Nigeria: Enforcement Of Choice Of Foreign Law And Jurisdiction In Transaction Agreements

Last Updated: 24 April 2014
Article by Afoke Igwe

The Nigerian courts recognise parties' choice of foreign (non-Nigerian) law and jurisdiction. The Nigerian courts will, as a general rule, give effect to the parties' choice of a foreign governing law and will, accordingly, apply such law in the determination of any claims that come within their jurisdiction. For instance, where parties have English law as the governing law of the contract, Nigerian courts, will, generally give effect to the choice of English law as the governing law of the contract if any claim in relation to the contract were to come under their jurisdiction.

Nigerian courts will, however, only interfere with parties contract in circumstances where the terms of the contract are contrary to Nigerian public policy, inconsistent with Nigerian law or where there are vitiating elements (for example, mistake, misrepresentation, undue influence, illegality, etc.) in the terms and conditions of the contract. The Supreme Court of Nigeria has ruled in Sonnar & Anor. v. Partnenreedri M.S Nordwind & Anor (1988) N.S.C.C. pps. 28-49 that the parties' choice of law is not conclusive and that to be effective the choice of law must be "real, genuine, bona fide, and reasonable". The Nigerian Supreme Court has also held that the foreign law chosen by parties as the proper law of their contract" must have some relationship to and must also be connected with the realities of the contract considered as a whole".

As with the case of the parties' choice of law, the Nigerian courts have demonstrated that in certain limited circumstances they will be prepared to assume jurisdiction notwithstanding the express choice of some other jurisdiction by the parties. Oputa, JSC in the Sonnar Case above stated that:

"our courts should not be too eager to divest themselves of jurisdiction conferred on them by the constitution and by other laws simply because parties in their private contract chose a foreign forum and a foreign law".

The factors which the courts will consider in determining whether to assume jurisdiction were also set out in the Sonnar Case and include:

  1. the countries with which the parties are connected;
  2. the location of the evidence, the convenience in terms of accessibility and expenses between the domestic and foreign courts;
  3. whether the party seeking to stay the proceedings is only seeking procedural advantages; and
  4. whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would:

    1. be deprived of security for that claim;
    2. be unable to enforce any judgment obtained;
    3. be faced with a time-bar not applicable to the domestic court or;
    4. for political, racial, religious or other reasons be unlikely to get a fair trial.

Recognition and enforcement of foreign judgments

Where a party has obtained a judgment (a "foreign judgment") in a court other than a Nigerian court, the party can enforce the judgment in the Nigerian courts in either of 2 (two) ways:

  1. By the registration and enforcement of the foreign judgment as a judgment of the Nigerian court:

    Where the judgment has been obtained in the courts of a country that accords reciprocal treatment to the judgments of Nigerian courts, the party can enforce such judgment in the Nigerian courts by virtue of either the Reciprocal Enforcement of Judgments Act, Chapter 175, Laws of the Federation of Nigeria, 1958 (the "1958 Ordinance") (in the case of the judgments of an English court) or the Foreign Judgments (Reciprocal Enforcement) Act, Chapter 35, Laws of the Federation of Nigeria, 2004.

    The procedure for the enforcement of foreign judgments, as laid down by the 1958 Ordinance, which is applicable to the enforcement of English judgments, is as follows:

    1. An application for leave to register a foreign judgment must be made by way of a petition ex-parte, supported by an affidavit, within 12 (twelve) months after the date of the judgment or any longer period as may be allowed by the registering High Court.
    2. When an order granting leave to register the judgment is made on notice by the court, the order shall be served on the judgment debtor.
    3. Notice in writing of the registration of the judgment must be served on the judgment debtor within a reasonable time after registration.
    4. Upon registration, the foreign judgment can be enforced the same way that a domestic judgment may be enforced.
    Under the Foreign Judgment (Reciprocal Enforcement) Act, the procedure for enforcing foreign judgments is as follows:

    1. An application must be made by a Motion on Notice to a High Court in Nigeria within 6 (six) years after the date of the judgment, or where there is an appeal against the judgment, after the date of the last judgment given in the appeal, to have the judgment registered in the High Court.
    2. On the registration of the judgment by the court, the judgment will have the same force and effect as a judgment given by the court in which the foreign judgment is registered and can be enforced in the same way that a domestic judgment may be enforced.
    A foreign judgment will, however, not be enforced if it is contrary to Nigeria's public policy, or does not relate to a definite sum; or if it is made by a court of the foreign country that has no jurisdiction over the matter or where the defendant was not given an opportunity to present its case.
  2. A foreign party also has the option of suing upon or bringing a fresh action for the recovery of a debt, based on the foreign judgment.

Enforcement of foreign arbitral awards

As regards foreign arbitral awards, Nigeria is a signatory to and has ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has been incorporated into Nigerian law through the Arbitration and Conciliation Act, Chapter 19, Laws of the Federation of Nigeria, 2004. The Nigeria's Arbitration Act is modelled very closely upon the UNCITRAL model law and rules. What this means is that arbitral awards made by a recognised international arbitration, such as the London Court of International Arbitration, will be recognised and enforced by Nigerian courts subject to the provisions of the Arbitration Act.

The procedure for obtaining recognition or enforcement of a foreign arbitral award requires the party applying for enforcement of such foreign award to at the time of the application to provide:

  1. the duly authenticated original award or a certified copy of it,
  2. the original arbitration agreement or a certified copy of it, and
  3. a translation of (i) and (ii) above into the English language if they are in a language other than English language.

The foreign arbitral award may be set aside in Nigeria in the following circumstances:

  1. a party to the arbitration agreement is under some legal incapacity;
  2. the arbitration agreement is invalid under the parties' choice of law;
  3. the party against whom the award is sought to be enforced was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
  4. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
  5. the award contains decisions on matters which are beyond the scope of the submission to arbitration, provided however that where the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside;
  6. the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the agreement of the parties, unless such agreement (i.e. of the parties) was in conflict with a provision of the Arbitration Act from which the parties cannot derogate;
  7. the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made;
  8. the subject matter of the dispute is not capable of settlement by arbitration in Nigeria, or
  9. the recognition or enforcement of the award will be against public policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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