Nigeria:
Overview Of Commercial Litigation In Nigeria
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Commercial litigation is a means of resolving a commercial
dispute in Nigeria through instituting an action in court with its
origin rooted in English Common Law. A commercial dispute can arise
between Nigerian parties to a transaction or between international
parties where there is the existence of a connecting Nigerian
factor which could be as a result of the location of the contract,
place of performance, or domicile of parties to the
transaction.
Commercial litigations in Nigeria are commenced in the State
High Courts or the Federal High Court of the Federal Capital
Territory (FCT) through Writ of Summons or an Originating Summons
depending on the nature of the suit. These courts have the
unlimited general jurisdiction to hear and determine any commercial
litigation instituted before it regardless of the value, other than
those commercial disputes that are within the exclusive
jurisdiction of the Federal High Court such as disputes relating to
securities, admiralty, intellectual properties, operation of
companies among others as stipulated in Section 249 of the
Constitution.
Commercial litigation in Nigeria is regulated and governed by
various sources of laws such as;
- Constitution of the Federal Republic of Nigeria 1999 (as
amended), which created the various courts in Section 230(1),
237(1), 249(1), 270(1) and jurisdictions of each court. - Various statues
- Judicial precedents,
- Rules of courts and practice directions.
Jurisdiction of Court in Commercial Litigation
The jurisdiction of a court is the power of the court to decide
a commercial dispute between parties. Every court in Nigeria is
established by laws and it usually the law establishing the court
that also defines the jurisdiction of such a court. In the case of
Madukolu & Ors Vs. Nkemdili 1962 2 SCNLR, 341,
the Supreme court laid down the conditions that determine the
jurisdiction of a court as follows:
- The court must be properly constituted with regards to the
number and qualification of its members. - The subject matter of the dispute must be within the
jurisdiction of the court and no feature in the case which prevents
the court from exercising its jurisdiction. - The case must have been brought to court by the due process
after satisfaction of relevant provisions on condition
precedents.
Capacity to institute commercial litigation in Nigeria
In any cause of action, after determining the nature of the
commercial claim, the jurisdiction of the court, and proper advice
on any of the Alternative Dispute Resolution mechanism and the next
matter should be the likely parties to the litigation. The
appropriate parties to the commercial litigation are important
because a court can only resolve a dispute if the right parties are
before it. Once the relevance of parties is not determined, it goes
to the root of the matter. For the commercial litigation to be
competent before the Nigerian courts, both parties must be legal
persons (either natural or juristic). If the competence of any of
the parties is challenged, the onus lies before the party to
establish his competence, as lack of competence on the part of
either party to the action will lead to the action being struck out
by the court.
Before commencing commercial litigation for a claim in court,
there are certain factors to be considered by the parties. Some of
them will be mentioned below.
- The existence of a limitation period for commencing the
litigation. The limitation period for commercial claims is
dependent on the nature of the claim. For example, the limitation
period for instituting an action for a simple contract is six (6)
years as provided by Section 8 of the Limitation Law of
Lagos State, 2003. - The court that has competent jurisdiction to determine the
litigation. - The issuance of pre-action notices or letter of demands where
applicable. - The appropriate names of parties and where the parties or a
party is a company, the names as registered with the Corporate
Affairs Commission (CAC). - The remedies that are available to the litigant.
- The civil procedure rules of the court.
- Whether there must be recourse to any form of alternative
dispute resolution mechanism before commencing the litigation. - The cost of the litigation process.
Alternative Dispute Resolution
Although litigation is the most common form of resolving
commercial disputes in Nigeria, it could be an unwieldy process
because of factors such as delay in adjudication, overflow of cases
before the court, or delay caused by an unwilling party to the
suit. As a result of this, it is advisable and encouraged to
resolve commercial disputes through any of the alternative dispute
resolution mechanisms. The following are the methods of alternative
dispute resolution in Nigeria:
- Negotiation
- Mediation
- Conciliation
- Arbitration
However, it is noteworthy to state that unlike litigation, which
involves a summon of court, alternative dispute resolution option
is voluntary unless parties have had a prior agreement to have
recourse to it.
Finally, before commencing commercial litigation in Nigeria, one
must consider the subject matter of the claim, the location of
parties, the place where the dispute occurred, or where the course
of action arose, among others. All these factors will determine the
appropriate court to institute the action and the procedure to
follow.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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