THE EXPORT-IMPORT BANK OF THE USA v. NDIC
(2021)LCN/15626(CA)
In The Court of Appeal
(LAGOS JUDICIAL DIVISION)
On Tuesday, March 16, 2021
CA/L/372/2011
Before Our Lordships:
Joseph Shagbaor Ikyegh Justice of the Court of Appeal
Onyekachi Aja Otisi Justice of the Court of Appeal
Abdullahi Mahmud Bayero Justice of the Court of Appeal
Between
THE EXPORT-IMPORT BANK OF THE UNITED STATES OF AMERICA APPELANT(S)
And
NIGERIAN DEPOSIT INSURANCE CORPORATION (Qua Provisional Liquidator Of Gulf Bank Plc) RESPONDENT(S)
RATIO
THE FUNDAMENTAL PRINCIPLE OF JURISDICTION
Jurisdiction is the authority or power of a Court to adjudicate over any matter. It is the very basis on which a Court adjudicates over a matter. Jurisdiction is conferred on a Court by the Constitution or by Statute, as may be permitted by the Constitution; Adetayo v. Ademola (2010) LPELR-155(SC); Adah v. N.Y.S.C. (2004) 19 NSCQR 220; Utih v. Onoyivwe (1991) 1 SCNJ 25. PER OTISI, J.C.A.
WHETHER OR NOT A COMPLAINT QUERYING THE JURISDICTION OR AUTHORITY OF A COURT TO HEAR A MATTER IS FOUNDATIONAL TO THE LEGALITY OF ANY DECISION FLOWING FROM THE PROCEEDINGS BEFORE THAT COURT OVER SUCH MATTER
A complaint querying the jurisdiction or authority of a Court to hear a matter is foundational to the legality of any decision flowing from the proceedings before that Court over such matter. The imperative reason for hearing and resolving a complaint on jurisdiction at the earliest is that where a Court proceeds to hear a matter, without jurisdiction, the proceedings, no matter how well conducted, as well as every order or decision arising therefrom, amount to a nullity; ex nihilo nihil fit; Melwani v. Five Star Industries Ltd (2002) 1 S.C. 120; Oloba v. Akereja (1988) 3 NWLR (Pt.84) 508, (1988) 7 SC (Pt.1) at pp. 11-12. The issue of jurisdiction is therefore always raised and determined at the earliest to save costs and time and also avoid a null trial; Petrojessica Enterprises Ltd v. Leventis Technical Company Ltd (1992) LPELR-2915 (SC); Nwankwo v. Yar’Adua (2010) 12 NWLR (Pt. 1209) 518 S.C.; Obaba v. Military Governor of Kwara State (1994) 4 SCNJ 121; Okoye v. N.C.F.C. (1991) 7 SC (Pt. 111) 33. PER OTISI, J.C.A.
WHETHER OR NOT THE CLAIM OF A PLAINTIFF DETERMINES THE JURISIDICTION OF THE COURT
The Appellant’s Counsel has rightly submitted that jurisdiction is determined by the claim of the plaintiff as evinced in the writ of summons and statement of claim, and not by the defence of the defendant. This is well settled; Adeyemi & Ors v. Opeyori (1976) LPELR-171(SC); Babale v Abdulkadir (1993) LPELR-693(SC); ITPP Ltd v UBN Plc (supra), (2006) LPELR-1519(SC); Adetayo & Ors v Ademola (2010) LPELR-155(SC), (2010) 15 NWLR (PT 1215) 169; Zakirai v. Muhammad & Ors (2017) LPELR-42349(SC). The Court is to examine the enabling law vesting jurisdiction in the Court in the light of the reliefs sought by the plaintiff. Where the reliefs sought fall within the jurisdiction of the Court; the Court must assume jurisdiction. But, where the reliefs fall outside its jurisdiction, the Court must decline jurisdiction. In resolving the controversy in this appeal therefore, the claim of the Appellant as plaintiff before the lower Court must be examined to ascertain whether the claim came within the jurisdiction conferred on the lower Court. PER OTISI, J.C.A.
WHEHER OR NOT THE JURISDICTION OF THE FEDERAL HIGH COURT IS UNLIMITED
The jurisdiction of the Federal High Court is not unlimited. The subject matter and status of parties jurisdiction of the Federal High Court is circumscribed primarily by the provisions of Section 251 of the 1999 Constitution, as amended, and by various other legislations that donate jurisdiction to the Federal High Court over specific matters. The subject matter in controversy must fit into one of the enumerated compartments of jurisdiction of the Federal High Court donated by the Constitution or other Statute, before the Federal High Court can have the jurisdictional toga to entertain the suit. See also Olutola v Unilorin (2004) LPELR-2632(SC); PDP v Sylva (2012) LPELR-7814(SC); Opia v INEC (2014) LPELR-22185(SC); Jev v. Iyortyom (supra) Abdulraheem & Ors v. Oduleye & Ors (2019) LPELR-48892(SC).
Remarking on the import of the drafting technique employed in the provisions of Section 251 of the 1999 Constitution, as amended, this Court, per Nweze, JCA (as he then was) in Oladipo v Nigeria Customs Service Board (2009) LPELR-8278(CA) at pages 14 – 16, succinctly said:
“The point must be noted that the draftsman of that section painstakingly itemised the subject matters that fall within the exclusive jurisdiction of the Federal High Court. In all, that section vested exclusive jurisdiction on the Federal High Court in eighteen major items, see, per Tobi JSC in Olutola v. UNILORIN (2004) 18 NWLR (pt 905) 416, 462. The implication of this technique is that the said Court [Federal High Court) is actually a Court of enumerated jurisdiction, that is, a Court whose jurisdiction is not only delimited by statute but whose jurisdiction is delineated in relation only to the subject matters enumerated therein. PER OTISI, J.C.A.
DEFINITION OF A LETTER OF CREDIT
Now, a Letter of Credit represents an instrument under which the issuer, usually a bank, at a customer’s request, agrees to honour a draft or other demand for payment made by a third party, the beneficiary, as long as the draft or demand complies with specified conditions, and regardless of whether any underlying agreement between the customer and the beneficiary is satisfied; Black’s Law Dictionary 9th Edition, 2009 at 987; Imoka & Anor v. UBA Plc (2012) LPELR-19837(CA); Nwangwu v FBN (2008) LPELR-4478(CA). PER OTISI, J.C.A.
WHETHER OR NOT DISPUTES FOUNDED ON SIMPLE CONTRACTS ARE UNDER THE EXCLUSIVE JURISDICTION OF THE FEDERAL HIGH COURT
This is well settled. In a plethora of judicial pronouncements, it has been established that disputes founded on simple contracts are not among those envisaged in the exclusive jurisdiction conferred on the Federal High Court under Section 251 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended); Onuorah v. Kaduna Refining & Petrochemical Co. Ltd (supra), (2005) LPELR-2707(SC); Adelekan v. ECU-line NV (supra), (2006) 12 NWLR (pt. 993) 33, (2006) LPELR-113(SC); Roe Ltd v UNN (2018) LPELR-43855(SC); Dec Oil & Gas Limited v. Shell Nigeria Gas Limited (2019) LPELR-49347(SC). PER OTISI, J.C.A.
ONYEKACHI AJA OTISI, J.C.A. (Delivering the Leading Judgment): This appeal was lodged against the decision of the Federal High Court, Lagos (the lower Court) in its ruling delivered on January 14, 2011 Coram P. Ajoku, J. in Suit No: FHC/L/CS/1295/2005 wherein the lower Court, in an application filed by the Respondent, held that it had no jurisdiction to adjudicate upon the Appellant’s claim.
The facts leading to this appeal, on the part of the Appellant, may be summarized in this manner: By a Commercial Invoice and Original Final Invoice No WTI/FCT/NG/10/2003A dated 21/10/2003, the Widespread Trading International Inc (WTII) had a contract with FC and T Projects Ltd (FC & T), a private limited liability Company based in Nigeria whereby WTII agreed to sell and FC & T agreed to buy 25 refurbished 86/90 Forty Foot GMC/RTS Transit Buses (the goods) at a total free-on-board value of $562,500.00. By the Commercial Invoice and Original Final Invoice, the freight charges and ancillary charges for the transportation of the goods to FC & T in Nigeria were $248,750.00 and $170,000.00, respectively. By the said Commercial Invoice and Original Final Invoice, the total cost of the goods together with the shipping cost by WTII from USA to FC & T in Nigeria was $981,250.00.
By another Pro-forma Commercial Invoice and Final Invoice No WTI/FCT/NG/11/2003B dated 12/5/2004, WTII in USA agreed to sell and FC & T in Nigeria agreed to buy 25 refurbished 86/90 Forty Foot GMC/TMC/RTS Transit Buses (the goods) at a total free-on-board at a unit cost of $22,500.00, with the total cost at $517,500.00. WTII and FC &T agreed to employ the means of documentary credit, particularly the opening/issuance of Letter of Credit for the purpose of the sale and purchase of the goods. Pursuant to this agreement, WTII sought and obtained credit facilities from RZB Finance LLC (RZB), a financial institution based in USA, to finance the export of the goods from the USA, while FC & T sought and obtained from GBN, as issuing Bank, an Irrevocable Transferable Letter of Credit bearing Documentary Credit No GBN/2003/0037 in favour of WTII. By the said Letter of Credit, GBN undertook to pay WTII through RZB, the confirming Bank, upon satisfying the conditions for payment as stipulated therein, and issued Notification of Documentary Credit for the sum of US$1, 962,500.00.
As a condition precedent to RZB financing the exportation of the goods to Nigeria and WTII agreeing to sell the goods to FC & T, and pursuant to the terms of the sale agreement between FC & T and WTII, both FC & T and WTII agreed that RZB take out an insurance policy with the Appellant, insuring the payment of the sum of UD$1,962,500.00 being the value of the goods and sundry charges as evidenced by the Letters of Credit. The Appellant is an agency of the Government of United States of America (USA) that is engaged in the financial support of exports from the USA and whose services include giving insurance cover to exporters based in the USA against payment defaults by foreign buyers. RZB took out the insurance policy with the Appellant, with the knowledge and agreement of both GBN and FC & T. Premised upon this, WTII agreed to deliver the goods to FC & T and in accordance with the terms of the Letter of Credit. However, when GBN failed to make payment to RZB, WTII was paid by RZB. Pursuant to the terms of the insurance policy, RZB, upon payment of the insurance claim by the Appellant, assigned all its rights under the Letter of Credit to the Appellant. The Appellant made attempts to recover the payment from GBN, the Respondent. After unsuccessful attempts, the Appellant as plaintiff instituted action before the lower Court by Writ of Summons and Statement of Claim, both dated 9/12/2005, seeking the following reliefs, pages 1 – 13 of the Record of Appeal:
“(i) The sum of US$2,943,750.00 [Two million, nine hundred and forty-three thousand, seven hundred and fifty United States Dollars], being principal and accrued interest [as at the 6th day of April, 2005] due to the Plaintiff by virtue of the terms of a Letter of Credit issued by the Defendant and bearing Letter of Credit issued by the Defendant and bearing Letter of Credit No. GBN/2003/0037.
(ii) Interest on the said sum US$2,943,750.00 at the rate of 7% from the 6th day of April, 2005, until the final liquidation of the judgment-debt and costs.
(iii) Costs of this action in the sum N2,000,000.00 [Two million Naira] only” The Respondent as defendant, in its Statement of Defence, denied the claims of the Appellant, pages 194-229 of the Record of Appeal. The Respondent also filed a Motion on Notice seeking the following relief, pages 272-273 of the Record of Appeal:
AN ORDER of this Honourable Court striking out the Plaintiff’s suit in its entirety.
The grounds upon which the application was sought were that:
1. The Plaintiff’s action in its entirety is a claim for payment for supply of goods.
2. The Federal High Court has no jurisdiction in respect of a simple contract specifying payment obligations for supply of goods.
3. Plaintiff’s action does not relate to any matter under Section 251(1) of the 1999 Constitution or any matter under any Act of the National Assembly in respect of which the Federal High Court is vested with jurisdiction.
The lower Court heard arguments on the said Motion and, on 14/1/2011, declined jurisdiction to entertain the Appellant’s suit. The lower Court further ordered the return of the case file to the Chief Judge of the Federal High Court for transfer to the Lagos State High Court, pages 350-366 of the Record of Appeal. Dissatisfied with the decision of the Federal High Court, the Appellant filed a Notice of Appeal on 28/1/2011 on one ground of Appeal, pages 367-370 of the Record of Appeal.
The parties filed Briefs of Argument, pursuant to the Rules of this Court. The Amended Appellant’s Brief was filed on 31/10/2019 but deemed properly filed and served on 23/1/2020. The Respondent’s Brief was filed on 3/2/2020. The Appellant filed a Reply Brief on 20/3/2020 but deemed properly filed and served on 18/1/2021. At the hearing of the appeal on 18/1/2021, the Briefs were respectively adopted by O. Iyayi, Esq. for the Appellant, and, by O. Akinosun, SAN, with Ayodeji Jolaoso, Esq., for the Respondent. Mrs. Iyayi urged the Court to allow the appeal and set aside the ruling of the lower Court, while Senior Counsel, Akinosun, SAN, urged the Court to dismiss the appeal and affirm the ruling of the lower Court.
The Appellant, in its Brief distilled this sole issue for determination of the appeal:
Whether taking into account the subject-matter of the Appellant’s claim before it, the lower Court was right in deciding that the Federal High Court lacks the jurisdiction to adjudicate upon the Appellant’s claim.
For the Respondent, the issue for determination was framed thus:
The Appellant instituted this action to a recover debt stemming from a contract for the supply of mass transit buses. Sec 251(1) (d) confers exclusive jurisdiction in State High Courts in respect of matters relating to simple contract. Was the lower Court right when it declined jurisdiction to entertain the suit.
The issues seek the same determination. I shall adopt the issue as framed by the Appellant.
Arguments
For the Appellant, it was argued that jurisdiction of a Court is determined by the claim of the plaintiff as endorsed on its writ of summons and statement of claim, and not the defendant’s statement of defence, relying on Onuorah v Kaduna Refining & Petrochemical Co. Ltd (2005) 6 NWLR (PT 921) 393; Tukur v Government of Gongola State (1989) 4 NWLR (PT 117) 517. The lower Court recognized that the Appellant’s relief was predicated upon a Letter of Credit transaction, and then proceeded to hold that the Appellant’s claim was for recovery of debt and that it was a matter of simple contract, which does not fall within the jurisdiction of the Federal High Court. Counsel contended that it was not the case of the Appellant at the lower Court that the Letter of Credit was issued by the Respondent in favour of the Appellant. The Appellant’s rights accrued from Insurance Clause in the Letter of Credit transaction whereby the Appellant as insurer acquired the rights of RZB to recover from the Respondent, the sums due to it under the Letter of Credit transaction upon the failure of the Respondent to make payments to RZB as the issuing Bank in the Letter of Credit transaction. Counsel submitted that the lower Court’s reliance on Akinsanya v UBA Ltd (1986) 4 NWLR (PT 35) 273 and Onuorah v Kaduna Refining & Petrochemical Co. Ltd (supra) was in error as both cases had no bearing to the instant case.
The Appellant’s action did not arise from it being a buyer or seller of goods, or from the supply of goods. It arose from a Letter of Credit transaction and therefore not an action in simple contract. By Section 251(1)(d) of the 1999 Constitution, claims relating to rights attached to Letters of Credit fall within the jurisdiction of the lower Court. The Appellant’s claim was for the payment of the sum of US$2,943,750.00 pursuant to rights accruing to it by the Letter of Credit No. GBN/2003/0037 issued by the Respondent and not a claim for supply of goods, as found by the lower Court. It fell within the jurisdiction of the lower Court. Reliance was also placed on the decision of this Court in Central Bank of Nigeria v Industrial Bank Ltd (1997) 9 NWLR (PT 522) 712. The only exception to the exclusive jurisdiction of the Federal High Court is found in the proviso to Section 251(1)(d) of the Constitution, which confers concurrent jurisdiction on both the State and Federal High Courts where the cause is between a bank and its customer, citing NDIC v Okem Enterprises Ltd & Anor (2004) 10 NWLR (PT 880) 107 at 198. It was submitted that the Appellant’s case was not caught by this proviso. The case of the Appellant relating to its rights derived from the terms of a letter of credit, fall within the purview of the Federal High Court. Further reliance was placed on the decisions in Owena Bank Nig Plc v Michael Ade-Ojo (2003) 17 NWLR (PT 848) 174 at 193; Societe Bancaire (Nigeria) v Margarida Salvado De Lluch (2004)18 NWLR (PT 905) 341.<br< p=”” style=”box-sizing: inherit; margin: 0px; padding: 0px;”></br<>
Appellant’s Counsel further cited and relied on Alsthom SA & Anor v Saraki (2005) 3 NWLR (PT 911) 208 at 224 – 225 in arguing that the trial Court had acted upon a misconception of the law and that was in the interest of justice to set aside the ruling of the lower Court. The Court was urged to allow the appeal.
For the Respondent, it was submitted that jurisdiction is the life wire of every matter as it goes deep to the root of the matter. No matter how well structured the arguments of the parties are, once a Court lacks jurisdiction to hear the suit it amounts to a nullity, citing Chief Etuedor Utih & Ors. v. Jacob Umurhurhu Onoyivwe & Ors. (1991) LPELR-3436(SC). The Respondent argued that the lower Court, after considering the Appellant’s claim, was right to have declined jurisdiction and transferred the case to the Honourable Chief Judge for onward transmission to the High Court of Lagos State.
The case of Akinsanya v. UBA (supra) was relied on to submit that the mere fact that a letter of credit is involved does not bring the claim within the jurisdiction of the Federal High Court. From the facts of the case, the underlying dispute was about payment for the supply of goods. It had nothing to do with issuance of letter of credit, defect in letter of credit or any dispute intrinsic in the nature of the letter of credit. The Appellant’s simple request was for payment of a specified sum of money, purportedly due from a contract for supply of the buses, such that the suit would automatically terminate the moment the money claimed on the contract is paid. The claim did not relate to any subject for which the jurisdiction of the Federal High Court was established.
Senior Counsel for the Respondent posited that the cases of Central Bank of Nigeria v. Industrial Bank Ltd. (supra) and Owena Bank Nig. Plc v. Michael Ade Ojo (supra) relied on by the Appellant did not support their position. The Appellant’s claim at the lower Court was for payment under a contract for supply of mass transit buses by WTII to FC&T. The Appellant, under a misapprehension that the contract for supply of mass transit buses was financed by a GBN’s Unconfirmed Letter of Credit, instituted the action at the lower Court to recover the payment of the sum of US$2,943,750.00 for the mass transit buses. It was an action for demand of money. As settled by judicial pronouncements, the Federal High Court has no jurisdiction in respect of claims arising out of contracts, citing Integrated Timber and Ply Wood Products Limited v. Union Bank Plc (2006) LPELR-1519(SC); Onuorah v. K.R.P.C LTD (supra); Adelekan v. Ecu-Line NV (2006) 12 NWLR (PT.993); Associated Discount House Limited v. Amalgamated Trustees Limited (2006) 10 NWLR (PT. 989) at 635.
It was argued that the Appellant, in the Appellant’s Brief, had acknowledged the fact that there was a sale agreement which arose from a contract between FC&T and WTII for the purchase of mass transit buses. The Appellant further acknowledged that the issuance of the Letter of Credit emanated from the main claim of a simple contract where it stated that the issuance of the Letters of credit was for the purpose of the sale and purchase of the goods. It was posited that the issuance of a Letter of Credit was not the subject matter for contention. Rather, the subject matter for contention was the unpaid sum which arose from the simple contract between the parties. The Letter of Credit herein was just one of the processes included in the execution of the subject matter, which was the simple contract between the parties. Senior Counsel reasoned that the Letter of Credit cannot stand independently on its own without the mention of the simple contract. It was the position of the Respondent that the Appellant’ claim cannot stand when it is severed from the simple contract between the parties.
It was further posited that by the provisions of Section 251(1)(d) of the Constitution of the Federal Republic of Nigeria, the jurisdiction of the Federal High Court would only be invoked in relation to the issues of a Letter of Credit where it involves the Central Bank of Nigeria. In the instant case, the appropriate Court to adjudicate upon the matter is the High Court of Lagos State, taking into consideration that the letter of credit does not involve the Central Bank of Nigeria. Reliance was placed on the decision of this Court in Agu v CBN (2016) LPELR-41091(CA).
Senior Counsel finally submitted that the Appellant had failed to show any just ground for the Court to rely on in upturning the decision of the lower Court. The Court was urged to dismiss the appeal.
In the Reply on points of law, the Appellant submitted that the Respondent cannot formulate a case for the Appellant or state that which it perceives to be the Appellant’s case as a basis for the determination of jurisdiction of the Court. The Court was urged to interpret Section 251(1) (d) as a whole and not in isolation. On rules for interpretation of Statutes, reliance was placed on the decision in Ugwu v Ararume (2007) 6 SC (Pt 1) 88. The Court was again urged to allow the appeal.
Resolution
Jurisdiction is the authority or power of a Court to adjudicate over any matter. It is the very basis on which a Court adjudicates over a matter. Jurisdiction is conferred on a Court by the Constitution or by Statute, as may be permitted by the Constitution; Adetayo v. Ademola (2010) LPELR-155(SC); Adah v. N.Y.S.C. (2004) 19 NSCQR 220; Utih v. Onoyivwe (1991) 1 SCNJ 25.
A complaint querying the jurisdiction or authority of a Court to hear a matter is foundational to the legality of any decision flowing from the proceedings before that Court over such matter. The imperative reason for hearing and resolving a complaint on jurisdiction at the earliest is that where a Court proceeds to hear a matter, without jurisdiction, the proceedings, no matter how well conducted, as well as every order or decision arising therefrom, amount to a nullity; ex nihilo nihil fit; Melwani v. Five Star Industries Ltd (2002) 1 S.C. 120; Oloba v. Akereja (1988) 3 NWLR (Pt.84) 508, (1988) 7 SC (Pt.1) at pp. 11-12. The issue of jurisdiction is therefore always raised and determined at the earliest to save costs and time and also avoid a null trial; Petrojessica Enterprises Ltd v. Leventis Technical Company Ltd (1992) LPELR-2915 (SC); Nwankwo v. Yar’Adua (2010) 12 NWLR (Pt. 1209) 518 S.C.; Obaba v. Military Governor of Kwara State (1994) 4 SCNJ 121; Okoye v. N.C.F.C. (1991) 7 SC (Pt. 111) 33.
The Appellant’s Counsel has rightly submitted that jurisdiction is determined by the claim of the plaintiff as evinced in the writ of summons and statement of claim, and not by the defence of the defendant. This is well settled; Adeyemi & Ors v. Opeyori (1976) LPELR-171(SC); Babale v Abdulkadir (1993) LPELR-693(SC); ITPP Ltd v UBN Plc (supra), (2006) LPELR-1519(SC); Adetayo & Ors v Ademola (2010) LPELR-155(SC), (2010) 15 NWLR (PT 1215) 169; Zakirai v. Muhammad & Ors (2017) LPELR-42349(SC). The Court is to examine the enabling law vesting jurisdiction in the Court in the light of the reliefs sought by the plaintiff. Where the reliefs sought fall within the jurisdiction of the Court; the Court must assume jurisdiction. But, where the reliefs fall outside its jurisdiction, the Court must decline jurisdiction. In resolving the controversy in this appeal therefore, the claim of the Appellant as plaintiff before the lower Court must be examined to ascertain whether the claim came within the jurisdiction conferred on the lower Court.
The jurisdiction of the Federal High Court is not unlimited. The subject matter and status of parties jurisdiction of the Federal High Court is circumscribed primarily by the provisions of Section 251 of the 1999 Constitution, as amended, and by various other legislations that donate jurisdiction to the Federal High Court over specific matters. The subject matter in controversy must fit into one of the enumerated compartments of jurisdiction of the Federal High Court donated by the Constitution or other Statute, before the Federal High Court can have the jurisdictional toga to entertain the suit. See also Olutola v Unilorin (2004) LPELR-2632(SC); PDP v Sylva (2012) LPELR-7814(SC); Opia v INEC (2014) LPELR-22185(SC); Jev v. Iyortyom (supra) Abdulraheem & Ors v. Oduleye & Ors (2019) LPELR-48892(SC).
Remarking on the import of the drafting technique employed in the provisions of Section 251 of the 1999 Constitution, as amended, this Court, per Nweze, JCA (as he then was) in Oladipo v Nigeria Customs Service Board (2009) LPELR-8278(CA) at pages 14 – 16, succinctly said:
“The point must be noted that the draftsman of that section painstakingly itemised the subject matters that fall within the exclusive jurisdiction of the Federal High Court. In all, that section vested exclusive jurisdiction on the Federal High Court in eighteen major items, see, per Tobi JSC in Olutola v. UNILORIN (2004) 18 NWLR (pt 905) 416, 462. The implication of this technique is that the said Court [Federal High Court) is actually a Court of enumerated jurisdiction, that is, a Court whose jurisdiction is not only delimited by statute but whose jurisdiction is delineated in relation only to the subject matters enumerated therein.
It would, therefore, amount to wreaking havoc on the express letters and intendment of the said Section 251 to construe it as granting the said Court a carte blanche to deal with every conceivable matter [that is, beyond those expressly enumerated above] that relates to a federal agency. This cannot be so.
The effect of the circumscription of the jurisdiction of the Court to those eighteen major items is that whenever the question of the jurisdiction of the Court is canvassed, attention ought to be focused on the subject matter of the suit. If the subject matter of the suit cannot be pitch forked into any of those eighteen major items, then that Court is not the proper forum for the ventilation of the action.”
By Writ of Summons and Statement of Claim, both dated 9/12/2005, the Appellant sought the following reliefs, pages 1 – 13 of the Record of Appeal:
(i) The sum of US$2,943,750.00 [Two million, nine hundred and forty-three thousand, seven hundred and fifty United States Dollars], being principal and accrued interest [as at the 6th day of April, 2005] due to the Plaintiff by virtue of the terms of a Letter of Credit issued by the Defendant and bearing Letter of Credit issued by the Defendant and bearing Letter of Credit No. GBN/2003/0037.
(ii) Interest on the said sum US$2,943,750.00 at the rate of 7% from the 6th day of April, 2005, until the final liquidation of the judgment-debt and costs.
(iii) Costs of this action in the sum N2,000,000.00 [Two million Naira] only.
For the Appellant, the contention was that the lower Court had the jurisdiction to entertain the complaint because it arose from a Letter of Credit transaction and not from a simple contract, the Appellant not being a buyer or seller of goods, or from the supply of goods. The Appellant relied on the provisions of Section 251(1)(d) of the 1999 Constitution, as amended. For the Respondent, the opposite position was that the action had nothing to do with issuance of letter of credit, defect in letter of credit or any dispute intrinsic in the nature of the letter of credit. The Appellant’s complaint was, rather, for payment of a specified sum of money, purportedly due from a contract for supply of the buses. Now, Section 251(1) (d) provides:
251.
(1) Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other Court in civil causes and matters –
(d) connected with or pertaining to banking, banks, other financial institutions, including any action between one bank and another, any action by or against the Central Bank of Nigeria arising from banking, foreign exchange, coinage, legal tender, bills of exchange, letters of credit, promissory notes and other fiscal measures: Provided that this paragraph shall not apply to any dispute between an individual customer and his bank in respect of transactions between the individual customer and the bank;
Section 251(1)(d) confers exclusive jurisdiction on the Federal High Court in these specified matters; NDIC v Okem Enterprises (supra), (2004) LPELR-1999(SC).
Now, a Letter of Credit represents an instrument under which the issuer, usually a bank, at a customer’s request, agrees to honour a draft or other demand for payment made by a third party, the beneficiary, as long as the draft or demand complies with specified conditions, and regardless of whether any underlying agreement between the customer and the beneficiary is satisfied; Black’s Law Dictionary 9th Edition, 2009 at 987; Imoka & Anor v. UBA Plc (2012) LPELR-19837(CA); Nwangwu v FBN (2008) LPELR-4478(CA).
Article 2 of the Uniform Customs and Practice for Documentary Credits (1993 Revision) ICC No 500, which the Letter of Credit issued by GBN, the Respondent, was subject to (page 112 of the Record of Appeal), defines the expressions ‘documentary credits(s)’ and ‘credits(s)’ used therein to mean any arrangement, however named or described, whereby a bank (the issuing bank), acting at the request and in accordance with the instructions of a customer (the Applicant) or on its behalf,
(i) is to make a payment to or to the order of a third party (the Beneficiary) or is to accept and pay bills of exchange (Draft(s)) drawn by the Beneficiary, or (ii) authorises another bank to effect such payment, or to accept and pay such bills of exchange (Draft(s)), or (iii) authorizes another bank to negotiate, against stipulated document(s), provided that the terms and conditions of the Credit are complied with.
Expounding further on the nature of letters of credit, the Supreme Court, per Bello, JSC (as he then was) in Nasaralai Enterprises Ltd v. Arab Bank (Nig) Ltd at pages 20-22 cited with approval the case of United City (Investments) Ltd. v. Royal Bank of Canada (1983) A.C. 168, thus:
“In the recent case of United City (Investments) Ltd. v. Royal Bank of Canada (1983) A.C. 168 at 182-183, Lord Diplock explained that four contracts are involved in a commercial letter of credit. He said –
“It is trite law that there are four autonomous though interconnected contractual relationships involved.
(1) the underlying contract for the sale of goods, to which the only parties are the buyer and the seller; (2) the contract between the buyer and the issuing bank under which the latter agrees to issue the credit and either itself or through a confirming bank to notify the credit to the seller and to make payments to or to the order of the seller (or to pay, accept or negotiate bills of exchange drawn by the seller) against presentation of stipulated documents; and the buyer agrees to reimburse the issuing bank for payments made under the credit. For such reimbursement the stipulated documents, if they include a document of title such as a bill of lading, constitute a security available to the issuing bank; (3) if payment is to be made through a confirming bank the contract between the issuing bank and the confirming bank authorising and requiring the latter to make such payments and to remit the stipulated documents to the issuing bank when they are received, the issuing bank in turn agreeing to reimburse the confirming bank for payments made under the credit; (4) the contract between the confirming bank and the seller under which the confirming bank undertakes to pay to the seller (or to accept or negotiate without recourse to drawer bills of exchange drawn by him) up to the amount of the credit against presentation of the stipulated documents.”
At page 183 of the Report, Lord Diplock said:
“Again, it is trite law that in contract (4), with which alone the instant appeal is directly concerned, the parties to it, the seller and the confirming bank, “deal in documents and not in goods,” as Article 8 of the Uniform Customs puts it. If, on their face, the documents presented to the confirming bank by the seller conform with the requirements of the credit as notified to him by the confirming bank, the bank is under a contractual obligation to the seller to honour the credit, notwithstanding that the bank has knowledge that the seller at the time of presentation of the conforming documents alleged by the buyer to have, and in fact has already, committed a breach of his contract with the-buyer for the sale of the goods to which the documents appear on their face to relate, that would have entitled the buyer to treat the contract of sales as rescinded and to reject the goods and refuse to pay the seller the purchase price.”
In the light of this elucidation, the following contracts can be identified from the Statement of Claim:
1. The contract for the sale of goods between WTII, the seller in USA, and FC & T, the buyer in Nigeria. This contract was predicated on the terms of the contract of sale, and acceptance of the documents under a Letter of Credit.
2. The contract between WTII, the seller, and RZB, the confirming Bank, to finance the export of the goods from USA to Nigeria, whereby RZB agreed to act as a confirming Bank in respect of any Letter of Credit which shall be issued or opened in respect of the sale of the goods, and RZB undertook to disburse funds to cover the Letter of Credit.
3. The contract between FC & T, the buyer, and GBN, the issuing Bank for Letter of Credit in favour of WTII, whereby GBN undertook to issue credit through RZB, the confirming Bank, upon agreed conditions.
4. The contract between GBN, the issuing Bank and RZB, the confirming Bank.
The four contracts were based on documents. Now, there was a fifth contract identified in this case:
5. The contract between RZB and the Appellant, which was an insurance policy contract whereby the Appellant insured the payment of UD$1, 962,500.00 being the value of the goods.
This fifth contract arose from one of the conditions stipulated as a condition precedent to RZB acting as a confirming Bank. This was that RZB should take out an insurance policy to insure the payment of the sum of UD$1, 962,500.00, being the value of the goods as evinced by the Letter of Credit issued by GBN, the Respondent. The insurance was to be covered by the buyer, FC & T. See paragraph 15 of the Statement of Claim, page 7 of the Record of Appeal. Thus, with the knowledge and agreement of WTII, FC & T and GBN, the Respondent, RZB took out the insurance policy with the Appellant, which is an agency of the USA Government that is engaged in the financial support of exports from the USA and whose services include giving insurance cover to exporters based in the USA against payment defaults by foreign buyers. The Appellant pleaded in paragraphs 22 – 28 of the Statement of Claim, pages 9 – 10 of the Record of Appeal:
22. In conformity with the Uniform Custom and Practice for
Documentary Credit applicable to the issuance of the Letter(s) of Credit and the giving of value for same, GBN is under obligation within seven (7) days of the receipt of RZB’s letter of 6th November, 2003 to inform RZB whether or not it intends to accept the Letter(s) of Credit for payment.
23. In accordance with Article 13 of the Uniform Custom and practice for Documentary Credit, RZB as the confirming bank is entitled upon the failure by GBN to state within seven (7) days whether or not it intends to accept the Letter of Credit for payment to assume that the same is good for payment and proceed to give value to WTII.
24. The Plaintiff avers in relation to the contents of paragraphs 21 – 23 above that GBN did not within seven (7) days of the receipt of the letter of RZB dated the 6th days of November, 2003, respond in any manner or form to the contents of RZB’s letter. RZB in conformity with the terms of the Letter of Credit and its obligation as a confirming bank as stipulated, both by the terms contained in the Letter of Credit and the Uniform Custom and Practice for Documentary Credit, did accordingly make payment to WTII.
25. The Plaintiff avers that upon the failure/refusal of GBN to make payment to RZB in compliance with the terms of its letter of 6th November, 2003, RZB did in conformity with the terms of its insurance policy taken out with the Plaintiff and dated the 20th day of June, 2002 with No. ELC-221325 and insuring the payment of the value of the afore-mentioned Letter of Credit, deliver upon the Plaintiff, a Notice of Claim and Proof of Loss dated the 11th day of February, 2005 demanding that the Plaintiff make payment to it in accordance with the insurance policy which it took out.
26. By the terms of Clause 6 (e) of the Insurance Policy, RZB agreed to execute upon delivery of the Notice of Claim and Proof of Loss upon the Plaintiff, the Release and Assignment form incorporated in the Proof of Loss form.
27. Accordingly, on the 11th day of February, 2005, RZB in compliance with the terms of the insurance policy taken out with the Plaintiff, particularly its Clause 6(e), did assign to the Plaintiff its rights to recover from the Defendant, all sums due and payable to RZB by virtue of the terms contained in the aforementioned Letter of Credit by executing in favour of the Plaintiff, a Release and Assignment form/agreement which stipulated thus:
“And in further consideration of the claim payment by Exim-Bank, the insured does assign to Exim Bank, its successors and assigns, all rights, title and interests in and all sum of money now due, or to become due, to the insured from the buyer under the transactions and accounts relating to the claim and any all contracts, security and evidence of indebtedness relating thereto; to have and to hold the same with full power, at their own cost, to collect and enforce the same for their own use and benefit by any action or proceeding in the name of the insured or otherwise and to take all legal steps as they deem proper or necessary in connection herewith”.
28. The Plaintiff has since paid over to RZB, all sums due and payable to it under the terms of the Letter of Credit issued by the Defendant and referred to in the earlier parts of this process.
Thus, notwithstanding the default by the Respondent, the issuing Bank, in payment to RZB, the confirming Bank, as agreed, RZB, as obligated by agreement, made payment to WTII. There being an insurance cover with the Appellant for the value of the payment, the Appellant settled RZB.
As averred by the Appellant, by the terms of Clause 6(e) of the Insurance Contract, RZB assigned to the Appellant its rights to recover from the Respondent all sums due and payable to RZB by virtue of the Letter of Credit issued by GBN in favour of WTII. Having settled RZB and upon being assigned the rights of RZB under the Letter of Credit, the Appellant then sought to enforce the said contract between RZB and GBN. The present action is the result of unsuccessful attempts to enforce the said contract with GBN, the Respondent.
The insurance contract that had the rights of RBZ assigned to the Appellant was predicated on the terms of the various agreements reached by WTII, FC & T, GBN and RZB. Now, the foundation of the contracts between WTII, FC & T, GBN (the Respondent), RBZ and the Appellant was the contract between WTII, the seller, and FC & T, the buyer. The trial Court would only be able to comprehensively examine and determine any issue or issues in controversy on the merit by also examining due compliance with the terms of the contract between WTII and FC & T by the parties. The question now is whether the exercise of jurisdiction by the lower Court over this issue is within the purview of Section 251(1)(d).
In my humble but considered view, I do not think so. In the first place, the contract in issue herein cannot be said to have been founded on the Letter of Credit issued by the Respondent (GBN) and in favour of the confirming Bank, RZB. The terms of the Letter of Credit were not in issue. WTII, the seller, and FC & T, the buyer, negotiated and agreed upon the terms for the purchase of the goods, the mode of the credit and the mode of transportation or dealing of the goods from the country of purchase, USA, to the country to which the goods are to be delivered, being Nigeria. The mode of payment was in the form of documentary credit, the Letter of Credit issued by GBN, the Respondent.
The insurance contract between RZB and the Appellant may have some connection with the documentary credit issued by the Respondent, but resolving any controversy arising therefrom cannot be done in isolation of similar examination of the original contract between WTII and FC & T. It is important to note that in the contract between the buyer and the seller, the acceptance of documents under a letter of credit does not preclude the buyer from rejecting the goods subsequently, if the goods, on their arrival, do not conform to the contract of sale; Akinsanya v. UBA Ltd (supra), (1986) LPELR-355(SC). The lower Court certainly did not have the vires by virtue of Section 251(1) to examine issues arising from any breach or otherwise of the contract between WTII and FC & T. This is well settled. In a plethora of judicial pronouncements, it has been established that dis
putes founded on simple contracts are not among those envisaged in the exclusive jurisdiction conferred on the Federal High Court under Section 251 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended); Onuorah v. Kaduna Refining & Petrochemical Co. Ltd (supra), (2005) LPELR-2707(SC); Adelekan v. ECU-line NV (supra), (2006) 12 NWLR (pt. 993) 33, (2006) LPELR-113(SC); Roe Ltd v UNN (2018) LPELR-43855(SC); Dec Oil & Gas Limited v. Shell Nigeria Gas Limited (2019) LPELR-49347(SC).
The mere fact that documentary credit by way of Letter of Credit was issued in the course of the trade relationship between WTII and FC & T, did not immediately catapult the instant claim into one that was covered by Section 251(1)(d) of the 1999 Constitution, as amended. Article 3 of the Uniform Customs and Practice for Documentary Credits (1993 Revision) ICC No 500, on Credits v Contracts provided:
a. Credits, by their nature, are separate transactions from the sale or other contract(s) on which they may be based and banks are in no way concerned with or bound by such contract(s), even if any reference whatsoever to such contract(s) is included in the Credit. (Emphasis mine)
Therefore, the rights of the confirming bank, RZB as assigned to the Appellant, was a separate transaction from the Letter of Credit transaction, as issued by the Respondent. I am also guided by the decision of the Supreme Court in Akinsanya v. UBA Ltd (supra).
I agree with Senior Counsel for the Respondent that the decisions in Central Bank of Nigeria v. Industrial Bank Ltd. (supra) and Owena Bank Nig. Plc v. Michael Ade Ojo (supra) relied on by the Appellant, do not support their position. The same goes for the case of Societe Bancaire (Nigeria) v Margarida Salvado De Lluch (supra). The issue therein revolved around a banking matter which, not being affected by the proviso in Section 251(1)(d), was within the jurisdiction of the Federal High Court.
It is for the entirety of the afore reasons that I see no reason to disturb the decision of the lower Court declining jurisdiction to adjudicate over the complaint of the Appellant.
Before I conclude, I must confess that I have personally wondered if the Appellant would not have fared better by refraining from lodging this appeal, which has for various reasons been pending for about ten years, but rather have had the matter heard and determined by the Lagos State High Court on the merits. The matter would long have been resolved one way or the other by the State High Court. An appeal by either party would then be predicated on a complaint arising from the decision of the trial Court, having heard the case on its merit. It seems to me that the Appellant appears to have colossally lost a lot more, taking into consideration changes that impact businesses, such as fluctuating exchange rates and global rises in inflation indices. That said, the sole issue arising for determination is resolved against the Appellant.
This appeal is without merit and hereby fails. The decision of the lower Court delivered on 14/1/2011 is hereby affirmed. It is further ordered that the consequential Order made by the lower Court that the case file be transferred to the Lagos State High Court by the Hon Chief Judge of the Federal High Court for hearing and determination is also hereby affirmed.
It is further ordered that parties are to bear their costs.
JOSEPH SHAGBAOR IKYEGH, J.C.A.: I agree with the robust judgment prepared by my learned brother Onyekachi Aja Otisi, J.C.A., with nothing extra to add.
ABDULLAHI MAHMUD BAYERO, J.C.A.: I agree.
Appearances:
O. IYAYI, ESQ. For Appellant(s)
O. AKINOSUN, SAN, with him, AYODEJI JOLAOSO, ESQ. For Respondent(s)