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New Legal Regime on Stamp Duty Charges

Stamp duty is a tax that is levied on single property purchases or documents (including, historically, the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions).

The Finance Act, 2019 amended some provisions of the Companies Income Tax Act, Petroleum Profit Tax Act, Personal Income Tax Act, Value Added Tax Act, Customs and Excise Tariff etc., Capital Gains Tax Act and Stamp Duty Act.

Sections 52 to 56 of the Finance Act, 2019 amended Sections 2, 4, 89 and the Schedule of the Stamp Duty Act, 2004. Section 55 of the Finance Act, 2019 deleted Section 90 of the Stamp Duty Act, 2004.

We shall discuss new trends in stamp duty charges under the Finance Act, 2019.

Modern innovations on stamp duty under the Finance Act, 2019

Section 52 of the Finance Act, 2019 amended Section 2 of the Stamp Duty Act, 2004 to extend the meaning of “stamp” to include “an electronic stamp or electronic acknowledgment” for denoting any duty or fee. Again, the provision extended the meaning of “stamped” to include “instruments and materially tagged with electronic stamp or national stamp on an electronic receipt”. The meaning of “instruments” is extended to “electronic documents”.

Similarly, Section 54 of the Finance Act, 2019 amended Section 89 of the Stamp Duty Act, 2004 to include “electronic inscription whereby any money” is paid within the meaning of “receipt” for the purpose of stamp duty payment. Section 89 is introduced to provide for “digital tag with electronic stamp or any acknowledgement of duty charged on an electronic transaction”.

Section 89 is also introduced to provide that “electronic receipt or electronic transfer for money deposited in any bank” of N10, 000 naira and above paid by the owner of the account shall be charged a one-off duty of N 50 naira.

Who is the competent charging authority?

Under Section 53 of the Finance Act, 2019 which amended Section 4 of the Stamp Duty Act, 2004, the Federal Inland Revenue Service is the competent authority to charge duties on instruments between a company and an individual, group or body of individuals.

The relevant tax authority in a State is the competent authority to charge duties on instruments between persons or individuals within the respective States of the Federation.

The FIRS is empowered to collect stamp duties on all banking transactions though its agents; Banks and other Financial Institutions.

How much is the duty on electronic receipt or electronic transfer?

By the provisions of Section 54 of the Finance Act, 2019, a one-off duty of N 50.00 shall accrue for amounts from N 10, 000 and above. Nevertheless, duty shall not accrue where a person pays or transfers money electronically between his accounts within the same Bank.

What are chargeable transactions?

Instruments such as agreements, contracts, receipts, memorandum of understanding, promissory notes, insurances policies and other transactions listed in the Schedule to the Stamp Duty Act, 2004 are subject to stamp duty.

Exempted transactions under the Finance Act, 2019

a) of the Finance Act, 2019 amended the Schedule of the Stamp Duty Act, 2004 to include exempt receipts as “receipts given by any person in a Regulated Securities Lending Transaction carried out under regulation issued by the Securities and Exchange Commission”.

b) of the Finance Act, 2019 amended the Schedule of the Stamp Duty Act, 2004 and provided that shares, stocks or securities returned or transferred by a lender to its approved agent or a borrower in furtherance of a Regulated Securities Lending Transaction as well as documents relating to regulated securities lending transactions carried out under regulations by the Securities and Exchange Commission are exempted from stamp duty.

Procedure for Obtaining Mobile Money Operator License

A mobile money operator is a mobile money service provider that develops and delivers financial services through mobile phones and mobile telephone networks.

On 3rd August 2021, the recent Central Bank of Nigeria released the Guidelines for the Establishment and Regulation of Payments Service Holding Companies in Nigeria. The Guidelines requires companies that intend to offer both switching and processing and mobile money services to set up a PSHC structure.

The Guidelines defines PSHC as a company whose principal object clause is to be a holding company set up for the purpose of making and managing equity investment in 2 or more companies, being its subsidiaries, which are payment service providers across the following categories:

  1. Mobile Money Operations
  2. Switching and Processing
  3. Payment Solution Services.

(A) Share capital

The minimum issued share capital of a company seeking to apply for an MMO license is N2,000,000,000.00 at 540 naira per dollar.

The PSHC and MMO are in the same category with the switching and processing and payment solution services subsidiary companies in terms of the minimum share capital requirement of N 2, 000,000,000.00 share capital which must be deposited with CBN before the completion of the license application process.

(B) Procedure for Obtaining a Mobile Money Operator License

The licensing requirement as provided in the CBN guideline requires the promoters of the companies to submit a formal application for the grant of a License addressed to the Director, Payments System Management Department of the CBN.

The licensing process shall be in two phases: Approval-in-Principle and Final License stage.

(C) Requirements for Grant of Approval-In-Principle (AIP)

The application shall be accompanied with the following:

  • A non-refundable application fee of N1, 000,000.00 or such other amount that the CBN may specify from time to time; payable to the CBN, through electronic transfer.
  • Evidence of meeting the prescribed minimum paid-up capital subject to the satisfaction of the CBN.

Detailed business plan or feasibility report which shall, at a minimum, include:

  • Objectives of the PSHC and those of the subsidiaries it intends to establish/acquire.
  • Justification for applying for the payments service holding company.
  • Ownership structure in a tabular form indicating the name of proposed investor, profession/business and their percentage shareholdings.
  • Bio-data, resume/curriculum vitae of proposed investors.
  • Indication of sources of funding of the proposed equity contribution for each investor.
  • Where the source of funding the equity contribution is a loan, it shall be a long term facility of, at least, a 7-year tenor, and shall not be obtained from the Nigerian banking system or foreign subsidiaries of Nigerian banks.
  • Corporate Governance Charter of the PSHC stating the roles and responsibilities of the board and its sub-committees, among other things.
  • Criteria for selecting board membership.
  • Bio-data and detailed resumes of directors and board composition.
  • List of identified top/senior management staff, bio-data and detailed resumes stating qualifications, experiences, records of accomplishment, etc.
  • National or Government issued identity documents bio-data and Bank Verification Numbers of proposed Board and management staff of the company.
  • The Tax Identification Number of the company and its Tax Clearance Certificate where applicable.
  • A schedule of services that will be shared in the group.
  • Five-year financial projection on the operations of the PSHC indicating expected growth and profitability, and details of the assumptions that form the basis of the financial projection.
  • Details of Information Technology infrastructure proposed to be deployed.
  • Information on and pictorial representation of the corporate group structure with shareholding percentage by the PSHC in each of the subsidiaries and their principal businesses and registered Head offices.
  • A written and duly executed undertaking by the promoters that the PSHC shall be adequately capitalised for the volume and character of its business at all times, and that the PSHC shall be under the supervisory authority of the CBN, as an Other Financial Institution.
  • For regulated foreign institutional investors, the CBN shall require a no objection letter from the regulatory body in the home country.
  • Shareholders’ agreement providing for disposal/transfer of shares as well as authorisation, amendments, waivers, reimbursement of expenses, etc.
  • Statement of intent to invest in the PSHC to be made by each investor in the PSHC.
  • Technical Services Agreement, where applicable.

Draft copy of the company’s Memorandum and Articles of Association. At a minimum, the MEMART shall contain the following information:

  • Proposed name of the PSHC.
  • Object clause which shall be limited to the permitted activities of its license.
  • Subscribers to the MEMART.
  • Procedure for amendment.
  • Procedure for share transfer or disposal.
  • Appointment of directors.
  • Where the promoters of the PSHC are corporate investors, the CBN shall require them to forward the following additional documents.
  • Certificate of Incorporation.
  • Board resolution supporting the company’s decision to invest in the equity shares of the proposed PSHC.
  • Names, biometrics, BVNs and addresses of owners, directors and their related companies, if any.
  • Audited financial statements and reports of the company, including Tax Clearance Certificate for the immediate past 3 years.
  • Certified True Copies of the company’s CAC forms showing the details of allotment and particulars of directors.
  • Any other document/information that the CBN may require from time to time.
  • If satisfied with the application of the promoter, the CBN may grant an Approval in Principle.

Duration

The AIP stage usually takes a period of between 2-3 months to process.

(D) Requirements to Incorporate an MMO company

Companies in Nigeria are incorporated at the Corporate Affairs Commission. The requirements for incorporating a company are as follows:

  1. 2 unique names of the proposed company to be reserved at the CAC;
  2. Name, address, phone number, email and means of identification of at least 2 Directors, one of which must be a Nigerian or a foreigner with business permit to carrying on business in Nigeria;
  3. Name, address, phone number, email, means of identification of at least one Share holder and in the case of corporate shareholder its incorporation Certificate and Board Resolution to acquire shares in the proposed company;
  4. Objects of the proposed company;
  5. Nigerian address, phone number and email of the proposed company;
  6. Special Articles of Association of the proposed company ;
  7. Name, address, phone number, email, means of identification of Company Secretary;
  8. Approval in Principle from CBN;
  9. Payment of statutory filing fees and stamp duty.

Duration

The incorporation stage will take a period of 7-10 business days.

(E) The Requirements for Granting a Final License

Within six months after obtaining the AIP and incorporation of the company, the promoters of a proposed PSHC shall submit an application to the CBN for the grant of a final license.

The application shall be accompanied with the following:

  • Non-refundable licensing fee of N5,000,000.00, or such other amount that the CBN may specify from time to time, payable to the Central Bank of Nigeria by electronic transfer.
  • Evidence of promotion or investment of a payment service company.
  • Evidence of payment of capital contribution by each shareholder.
  • Evidence of location of Head Office for the take-off of the PSHC.
  • Schedule of changes, if any, in the Board, Management, IT infrastructure and significant shareholding since the grant of AIP.
  • Evidence of ability to meet technical requirements and modern infrastructural facilities such as office equipment, computers, telecommunications, etc. to perform PSHC operations and meet CBN and other regulatory requirements.
  • Organisational structure, showing functional units, responsibilities, reporting relationships and grade of heads of departments/units.
  • Board and staff training program.

Duration

The Final Licence stage usually takes a period of between 2-3 months to process.

(F) Requirements for Commencement of Operations

Upon obtaining the Final Licence, the PSHC shall inform the CBN of its readiness to commence activities and such information shall be accompanied with one copy of each of the following:

  1. Shareholders’ Register.
  2. Share certificate issued to each investor.
  3. Enterprise Risk Management Framework.
  4. Internal Control Policy.
  5. Minutes of pre-commencement board meeting.
  6. Opening statement of affairs signed by directors and auditors.
  7. Date of Commencement of Activities.

(G) Conclusion

In order to manage financial risks and for efficiency of the business, the CBN expect promoters of a Mobile Money Operator to form at least 3 companies; first, the PSHC which is the holding company; second, a mobile money operator subsidiary and third, the switching and processing subsidiary. Each of the 3 companies shall have a minimum share capital of N 2, 000, 000, 000.

Recovery of Foreign Judgment Debts

Enforcement of foreign judgments has significant relevance in this era of increased international trade and foreign investments. Businesses are more comfortable doing business with foreign partners knowing that if they obtain judgment from a superior court in their home country; it can be enforced against the judgment debtor across borders.

Fortunately, Nigerian courts recognise judgments from superior courts of commonwealth countries and countries with reciprocal treatment with Nigeria.

This has increased the confidence of foreigners and foreign companies to do business with Nigerians and Nigerian companies. Nevertheless, the procedure for registration of foreign judgment in Nigeria is not without challenges. Apart from the uncertainty in the statute and rules regulating the enforcement of foreign judgment, the procedure for registration of foreign judgments does not take into cognisance the evolving trends in global economy and international commerce.

The statute regulating the enforcing of foreign judgments in Nigeria is imprecise. Ordinarily the recent Foreign Judgment Act, CAP 152, Laws of the Federation of Nigeria, 1990 would have been the legislation regulating enforcement of foreign judgment but the Supreme Court in the case of Macaulay v R.Z.B of Austria 18 NWLR 282 held that the Minister of Justice has not made an order extending the Act to judgments of the United Kingdom and other countries with reciprocal treatment with Nigeria pursuant to Sections 3 and 9 of the Act as such the first part of Act is inapplicable.

Again, in the case of Grosvenor Casinos Ltd v Ghassan Halaoui 10 NWLR 309, the Supreme Court postulated that both the Act and the Reciprocal Enforcement of Judgments Ordinance, CAP 175, Laws of the Federation of Nigeria, 1958 are relevant statutes in the enforcement of foreign judgments in Nigeria.

Judgment creditors now rely on the colonial Reciprocal Enforcement of Judgment Ordinance, 1958 which provides for a 12 months period to register and recover a foreign judgment debt in Nigeria. This is why in Suit No. FHC/ABJ/CS/203/2017; Emmanuel Ekpenyong Esq v. Attorney General and Minister of Justice of the Federation, I sought an order of mandamus at the Federal High Court, Abuja Division to compel the Attorney General and Minister of Justice of the Federation to promulgate an Order to bring the 1990 Act into operation.

The Federal High Court in its judgment opined that the Minister has discretionary powers to promulgate the Order. The trial court held that the Minister had unlimited powers to determine when to promulgate the Order. An appeal against the trial court’s judgment is pending before the Court of Appeal, Abuja division. The backlog of appeals at the appellate court has made it difficult to obtain a hearing date for the appeal.

The imprecision on the particular statute regulating foreign judgment enforcement has a devastating effect on the whole process of registering foreign judgment in Nigeria. For instance, the time within which to register a judgment under the 1990 Act is 6 years while the time to register a judgment under the Ordinance is 12 months. Since there is no Foreign Judgment Enforcement Rules for the 1990 Act, the Reciprocal Enforcement of Judgments Rules of the Ordinance which was enacted in 1922 regulates the legal conditions for registration of foreign judgment in Nigeria today.

Rules 1 and 5 of the Rules of the Ordinance which provides that the application for enforcement of foreign judgment be made by a motion ex-parte is inconsistent with the modern concept of fair hearing and the current civil procedure rules of Courts that an adverse party must be put on notice. It is without doubt that the Rules of the Ordinance is out of touch with modern realities and the different conditions in the applicable legislations have led to calamity and more uncertainty.

In a Ruling of a Lagos High Court, per Candide-Johnson J, the Court rejected the registration of a Judgment of Justice Michael Burton of the High Court of Justice, Queen’s Bench Division, Commercial London on the ground that since the Lagos Court did not have jurisdiction to hear the subject matter before the original Court, it could not register and execute the Judgment of the original court against the judgment debtor. But registration of foreign judgment under the provisions of the applicable legislations appears to be a subject matter on its own. Little wonder the process of registration of foreign judgment is regulated by its separate and distinct legislations and rules which spell out its conditions and legal requirements.

The applicable legislations provide that Nigerian courts shall accord reciprocal treatment to judgment of ‘superior courts’ from commonwealth countries and other countries with reciprocal treatment with Nigeria. They also provide that a judgment creditor from a foreign country with reciprocal treatment with Nigeria may apply to a ‘superior court’ in Nigeria within the specified time for registration of the judgment. From the ordinary meaning of the wordings of the provisions of the applicable legislations on conditions for registration of foreign judgments, it did not contemplate that the jurisdiction of the Nigerian court to register a foreign judgment will be subject to its jurisdiction to hear and determine the original subject matter of the case.

Since the judgment creditor is not asking the Nigerian court to hear the case based on its subject matter, but to grant leave for registration of the foreign judgment under the applicable legislations only, Nigerian courts have no business making its jurisdiction to hear the subject matter of the case, a condition precedent for registration of the judgment. Unless the appellate courts pronounce on this grey area, it will continue to impede the registration of foreign judgments in Nigeria.

An interesting requirement of the applicable legislations is that the Defendant against whom the foreign judgment is to be enforced must have been a Defendant at the original court. This requirement creates a profound difficulty for Judgment creditors. With the recent economic meltdown, businesses are trying to stay afloat by merging or acquiring other companies. To maintain a local presence, a multinational company may take over the business and goodwill of viable Nigerian Company. Upon such takeover the acquired company is wound up.

What then happens to a judgment creditor who obtained a foreign judgment against the acquired company? Does it mean that the judgment creditor cannot maintain a cause of action against the acquiring company just because the acquiring company was not a Defendant at the original court? Since the acquiring company acquired both the assets and liabilities of the acquired company and the acquired company is no more, the justice of the case demands that the foreign judgment obtained against the acquired company should be enforced against the acquiring company.

Another curious requirement in both the Act and the Ordinance is that foreign judgments in respect of fine, taxes and penalties cannot be enforced in Nigeria. This is against the whole concept of reciprocal treatment of judgment because it may give a safe haven to impenitent tax evaders. With the increase in tax evasion by foreign businesses and multinational companies, inability of states and government bodies to recover judgment debts in respect of fines, taxes and penalties across borders would led to a great loss of revenue. The role of fines, taxes and penalties is invaluable in the economic development of states in the 21st Century. Unlike the 19th Century where most states closed their borders against foreign goods and investment, the 21st century world is a global village.

Though Section 1 of the Foreign Judgments Act 1933 provides that taxes or other charges of a like nature or in respect of a fine or other penalty cannot be registered and enforced in United Kingdom, the United Kingdom Prime Minister David Cameron in a letter to Leaders of the British Overseas Territories and Crown Dependencies dated 20 May 2013 said “… I very much welcome the commitments you have made to automatic tax information exchange, both on a bilateral and multilateral basis, which will help us to reach our goal of setting a global standard in tax transparency… We also need to ensure information exchange works effectively for all… That is why we strongly support the Multilateral Convention on Mutual Assistance in Tax Matters”.

This highlights the importance of cross border tax collection. Nigeria will gain more if it offers herself and other states the opportunity to recover fine, taxes and penalties against evading offenders by either amending her Foreign Judgment statutes to accord foreign judgments on fine, taxes and penalties the same status with monetary judgments or enter into Multilateral and Bilateral treaties with other states to assist themselves on recovery of cross borders fine, taxes and penalties.

Furthermore, the requirement that once an appeal is filed at the original court, the foreign judgment cannot be registered at the registering court may be prejudicial to the judgment creditor. What happens in a situation where an unscrupulous debtor in an attempt to forever deny the judgment creditor the fruits of his judgment files an appeal at the original jurisdiction and goes to sleep? What happens to the judgment creditor where the judgment debtor dissipates the res before outcome of the appeal at the original court? Is it not justiciable to preserve the res at the registering court pending the outcome of the appeal at the original jurisdiction? This is the reasoning behind the provisions of Section 1 of the United Kingdom’s Act which provides that “a judgment shall be deemed to be final and conclusive notwithstanding that an appeal may be pending against it, or that it may still be subject to appeal, in the courts of the country of the original court”.

In conclusion, there is a need for the lingering crisis on the law regulating enforcement of foreign judgment in Nigeria to be settled. The legal conditions for enforcement of foreign judgment have been interpreted too broadly to adequately protect the interest of foreign judgment creditors. Therefore, the law and rules should be amended to reflect modern realities.

The Courts should be proactive in breaking new grounds and developing the jurisprudence on enforcement of foreign judgment in Nigeria in accordance with the essence of reciprocity of judgments. This will improve the prospects of Nigeria as a business destination and enhance the growth of her economy.

Navigating Arbitration and Specialised Courts in IP Matters

IP is a category of property that includes intangible creations of the human intellect. There are many types of IP, and some countries recognise more than others. The best-known types are copyrights, patents, trademarks, and trade secrets.

Enforcement of IP in Nigeria is saddled with loop holes, bureaucratic bottlenecks, lack of technical knowledge, skills and lack of public awareness. These have led to the prevalence of piracy, counterfeiting, unauthorised, unlicensed use and infringement of IP rights.

Though there have been laudable developments in recent times, there is still a wide gap in the enforcement of Intellectual Property Rights.

Regulatory Framework & Institutions

The principal types of Intellectual Property rights in the Nigeria Legal System are Copyrights, Patents, Trademarks and Industrial Designs. The regulatory frameworks include by the Copy Right Act Cap C28, Trade Marks Act Cap T13, Patent & Design Act P2 and the Merchandise Marks Act Cap M10.

These laws are enforced by the Nigerian Copyright Commission, The Trademark, Design and Patents Registry which is a subdivision of the Ministry of Industry, Trade & Investment, The National Agency for Food and Drug Administration Control, The Nigerian Police and The Nigerian Custom Service.

Nigeria is also a signatory to numerous international treaties on Intellectual Property. These include the World Intellectual Property Convention of 1970, Agreement on Trade-Related Aspects of Intellectual Property Rights, Berne Convention and Rome Convention for the Protection of Performers, Producers of Phonograms &Broadcasting Organisation etc.

The Current Situation

Enforcement of IP rights in Nigeria have been slow, largely ineffective and ladled with obstacles and loopholes.

We shall consider the causative factors:

  • Obsolete and Weak Laws: The principal laws in force were adopted from the Laws of England and date back as far as the 19th Century with no review since enactments. Intellectual Property is a steadily evolving concept and these laws do not also take into consideration, these dynamic changes in IP including the advancements in Technology. These Laws are also weak and cannot effectively control issues like piracy and counterfeiting.
  • Non Implementation of International Treaties: Section 12 of the Constitution of the Federal Republic of Nigeria 1999 as amended provides that before an International Treaty can be implemented in Nigeria, it must be ratified and enacted by the Legislative. Though Nigeria is a signatory to numerous International Treaties on IP, which can be a supplement to our laws, these cannot be implemented because they haven’t been ratified and enacted according to the CRFN.
  • Lack of Awareness and Inadequate Finance & Staffs of the Regulatory Agencies: Regulatory Agencies charged with enforcing IP rights in Nigeria are greatly understaffed; lack the necessary equipment, training and knowledge to effectively carry out their duties. . These culminate in a slow and inefficient enforcement of IP rights.
  • Lack of Uniformity and Cooperation amongst enforcement Agencies: Intellectual Property is a broad and technical area. Its enforcement cannot be carried out by one regulatory agency alone; the agencies need to work together. However in Nigeria, there is no such cooperation, they also lack a uniform public domain between the agencies to access the data of each agency in enforcing Intellectual property rights.
  • Judicial Enforcement: The Nigerian Judicial System is slow and t cases take an inordinate amount of time before coming to a conclusion. This coupled with the technical nature of Intellectual Property Rights, the lack of such technical knowledge by the Judges and the non-observance of judicial orders has further inhibited the effective enforcements of IP rights by the Judiciary. Furthermore the Federal High Court is vested with exclusive jurisdiction over IP disputes. This is a bar to parties exploring Alternative Dispute Resolution.

The Way Forward

Due to the loopholes in enforcing IP rights and resolving IP disputes in Nigeria, it has become necessary that new and alterative procedures need to be considered. These include Arbitrations and Special Courts.

Why Arbitration

Arbitration according to the Black’s Law Dictionary is a dispute resolution process in which the disputing parties choose one or more neutral third parties to make a final and binding decision resolving the dispute. WIPO has advocated for the use of Arbitration for resolving IP disputes and has gone further to establish an Arbitration & Mediation Centre for resolving IP disputes.

It also has in place its Arbitration rules. Discussed here are the advantages of Arbitration over Litigation and why IP disputes should be resolved using Arbitration in Nigeria.

  • Technicality involved in Intellectual Property: Intellectual Property is a technical subject matter. Therefore it is a better to use an Arbitrator who has specialised knowledge of Intellectual Property. This is even more so when technical issues like computer programs, Industrial designs, patents etc. are being contested. When parties can choose their adjudicator they have the opportunity of picking one who possesses the necessary technical knowledge.
  • Expert determination: Disputing parties can also refer the matter to an expert in the area of dispute for expert opinion, appraisal, valuation or determination to settle a dispute. This expert can act as Arbitrator and the resulting decision is binding on the parties.
  • International Nature of Intellectual Property Disputes: IP is by its nature intangible and global unlike other forms of property. It can be exploited and transmitted globally instantaneously. This makes its rights infringeable internationally and disputes are cross borders. Therefore IP disputes are best resolved by Arbitration which is most suitable for International disputes.
  • Flexibility of Arbitration: Arbitration by its nature is flexible. The parties can choose the Arbitrator, time, conduct of the proceedings and venue of the proceedings. Also they can choose the applicable law to govern the proceedings. This is important having regards to the International nature of Intellectual Property disputes. Parties do not have to be bound by the local laws of a disputing party.
  • The Time Involved and Finality: Arbitral proceedings are fastidious. Parties do not have to go the tedious and formal procedure involved in litigation. Arbitration is expeditious, quick and efficient. This is an advantage for Intellectual Property disputes which are of a technical and economical nature and need to be resolved timeously. Furthermore, contracting parties can resolve that there will be no appeal to the arbitral award. This ensures the dispute will be brought to an end quickly unlike litigation where parties by contract cannot bar an appeal.
  • Confidentiality: Arbitration ensures confidentiality between parties. IP disputes may involve trade secrets and commercial benefits. These are better kept confidential in order to avoid being exploited by the public. Arbitration also ensures that parties’ trade reputation is protected and this is a commercial benefit.

Establishing Special IP Courts

A special IP Court is an independent public judicial body that can operate at national or regional levels to adjudicate IP disputes, enforcement of IP rights and incidental disputes. There has been a global trend toward the establishment of specialised IP courts especially in developed Countries.

Establishing a specialised Court improves the quality of justice available to litigants. This is because the Judiciary will have vast experience and knowledge in IP. This is unlike non specialised Court where the judiciary may or may not have vast knowledge of IP. Specialised Courts are better equipped to keep pace with and adapt to dynamic developments in Law.

Another advantage of specialised Courts is that they allow for timely and cost-effective handling of proceedings and can improve consistency in case Law. Establishing a specialised IP Court or Tribunal in Nigeria will further enhance the effective enforcement and protection of IP rights in Nigeria and it is important considering the fact that some IP disputes are of a criminal nature and thus not arbitrable.

Conclusion

Intellectual Property plays a key role in the economy and development of a Country. Where these rights are adequately protected, enforced and implemented, it has a lot of benefits to the economy and the society at large.

Lessons have been learnt form developed countries who have given IP the paramount stage that it deserves. A crucial method of ensuring these rights and enforced and disputes are efficiently resolved is to resort to Arbitration and establish specialised IP Courts.

Our Laws should be amended to meet up with dynamic trends in IP, to provide resort to ADR especially Arbitration and Special Courts and Tribunals should be established to ensure speedy and effective trial of IP disputes.

Is Customary Arbitration the Solution to Congestion of Cases?

Arbitration is a way to resolve disputes outside the judiciary courts. The dispute will be decided by one or more persons, which renders the ‘arbitration award’.

It is no longer news that determination of disputes especially commercial disputes before Nigerian courts is not time efficient. The courts are usually congested and cases are subjected to too many adjournments. A litigant cannot reasonably predict the term of a case in court.

Presently, the courts are not sitting because judiciary workers are on strike to demand financial autonomy for the judiciary. It is clear that the delay in resolving disputes in court makes the English model court system to be ineffective in meeting the demands for justice in Nigeria in the 21st century.

Customary arbitration was used to reach peaceful resolution of disputes in pre-colonial Nigerian societies. This made it easier for business and social relationships to be maintained in that era. The reason for this is that customary arbitration encouraged amicable settlement of disputes and the need to restore cordiality amongst members of the society.

The rights and liabilities of the parties were not interpreted in isolation like in the current English system of litigation. The rights and liabilities of the parties were interpreted in accordance with the general social good of the society.

Interestingly, recently in Umeadi v Chibunze 10 NWLR 405, the Supreme Court found that where parties who believe in the efficacy of juju, resort to oath-taking to settle a dispute, they are bound by the result and so the common law principles in respect of proof of title to land no longer applies since the proof of ownership of title to land will be based on the rules set out by the traditional arbitration resulting in oath-taking.

The Court further stated that where customary arbitration is pleaded and proved, it is binding on the parties and capable of constituting estoppels.

The main difference between customary and modern arbitration is that while the former cannot be enforced as a judgment of court, the later can be enforced as a judgment with leave of court. However, if a customary arbitration award is pleaded and proved before a court of law, the parties cannot resile from it as it will be binding on them and create estoppel.

Customary arbitration is indigenous to Nigerian societies and has been part of our dispute resolution mechanism since time immemorial. It is more effective than the acrimonious and technical English model of litigation.

Hence, the Bill before the National Assembly to amend the Arbitration and Conciliation Act should take cognisance of the benefits of customary arbitration and make provisions for it to coexist with domestic and international commercial arbitration.

In order to ensure its efficacy, a customary arbitration award should not be subjected to the principles of English law by the court testing whether the decision of the customary tribunal meets English law standards. This is because the history and composition of the English system of adjudication is different from customary arbitration in Nigeria.

It is settled law that parties are bound by the terms of their agreement. Litigants do not need to go to conventional courts to resolve all their disputes.

If parties to a dispute subject themselves to customary arbitration before a religious or traditional leader, clan or village head or other persons they trust, they should naturally be bound by the decision of the person who they choose to resolve their dispute. This will in no small way decongest the courts, promptly resolve disputes and give Nigerians a sense of fulfilment in the justice delivery system in the country.

Indeed, the Supreme Court decision in Umeadi v Chibunze is a breath of fresh air and a welcome development.

It is also a clarion call for Nigeria to go back to its roots and develop its own customary arbitration and indigenous dispute resolution mechanisms, culture and principles which will better serve the demands of Nigerians for a justice system which will serve them promptly and efficiently.

Why Construction Liens Should Be Adopted

Construction liens are legal claims for money expended or unpaid compensation filed by a contractor or other professional on a building or design. This is done by filing a public notice on a property stating that the owner of the property owes the contractor a stated sum of money.

It can also be filed by a subcontractor or materials supplier for any work done on a building.

The purpose of a construction lien is to serve as an encumbrance on the property upon which a lien is filed. It also gives notice to a bonafide purchaser for value that there is an unpaid sum outstanding to the contractor, subcontractor, materials supplier or other professional. It may prevent interested purchasers from purchasing the property until the unpaid sum is liquidated.

Benefits of a Construction Lien

When a Construction lien has been effectively filed, it acts as an encumbrance on the property and any third party who goes ahead to buy the property obtains title subject to the lien. It prevents the sale or refinance of the property because a prudent purchaser or mortgagor will not want to obtain a property that has a lien on it. The lien helps contractors, sub-contractors, material suppliers and other professional to quickly resolve payment problems.

Constructive lien also gives the holder of the lien an equitable interest in the property because failure of the property owner to clear the outstanding debt can grant the lien holder the right to foreclose the property after a period of time.

Furthermore, when the lien is placed, it hastens the property owner’s decision to clear the unpaid sums. It is an additional remedy granted to contractors in addition to the right to sue for a breach of contract. Nevertheless liens are not absolute; a property owner who is disputing the sum claimed can challenge the lien in Court.

Other Jurisdictions

Construction lien in its modern form originated in the United States of America after it was introduced by Thomas Jefferson to encourage the construction of Washington. Today, it is applicable in all states in United States and a lot of developed countries like England, France and Canada. However, Countries in Latin America and UAE specifically prohibit the lien except where the parties voluntarily adopt it as binding on them.

Current Situation

Construction liens are strictly regulated by statutes. Unless there is a law stipulating its procedure it can generally not be applied. In Nigeria, construction liens are generally not applicable due to the absence of a statute enacting it. Given the benefits of the concept of construction liens, one wonders why Nigeria, a country growing at a tremendous rate, where real estate is on the rise has not adopted this concept which seeks to protect the contractor while encouraging economic development.

Furthermore, the Nigerian judicial system is slow and before unpaid contractors can recover their money, a lot of productive time may have been wasted. There is also the issue of the depreciating value of our naira which stalls economic growth and development.

Another consideration is the number of people involved in the construction business who actually need protection and prompt payments; these include bricklayers, architects, quantity surveyors, materials suppliers, engineers etc.

Escaping the Current Situation

There are instances where contractors can take advantage of construction liens. An example is where a right of a contractor to a construction lien is expressly stated in the construction contract. This is advisable because it guarantees the contractor payment for his labour and expenditure.

Another instance is approaching the Court to place a lien or encumbrance on the property. This will usually be done by filing a suit for breach of contract claiming for the unpaid fees. The contractor can ask for an interlocutory or perpetual order of the court, placing a lien on the property to prevent the property owner from disposing it or mortgaging it until the unpaid sums or Judgment sums are liquidated.

Since the Court has discretion on whether or not to grant the remedy of placing a lien on the property, it is advisable that contractors should insist on a construction lien clause being part of the construction contract. This is because it is settled Nigerian law that parties are bound by their agreement.

The Way forward

Construction lien is a creation of statute and to effectively utilise it in Nigeria, our legislators need to promulgate a law recognising and enforcing it or amend our existing real property and construction laws in Nigeria to accommodate it.

The benefits of construction liens are numerous and a developing Country like Nigeria needs to use the concept to its benefits. This will curb the excesses of recalcitrant property owners who wish to take advantage of the loopholes in the Nigerian legal system to deliberately refuse to pay sums owed by them to professionals who constructed the property.