the Federation of Nigeria, 1990 hereinafter referred to as (“the 1990 FJRE Act.”) [Enacted in 1961 as L.N.56, 1961]. []
  14. Foreign Judgement (Reciprocal Enforcement) Act, Section 2 defines the term “judgment” to include an arbitral award. []
  15. See The FJRE Act. []
  16. The REFJ Ordinance was extended to judgments of various territories and dominions under Her Majesty’s protection by virtue of a number of proclamations made under Section 5 of the Ordinance. Some of the territories and dominions to which it was extended include, the Supreme Court of the Gold Coast Colony, Colony and Protectorate of Sierra Leone, Courts of the Chief Commissioners of Ashanti and of Northern Territories of the Gold Coast, Supreme Court of the Colony of the Gambia, Supreme Court of the State of Victoria, Barbados, Bermuda, British Guiana, Gibraltar, Grenada, Jamaica, Leeward Island, St. Lucia, St. Vincent and Trinidad and Tobago. []
  17. Reciprocal Enforcement of Foreign Judgments Ordinance, Section 3(1). The court, however, has the discretion to permit a longer period for registration. []
  18. Andrew Mark Macaulay v. Raiffeisen Zentral Bank (RZB) Austria, (2003) LCN/3050(SC). []
  19. Foreign Judgment (Reciprocal Enforcement) Act, Section 4. []
  20. See Tulip (Nig.) Ltd. v. Noleggioe Transport Maritime S.A.S (2011) 4 NWLR (Pt. 1237) 254. []
  21. “original court,” as used in the Act means the court by which the foreign arbitral award was given. []
  22. Foreign Judgment (Reciprocal Enforcement) Act, Section 3. []
  23. Nwakoby & Aduaka, supra note 635. [] []
  24. Foreign Judgment (Reciprocal Enforcement) Act, Section 6(1)(ii). []
  25. Foreign Judgment (Reciprocal Enforcement) Act, Section 6(1)(iii) []
  26. Foreign Judgment (Reciprocal Enforcement) Act, Section 6(1)(iii). []
  27. Dale Power Systems Plc v. Witt & Busch Ltd, (2001) 8 NWLR (PT 716). []
  28. Halaoui v. Grosvenor Casinos Ltd, (2002) 17 NWLR (PT. 795). []
  29. This is expressed in the maxim ‘juria novit curia.’ []
  30. This is similarly expressed in the maxim ‘ignorantia judicis ex calamitas innocentis.’ []
  31. See Marine and General Assurance Co Plc v. Overseas Union & 7 Others. []
  32. Andrew Mark Macaulay v. Raiffeisen Zentral Bank (RZB) Austria, (2003) 18 NWLR (Part 852) 282. []
  33. Id. at 296 para. E-G. []
  34. It is properly cited as The 1914 Nigerian Ordinance, Orders and Regulations, 199. This was issued as Chapter 9 of the 1923 edition of the Laws of Nigeria and later Chapter 13 of both 1948 and 1958 editions of the Laws of the Federation of Nigeria {Ch. 9, 92 (1923); Ch. 13, 204 (1948); Ch. 13, 204 (1958)}. See also Charles Nwalimu & Peter Lang, The Nigerian Legal System, 2009, 646, 658). []
  35. The Arbitration Ordinance Act of 1954 was later to be incorporated into the Laws of the Federation of Nigeria, 1958, as this was the year Nigeria had the first set of organized laws. []
  36. The regions that were in existence then in Nigeria were Northern, Western, Eastern, Mid-Western Regions and the Federal Territory of Lagos, the then Southern Cameroons. []
  37. The Act was enacted by a military decree in 1988 and came into effect on 13th March, 1988. []
  38. The term ‘commercial’ is defined to include “all relationships of a commercial nature including any trade transaction for the supply or exchange of goods or services, distribution agreement, commercial representation or agency, factoring, leasing, construction of works, constructing, engineering licensing, investment, financing, banking, insurance, exploitation, agreement or concession, joint venture and other forms of industrial or business co-operation, carriage of goods or passengers by air, sea, rail or road.” []
  39. See the recital to the Act. []
  40. Arbitration and Conciliation Act, Section 51(1). []
  41. M.S.S. v. Kano Oil Millers, (1974) NNLR 1 []
  42. See also A.C. Toepter Inc. of New York v. John Edokpolor, (1965) All NLR 292. []
  43. Arbitration and Conciliation Act, Section 51(2). []
  44. The appropriate court referred to above is the Federal High Court or the relevant State High Court. []
  45. Imani & Sons Ltd. v. BIL Construction Co. Ltd., [1999] 12 NWLR [Pt. 630] at p. 263. []
  46. Abiloye & Akolade, supra note 673. See also Emilia Onyema, Enforcement of Arbitral Awards in Sub-Sahara Africa (2010) LCIA, 26(1). []
  47. J.G. Wetter, ‘The Present Status of the International Court of Arbitration of the ICC: An Appraisal’ (1990) 1 AM Rev Intl Arb 91. []
  48. Nigeria acceded to the Convention on March 17, 1970, but it was not until 1988 when Nigeria domesticated the Convention by virtue of the promulgation of the Arbitration and Conciliation Decree in 1988. []
  49. Arbitration and Conciliation Act, Section 54. []
  50. Id. at Section 54(1)(a). []
  51. Id. at Section 54(1)(b). []
  52. New York Convention, Article III. [] []
  53. Ebokam v. Ekwenibe & Sons Trading Company [2001] 2 NWLR (Pt. 696) 32. []
  54. See the opening statement of the New York Convention, Article III. []
  55. ICSID Convention, Article 25. []
  56. ICSID Convention, Article 54(1). []
  57. Constitution of the Federal Republic of Nigeria (as amended), 1999, Section 12. []
  58. ICSID Convention, Article 69. []
  59. International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act Cap 120 Laws of the Federation of Nigeria, 2004. []
  60. Id. at Section 1. []
  61. 64 ICSID Convention, Article 54(2). []
  62. International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act, Section 1(2). []
  63. Federal High Court (Civil Procedure) Rules 2009. []
  64. Federal High Court (Civil Procedure) Rules 2009, Order 52. []
  65. Federal High Court (Civil Procedure) Rules 2009, Order 52 Rule 16. []
  66. Federal High Court (Civil Procedure) Rules 2009, Order 52 Rule 17. []
  67. See Constitution of the Federal Republic of Nigeria [Nigeria], Act No. 24, 5 May 1999. []
  68. Hans Kelsen was an Austrian jurist, legal philosopher and political philosopher. He was the author of the 1920 Austrian Constitution, which to a very large degree is still valid today. []
  69. Constitution of the Federal Republic of Nigeria, Section 1(3). []
  70. Attorney-General of Lagos State v Attorney-General of the Federation (SC 70 of 2004) [2004] NGSC 19 (10 December 2004). []
  71. Fons et origo is a Latin term meaning “source and origin”. []
  72. Ebokam, supra note 55. []
  73. Abiola Orekoya, SJD (Ph.D.) Candidate; LL.M. (Tulane); B.L. (Abuja); LL.B. (Lagos). []

Average Settlement Value for Racial Discrimination Lawsuit – Matthew J.P. Coffman

This article is specific to the United States of America.

Discrimination in the workplace happens far too often. Discrimination at work can be based on a number of different characteristics such as gender, age, sexual orientation, or race. A 2019 Glassdoor survey found that 42% of all employees surveyed had experienced or witnessed racial discrimination in the workplace.

For individuals who believe they are facing racial discrimination in the workplace, there are state and federal laws and agencies, like the U.S. Equal Employment Opportunity Commission (EEOC), in place to offer you protection as an employee and allow you to seek legal action against your employer.

This may result in you and a racial discrimination lawyer that you work with seeking a racial discrimination lawsuit settlement. A large question tied to that is often what the average settlement value for a racial discrimination lawsuit is. We answer that question and related topics below.

Disclaimer: The following is not legal advice. It is general information meant to inform. Please consult with a race discrimination lawyer for legal advice or guidance.

What is Racial Discrimination in the Workplace?

To start, let us briefly define racial discrimination in the workplace.

As defined by the EEOC, racial discrimination involves treating an applicant or an employee unfavorably because they are “of a certain race or because of personal characteristics associated with race (such as hair texture, skin color, or certain facial features).”

Discrimination can happen when the victim and the perpetrator of the discrimination are of the same race as well.

Under the EEOC, discrimination is forbidden in all aspects of employment including:

  • Firing, termination, and layoffs
  • Hiring
  • Pay
  • Promotions
  • Benefits (health insurance, 401k, stock options, etc.)
  • Job assignments

Employees who are facing racial discrimination at work should consult with a racial discrimination lawyer to learn more about their rights and what steps they can take to pursue a racial discrimination lawsuit.

What is the Average Settlement Value for a Racial Discrimination Lawsuit Settlement?

Unfortunately, the answer to this question is not something that is one size fits all. There really is no average settlement value for a racial discrimination lawsuit settlement that we can share in simple numbers since each case is going to vary based on a number of different factors.

These factors include but are not limited to:

  • The kind of racial discrimination you faced
  • The severity and length of the discrimination
  • If your employer took appropriate steps to address the discrimination once they were notified
  • The evidence you have of the discrimination
  • What kind of damages you suffered

The above factors will ultimately play a large role in the amount of damages you will receive from any lawsuit settlement.

Is There Any Limit to the Damages that I Can Receive?

Even if we cannot pinpoint a specific average settlement value, one thing to be aware of is that depending on federal, state, and local laws, there are limits on the certain amounts of damages that you can receive from your lawsuit.

For example, there is a cap number of damages that individuals can receive for emotional distress and punitive damages based on employer size at the federal level. The EEOC lays out these limits as following:

  • Employers with 15-100 employees, the limit is $50,000.
  • Employers with 101-200 employees, the limit is $100,000.
  • Employers with 201-500 employees, the limit is $200,000.
  • Employers with more than 500 employees, the limit is $300,000.

State and local laws may also have their own cap amounts.

Damages That are Available from a Racial Discrimination Lawsuit Settlement

Now that you have an idea of what factors are taken into consideration once you file a racial discrimination lawsuit, let’s take a brief look at some of the damages that can be awarded.

Damages from an employment lawsuit settlement include:

  • Back and front pay
  • Emotional distress
  • Lost benefits
  • Attorney’s fees
  • Punitive damages

It’s important to note that you may not receive all of the above damages. Just as the amount of damages will depend on the individual factors in your case, so too will the kinds of damages you may be awarded.

If you are experiencing racial discrimination at work and would like to pursue a racial discrimination lawsuit, consider reaching out to an experienced employment attorney for a consultation.


Image credit: pexels.com


About Author

Matthew J.P. Coffman is an experienced employment lawyer and the founder of the employment law firm Coffman Legal, LLC. Matthew provides zealous representation to employees in many types of employment disputes with a focus on unpaid wages and unpaid overtime cases.

Impact of the Global Energy Transition on the Nigerian Economy – Ogooluwa Osilesi

Impact of the Global Energy Transition on the Nigerian Economy

Change is said to be the one thing that remains constant. The Greek philosopher, Heraclitus of Ephesus, said – “the only constant in life is change.” It’s inevitable.

The world keeps evolving and science and technology are considered to be the major facilitators of evolution in the world. Science and technology have succeeded in making human daily activities easier and faster.

Not only has it brought ease to human endeavours, it has also contributed to helping humans live healthier and reside in a healthier and more conducive environment.

Energy is one of the basic amenities required for ease in our everyday affairs as most of our activities are linked to it, e.g, transportation, power supply, manufacturing processes amongst many others.

Energy plays a vital role in the economic growth, it’s an important factor in all sector’s of a country’s economy. It supports the provision basic needs in areas of communication(Radio, Emails, television) Transportation, Essential Health services etc. and also fuels and provides ease of productive activities in aspect of agriculture, commerce and manufacturing processes.

Fossil fuels—such as coal, oil, and natural gas—has been dubbed the main source of energy in the world and has been powering many economies for years. They account for about 80% of the world’s energy. However, studies on fossil fuels have been shown to have very dangerous effects and stand as a threat to the climate and humanity. Fossil fuels pollute the environment and are considered to be the major contributor to global warming.

In lieu of the threat of global warming, the world has begun moving towards green energy which is deemed more friendly to the ecosystem. Green energy is energy derived from natural sources, such as sunlight, wind, water, biomass, which do not cause harm to our environment.

Green energy is also of huge benefit to the environment because it is renewable as against fossil fuels that are not renewable. This implies that green energy doesn’t run out and are inexhaustible as opposed to fossil fuels that can’t be reused. Green energy is thus, a means to prevent the current global warming and the effect it has on the world.

Technology has facilitated this transition and made it easier on the world. Thus, we have electric-powered vehicles that don’t run on fuels, such as Tesla, Hyundai Ioniq electric, and many others.

Also, rather than depending on fossil based power supply, solar panels are now in vogue. Statista Research Department in a February 2022 publication stated that as of 2020, the solar energy capacity in Nigeria amounted to about 28 megawatts, which shows that it is on the rise.

At the 2015 COP 21 (conference of parties) in Paris, parties to the UNFCCC reached a consensus to combat climate change and to take positive gigantic steps towards achieving this, thereby preventing global warming.

The central aim of the Paris Agreement is to strengthen the global response to the threat of climate change by limiting the of global warming to below 2 degrees Celsius and fostering efforts to limit the increase to 1.5 degrees.

In 2017, Nigeria ratified the Paris agreement and at the COP26, reaffirmed its commitment to the same agreement and adopted climate change policies with a target to go carbon-neutral by 2050 or 2060. Thus, nations have agreed to transition from fossil fuels as a means to combatting global warming.

The effect the global energy transition has on economies are diverse. The transition has its pros and cons. For countries whose major source of revenue is fossil fuels, the transition will not be favourable at the onset, as it will take a huge toll on such economies.

Nigeria falls under this ambit because the oil sector is the major source of revenue and mainstay of its economy. Since the discovery of crude oil in Oloibiri, Niger Delta in year 1956, oil has been the economic foundation of the country.

Nigeria, a part of the nationally determined contributor to the COP21 2015 Paris Agreement, committed to cutting its carbon emissions unconditionally by 20% or conditionally by 45% with international support by 2030. Nigeria further committed to include clean cooking as part of its contribution in 2021.

Nigeria’s participation in the Paris Agreement is not the nation’s first attempt at effecting climate change. Policies such as The Vision 20:2020 that identified climate change and global warming as a threat to the nation’s sustainable development, attests to this.

The global energy transition as expected, is a change from the fossil fuel norm and is here to stay and in light of this will lead to changes in the power sector as well as the economic sector of the country.

The transition will have diverse impact on several economies around the globe, of which Nigeria will not be an exception.

Effect of Global Energy Transition on the Nigerian Economy – In the Short Run

The global energy transition was agreed upon with the view to reduce, drastically, the production and use of fossil fuels. This will have a negative effect on Nigeria whose economy depend dominantly on fossil fuels, as Nigeria is known to be one of the largest oil exporters in Africa.

It is no gainsaying that the oil sector is the rock upon which the Nigerian economy is founded. This oil shock of 2016 that threw the GDP into -1.60% attests to this fact. Although the oil sector amounts to only 7.2% of the country’s GDP, fossil fuels account for about 60% of the government revenue and 90% of foreign exchange earnings. This makes Nigeria very volatile, because a reduction in the government revenue could affect the smooth-running the country.

The transition will also induce a great fall in the country’s foreign exchange earnings because oil revenue accounts for 90% of it. this could thus, destabilize fluctuations in the exchange rate and weaken the national currency.

As it is, statistics have shown that the unpredictable global crude oil prices and similar factors have caused a decrease in the demand for crude oil thereby diminishing oil transactions and the revenue and profit derived from it compared to what obtained prior to the Paris Agreement.

Furthermore, a drastic unprecedented or poorly planned switch from fossil fuel-based economy could be damaging to the economy as the foundation needed to effect the transition is rushed and not strong.

This implies that there is a possibility that the Nigerian economy enters into an irretrievable slump as a result of the transition, if adequate steps, management and policies are not kept in place and fervently implemented.

According to the International Labour Organisation, the Nigeria Oil Sector currently employs about 65,000 direct staff and 250,000 indirect staff. Thus, energy transition is bound to render a large number of the employees unemployed.

Furthermore, production activities are also bound to suffer from the decrease in production of fossil fuels.

Effect of Global Energy Transition on the Nigerian Economy – In the Long Run

The global energy transition is said to pose gargantuan benefits in the long run when fully attained and assimilated into the economy.

In September 2019, The International Renewable Energy Agency (IRENA) report titled, ‘Transforming the Energy System – And Holding the Line on the Rise of Global Temperatures’ argues that the cost of “climate- proofing” the global energy mix is lower than the cost of inaction, “even without factoring in the payoffs of mitigating climate change and achieving long-term sustainability.”

This implies that the benefit the transition offers is greater compared to the danger and threat fossil fuels pose to the world.

1. Increase in Gross Domestic Product

The study estimates that the transition could create about 2.5% increase in Gross Domestic Product (GDP) gains by 2050 including increase by millions in job opportunities.

The International Renewable Energy Agency (IRENA) published a report in collaboration with the African Development Bank (AFDB) titled “Renewable Energy Market Analysis: Africa and its Regions”.

The report estimated that the African economy has the potential to grow by 6.4% in 2050 when an effective energy transition policy and management framework is integrated and implemented.

2. Increase in Job Opportunities

As a matter of fact, the International Renewable Energy Agency’s “Renewable Energy and Jobs – Annual Review 2021” stated that its most recent report estimates that in year 2020 about 12 million people were employed in the sector, directly and indirectly, with Solar PV leading the field and accounting for about 4 million jobs. The wind energy sector on the other hand, employs about 1.25 million people. This indicates growth in the sector because the first edition estimated 7.3 million in 2012.

3. Human Welfare

The State of Global Air, 2020 Report estimated that air pollution contributed to about 6.7 million deaths in 2019. Fossil fuels, processing and production, is a major contributing factor to air pollution.

Fossil fuels possesses a lot of harmful combustion products and are one of the major contributors to global warming thereby standing as a huge threat to humanity. Thus, the energy transition will bring about the use of environment friendly energy. It will also ensure lower carbon emissions.

4. Reliable Energy Source and Efficiency

Research has shown that we will run out of fossil fuels in the long run as it is not inexhaustible. This shows that failure to transition has the potential to throw the economy into jeopardy.

As a matter of fact it has been said that fossil fuels are no longer enough to meet the power/energy meets of Nigeria. Energy transition will prevent this havoc as it is more reliable, renewable and is derived from constant natural sources such as the sun, wind and the likes. This will further produce constant power supply in Nigeria where bad power supply is known to be a cankerworm that has eaten deep into the Nigerian fabric for years.

5. Economic Stability

Consistent dependence on fossil fuels will cause it to wield so much power such that it will be the scale upon which the Nigerian economy will be weighed. The oil shock of 2016 which had a negative impact on the Nigerian economy is an example of the power it can harness.

Energy transition will protect the Nigerian economy from being at the whims of such controlling factor. It will also promote economic stability and reduce economic susceptibility to fluctuations in energy prices. It will further diversify energy supply and reduce dependence on imported fuels.

6. Innovations

Energy transition will foster innovation in the country and lead to the rise of startups and small medium enterprises. The integration of renewable energy and new technologies will help advance this motion, not to talk of the job opportunities such innovations could create.

Recommendations

A country that transits to green energy is sure to gain specific benefits in various spheres. These include, environmental and economic benefits as earlier stated. The following recommendations will be sure to secure this transition and make it effective and beneficial.

1. Investment

It is advised that the Nigerian government follows the global trend of investing more in renewable energy than before as this has been proven to yield more profit for economies that have done same.

The “Clean Energy Investing: Global Comparison of Investment Returns” report estimated that listed renewable power portfolios outperformed listed fossil fuel portfolios in all markets and renewable energy companies’ cost of capital remain lesser than that of fossil fuel companies.

The Nigeria Sovereign Investment Authority is said to be investing an initial sum of 10 billion naira in the off-grid renewable space. Entities like Britain and the Agence Francaise de Developpement (AFD) have funded renewable energy projects in the country to the sum of $13.6 million and $70 million respectively in 2021.

2. Diversification of the Economy

To prevent a staggering damage to the Nigerian economy due to its exit from an oil-based economy, measures should be taken to diversify the nation’s income and revenue such as investing in non-oil sectors.

3. Establishment and Implementation of Effective Policies and Monitoring Bodies

It is imperative that laws be made to foster the energy transition and make it easier. the Nigerian government has established various programmes, initiatives, policies such as the National Renewable Energy and Energy Efficiency Policy and the Renewable Energy Master Plan.

However, it is not enough to just establish these agencies, they should be effective, policies should also be strictly implemented. Furthermore, an effective legal framework will encourage and attract investment.

4. Public Enlightenment

The general public should be educated about the benefits of renewable energy and the threat fossil fuels pose to the climate. They should also be enlightened on ways to actively help the energy transition cause and reduce global warming.

5. Promotion of Innovation

Government should encourage innovation and urge citizens to do same by investment, competitions and awards.

For example, All On, a green energy hub launched its 2022 edition of the yearly Nigeria Off-Grid Energy Challenge in collaboration with the United States African Development Foundation (USADF). This challenge is stated to identify and help scale innovative off-grid solutions to power up several areas in Nigeria.

6. Stable Political Economy

Investors would rather invest in an economy that is stable politically because a country that is not stable politically shall be at the whims and caprices of every political change that occurs thereby leading to a fluctuating economy.

Conclusion

Nigeria should not sit idly while other nations are jumping on this hot profiting trend of renewable energy that is profitable to our health and economy.

The oil sector failed the Nigerian economy in year 2021 while the non-oil sector contributed to 92.76% of the country’s GDP. As it is, reduction in price of crude oil and illegal oil activities such as bunkering already renders the economy vulnerable.

Failure to take advantage of the energy transition in diversifying the Nigerian economy and shifting from an oil sponsored economy to non-oil will be sure to cause a fatal earthquake to the economy.


Bibliography

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– https://businessday.ng/amp/news/article/nigerian-government-to-invest-n10bn-in-off- grid-renewable-space/
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– https://www.reuters.com/business/energy/britain-raise-nigerian-renewable-climate- change-investments-2022-02-21/
– Adeola Bademosi, January 3, 2022, available at – https://tribuneonlineng.com/is-nigeria
-ready-for-global-energy-transition-by-2025/
– https://www.dataphyte.com/latest-reports/climate/climate-change-energy-transition- can-grow-africas-economy-by-6-4-irena-report/?amp_markup=1
– https://businessday.ng/amp/energy/article/nigeria-may-face-political-instability-after- global-energy-transition-report/
– https://doi.org/10.1016/j.rser.2019.109547
– https://doi.org/10.1016/j.egyr.2020.04.022 https://thelawreviews.co.uk/title/the-renewable-energy-law-review/nigeria
– https://businessday.ng/amp/featurea/article/nigerias-long-walk-to-energy-transition/ – https://www.irena.org/publications/2021/jun/-/media/D491BFC62BC7462A898D7837A669DC4D.ashx
– https://www.stateofglobalair.org/home


About Author

Ogooluwa Osilesi is a final year student of law at Olabisi Onabanjo University. Her interests in law include, but not limited to Intellectual property law, Corporate Finance, Commercial Dispute Resolution, Energy law and legal technology, amongst others.

See also: The Impact of Intellectual Property Law in the Economic Development of Nigeria