Emmanuel Ohiri – Money Judgment;Unclogging the wheel of Justice

Emmanuel Ohiri – Money Judgment;Unclogging the wheel of Justice



Introduction
The
legal mantra, “a winning party has a right to enjoy the fruit of his judgment”
has been greatly abused in Nigeria. Justice delayed is justice denied even
though litigation under the Nigerian judicial system is more often than not
protracted. Once a claimant initiates an action, it is reasonable for him to
expect that the match will result in a penalty shootout after warming up,
playing till full time and extra time. This is largely due to the various
administrative hurdles, professional antics and unscrupulous practices, which
plagues the administration of justice system in Nigeria (a huge topic for another day).

 A
tool usually deployed by legal Practitioners to choke the delivery of justice
and ensure the triumphant party merely obtains a Pyrrhic victory is by
obtaining an order for stay of execution. This order prevents the successful
party (Judgment Creditor) from being rewarded by the losing party (Judgment
Debtor). Whilst the rules of court provide for various ways of enforcing
judgments, the defeatist attitude of litigants in Nigeria and sadly as well as
their solicitors, lead to frivolous applications for stay of execution before
the ink is dry on the judgment. [I may have prepared one or more of such applications
in my experience ;-)]. For fear of being chastised by the Court of Appeal (in the case of trial courts),
and under the guise of preserving the “Res”, Nigerian courts have cultivated
the habit of granting applications for stay of execution of judgments it has
toiled over the years to deliver. In my opinion, these courts usually fail to
consider the circumstances of each case and or the weight of evidence adduced
by the Applicants before granting such orders. This is unjust especially in the
case of money judgments.
Stay of Execution of a Money Judgment
A
Judgment Creditor is entitled to reap the benefits of a judgment delivered in
his favour until the same is set aside. Nevertheless, an unsuccessful litigant
may apply for stay of execution but he must show substantial reasons for
wanting to deprive the successful party of the fruits of his judgment. There
are however exceptional and special circumstances that may warrant the
deprivation of a successful party of the fruits of his money judgment. These
circumstances are entirely at the discretion of the court. The court is
required to consider the equal right to justice of both parties. The Supreme
Court’s decision in U.B.N
Ltd v Odusote Bookstore Ltd
may shed some light on this point,
as the court held: A
discretion that is based (sic) in favour of an appellant for stay but does not
adequately take into account the respondent’s right to justice is a discretion
that has not been judicially exercised”
.[1]
In
considering the parties’ equal right to justice, the law stipulates that one of
the circumstance where a Judgment Debtor should be allowed to retain the
judgment debt pending appeal, is where there is a pending valid appeal before
the superior court and the Judgment Creditor consents to such an arrangement.
See U.B.N Ltd’s case
referred to above. Consequently, where an appeal has not been entered at the
superior court and the Judgment Creditor has not consented to the Applicant
retaining the judgment sum, the court has no power to permit the Applicant to
hold the same.
 Responsibility of the Court
As
an application for stay of execution is an exercise of the equitable powers of
the court, an Applicant for a stay of execution of a money judgment must
approach the court with clean hands by exhibiting in its affidavit, its last
audited annual statement of account to provide the court with full and frank
knowledge of its financial position. The court has held that in the case of a
company, the law enjoins it to prepare an audited annual statement of account showing
its assets, which will include its reserve (if any) and liabilities. Where it
fails to do so either through neglect to disclose relevant facts or suppression
of them, it has not shown readiness for fairness and equity[2]. 
This
means that the equitable powers of the court may only be invoked where the
Applicant had provided the court with detailed proof (in its affidavit) of its
assets and liabilities. This requirement is more critical where the Applicant
has either claimed poverty or opulence as the basis for grant of stay of
execution. The requirement formed the basis of the decision of the Court of
Appeal in Chukwu v.
Onyia[3]
, where the Court of Appeal per Uwaifo JCA held as
follows: “That is the only
way the court can best exercise its discretion to grant or refuse the stay.
Bare assertions of poverty or opulence by him do not assist, afortiori when the
facts are suppressed or misrepresented by him. Arguments based on them make a
ritual of the principles and in effect invite the court to exercise its
discretion on nothing other than those principles, or indeed on false facts,
instead of upon true and full facts guided by the principles. This does
incalculable harm to the course of justice.”(Underlining ours)
 Conclusion
It
is important that the court should refuse to grant applications for stay of
execution of a money judgment where Applicants fail to exhibit their financial
statement or a breakdown of their assets and liabilities towards enabling the
court invoke its equitable powers. A Judgment Creditor should not be denied the
fruit of his judgment on insubstantial grounds or lack thereof in the
Applicant’s affidavit. At the very least, the court should invoke its power to
order the payment of the judgment debt to the Chief Registrar of the court, who
shall in turn deposit the same into an interest yielding deposit account in a
reputable commercial bank pending the determination of the appeal[4].
[1]
(1994) 3 NWLR (Pt 331) 129 at 150 – 151
[2]
Guinea Insurance Plc. v. Monarch Holdings Ltd. (1996) 3 NWLR pt. 436 p.365 @371
G-H
[3]
(1990) 2 NWLR pt.130 p.80 @84-85 H-B
[4]
Kwarapoly vs. Oyebamiji (2008) 3 NWLR (part 1075) page 459, Kopek Construction
Ltd vs. Ekisola (1998) 10 NWLR (part 568) page 120.

Emmanuel Ohiri
TNP

Emmanuel Ohiri is a vibrant and dynamic young lawyer with a high level
of intellectual curiosity, passion for perfection and tactical
proficiency.

Ed’s
Note – This article was originally posted here.
TyLegal – Is life imprisonment suitable for rapists?

TyLegal – Is life imprisonment suitable for rapists?


The Kaduna state government has proposed life imprisonment
for rapists, especially where minors are involved. Try as one might, it is
difficult to comprehend why a man will rape anyone at all, much less a minor.
Short of being mentally deranged, I cannot think of any excuse for such…

While the proposition of life imprisonment is very
commendable, some people are of the opinion that it is a lenient punishment.
They have instead opted for other penalties such as maiming, castration,
various forms of inhumane treatment or the definite price, the death penalty.
Though some may argue that these are extreme measures and are
not in line with the laid down laws, it can also be argued that the victims of
these rape incidents are marred for life. They suffer various levels of
self-blame, depression, anger, shame, intimidation and fear. They are exposed
to sexually transmitted diseases, unwanted pregnancies, uterine fibroid,
amongst many other negative effects and only a few are able to rise above such
horrific incidents to live a fulfilling life. Some who are sexually abused at a
young age may require treatment for the rest of their lives.
Be that as it may, we must also bear in mind that both male
and female are affected by these heinous acts. Lots of young boys and girls
these days suffer different forms of sexual abuse from older ones, especially
those they trust. This makes it difficult for them to trust reliable people who
truly care about them when they grow up.
Victims of sexual assaults are advised to do all or any of
the following:
§  Go
to a safe place, call a family member or trusted friend who can provide the
needed support.
§  Preserve
all physical evidence and report the crime to the police immediately.
§  Get
medical care as soon as possible.
§  Write
down as much as can be remembered including a description of the attacker.
§  Speak
with someone who is trained to assist sexually assaulted victims.
The healing process is usually a long one and some victims of
sexual assault tend to suffer from the effects for the rest of their lives.
Which brings us back to the question, why should the perpetrator of a sexual
assault be allowed to carry on living, even if it is behind bars? Perhaps, the
world would be a safer place without such perpetrator in it?
What do you think? 
Photo credit:LiveLeak

Ed’s Note – This article was originally published here

Busayo Adedeji – Corporate and Individual Liability Under The Immigration Act (2015)

Busayo Adedeji – Corporate and Individual Liability Under The Immigration Act (2015)

The immigration act was
recently reviewed/amended and same was signed into law by former president
Goodluck Jonathan before leaving office in 2015. The law (upon signing by the
then president) immediately became effective as the principal law regulating
immigration in Nigeria.
Some of the sections
detailing corporate and individual offences/punishments under the act are
highlighted below:

  • The act expressly prohibits persons’ order
    than citizens of Nigeria from accepting employment anywhere in Nigeria (except
    same is offered by the government) without the consent of the Comptroller
    General of Immigrations (CGI) being first sought and obtained.[1]
  • The act
    goes further to state “no person other
    than a citizen of Nigeria shall on his own account or in partnership with any
    other person, practice a profession or establish or take over any trade or
    business whatsoever or register or take over any company with limited liability
    for any such purpose, with the consent in writing of the Minister”
    .[2]
  • The
    act states that any person desirous of entering Nigeria shall produce to an
    immigration officer consent of the CGI failure of which attracts a fine of One
    Million Naira (N1,000,000) or deportation
    or both as a prohibited immigrant.[3]
  • Where a person formerly exempted from the
    foregoing provisions of the act ceases to be so exempted, he shall be deemed as
    a person seeking entry in to Nigeria for the first time and the foregoing shall
    apply to such a person.
  • The CGI may revoke a permit or reissue it on
    such terms and conditions as he deems fit, failure to comply with the
    directives of the CGI attracts imprisonment for a term of 5 years or a fine of
    Two Million Naira (N2,000, 000) or
    both.
  • Any expatriate
    person who fails or neglects to apply for the:
1.  Regularization of his stay in Nigeria
within the stipulated period;
2.  Renewal of his business visa, transit,
visitors pass, or Temporary Work Permit (TWP); or 
3.  Renewal of his residence permit after thirty
(30) days of the expiration of same is guilty of an offence and is liable to
imprisonment for a term of three years or a fine of Five Hundred Thousand Naira
or both.[4]
  • The act expressly prohibits the discharge,
    re-designation and change of employment of an expatriate employee without the
    consent and approval of the CGI first sought and obtained. The implication of
    this is the employer, employee and their dependents (if not Nigerian citizens)
    being deported and business wound up.[5]
  • It is an offence under the act to alter,
    produce or reproduce a travel document.
  • The act also makes provisions for punishments
    for offences that have not been captured by the act, the punishment in such
    cases are imprisonment for a year or a fine of One Hundred Thousand Naira (N100,000), in the case of the offender
    being an agent the punishment shall be imprisonment for ten years or a fine of
    Two Million Naira (N2,000,000).
It is pertinent to state
that the new immigration regime under the new CGI has shown zero tolerance for
issues relating non-compliance, has investigations and invitations of erring
corporations are the order of the day. Despite the foregoing corporations and
individuals alike should always seek the assistance of an immigration lawyer
when immigration issues arise.
Busayo Adedeji is an Associate in the
corporate and commercial, corporate immigration, employment and labour, banking
and corporate finance practice group of Bloomfield Law Practice; and advises multinational
and local clients on matters such as regulatory compliance, trade unions,
labour and employment, dispute resolution etc.
Image
credits: https://tarrantgreenparty.wordpress.com


[1]
Section 36(1)(a)
[2]
Section 36(1)(b)
[3]
Section 36(2)
[4]
Section 57 (5)
[5]
Section 58

 

Chukwudi Ofili – Perfection of Security Documents and the Practice of Upstamping in Nigeria

Chukwudi Ofili – Perfection of Security Documents and the Practice of Upstamping in Nigeria


In Nigeria, debts are typically secured
through the use of guarantees, mortgages, fixed and floating charges and
pledges of real, personal, tangible and intangible property belonging to the
debtor or a guarantor of the debtor. Security created in favour of a lender for
providing debt financing is documented using different forms of security
documents.

In order to perfect security documents,
such documents must be stamped at the stamp duties office and registered at the
Corporate Affairs Commission (CAC). For certain assets such as real property
which require the consent of the Executive Governor of the state where the real
property is situate, such consent must be obtained to perfect the security
created under such document. The statutory obligation to stamp documents that
transfer or create a proprietary interest in assets is provided for under the
Stamp Duties Act (SDA) with specific emphasis on sections 3, 23 (1) and (4) of
the SDA. In addition, a charge created by a company to provide security to a
lender is void against a liquidator and such lender (as a creditor of the
company) unless it is registered with the CAC within 90 days of creation.
However, in large financing
transactions, the stamp duty payable in respect of a security document could be
very high (and in certain cases, prohibitively so).  It is not uncommon
for lenders to a financing to agree that the borrower may pay stamp duty on
only a portion of the secured amount rather than the whole secured amount, with
a further assurance from the borrower that the full stamp duty will be paid on
a future date or upon the occurrence of certain events.  This practice is
known as “upstamping”.  Until the security document is upstamped, any such
lender is only protected up to the amount expressed to be secured and a lender
may lose priority to any subsequent security granted on the charged assets
during the period between the initial stamping and the full upstamping of the
security document.
The Implication of Upstamping on
Lenders
Neither the SDA nor the Companies and
Allied Matters Act (CAMA), stipulate that a security document that secures a
credit facility must be stamped and registered for the exact amount extended to
a company or person. However, where a security document is stamped for an
amount lower than the facility amount, the lenders will only be permitted to
prove for and realise the security for the secured amount
i.e. the amount
for which that lenders has stamped and registered his securityCAMA
recognises the right of parties to commercially structure their transactions
such that the security documents can be stamped for an initial amount and then
subsequently up stamped for an additional amount.
Pursuant to section 202 of CAMA, any
additional amount for which a security document is up stamped will be valid and
effective to the extent of such increased amount. The lenders would only be
permitted to prove and realize the security for the full facility amount or a
higher amount only upon the security document being up stamped (i.e. payment of
additional stamp duty) to cover the facility amount or the higher amount being
sought to be recovered.
Potential Risk to Lenders in Enforcing
Security
There is a risk that prior to the
lenders up stamping the security document for the full facility amount,
intervening third party interests might have arisen (i.e. under other third
party security), thus raising pertinent priority issues where another creditor
has acquired an intervening proprietary interest. If prior to an up stamping to
secure additional amounts, another creditor advances money to the borrower, and
perfects its security interest over the same assets that form the
subject-matter of the lenders’ security, that creditor will rank ahead of the
lenders’ interest as it relates to the subsequent up stamped additional amount
to be secured but lenders will still have priority in respect of original
amounts for which the security was perfected.
Hardening Period
Another risk lenders face in an
upstamping scenario is that an agreement to upstamp to secure additional
amounts, might be viewed as a fraudulent preference in the event of insolvency
of the borrower. See section 495 of CAMA. This “hardening period” rule,
and the resultant effect is that the additional / up stamped security interest
would be void against the liquidator of the borrower and enable the liquidator
claw-back any such payments or cancel such acts. Arguments can be made whilst
referring to decisions of English courts on the fact that a preference is not
fraudulent by essentially showing that the dominant motive for such preference
is not to prefer certain creditors to the detriment of others. It should
however be noted that such arguments are only persuasive to Nigerian courts as
Nigerian courts are not bound by the decision of English courts; they are only
of persuasive authority.
On the flip side, where the dominant
motive was to carry out a pre-existing obligation, or to keep on good terms
with a creditor, it is likely that Nigerian courts will follow English courts
in holding that in such circumstances the preference is a fraudulent
preference. It is important to note that there are no Nigerian law decisions on
this point, however, Nigerian courts are likely to follow English courts on
this point.
Addressing the Residual Risks of
Upstamping
The risks identified above, while
adopting the upstamping regime, can be mitigated by:
1.     Establishing an
upstamping regime in the relevant loan documentation;
2.     Using a negative
pledge clause restricting the borrower from creating any additional security
over its assets;
3.     Using automatic
crystallization provisions in the security documents for floating charges to
crystalise into a fixed charge when there is an attempt to create security over
the assets in favour of a third party; and
4.     Establishing a stamp
duty escrow account to hold the balance of the perfection costs to enable
lenders upstamp at will.
The options highlighted in (1) to (4)
above are by no means exhaustive as other options have not been discussed in
this paper.
 Chukwudi Ofili is
a Senior Associate in the corporate and commercial, banking and corporate
finance practice group of Bloomfield Law Practice; and advises on matters such
as local and foreign currency syndicated lending, leases
transaction/structured/project finance, structured trade finance, energy and
natural resources, due diligence issues and advisory services, foreign
investment advisory services, taxation and real estate.
Ed”s Note – This article was originally published by the author here
Supreme Court Rules Igbo girls can inherit property

Supreme Court Rules Igbo girls can inherit property

The Supreme Court recently delivered a landmark judgment that will alter the domination, subjugation, discrimination and humiliation suffered by women in Igboland from time immemorial. In the judgment, the apex court voided the Igbo law and custom, which forbids daughters from inheriting their late fathers’ estate. The Court declared that the tradition is discriminatory and conflicts with the provisions of the Nigerian Constitution. 


The court held that the practice conflicted with Sections 42(1)(a) and (2) of the 1999 Constitution of the Federal Republic of Nigeria on the fundamental freedom from discrimination granted every Nigerian. The judgment was on appeal marked: SC.22/2014 filed by Mrs. Lois Chituru Ukeje (the wife of the late Lazarus Ogbonna Ukeji) and their son, Enyinnaya Lazarus Ukeje, against Mrs. Gladys Ada Ukeje, the deceased’s daughter.


Gladys had sued the deceased’s wife and son before the Lagos High Court, claiming to be one of the deceased’s children and sought to be included among those to administer their deceased father’s estate. The Supreme Court found that she was a daughter of the deceased and that she was qualified to benefit from the estate of their father who died in Lagos in 1981 without writing a will on how his estate should be shared among his descendants. The Court of Appeal in Lagos to which Mrs. Lois  Ukeje and Enyinnaya Ukeje appealed, upheld the decision of the trial court, prompting them to appeal further to the Supreme Court.

In its judgment on Friday, June 1, 2016, the Supreme Court held that the Court of Appeal, Lagos was right to have voided the Igbo Native Law and Custom that disinherited female children.

Justice Bode Rhodes-Vivour who read the final judgment held that “no matter the circumstances of the birth of a female child, such a child is entitled to an inheritance from the late father’s estate. Consequently, the Igbo customary law, which disentitles a female child from partaking in the sharing of her deceased father’s estate, is a breach of section 42(1) and (2) of the constitution, a fundamental rights provision guaranteed to every Nigerian.”  The said discriminatory customary law is void as it conflicts with section 42(1) and (2) of the constitution.

The Anambra State Women Association in Lagos (ASWAL), a socio-cultural organization, comprising women representatives of 177 communities in Anambra State residing in Lagos State, has commended the Supreme Court for the judgment. The Anambra State House of Assembly Speaker Rita Maduagwu, told the ASWAL President Dr. (Mrs.) Nkiru Ifekwem, who led other members of the group to the House that they had already domesticated it.

We commend the Supreme Court for its bold decision, because it is a judgment that is long overdue. Over the years, women have contributed to the development of the society, in some cases more than the men, but when it comes to inheritance they are sidelined. This, naturally, makes them feel inferior to men, which is very unfair and inhuman.

Though a judgment can only give what is sought, we hope a similar judgment on wives’ rights to inherit their husbands’ estate is on the way.  Dr. Ifekwem said the verdict meant that every female child in the South-East shall henceforth get a share of their fathers’ and/or husbands’ property, if the deceased had no male child.

We hope that even where the deceased had a male child, a female child would still be entitled to a part of his estate as her inheritance. A wife should get a portion of her husband’s estate as her inheritance as well.


The issue of denying female children inheritance is not peculiar to Igboland. It is practised in many parts of the country. We, therefore, encourage civil society organisations to do more and pressurize State Houses of Assembly to domesticate this judgment and pass it as an edict in every part of Nigeria.


Source- www.dailytrust.com.ng
Osinuga Damilola – Lease as an Alternative Financing Vehicle in Ship Acquisition

Osinuga Damilola – Lease as an Alternative Financing Vehicle in Ship Acquisition


Acquisition of ships is
fundamental to the shipping business. Notwithstanding the mode of acquisition,
i.e. whether by an outright purchase, construction of a new ship or otherwise,
ship financing continues to be an integral part of ship acquisition. Financing
ship acquisitions can be effected through the provision of debt or equity.
The most common means is
to obtain a loan for part or all of the purchase price otherwise known as debt
financing. However, due to the nature of the marine business, many financing
institutions are reluctant to finance the acquisition of ships without adequate
security or a good credit rating with such financial institution.

With the advent of “lease
structured financing” debt and equity, as the most common ways of financing
ship acquisitions appear to have found a competitor. Lease structured financing
is a popular and well-tested concept among airlines and other aircraft
operators.
Ship Lease Operation
The lease is perhaps best
described in general terms as a conveyancing method where the possession of
property passes but ownership or title in the asset does not pass to the
purchaser. A somewhat more precise legal definition of a lease is that it is a
contract through which the owner of property (the lessor) conveys to another
person (the lessee), in consideration of payment as agreed, the right to
possession and use of the property for an agreed period.
There are basically two
types of lease:
1.    
Operating Lease; and
2.    
Finance Lease
Operating Lease
Operating lease is a lease
in the real sense. Outside of shipping it is widely used for rental (or hiring)
of equipment and durable consumer items. The risk usually remains with the
lessor who maintains the asset and the lessee normally has the discretion to
terminate the lease, at the end of which the property reverts back to the
lessor. However, if so provided in the contract, either party may have the
right to cancel the lease. A typical example of the operating lease is the leasing
of containers in the shipping industry, where container lines lease containers
from container leasing companies.
As far as ships are
concerned, where an operating lease is in place, it is usually in the form of a
short or mid-term bareboat charter after which the lessee will return the ship
to the lessor. The lessor assumes such risks as the technological obsolescence
of the ship and the re-employment of the ship after the lease period. During
the charter period, the lessee acts as if he owns the ship and the lease
payments do not involve an amortization of the leased property; nor is there an
option to purchase in favour of the lessee. Recently, there has been an
increase in the use of short-term bareboat charters with an increasing number
of financial institutions willing to provide ships for this market. Although it
is not a financing vehicle in strict terms, it is referred to as an alternative
source of finance.
It is notable that there
is another quasi-operating lease where the lessor may provide the manpower and
services required to operate the equipment. In aviation this is referred to as
“wet lease” while in shipping it is referred to as time charter. Time
chartering is not pure equipment leasing because the provider of the ship, i.e.
the owner, provides the crew and is responsible for the navigational
operation of the ship. The charterer is thus not in full possession of the
ship. However, it is also an important and convenient way for a shipowner to
expand his fleet in peak trading conditions because he can completely control
the commercial operation of the ship. In this sense, time charter is very much
akin to an operating lease.
It is pertinent to note
that in recent times time-charter periods especially for big container ships
have increased. This, together with the shortening of bareboat charter period,
denotes that operating leases are playing an increasingly important role in the
supply of tonnage for shipping companies.
Finance Lease
Finance lease transfers
all the risks and rewards incident to ownership of an asset. This type of lease
is typically used for long –term finance of ships and covers a substantial part
of the ship’s economic life. The ship is usually fully amortized (including the
lessor’s returns on his investment). The lessor, whose main role is as
financier gets most of his pay-out in respect of the ship because the total of
the hire amount and payments are calculated to cover the cost or purchase price
of the ship, the additional expenses which the lessor might incur as well as
part of the lessor’s profit. The lessor also has little involvement with the
asset beyond owning it, and all operating responsibilities including
procurement of insurance fall on the lessee who, in the event of early
termination, must fully compensate the lessor (usually the lessee anticipates a
substantial down payment. This binds the lessor to the sale. If the lessee
defaults, he loses his down payment as well).
Although the finance lease
generally appears on the lessee’s balance sheet, its main attraction to
shipping companies is that it brings tax benefit by depreciating the ship’s
value against profits and by assisting companies with high profits but no
suitable investment of their own to obtain tax relief by purchasing a ship.
Under a finance lease scenario, the ship, built to the lessee’s specification
(if a newbuilding), or chosen by the lessee (if it is a second hand), is
purchased by the company providing the finance (the lessor) and leased under a
long-term agreement (usually a bareboat charter) to the shipping company
(lessee) which may purchase the property at a nominal price after the primary
leasing period.
The advantages of ship
leasing, as argued by practitioners, are similar to those claimed by the
classical economists. These advantages are focused on the two major categories,
tax benefit and financial position improvement.
Tax Benefit
The tax advantage argument
is perhaps the strongest justification for using lease as a financing vehicle
in shipping. Experts have pointed out that the tax benefits accruing out of
leasing are of predominant interest. With leasing, the most significant tax
benefit is the deferral of tax liability on capital allowance. The rate of hire
will reflect the immediate use of the tax allowance by the lessor. Capital allowances
can be used as set offs against taxable profits. The lessee would favour
leasing as a financing vehicle in shipping because the lessee is usually keen
on ‘disguising’ a finance lease in the form of an operating lease to derive the
off-balance sheet benefit.
Financial Position
Improvement
The scarcity of financing
from financial institutions or other financing options for shipping lines has
created a space which is now filled by leasing companies which have easier
access to capital funds. In such cases, it is of great value for the carriers
to have access to diverse sources of capital that will assist them with their
fleet expansion and renewal plans by acquiring larger, modern and
fuel-efficient vessels and achieving the necessary economies of scale to remain
competitive. In a cyclical and very capital intensive industry, such as
shipping, the lease can preserve the lessee’s working capital and its financial
position through long-term repayment structure (often longer than the one
offered from banks) and effective cash management through matching the rental
profiles with income streams (cashflow). Moreover, the lease structure permits
the lessor to lock in carriers to long-term charter arrangements and fixed
rates that are oblivious to the volatility of the spot charter market and thus
achieve a secure revenue base and higher financial leverage than other
investors in the ship financing market.
Furthermore, in comparison
with the traditional debt financing from financial institutions, lease
financing differs in the sense that the lessor retains legal title/ownership of
the ship during the lease period which provides the lessor with a built-in
security that offsets the absence of a loan agreement and ship mortgage in the
lease financing ‘equation’. Despite being the owner, the lessor does not have
possession of the ship since such right is retained by the lessee.
Conclusion
Despite the current
downturn in the shipping market, there are good grounds to believe that there
is still overflow of available finance in the market. In the last few years,
there has been significant growth and expansion in the leasing business.
Similarly, there has been an upsurge inleasing transactions, particularly
amongst the Chinese commercial banks, the subsidiary leasing companies of
banks, hedge funds and financial institutions fueling this growth and becoming
major capital providers to the shipping industry with an intention to further
expand and diversify their portfolio of ships and establish their presence in
Europe, America and Africa.
It can be argued that the
lease structure highlights the polarisation of the shipping business. As a
result, the pure asset players, such as the lessors have strengthened their
financial position while the carriers have become weaker. This has changed the
traditional notion of the ‘shipowner’ as we know it, in the sense that the
leasing companies are now the large shipowners.
Being a sophisticated
structure, whether or not the purchaser will qualify for a the ship lease will
depend on the parties’ intentions, credit ratings, operational decisions and
market status. Despite its restrictions, the prospects of the finance lease
seems promising given the increasingly popular trend of outsourcing the asset
management services of shipping companies. As a relatively new alternative in
the international financial arena, ship lease is still developing and
undergoing tests.
Damilola Osinuga is an
Associate in the Shipping and Oil Services practice group of Bloomfield Law
Practice
, Nigeria
Ed’s Note – This article
was originally posted here
.
Tanimola Anjorin –  An exposè on the Arbitration procedural stages

Tanimola Anjorin – An exposè on the Arbitration procedural stages

Arbitration as a better alternative to litigation: An
exposè on the procedural stages[1]
ABSTRACT
Alternative Dispute Resolution (“ADR”) simply refers to any means of
dispute resolution excluding litigation in a courtroom.  It is a form of
facilitated settlement, which is confidential and without prejudice. 
Consequently, the details of the process are not usually disclosed to the
public except where it snowballs into a court action.
 

The laws governing arbitration in
Nigeria include the Arbitration and Conciliation Act (“the Act”)[2],
which is a federal law, Lagos State Arbitration Law 2009 (“the Lagos Law”) and
some other states’ arbitration laws.
This paper seeks to examinethe procedural stages in arbitration,one of
the most common ADR mechanisms,
and the reasons which
make arbitration a better alternative to litigation. 
I        INTRODUCTION
Arbitration
provides a forum for participants to present arguments and evidence in support
of their case, to a third party neutral who makes a binding decision called an
award. It is a process controlled by a single arbitrator or a panel of
arbitrators appointed by the parties.
Any
of the parties to a contract may adopt arbitration where an arbitration clause
is contained in the agreement, and a dispute arises in relation to it.Where
there is noarbitration clause and the parties desire is to proceed to
arbitration, a consent to arbitration via submission agreement may be entered
by the parties.
The
expeditious disposal of cases in arbitration stems from the less formal
procedure adopted in arbitral proceedings.The procedure for initiating and
conducting arbitration are spelt out in the arbitration rules to be found in
the First Schedule to the Act. 
One
of the advantages of arbitration is that the disputants have consensually
chosen their own private “judge” called the arbitrator(s)[3].
The arbitral tribunal determines the venue of the hearings after due
consultation with the parties. Where there are three or more arbitrators,
decision is by majority. Therefore, an odd number of arbitrators is advised. 
Arbitration
commences with a notice to commence arbitration being sent by an aggrieved
party to the other party.In the course of arbitration proceedings, request for
more information, discovery of documents and visits to relevant location may be
done. However, to ensure expeditious disposal of the matter, all of these
issues would most likely be narrowed down during pre-hearing review. 
The
tribunal listens to the oral statements and questioning of the witnesses of
both parties(cross examination)as examination-in-chief may be in form of
witness statements on oath. Also, expert witnesses may be called by the parties
to render their opinions on issues in dispute.This may be pruned down during
pre-hearing review as the parties are likely to distill witness of facts and
expert witnesses.
Arbitration
proceedings are not however regulated by formal rules of evidence as stipulated
in the Evidence Act thereby resulting in less formal and flexible proceedings.
II       PROCEDURE
IN ARBITRATION
In
ensuring an expeditious process in arbitration, some basic procedures are adopted
which endears the business world to arbitration instead of litigation:
JURISDICTION
The
first step in any arbitral proceedings is to constitute the arbitral panel.This
can either be provided in the arbitration agreement or conducted in accordance
with the Act[4]. In any
case, there can be no arbitration without an arbitrator and an arbitrator must
be appointed to conduct the reference. Once the arbitrator is appointed he must
be clothed with jurisdiction.
Jurisdiction is the authority to arbitrate
upon the dispute between the parties.
The arbitrator is only authorised to
exercise the jurisdiction and powers conferred on him by the parties.
His
jurisdiction is derived from the agreement of the parties i.e. the issues
submitted to him for determination or from Statute. The arbitral tribunal is
competent to rule on its jurisdiction[5].
PRELIMINARY MEETINGS
The
mainpurpose of a preliminary meeting is to plan the expeditious and efficient
conduct of the arbitration. Arbitration is a broad spectrum where innovations
and variety are not only encouraged but lauded:
“…the
arbitral tribunal may, subject to this Act, conduct the arbitral proceeding in
such a manner as it considers appropriate so as to ensure a fair hearing”[6].
The
overriding procedural obligations of an arbitration tribunal in conducting a
reference include:
(i)    complying with the express mandate, if any,
laid down by the parties;
(ii)   conducting the process fairly and even-handedly;
and
(iii)  using all reasonable dispatch in entering on, proceeding
with the reference and making an award.
 
Preliminary
meeting therefore cannot be held until:
(i)    The tribunal has been appointed;
(ii)   The tribunal has been provided with the
information as to the principal issues between the parties although this can
sometimes be dealt with at the preliminary meeting;
(iii)  Administrative fees, where applicable, have
been paid; and
(iv)  The impartiality of the arbitrators have been
checked, where necessary, and the result made available to all.
It
is imperative that adequate preparations be made well ahead by the arbitrators,
the parties and their advisers before the preliminary meeting. Issues like the (i)
venue[7],
(ii) time[8],
(iii) transportation arrangements for the arbitrators and other sundry issues must
be addressed in order to have a successful meeting and most importantly, a well-drawn
up agenda.
In
advance of the preliminary meeting, the parties should also try to identify the
matters to be dealt with and, if possible, agree on the procedure and any
directions to be sought from the tribunal. If agreement is reached, this will
save time and costs at the preliminary meeting itself and may even render such
meeting unnecessary.
PRE-HEARING REVIEW
It
is preferable except in very simple cases to hold a pre-hearing review before
the hearing and after all the preliminary meetings. This helps to save time and
costs at the hearing because the pre-hearing review helps the arbitrator and
the parties clarify all outstanding issues so that by the time they go into the
hearing they can go through them on a day-to-day basis and finish in a short time.
The matters to be discussed at the pre-hearing review will vary depending on
what has transpired at the preliminary meetings (if any).
PROCEEDINGS AT TRIAL
The choice of proceedings to be adopted depends on
the facts of each case[9].
Where parties do not
choose or agree on any type of hearing, the tribunal chooses the type of
hearing[10].
It is better for the parties to agree
on the type of hearing to be adopted where there is a serious dispute over
relevant facts. The proceedingat trial may take the form of:documents only where there are no oral testimonies to support
the claim;documents only with brief oral final submissions; or documents only
with only experts in attendance to give oral testimony before the arbitrators
.If
“Documents Only” method is
agreed, then the “issues” need
to be framed with more precision than when any other form of proceedings is
adopted. 
Short
Procedure Hearing:
This
is only suitable for “quality”
dispute requiring some summary decision,i.e,“look
and sniff”
cases.  Each party usually
bears his own costs.
Full
Procedure with Hearing:
This
is for disputes that require examination
or cross-examination of witnesses of fact.
  This evidence is usually partly oral and partly documentary.
The tribunal must consider whether a Scott Schedule[11]
is desirable.
It must
be noted that the procedure adopted determines the length of the hearing.
However,
the
procedure adopted must not contravene the provisions of the applicable law and
procedural rules:
“…the Claimant to state the fact
supporting his Points of Claim, the points at issue and the relief or remedy
sought by him whilst the respondent is to state his Points of Defence in
respect of the particulars unless the parties have otherwise agreed on the
“required elements of the Points of Claim and Defence.[12]
The
tribunal and parties must consider such factors as the complexity of the matter
and the nature of the dispute in ensuring that they adopt the most suitable
procedure. Disputes with little factual details may be best suited to the
Statement of Case procedure by mere exchange of correspondence; e.g. quality
disputes which are tobe determined on expert evidence only while pleadings may
be best suited to cases involving complex issues of law.
The
tribunal is to determine the time for exchange of written statements. In any
case, the law provides that the time must not exceed 45days except if
justifiable[13].
AGREED BUNDLE
In
arbitration proceedings the parties agree on an “Agreed Bundle” of documents,
which constitutes the documents to be referred to during the hearing. The arbitrator
will direct the parties to meet and agree on the bundle within a specified
time. This also helps to fast track proceedings.
RELEVANCY AND ADMISSIBILITY
The Evidence Act excludes
arbitration from its application[14].
This is not to say however that rules of evidence do not apply to arbitration.
In fact, the rules of evidence are wider than what the Evidence Act provides
and they apply to arbitration to enable the arbitrator come to a reasonable
decision on the evidence before him. It should be noted that Section 15 (3) of
the Actconfers powers on the arbitral tribunal to determine the admissibility,
relevance, materiality and weight of evidence placed before it[15].
The reason for this provision is to play down as much as possible the recurrent
technicalities that surround the rule of relevancy and admissibility under the
Evidence Act.
III     ARBITRATION
AS A BETTER ALTERNATIVE
The
numerous advantages of arbitration over litigation include a faster and cheaper
means of dispute resolution, utmost privacy of the issues between the parties[16]amongst
others. While litigation has been shown to give room for frivolous techniques, arbitral
proceedings have been sped up byadmitting written statements in place of
opening and closing speeches
, admitting depositions made by
witnesses of fact and inviting such witnesses only for cross-examination. In
addition,admitting reports prepared by experts while they appear only for
cross-examination,using a Scotts Schedule.
Other ways to save time at the
hearing are:
Defining the Issues
The
arbitrator should direct, at the outset, that a list of issues be agreed and
delivered to the arbitrator a reasonable time before the hearing, and that
failing such agreement each side delivers a list of what it considers to be the
issues. The procedure for defining the issues vary according to the nature and
complexity of the dispute.
Exchanging
Proofs in advance
The
arbitrator may require that proofs of all witnesses be exchanged, and copies
delivered to the arbitrator, before the hearing.
Documents
Selected before Hearing
The arbitrator
may require that the documents to be referred to at the hearing be selectedbefore
the hearing, and this should be the responsibility of the advocate who is to
conduct the case.  The arbitrator should also
direct that:
(i)      The consolidated bundle(s)
of the documents selected should be delivered to the arbitrator by a specified
date before the hearing;
(ii)      At the hearing all the
documents so submitted shall be taken as read (because he will in fact have
read them); and
(iii)      At an appropriate stage
the arbitrator will specifically consider the question whether a substantial
number of irrelevant documents has been selected, and if so whether a special
order should be made in respect of the additional costs thereby occasioned.
The
frontloading system and the case management conference in the rules of court[17]
can be likened to the preliminary meetings, pre-hearing sessions, defining
issues and exchanging proofs and written statements obtainable in arbitration
proceedings. The introduction of these similar concepts in the rules of court
and a fast track division is to ensure efficient and speedy dispensation of
justice but the bureaucracy in the system has prevented the system from making
any remarkable achievements. Even the motion for summary judgment in the rules
which shouldn’t take more than 2weeks to hear and determine usually suffers the
same fate as the cases on the general cause list.
It
is the duty of the arbitral tribunal to adopt
procedures suitable to the circumstances and to avoid unnecessary delay and
expenses.
The parties must also cooperate by doing all things necessary
for the proper and expeditious conduct of the proceedings as cost may be
awarded against any party that foists any sort of delay tactics in the course
of the proceedings.
IV CONCLUSION
The
proceduresin arbitration sessions examined above have proved effective and
efficient in the expeditious disposal of arbitral cases, thereby endearing the business
community and the public in general to the choice of arbitration over
litigation. The adoption of arbitration either by an arbitration clause or
submission agreement has become more popular as people are coming to terms with
the fact that arbitration constitutes a better alternative. It is also an
amicable method of dispute resolution enabling the parties to maintain their
business relationships.


[1]Tanimola Anjorin
holds a bachelor’s degree in History and International Studies from Lagos State
University. He thereafter obtained a Bachelor of Laws degree from Lagos State
University and was called to the Nigerian Bar. He is also an Associate of the
Chartered Institute of Arbitrators (UK) Nigeria Branch.
[2]1988 Cap. A18 LFN 2004.
[3]Where the parties to an arbitration
agreement do not provide for the number of arbitrators to be appointed, section
7 of the Act provides that the number of arbitrators shall be deemed to be
three.
[4]Section 6 of the Act provides for
the number of arbitrators to be appointed in the event that the arbitration
agreement is silent on this issue while Article 6 – 8 of the Arbitration Rules
in the First Schedule gives a detailed procedure to be adopted in the
appointment process.

[5]This is laid down in the popular case ofCOMPETENZ v COMPETENZ. See also section
12 of theAct and Article 21 of the Arbitration Rules in the First Schedule to
the Act.

[6]Section 15(2)of the Act.
[7]Section 16 of the Act.
[8] 
Section 17
of the Act.
[9]  Section 20(1) of the Act
[10]See Article 15 of the Arbitration
Rules in the First Schedule to the Act.
[11]In arbitration sessions, parties
bring numerous claims and issues which make the arbitral proceedings appear
like litigation. In order to avoid this, the tribunal may resort to the use of
the Scott schedule. The Scott schedule is essentially a table with inputs from
both the claimant and respondent. The claimant sets out hisargument first, and
then the schedule is passed to the respondent to set out his responses. The
main objective of the Scott schedule is for the issues in disputes to be
presented as clearly as possible, thus saving time, reducing cost and
conserving efforts.
[12]  Section19 the Act.
[13]See Article 23 of the Arbitration
rules in the First schedule of the Act.
[14]  Section 256(1)(a) of the Evidence Act 2011.
[15]See also Article 25(6) of the
Arbitration Rules in the First Schedule of the Act.
[16]Article 25 (4) of the Arbitration
rules provides: “Hearing shall be held in
camera unless the parties agree otherwise
”.
[17]Order 3, 5 and 25 of the High Court
of Lagos State (Civil Procedure) Rules 2012.

Photo Credit – www.newtonarbitration.com

Provisions of the Lagos State Properties Protection Law  2016

Provisions of the Lagos State Properties Protection Law 2016

Though not restricted to
the commercial city of Nigeria, Land grabbing has always been a big issue in Lagos
state. Property investors were not protected under the law and were being taking
advantage of by the popularly called “Omo Onile”, meaning in loose terms “Children
of the land” and their sponsors, or privileged individuals who used force,
threats and sometimes violence to unscrupulously take possession of land or
property belonging to other persons. It is common to see or hear of a crowd of
young men gather at the sites of undergoing private construction demanding for
unaccountable levies and fines. 

To say, these unlawful actions
have plagued the real estate industry in Lagos and other parts of Nigeria, is
to put it mildly. Sometimes, law enforcement agencies are also powerless to aid
or act in certain situations. The property divisions of the law courts are
filled with claims bothering on forceful and unlawful possession of land or
property and have been in court for quite some time. 
Lagosians can however smile
and be relieved, as Governor Ambode on the 15th of August, 2016,
signed into law, the LAW PROHIBITING FORCEFUL ENTRY AND ILLEGAL OCCUPATION OF
LANDED PROPERTIES IN THE LAGOS STATE. This new Law protects the proprietary
rights of Land and Property owners in Lagos State and also criminalizes actions
of forceful and unlawful entry or occupation of premises. 
The law states in Section
2(1), that – 
“ As from the commencement
of the law, no one shall use force or self-help to take over any landed
property or engage in any act inconsistent with the proprietary right of the
owner in the State. 
Furthermore, subsection
2(two) states that persons who have used force to take over the properties of others
and still do so after 3 months from the date of commencement of the law commit
an offence. Anyone who commits such offence is liable to ten (10) years
imprisonment. 
Also, anyone without
lawful authority who applies threats or violence to secure entry into any
landed property for personal use commits an offence. Regardless of if the entry
is lawful, it does not give a right to use threats or violence and anyone who
commits the offence shall be liable to 10 (ten) years imprisonment.
Furthermore, by virtue of
section 3(4), anyone who uses fire arms or offensive weapons or is in any way
armed or wounds anyone while committing the act of forced entry is liable to 4(four)
years imprisonment. 
Persons in illegal
occupation of premises who also fail to leave the property commit an offence
and are liable to a fine of N5,000,000
(Five Million Naira) and/or up to five (5) years imprisonment. By virtue of
Section 7, any encroacher who keeps fire arms or dangerous/offensive weapons on
the premises shall be liable to 10 (ten) years imprisonment. 
Any encroacher who tries
to sell the property knowing he has no lawful authority to do so commits a
crime and is liable to a fine of N500,000
(Five Hundred Thousand Naira) and/or Six (6) months imprisonment. If the person
is successful in selling the property, he shall be liable to a fine not
exceeding 100% the value of the property and/or 5(five)years imprisonment as
provided in section 8. 
It was always common for
purported family agents to unlawfully sell family property without the consent
of the head of the family. However, by virtue of the law, anyone who sells
family property without the authority of the family head or sells government
land without the authority of the relevant government authority shall be liable
to 21 (Twenty – One) years imprisonment. 
Due to the fact that many
property/estate agents and sometimes, lawyers, have been known to aid the sale
and unlawful encroachment of private property. Section 9, prohibits
professionals from aiding in conduct that constitute an offence under the law
and such professionals shall be reported to the relevant bodies for misconduct
and appropriate actions. 
A popular provision of the
Law is the section that prohibits that harassment of property owners by the omo
onile groups and other hoodlums. Section 10, states that persons who act as
agents and demand a fee in regard to construction on properties shall be
committing an offence and liable to a fine of 1(One) million naira and/or 2 (two)
years imprisonment. 
The Law also establishes a
task force to enforce the law and grants jurisdiction to the Special Offences
Court and other courts. 
In other to prevent
private persons from taking laws into their hands, no law enforcement agent,
vigilante group, ethnic, cultural or traditional militia shall have the right
to enforce the law except in terms with the Sheriffs and Civil Process Act.   
The enactment of this law
brings succor to all lawful property owners in Lagos State and is highly
welcome.
Dunmade Onibokun

Principal Partner
Adedunmade Onibokun &
Co.
+2349095635314
Dunmade’s legal practice
focuses on corporate and commercial law, regulatory compliance, due diligence,
corporate advice and commercial transactions. 
He is the Principal partner of Adedunmade Onibokun & Co. a law firm
based in Lagos, Nigeria. Dunmade is also a blogger and publishes the Legalnaija
Blawg via www.legalnaija.com

Photo credit – www.Nigerianelitesforum.com
RBN Bloggers – How to draft an Affidavit though you aren’t a lawyer

RBN Bloggers – How to draft an Affidavit though you aren’t a lawyer


Many people don’t like
lawyers simply because it appears they argue too much, others don’t like them
because they have encountered the ones who charge a lot. A client once told me
“I swallowed all the Paracetamol I could find when I saw your bill.”
All I could do was laugh. Knowing what I had charged, I knew I had undercharged
him just because I wanted him to retain my services and there he was still
insinuating I had overcharged. Like him, many people have the fear that lawyers
overcharge even when they don’t. And yet it’s not so easy to get by without a
lawyer on your side because there will always be a need for one.

However, there are a few
things you might be able to do on your own (if you are smart) that ordinarily
ought to be done by a lawyer. One of them is drafting an affidavit and getting
a police report for your missing or stolen item.
Just Before I tell you how
to go about it, first let me give you a layman definition of an affidavit.
An affidavit is simply a
document of facts made under oath. It is meant to stand as  your court
approved oral evidence. So while making an affidavit you are only expected to
state facts that you know to be true. Usually you don’t have to say what others
told you, just state what you know, so let’s assume you have just misplaced
your latest phone or your purse which had your ID card, ATM card and other
documents, and you rushed to the nearest police station to lay a complaint and
the police officer has asked you to bring an affidavit, here is what you should
do:
1.    
Find Out Which Court Is Nearest To
You:

All affidavits for stolen or missing items ought to be done at the court
nearest to where the incident happened. In law it is called jurisdiction I.e.
The court must have power over the matter brought before it. For instance, if
your phone was stolen in Ikeja Lagos state, the appropriate police station will
be Area F while the appropriate court to stamp your affidavit will be at the
Ikeja High Court or Ikeja Magistrate Court. You are not expected to go outside
the court nearest to you. (Or rather the court within your jurisdiction)
2.    
Get A Laptop:
Sit in front of a laptop and open Microsoft Word or any other word processor.
3.    
Type The Heading:
your heading should be in three lines and in the name of the court you will be
going. Here is how affidavits are headed:

First line:                  
                     
          In the Lagos High Court

Second line:                  
                     
   In The Ikeja Judicial Division

Third Line:                  
                     
                Holden At
Ikeja

Make sure the heading is bold, centralised and underlined.

4.    
The Subheading:
The subheading is a one line heading which states the purpose of the affidavit.
Examples are Affidavit of Loss of Original Certificate , Affidavit
of Loss of Phone
etc.

The sub-heading should be directly above the main content of the affidavit and
should also be bold, centralised and underlined.
5.    
The Introduction:
The introduction is where you tell the reader about yourself. It usually
contains basic (but static) details about yourself and here is the format.

I, John Doe, a Christian, male, Adult,
Doctor of No. 19 rbnbloggers street, Ikeja, Lagos, do make oath and state as
follows
:
The introduction should
contain all those facts so that anyone reading knows a little about you.
6.    
Statements of Facts: This is where you
start saying all the things that led to your making the affidavit. It should be
in sequential order and should be in numbered paragraphs starting from
“1.” Each paragraph should carry a single idea and you can have as
many paragraphs as you want but only necessary facts are needed. You should
begin each paragraph with “that”. See example below:
7.                                        
  1.
That on the 15th August 2016 I embarked on a journey to work on a BRT bus at
Ojota Bus Park
2.
That while on the journey, I had in my possession my brand new iPhone Six which
had my 080644456d Mtn sim card installed in it.
3.
That around 2 O’clock in the afternoon, two men carrying firearms approached me
along with other passengers on the bus and demanded our personal belongings.
4.
That my iPhone along with several sums of money amounting to Eight Hundred
Naira was obtained from me.
5.
That since then, I have no knowledge of the whereabout of neither the phone nor
the MTN sim card.
6.
The last Paragraph: The last paragraph comes after you have stated all the
facts and you feel its time to close the affidavit. The paragraph is simply a
static line that affirms your sincerity. This is how it is drafted:
7.
That I make this affidavit in good faith conscientiously believing same to be
true and in accordance with the oath Law of Lagos State.
8.    
The
signature:

After the paragraph above, it’s time to indicate where you will append your
signature. This should be on the right-hand side below the statements. Draw a
line that is big enough to contain your signature and under the line type the
word: Deponent. Do not sign the signature after you print it. You are
meant to sign it at the registry in the presence of the commissioner for oaths.
9.    
State
The Registry:

the next thing to do is to go down one step below and type the following words
on the extreme left-hand side of the document in this exact manner:

SWORN TO on this …….day of ……., 20….
at
the Ikeja High Court Registry.
10.                       
The
Commissioner for oaths:

Now its time to draft the commissioner for oaths section. You should go down
now and type the following in capital letters:        
                     
                     
              BEFORE ME:

Leave some space for signature and draw a line for the signature. Under the
line type the following words in capital letters:

—————————————————-

       COMMISSIONER FOR OATHS.

11. Print Out: Before you hit the print button,
go over your draft again and make sure you have eliminated all typographical
and spelling errors. Make sure you have also edited the draft to look like it
was done by a professional lawyer. Once you are satisfied, print out three
copies and run to the court, and ask for the court registry.
You will be asked to pay a
token amount which is not up to N500 (as at the time of publishing this post.)
12.   The last step: After you have paid, a
receipt will be issued to you and you will be asked to see the Commissioner for
Oaths. He or she will ask you to sign the documents. Append your signature at
the deponent’s space, then he/she will fill in the date and stamp the documents
and hand them back to you.
Disclaimer:
The opinions expressed in this article should not be taken as a substitute
for legal advice. For all questions and suggestions relating to Law you can
chat with us on our Whatsapp line: 09054551883
or send us an email at law@rbnbloggers.net
Ed’s Note – This article was originally
posted here.
Ivie Omoregie: So You Want to Stand As a Guarantor For LeBoo?

Ivie Omoregie: So You Want to Stand As a Guarantor For LeBoo?


Just
the other morning a friend of mine called messsscccrreeeaammmiinnggg;
she said a certain Nigerian bank had deducted N7m from her account. It was a
Saturday morning, so there was no way to contact the bank to ask them for the
exact details of the transaction. She said her account manager’s number was not
going through and that when she checked online she could not see specific
details for the deduction…just a series of transaction codes.

After
calming her down, I asked her to be patient and wait till Monday to get
clarifications. There was actually nothing that could be done before then, so
she had no choice but to relax and sleep. (I can just visualise her in church
the following morning…hehe)
When
she called the bank on Monday, she was given the biggest reality check of her
entire life. Apparently 2 years prior this time, her ex-fiancé had wanted to
expand his business and needed a loan from the bank. He didn’t have any assets
to secure the loan, and had asked her to stand as his guarantor. She has a
flourishing interior design business, and also receives a considerable amount
as rental income from property she inherited from her grandfather. Her boo was
her world and they were about to be married and start a life together. She was
doing well, so accepted to be his guarantor. In all honestly I think she
desperately wanted to personify the perfect “wifey” and so couldn’t say no.
He
kept on stressing that it was just a hypothetical situation and that the
chances of him defaulting were slim. She told herself she knew him inside out
and would be able to police his obligations under the loan agreement. The way
she saw it “at least he wasn’t being a waste man with no ambition. He had big
dreams of growing his business and was not asking her to ‘lend’ him money”.
As
you can imagine, when the relationship scattered because his ex-girlfriend had
just given birth to his first child, “policing his loan obligations” were not
at the forefront of her mind. In all honesty, she had completely and utterly
forgotten about that random document she signed over 2 years ago.

The question now was…how does she get her money back?
Let’s start with the Guarantee Agreement
A Guarantee Agreement is defined as a written undertaking made by one party
(the “Guarantor”)
to a second party (usually the “Creditor”),
consenting to be responsible if a third party (usually the “Principal Debtor”)
fails to perform a certain duty, i.e. payment of a debt.
Halsbury’s
Laws of England defines a Guarantee Agreement to mean an accessory contract by
which the Guarantor undertakes to be answerable to the Creditor for the debt,
default or miscarriage of a Principal Debtor; the primary liability to the
third party must exist or be contemplated before the creation of the Guarantee
Agreement.
I
must stress that in considering the adequacy of a Guarantee Agreement, what is
of importance is the financial position of the Guarantor and not the financial
inadequacy of the Principal Debtor.
The Creditor
This
is the person to whom obligations of the Principal Debtor and the Guarantor are
owed. In the event that the Principal Debtor defaults on his/her obligation to
pay the principal loan, then the Creditor may recover the amount outstanding
from the Guarantor.
The Principal Debtor
This
is the person primarily liable to the Creditor for the obligation guaranteed.
The Principal Debtor is not a party to the Guarantor’s contract with the
Creditor, even though the Guarantor’s contract stems from the dealings of the
Principal Debtor. Thus we often see instances where the Creditor has deemed the
Principal Debtor as incapable of settling the debt and thus focuses all efforts
on retrieving the outstanding monies owed, plus interest, from the Guarantor
(i.e. they no longer bother with the Principal Debtor and “hound” only the
Guarantor).
The Liability of the Guarantor
The
Guarantor’s liability is a secondary obligation that is only triggered upon
default by the Principal Debtor. A Guarantor cannot be held liable for more
than he/she has undertaken to guarantee; in addition, the liability of a
Guarantor cannot exceed that which is owed by the Principal Debtor.
The Guarantor’s Rights on Demand for Payment
The
manner in which the Creditor is able to make a demand against the Guarantee
Agreement is usually dependant on the terms of that agreement as well as the
terms of the agreement between the Principal Debtor and the Creditor.
Generally, the Creditor is only required to issue a demand notice to the
Guarantor upon a default by the Principal Debtor, the Creditor may thereafter
commence legal action for recovery if the Guarantor does not comply with the
terms of the demand notice.
Unless
the Guarantee Agreement itself provides otherwise, generally:
• There must be a clear case of default on the part of the Principal Debtor
before the Creditor can pursue the Guarantor;
• All remedy periods relating to the event of default should have expired with
the default in question not having been remedied;
• The Creditor must not have impliedly or expressly waived the default in
question.
However,
I must stress that the terms of individual Guarantee Agreements are governed on
a case by case basis; we are now seeing instances where as a prerequisite,
Creditors are demanding that the Guarantor issues blank cheques, said cheques
to be presented by the Creditor at the point of default by the Principal Debtor,
without the obligation requiring the Creditor to give the Guarantor prior
notice.
The Guarantor’s Rights After the Settlement of Debt
A
Guarantor has a right to the recovery of money improperly paid to a Creditor,
this would entail money which could have been paid under a mistake of fact as
to the Principal Debtor’s obligations.
The
Guarantor may also be indemnified by the Principal Debtor for the total amount
paid in settlement of the debt, plus interest. However, in reality a Principal
Debtor who was unable to repay its Creditor is unlikely to be able to repay the
Guarantor.
Determination of a Guarantee
I
must stress that unless the agreement to which the Guarantee was given had been
terminated in accordance with the terms of that agreement, whilst the Creditor
is being owed an obligation by the Principal Debtor, the Guarantors obligation
to the Creditor will continue to subsist.
Furthermore,
unless the Guarantee Agreement provides to the contrary, the Guarantee will be
determined if the Principal Debtors obligation is changed without the
Guarantor’s consent.
Conclusion
My friend was able to confirm that the reason why the bank was able to simply
deduct the money from her account was because she had issued an undated cheque
at the time of signing her Guarantee Agreement. It was simply filled in
and presented as final settlement for the debt.
Luckily
for my friend, under the terms of her agreement, the bank was supposed to give
her several demand notices at the point of default to enable her mitigate the situation
with hopes of getting the Principal Debtor to pay the debt being owed to the
Creditor.
The
bank had failed to do this, thus were forced (after stern warnings from my
friend’s lawyer, who happens to be a no-nonsense highly rated Senior Advocate
of Nigeria and who also happens to be my friend’s father) to reverse the
transaction and follow due process.
The
concept of guarantor is something which is now a part and parcel of modern day
banking, yet what intrigues me is the fact that many people do not seem to
appreciate the full implication of standing as someone’s guarantor. Maybe this
stems from the fact that it is to a large extent a worst case scenario.
Ivie Omoregie 

Ivie is a commercial lawyer,
with experience and keen interest in projects and transactions work within the
Sub Saharan African region. She is called to practice in England and Wales and
Nigeria. Her core practice areas: include – all aspects Corporate Commercial;
Corporate Governance, Risk and Compliance; Financial services and Banking;
Infrastructure and Projects; Venture Capital, Private Equity and Alternative
Investment (including Fund Formation and Administration) ; Public Procurement;
Natural Resources; Telecoms, Technology and Media; Agribusiness; Manufacturing
and Construction.

Ed’ s Note – This article was
originally published here