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An Appraisal of Challenges of Enforcing Foreign Judgments in Nigeria

posted 5 years ago

Enforcement
of foreign judgments has significant relevance in this era of increased
international trade and foreign investment. Businesses are more comfortable
doing business with foreign partners knowing that if they obtain judgment from
a superior court in their home country; it can be enforced against the judgment
debtor across borders. Fortunately, Nigerian courts recognize judgments from
superior courts of commonwealth countries and countries with reciprocal
treatment with Nigeria. This has increased the confidence of foreigners and
foreign companies to do business with Nigerians and Nigerian companies.
Nevertheless, the procedure for registration of foreign judgment in Nigeria is
not without challenges. Apart from the uncertainty in the statute and rules
regulating the enforcement of foreign judgment, the procedure for registration
of foreign judgments does not take cognizance of the evolving trends in global
economy and international commerce.

The
statute regulating the enforcing of foreign judgments in Nigeria is imprecise.
Ordinarily the recent Foreign Judgment (Reciprocal Enforcement) Act, CAP 152,
Laws of the Federation of Nigeria, 1990 (“the Act“) would have been the legislation
regulating enforcement of foreign judgment but the Supreme Court in the case of
Macaulay v R.Z.B of Austria
(2003) 18 NWLR (Pt. 852) 282 held that the Minister of Justice has not made an
order extending the Act to judgments of the United Kingdom and other countries
with reciprocal treatment with Nigeria pursuant to Sections 3 (1) and 9 (1) of
the Act as such the first part of Act is inapplicable. Again, in the case of Grosvenor Casinos Ltd v Ghassan Halaoui
(2009) 10 NWLR (Pt. 1149) 309, the Supreme Court postulated that both the Act
and the Reciprocal Enforcement of Judgments Ordinance, CAP 175, Laws of the
Federation of Nigeria, 1958 (“the
Ordinance
) (“applicable
legislations
“) are relevant statutes in the enforcement of
foreign judgments in Nigeria.

The
imprecision on the particular statute regulating foreign judgment enforcement
has a devastating effect on the whole process of registering foreign judgment
in Nigeria. For instance, the time within which to register a judgment under
the Act is 6 years while the time to register a judgment under the Ordinance is
12 months. Since there is no Foreign Judgment Enforcement Rules for the Act,
the Reciprocal Enforcement of Judgments Rules of the Ordinance (“Rules of the Ordinance“)
which was enacted in 1922 regulates the legal conditions for registration of
foreign judgment in Nigeria today. Rules 1 (1) and 5 of the Rules of the
Ordinance which provides that the application for enforcement of foreign
judgment be made by a motion ex-parte
is inconsistent with the modern concept of fair hearing and the current civil
procedure rules of Courts that an adverse party must be put on notice. It is
without doubt that the Rules of the Ordinance is out of touch with modern
realities and the different conditions in the applicable legislations have led
to calamity and more uncertainty.

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

The
applicable legislations provide that Nigerian courts shall accord reciprocal
treatment to judgment of ‘superior
courts
‘ from commonwealth countries and other countries with
reciprocal treatment with Nigeria. They also provide that a judgment creditor
from a foreign country with reciprocal treatment with Nigeria may apply to a
‘superior court’ in Nigeria within the specified time for registration of the
judgment. From the ordinary meaning of the wordings of the provisions of the
applicable legislations on conditions for registration of foreign judgments, it
did not contemplate that the jurisdiction of the Nigerian court to register a
foreign judgment will be subject to its jurisdiction to hear and determine the original
subject matter of the case. Since the judgment creditor is not asking the
Nigerian court to hear the case based on its subject matter, but to grant leave
for registration of the foreign judgment under the applicable legislations
only, Nigerian courts have no business making its jurisdiction to hear the
subject matter of the case, a condition precedent for registration of the
judgment. Unless the appellate courts pronounce on this grey area, it will continue
to impede the registration of foreign judgments in Nigeria.

An
interesting requirement of the applicable legislations is that the Defendant
against whom the foreign judgment is to be enforced must have been a Defendant
at the original court. This requirement creates a profound difficulty for
Judgment creditors. With the recent economic meltdown, businesses are trying to
stay afloat by merging or acquiring other companies. To maintain a local
presence, a multinational company may take over the business and goodwill of
viable Nigerian Company. Upon such takeover the acquired company is wound up.
What then happens to a judgment creditor who obtained a foreign judgment
against the acquired company? Does it mean that the judgment creditor cannot
maintain a cause of action against the acquiring company just because the
acquiring company was not a Defendant at the original court? Since the
acquiring company acquired both the assets and liabilities of the acquired
company and the acquired company is no more, the justice of the case demands
that the foreign judgment obtained against the acquired company should be
enforced against the acquiring company.

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

Though
Section 1 (2) of the Foreign Judgments (Reciprocal Enforcement) Act 1933(“the United Kingdom’s Act”)
provides that taxes or other charges of a like nature or in respect of a fine
or other penalty cannot be registered and enforced in United Kingdom, the
United Kingdom Prime Minister David Cameron in a letter to Leaders of the
British Overseas Territories (BOTs) and Crown Dependencies (CDs) dated 20 May
2013 said “…
I very much welcome the
commitments you have made to automatic tax information exchange, both on a
bilateral and multilateral basis, which will help us to reach our goal of
setting a global standard in tax transparency… We also need to ensure
information exchange works effectively for all… That is why we strongly
support the Multilateral Convention on Mutual Assistance in Tax Matters
This highlights the
importance of cross border tax collection. Nigeria will gain more if it offers
herself and other states the opportunity to recover fine, taxes and penalties
against evading offenders by either amending her Foreign Judgment statutes to
accord foreign judgments on fine, taxes and penalties the same status with
monetary judgments or enter into Multilateral and Bilateral treaties with other
states to assist themselves on recovery of cross borders fine, taxes and
penalties.

Furthermore,
the requirement that once an appeal is filed at the original court, the foreign
judgment cannot be registered at the registering court may be prejudicial to
the judgment creditor. What happens in a situation where an unscrupulous debtor
in an attempt to forever deny the judgment creditor the fruits of his judgment
files an appeal at the original jurisdiction and goes to sleep? What happens to
the judgment creditor where the judgment debtor dissipates the res before outcome of the
appeal at the original court? Is it not justiciable to preserve the res at the registering court
pending the outcome of the appeal at the original jurisdiction? This is the
reasoning behind the provisions of Section 1 (3) of the United Kingdom’s Act
which provides that a judgment shall be deemed to be final
and conclusive notwithstanding that an appeal may be pending against it, or
that it may still be subject to appeal, in the courts of the country of the
original court

In
conclusion, there is a need for the lingering crisis on the law regulating
enforcement of foreign judgment in Nigeria to be settled. The legal conditions
for enforcement of foreign judgment have been interpreted too broadly to
adequately protect the interest of foreign judgment creditors. Therefore, the
law and rules should be amended to reflect modern realities. The Courts should
be proactive in breaking new grounds and developing the jurisprudence on
enforcement of foreign judgment in Nigeria in accordance with the essence of
reciprocity of judgments. This will improve the prospects of Nigeria as a
business destination and enhance the growth of her economy.

Author

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