local and foreign businesses in Lagos potentially face multiple legal
challenges. Dr Bob Arnot, national programme manager of the J4Aprogramme
in Nigeria, explains the difficulties, as well as J4A’s interventions connected
to commercial and other types of dispute resolution.
and foreign business start-ups?
can be difficult to register or set up a company because there are many
overlapping laws and agencies which regulate businesses and investment, which
sometimes contradict each other. This makes it harder to create a new start-up.
expensive by lots of different tax laws, which mean that there is a
multiplicity of taxes in various disguises.
areas of commerce, like online business or franchising, as there’s no legal
framework to regulate, control or protect these activities.
system is sluggish. In 2012, it took an average of 583 days to conclude a
commercial case in a court in Lagos, the commercial capital. When a case goes
on appeal, it takes even longer. Nigeria’s Supreme Court is still dealing with
appeals filed in 2005. Such delays tie down capital and discourage businesses
borrowing funds – but it’s difficult
security offered as collateral in Nigeria. However, the country’s Land Use Act has created a bureaucracy that’s meant long waiting times for land
registrations and documentation to be approved, and produced an environment
that encouraged corruption. This makes it more difficult to use land as
collateral, makes it harder to borrow money and thus deters investment. Local
businesses have particularly struggled. It’s harder for them to access credit,
due to the lack of legal alternatives that can be used as security instead of land.
using moveable property (personal assets, like a car) as security when
borrowing money. This makes it harder for smaller companies and especially
women to access credit and get their businesses off the ground.
help foreign companies?
foreign and local businesses, so improving them should help everyone. For
instance, two of the laws that are currently under review are designed to
support small businesses. The Cooperative Societies Law encourages people to
pool their resources through cooperative societies. Members of these societies
have access to credit facilities which can then be used to start small
businesses. The Sales by Auction Law regulates the process of auctioning
property used as security for loans, protecting lenders and the financial
disputes is generally important to stimulate economic activity. This need not
take place solely in the court room. Encouraging people to settle disputes
outside the courtroom has helped local small businesses like the Gandun Albasa
General Furniture Association, a small trade association with about 55 members
in Kano, northern Nigeria. After learning more about alternatives to
litigation, they were able to resolve a dispute involving N17m (£68,000) in
Nigeria’s larger court system
assisting the establishment of ‘fast-track courts’ in Lagos, which aim to
settle disputes more rapidly for both local and foreign businesses.
commercial capital of Nigeria, and the state government is keen to encourage
that already exists in Ghana, Australia and the UK. The courts and judges
operate within Nigeria’s existing High Court but only handle certain cases that
qualify to be fast-tracked. To qualify, a case should involve at least N100m
(£328,833); include foreign businesses or investors; or relate to mortgages.
courts, ten of which have been designated fast-track commercial courts. The
remaining 45 courts handle other types of cases, such as criminal, land, and
the other courts. However, when they’re dealing with fast-track cases, there
are extra provisions in the rules. For instance, a fast-track case must be
concluded within nine months. But there is no such time standard for other
types of cases. The idea is to simplify and reduce the time between the filing
of a lawsuit, and the final court judgment.
disputes, to avoid distractions. But eventually, the system should expand to
include other cases, so that every court will apply similar rules.
new courts would be a good idea
established, some judges were worried that they would divert attention and
resources from the other courts. Lawyers were concerned that their control over
cases would be eroded: for example, defence lawyers often want to delay the
final judgment. Defendants argued that they would lose their rights to a fair
hearing, because of the time limit on each case.
explain the benefits of the new system to everyone involved. We trained the
judges, making sure they knew that the fast-track courts were a pilot which
could be tested and replicated to all other courts only if they were
successful. We made sure that lawyers realised that they could boost their
earnings by working in the fast-track system, as they would be able to take on
more cases. And to litigants, we related the benefits of resolving their cases
first – until we discovered the cause
we found that some judgments were still taking too long. We realised that these
delays were happening because the judges hadn’t had any specialist training on
a variety of complex topics being discussed in their courts. To make sure they
felt equipped to manage these cases, the judges were giving long adjournments
so they had time to read up on the subject matter. This was particularly true
in complex financial cases and tax litigation.
cases run smoothly
seminars to train the judges on the difficult commercial cases they were
encountering, run by seasoned law experts. This gave the judges the knowledge and
confidence to handle complex technical cases. There are now plans to extend
these seminars beyond the fast-track courts.
settings to improve access to justice for all Nigerians. We have supported the
court-connected multi-door courthouses, which provide options of arbitration,
mediation and early neutral evaluation; we work to improve the service delivery
provided by the lower courts and have undertaken pilot projects in
magistrate’s, customary and sharia courts; we have supported ‘citizen’s
mediation centres’ where smaller cases (predominantly landlord and tenant
cases) may be resolved. We have also worked with a range of business membership
organisations (for example, chambers of commerce and trade associations) to
improve their mediation practices so that the disputes that arise between their
members need never go to court.
provision of a wide range of legal services so that the inability to settle
commercial disputes (of whatever size) need not be a constraint on commercial
activity. If disputes can be settled quickly and cheaply without breaking the
economic relationship between the parties, then this will help sustain economic
activity, growth and development.
law, access to justice and sustainable development in Nigeria at the Global Law Summit in London on 23 February 2015.
the UK government’s Department for International Development (DFID) and managed
by the British Council. Find out more our work in justice, security and conflict resolution.