The Interplay Between Justice Administration, Commerce And The Nigerian Court System: Can We Be More Competitive?

As professions continue to take stock of the extent to which recent global events have affected their endeavours, one cannot help but feel that in the Nigerian legal profession, litigation lawyers have, perhaps, been the worst hit. From the initial closure of courts to the current limited access to them, our colleagues who practise in this area are undeniably seeing their ability to ply their trade significantly impaired. I had, against this backdrop, offered some perspectives in my recent piece on the silver lining that the ravaging pandemic offers, including in the area of administration of justice by our courts.

Yet, merely having courts that can offer virtual services, without more, will not guarantee that our justice delivery sector will enjoy the pride of place that it ought to occupy among national judiciaries in the world. As many of us would have noted, it has increasingly become apparent that high-value commercial disputes tend not to be litigated in Nigeria as the underlying contracts provide for either international arbitration at a foreign seat or litigation in foreign courts. This is not because parties to those contracts prefer to spend their fortunes at those fora. It is because the foreign jurisdictions that they typically choose have proven over time to be fit for purpose in dealing with commercial disputes and their realities. Hence, a lot of “legal tourism” with links to Nigeria is going on in the world with attendant debilitating effects on Nigerian lawyers and the Nigerian legal profession.

I believe that there is an opportunity for our judiciary to reinvent itself, join the league of attractive jurisdictions for commercial disputes, and thus become an enabler of the country’s economic recovery and expansion, moving forward. Whilst there are probably many things that could be done to trigger this transition, two relatively easy areas that essentially require nothing more than a little goading and shift in judicial attitude come to my mind:

More substance, less procedure
Many dispassionate observers will agree that the body of Nigerian substantive law on several matters affecting businesses and the economy is not being developed optimally. As I mentioned in a recent piece, we still make frequent recourse to decisions of other courts in the Commonwealth to address matters in respect of which we should have had exhaustive analysis and discussions in our domestic caselaw.

On each occasion that I have had cause to speak to my litigation colleagues about this subject, a common reason that they provide for this anomaly is one that we all have become familiar with: the continuing reign of procedure over substance in the litigation process. Cases have come before appellate courts bearing questions of substance that would have enriched our jurisprudence on several areas affecting investment and commerce. Many of those cases were ultimately determined, after protracted litigation, by reference to procedural points and without significant substantive analysis. In theory, those cases could go back through the process, correct any procedural lapses, and hopefully get a determination on the substance eventually. However, in practice, I am aware that it is usually more likely than not that the parties would have become so weary from the several years (decades in some cases) of litigation and incurring legal fees that they would simply prefer to lick their wounds and avoid Nigerian courts as much as possible when disagreements arise in the future. The setback that this causes for both legal practice and the economy should not be underestimated. The migration of cases that should ordinarily have been decided by Nigerian courts to courts and fora in other climes not only leaves our jurisprudence shallow but also has a direct impact on the revenue earning ability of Nigerian lawyers.

It is recommended that, as a matter of conscious judicial policy moving forward, commercial and investment disputes should receive accelerated hearing on the merits. The attempts that have been made to achieve this through the rules of court and other mechanisms do not seem to be sufficient or are simply not producing the desired results. If our courts begin to consistently decide matters on substance rather than procedural machinations, this will go a long way in settling the myriad of legal issues that ongoing global events have thrown up. It would also provide helpful jurisprudence on several legal issues that affect businesses, and ultimately make Nigeria a more attractive jurisdiction for resolving commercial disputes.

More costs, less frivolities
To further aid the efficiency of our justice administration, a rethink on the issue of costs awards is also imperative, particularly in commercial disputes. The focus on costs arises from the fact that matters, including time-sensitive ones on which commercial and investment decisions may depend, simply take too long to be resolved in Nigerian courts. Much of the delay is attributable to the sheer number of cases, including many frivolous ones, which our judges have to deal with. Yet, the judicial attitude towards award of costs does not seem to punish frivolous claims when they are eventually identified.

Nigerian courts tend to award relatively miniscule amounts as costs. I recently followed up on the proceedings in a matter which my partner, Adewale Atake, SAN, and his team were defending on behalf of a client operating in a petroleum industry allied company. I understood from them that after over a year of puzzling adjournments of the hearing of the defendant’s simple jurisdictional challenge regarding the unwarranted arrest of its cargo, the court of first instance found that the plaintiff’s claims were completely without merit and that the affected cargo should never have been arrested. Yet, the court awarded zero costs against the plaintiff in a matter in which the defendant had literally spent millions of dollars to maintain the affected cargo during the period of arrest. Cases like this abound across the various courts in Nigeria. For an emerging economy in a competitive world, this is a disservice to any efforts at attracting businesses, growing the legal system and expanding the economy. In more developed legal systems like England (where we are wont to referring to for precedents), this is certainly not the case. A recent example is the USD1.1 billion claim brought by the Federal Republic of Nigeria against Shell and Eni before an English court. Last week, the court delivered its judgment wherein it declined jurisdiction and awarded substantial costs against Nigeria.

In practical terms, this means that it is just too easy and cheap to frustrate commercial relationships in Nigeria through frivolous claims which could be pursued all the way to the Supreme Court without any real consequence beyond an award of comparatively paltry sums as costs. Indeed, an entire project could be held up by claims that are ultimately unwarranted, without any eventual award of substantial (let alone actual) costs to cover the exposure of the project stakeholders. In my humble view, by following this policy in commercial disputes, the justice delivery sector is unwittingly undermining the survival and viability of businesses and this, again, has, and will continue to have, adverse economic impact on Nigerian lawyers.

Granted, the policy objective behind awarding seemingly nominal costs is to ensure that access to justice is not prohibitive. But whilst this concern may be valid in other civil contexts such as enforcement of fundamental rights, it is arguably not warranted in large commercial and investment disputes. Businesses understand risks, including the risk that frivolous lawsuits could lead to substantial award of costs. Hence, to deter parties from wasting precious judicial time, significant costs (including legal fees) should follow whenever frivolous commercial claims/defences come before our courts. This is an effective way for incentivising fidelity to contractual arrangements. If done consistently, then it is inevitable that sooner rather than later, parties to commercial transactions will be wary of commencing flimsy claims, raising sham defences, or pursuing needless appeals. This, in turn, will improve the overall efficiency of our justice delivery system, improve trade and commerce and, of course, better the lot of Nigerian lawyers and the legal system.