The Premise – After
28 long and hard years of its existence, the Companies and Allied Matters Act
of 1990 is finally going to be overhauled in favour of a new Act which would be
cited similarly. The repeal and re-enactment planned by the National Assembly by
virtue of the Bill for An Act to Repeal the Companies and Allied Matters Act
1990 (Cap C20, LFN 2004) is long overdue considering the fact that the Act had
been severely left behind by the times and had become a hindrance to modern and
efficient corporate governance practices as well as general economic
development.

The Expectation – There
is an expectation that the re-enacted law would address several issues which
have been problematic for companies and for the Corporate Affairs Commission in
the past and this has prompted many to look carefully at the Bill that has been
pass by the National Assembly.

Bottom-line – A few
notable changes and additions to the law are as follows:

The Governing Board
of the Commission – the issue of the leadership of the Corporate
Affairs Commission has been properly defined in the bill; expressly referring
to the leaders of the Commission as the “Governing Board” and not as “Members”
as was the case before. Furthermore, in the appointment of a representative of
the accountancy profession to the leadership of the Commission, the Institute
of Chartered Accountants would no longer be the sole organisation whose members
would be considered as other professional bodies in the accounting profession
would have a shot at a seat at the table.

A representative of
the Institute of Chartered Secretaries would now form part of the leadership as
well as a representative from the Federal Ministry of Industry Trade and
Investment. These additions are key corporate governance practices which ensure
the diversity of any Board to aid creative problem solving and well rounded
decision and policy making. The functions of the “Governing Board” are also
clearly spelled out in the Bill and the chief of these is policy making for the
Commission. This most definitely would ensure that the Commission has a clear
focus and goal at all times.

Requirement for Pre-action Notice – this is a crucial change as it would drastically alter the procedure
for filing lawsuits against the Corporate Affairs Commission. The Bill requires
that before a suit can be commenced against the Commission, a pre-action notice
must be issued and served on it. This protection has been afforded several
other federal government agencies and it is good to see that said protection
has been expanded to the Commission.

The Right to Form a Company – Another key
change is the fact that 1 person may now incorporate a private company so long
as the provisions of the Act in respect of same are complied with as opposed to
the previous position where there had to be at least two persons. This would
make for ease of commencement of a business.

Company Limited by Guarantee – the
requirement for the consent of the Attorney General to the incorporation of a
company limited by guarantee has been dispensed with under the Bill. This is a
very welcome development as the cumbersome nature of obtaining the Attorney
general’s consent has always been a massive stumbling block to the
incorporation of companies limited by guarantee which are essential to social
development.

Disclosure of
Capacity by Shareholder – the issue of shareholder transparency
which has long been a concern has been dealt with by the Bill. Every
shareholder would be required to disclose to the company within 7 days of
becoming a member, the capacity in which he holds the shares and if he holds
them as a beneficial owner. There is also obligation placed on the company to
disclose this information to the Commission.

Place of Meeting – a very
progressive change to the law is that private companies are now free to hold
general meetings electronically provided that such meetings are conducted in
accordance with regulations to be made by the Commission from time to time.

The judicial system has proven extremely
inadequate at processing cases or enforcing decisions. Courts are slow and
generally considered inefficient for reasons that include funding, poor
physical facilities, staff shortages, congestions, and inadequate training etc.
The average duration for the resolution of cases in Nigerian courts is between
10 – 20 years spanning the entire tiers of the judicial system. This is
evidently unmanageable in any economy.

The enforcement of commercial
contracts or settlement of disputes continues to be a primary concern for
entrepreneurs and investors. Economic reforms and investment growth are hardly
achieved and barely successful in face of dispute resolution constraints. The
reason is that Litigation has become such a major bottleneck to business that
it is no longer seen as an effective mechanism for timely resolution of
commercial dispute. Reliable alternative methods of resolving commercial
disputes became imperative hence the introduction and wide acceptance of
Alternative Dispute Resolution (ADR) processes or mechanisms.

Arbitration has become the established method
of determining international commercial disputes. All over the world, states
have modernized their laws of arbitration to take account of this fact. In a
recent survey conducted by White and Case, in collaboration with Queen Mary
University, School of International Arbitration on the Improvements and
Innovations in International Arbitration, 90% of the respondents to that survey
confirmed that international arbitration is their preferred dispute resolution
mechanism.

New arbitral centers are being established
and there is rapid development of law and practice of arbitration. International
treaties such as the New York Convention of 1958 on the Recognition and
Enforcement of Foreign Awards as well a body like UNCITRAL[1]
is essential to the effectiveness of Arbitration internationally.

The attraction is that international
arbitration is conducted in different countries and against different legal, cultural
backgrounds with a striking lack of formality but upon certain and acceptable
international standards, norms and ethics. 
Records support the establishment and effectiveness of arbitration
institutions. International institutions driving arbitration includes the ICC
in Paris, SIAC in Singapore, LCIA in London, HKIAC in Hong Kong. In addition to
arbitration services provided by these institutions, they set rules and other
procedural requirements which attract users universally.

Nigeria generates a significant volume of
commercial transactions (both domestic and international with about 80 percent
of these transactions originating or terminating in Lagos). Unfortunately,
dispute arising from these transactions are ultimately arbitrated in foreign
countries. This situation has been attributed to the inadequacy and efficacy of
Nigeria’s legal and institutional framework for Arbitration. The “flight” of
“domestic” (i.e. purely Nigerian) arbitration cases to arbitral venues outside
Nigeria is unhelpful to Nigeria’s economic empowerment and development strategy
programme (NEEDS). It also means loss of revenue for majority of lawyers and other
ADR practitioners. Various efforts and proposals have been made at the national
level and some states too. The Repeal and Re-enactment Bill of the Arbitration
and Conciliation Act 1988 currently before the legislature makes an attempt at
addressing this issue. What is required is a commitment and affirmative steps
for actualization of the proposals.

In line with promoting policies which
encourage the development of arbitration in this region, there is currently a bill
before the National Assembly for the amendment of the Arbitration and
Conciliation Act (ACA) 1988. Under the present 30
years old framework, lengthy and expensive are words that are often used to
describe arbitration proceedings in Nigeria. These are words which should not
be associated with arbitration as a means of dispute resolution. The reform will
help the argument for making Nigeria a preferred seat of arbitration and thus
increasing Nigeria’s share of arbitration.

The Olisa Agbakoba Legal Mediation and Arbitration Center submitted a
proposal to the House Committee in charge of the repeal and the re-enactment of
the Arbitration and Conciliation Act. Our proposal seeks to introduce in the
Bill an opt-in provision for fixing the seat of arbitration in Nigeria. We propose that where
parties have failed to determine Seat and Place of the Arbitration, the
Arbitration tribunal should revert
to Nigeria as the forum or seat for the Arbitration. This would invariably promote the growth of the industry and also encourage
investment, drive economic development and improve Arbitration practice and
culture amongst Arbitrators and relevant professionals.

Another example of policies that drive the
growth and culture of arbitration is the Lagos Arbitration Law 2009. Lagos
remains the commercial hub of the nation with the potential of becoming an
international financial and investment center in Africa. However, it requires an
efficient commercial dispute resolution environment founded on enabling legal
and institutional frameworks. In United Kingdom, the London Court of
International Court of International Arbitration (LCIA) in London derives
tremendous support from the London City Corporation with the London Chamber of
Commerce as one of the core drivers. In view of foregoing, affirmative action
could be taken by a state like Lagos. During my tenure as the NBA President,
precisely in 2008, I made a proposal to the Lagos State Government on the need
for establishment of a Domestic Arbitration Center in Lagos as a pilot
initiative. The state then started the process by introducing ‘a Bill for a Law to provide for the
establishment, management and operation of a Center which would act as a Court
for Commercial Arbitration as other Dispute Resolution (ADR) Mechanisms in
Lagos State and for connected purposes therewith’. This resulted in the
establishment of the Lagos Court of Arbitration in Lekki, Lagos.

In Nigeria, business managers (or their legal
advisers) who have to decide on the advantages of choosing Nigeria as an arbitration
forum will be interested to see that the appropriate frameworks are in place. What
prevails at Ad Hoc Arbitration and ADR bodies applying different kind of rules;
favourably and unfavourably to the parties. Nigeria has commercial centers like
Lagos, Abuja, Port Harcourt and Kano with the potential of becoming
international financial and investment centers in Africa. A national culture of
Arbitration is imperative as a framework and symbol of institutional
arbitration.

In fact, a national culture or policy on
arbitration will galvanize the improvement of domestic arbitration and provide
the platform for development and standardization of Ad hoc Arbitration process.
As an international organization, the Regional Center for International Arbitration
(RCIA) Lagos is constrained to drive the kind of national support required for
development and practice of Arbitration. The fact is that Nigeria can emulate
the practice in successful jurisdictions like Singapore or Malaysia, which have
strategically positioned themselves in their regions as arbitration hubs,
generating enough dispute resolutions to act as a catalyst in the development
of their respective economies. They achieved this by a national policy and
culture of arbitration. Another country that has seen significant development
by adopting a national policy in arbitration recently is Rwanda with the
establishment of the LCIA-backed Kigali International Arbitration Center. Mauritius
and Egypt have shown themselves to be sound choices for African arbitral seats,
and their use in intra-African arbitrations should be promoted.

It is worthy of note that not one African
arbitration centre has attained its full potential. This could be attributed to
the fact that there are simply too many of them. Limited resources should be
channeled efficiently for the development of three or four regional centres,
which are fully equipped with state-of-the-art facilities and information
technology. If establishing a regional centre faces too much red-tape, then governments
should consider simply promoting those African institutions which have
successfully established themselves (such as the LCA, CRCICA, Mauritius
International Arbitration Centre and the KIAC which have all struck the right
balance between being supported by their respective governments, without
control or interference from them), and making them the default choice in their
contracts. This removes an item from public expenditure, and may have benefits
in terms of the political leverage to be gained from encouraging the use of one
or more of these centres.

Next Steps –

Under the tenure of the former Attorney
General of the Federation, Prince Bola Ajibola, the Nigerian policy of
Arbitration was at its height. It was under this tenure that the Regional Center
of Arbitration was setup. The Government needs to promote its arbitration
policy by fully backing a center of arbitration. The Lagos Court of Arbitration
(LCA) undoubtedly, has potential to become a powerhouse in international
arbitration in West Africa. Its strong institutional rules and the recent
development in arbitration legislation in Nigeria demonstrates that it can gain
the trust and acceptance of the region, and this should be a good springboard
from which to build an international arbitration centre and a regional
arbitration hub.

If this centre was promoted in intra-African
arbitrations, then it would build a track record of international arbitrations
(albeit from other African countries), and gain enough credence to administer
non-African arbitrations.

Stakeholders such as banks, maritime
operators, government agencies need to propel the development of arbitration by
keying into the sector. Contracts in these sectors need to contain arbitration
clauses. Disputes resulting from such contract should be arbitrated in Nigeria.
There should be no reason for a purely Nigerian dispute between Nigerian
parties to be arbitrated in London. There is a need to grow the Nigerian
arbitration jurisprudence and expertise.

Stakeholders also need to engage Presidential
Enabling Business Environment Council (PEBEC) on the ease of doing business.
The council must understand that for there to be growth or development in
Arbitration, an arbitration policy is crucial. Investors need to be assured
that in the event of any dispute, there is an efficient legislative framework
on arbitration to resolve such commercial dispute.

Conclusion – Telling the World

Nigeria must be cognizant of its bargaining
power. In the scramble for resources, investors will be forced to accept local
or regional arbitral systems and/or African seats, or risk losing deals.
Indeed, in a survey conducted by Simmons & Simmons in 2015, 72% of
respondents said that they would consider using local or regional arbitral
systems, and 58% said they would use an African seat.

In order to develop arbitration in this
region and prop Nigeria as a regional hub in West Africa, it is incumbent on us
to take active steps to increase awareness. We must build up the capacity of
our arbitration centres, then market them aggressively. We must make
legislative reforms an agenda priority, then publicise them widely. Stakeholders
need to develop more seasoned Nigerian Arbitrators by encouraging partnerships
between international law firms and locally-based firms. This will enable the
transfer of knowledge and skills, and the opportunity to gain from the wealth
of experience which international law firms have to offer, in order to build
local capacity.

In all these efforts, it is important to act
quickly and capitalize on the current interest in the continent and Nigeria, as
this will eventually wane. If we are successful, perhaps what might emerge is a
more mature Nigerian arbitration jurisprudence, and evolution of an
African-centric style of arbitration, or at the very least, one in which Nigeria
has had an influence.

The culture and policy of arbitration in
Nigeria is still at its infancy.

---

It is no secret that the world today is
a global village, interdependent on itself to ensure the continuity of a
thriving commercial community and the survival of each and every nation. Cross
border transactions are the norm in today’s world and cannot be avoided.  Daily, international business
contracts are signed as well as Bilateral Investment Treaties (BIT)   to protect international commerce, cross border
transactions and investments.

Human nature dictates that conflicts will
arise in the execution of these transactions. Conflicts are part and parcel of
contracts, particularly cross border contracts. For this reason, dispute
resolution mechanisms are agreed, setting out the parameters for the resolution
of potential disputes before they occur. In a recent survey conducted by White
and Case, in collaboration with Queen Mary University, School of International
Arbitration on the Improvements and Innovations in International Arbitration,
90% of the respondents to that survey confirmed that international arbitration
is their preferred dispute resolution mechanism.

On this premise, the question on the
ease and mechanics of arbitration and its competence in the resolution of
conflicts in the execution of cross border contracts and transactions comes to
fore. How can arbitration be a successful tool for the promotion of investment?

Due diligence must be carried out on the
future stability, predictability, and protection of foreign investment prior to
a potential foreign investor making an investment commitment. Arbitration, as noted, is the preferred dispute
adjudication method in protecting foreign investment.

Undoubtedly, there is
a nexus between the existence of a stable legal environment which is
pro-arbitration, and the level of investment which an economy can attract. For
instance, Bilateral Investment Treaties (BITs) play a role in promoting Foreign
Direct Investment in countries. BITs are treaties between countries which
protect foreign investors and their investments in a host country. This is
essentially by means of the dispute resolution clause in the BIT. More often
than not, this is an arbitration clause prescribing arbitration at the International
Center for Settlement of Investment Disputes (ICSID).

With the existence of
a BIT, potential investors and their investments enjoy some amount of security.
ICSID, being an institution of the World Bank, enjoys some level of compliance and
unreserved enforcement of its arbitral awards; the ICSID Convention being
widely assented to by countries who would rather be on the good side of the
World Bank.

Countries such as
Singapore, Hong Kong or Rwanda are premium investment hubs for potential
investors. These states each have a thriving pro-arbitration stance to dispute
resolution. In simple terms, arbitration friendly jurisdictions are the preferred
destination for potential investors. One could argue that arbitration not being
subject to any particular jurisdiction essentially wears a “transnational hat”
which strategically makes it independent of the national legal system of the
host nation. This advantage goes a long way in the minds of investors as the
idea of national bias or mistrust of the national legal system of a host state
is removed.

Also, arbitration
enjoys the clout of the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (the New York Convention 1958). This Convention ensures
the enforcement and recognition of foreign Arbitral awards in all states which
are signatories to the convention. Currently, the convention has 156 members,
thus easing the enforcement of Arbitral awards. These features amongst others encourage
investments and increase Foreign Direct Investment. Nigeria stands to
meaningfully benefit if the investment climate is conducive and receptive to
investors. The Nigerian economy, if it must develop, is in dire need of
investors who offer expertise, capital and industrial revolution.

Nigeria has made
definite progress in ADR over the years and with the recent marked growth in
foreign direct investment, arbitration would most certainly have a role to play
in the protection and sustenance of foreign investment which is fundamental to the
growth and development of our economy.

By – Ridwan Bello

       Associate, Olisa Agbakoba Legal

Background

In
2014, Nigeria’s economy witnessed immense growth, with a GDP of US$568.5
Billion, thereby becoming the largest economy in West Africa. This was
attributed mainly to an unprecedented increase in certain industries, such as
Telecommunications, Retail, Film and Entertainment Industry. However, in 2015 there
was a seismic shift as the country was heading towards recession due to a crash
in global oil prices.

The
state of the economy led the newly inaugurated Buhari administration to take
certain far-reaching measures to revive the economy, as a crucial part of the
government’s economic transformation policy in 2016, the Presidential Enabling
Business Environment Council (PEBEC) was established to remove bureaucratic
constraints to doing business in Nigeria and create a favourable environment
for growing business; specifically the council has as part of its mandate the
task of improving Nigeria’s ranking in the ease of doing business. On February
21, 2017, the council approved a 60-Day National Action Plan detailing actions
to be performed by certain Ministries, Departments and MDAs.

Certain
reforms have been introduced by the council in key areas such as-

Starting
a business- company name searches on the CAC portal has been introduced, a single
incorporation form has also been adopted by the CAC to save time and reduce
costs; documents can also be uploaded for submission on the CAC website, FIRS
e-payment solution has been integrated into the CAC portal.

 Dealing with Construction Permits- there is an
operational e-planning platform which allows tracking of applications, payment
of fees and uploading of architectural designs.

Getting
electricity-there has been a reduction in the number of procedures and time
lines at the Nigerian Electricity Regulatory Commission (NERC).

Getting
credit-online searches have been introduced at the National Collateral Registry

Registering
a property- sworn affidavits are no longer required at the registry and there
is an on-going streamlining of the registration process.

Trading
across borders- the palletisation of imports has become mandatory to enable
physical inspection of goods at the import, vessels importing into Nigeria are
now required to provide an advance cargo manifest for risk assessment and cargo
placement, the Nigerian Custom Service is required to coordinate physical
examination of goods, certain agencies such as the Central Bank of Nigeria, Nigerian
Customs Service (NCS) and commercial banks are now mandated to accelerate pre-export
documentation procedures and there is a reduction in container placement notice
time.

Entry
and Exit of people- The process for obtaining visa on arrival has been
simplified including the submission process. There are new immigration
regulations; arrival and departure forms have been consolidated, there is also 48-hours
visa processing time, and other infrastructural improvements at the Abuja
Airport.

The
National Assembly aligning with the objective of improving the ease of doing business
launched its own initiative in 2016 called the National Assembly Business
Environment Roundtable which is a partnership between the National Assembly and
private individuals seeking to introduce legal and constitutional reforms in
order to facilitate the ease of doing business in Nigeria. In its
“Comprehensive Review Of The Institutional, Regulatory, Legislative &
Associated Instruments Affecting Businesses In Nigeria”, it recommended the
review of several Bills such as the Federal Competition and Consumer Protection
Bill, 2015,  Federal Roads Authority
Bill, 2015, National Inland Waterways Authority Bill, 2015, National Roads
Funds Bill, 2015, National Transport Commission Bill, 2015 and the Nigerian
Ports & Harbours Authority Bill, 2015, Nigerian Postal Commission Bill,
2015 and establishment of a Federal Legislative Clearing House for cohesion and
consistency.

Fortunately,
the Federal Competition and Consumer Protection Bill 2016 has been passed by
the government, its main objective is to promote a competitive market and
protect consumer rights

Executive
Orders

In
July 2016, the President signed the first executive order on doing business in
Nigeria. The main objective of the order was to promote transparency and
efficiency in the Business Environment. Certain key changes were introduced,
and they are as follows:

Transparency-MDAs
were directed to make information on the procedure for obtaining licences,
permits and approvals including fees and timelines immediately available to the
public in their premises and on their websites. 

Default
Approvals- MDAs were directed to ensure that approvals are communicated in a
timely manner to members of the public, failure to do so will result in the
application being deemed granted.

One
Government- this was introduced to facilitate cooperation between MDAs in the
event that a customer requires input requirements and documentation from
another MDA.

Entry
Experience of Visitors and travellers- Ordinary visas and tourist visas are to
be issued or rejected within 48 hours. A list of visa requirements should be
provided, regarding port operations- all agencies represented at the ports have
been advised to streamline their operations into a single interface and Apapa
port should be operating for 24 hours. Importantly, each Port in Nigeria has
been directed to designate an existing export terminal for the exportation of
agriculture produce.

Other
Executive orders aim to address the following pertinent issues namely, timely
submission of annual budgetary estimates by all statutory and non-statutory
agencies, including companies owned by the Federal Government, support for
local content in public procurement by the Federal Government and  improve local content in public procurement
with science, engineering and technology components.

Ease
of Doing Business

Undoubtedly,
the reforms introduced by the government led to an improvement in Nigeria’s
ranking in the Ease of Doing Business. On November 8th 2017, the World Bank
Country Director, Rachid Benmessaoud, presented the Report on the Ease of Doing
Business to Vice-President Yemi Osinbajo, according to that report; Nigeria
moved up by 24 points from the 169th position on the 2017 ranking to 145^th
and was included in the 10 most reformed economies.

Graph
Depicting Nigeria’s Progress in the Ease of Doing Business

Source:
Invest Advocate available at
https://investadvocate.com.ng/2018/03/02/improving-nigerias-business-operating-environment-enhance-economic-growth/

What
is the Ease of doing business?

The
Ease of Doing Business is an index published by the World Bank which measures
by way of performance indicators the extent to which a particular country’s
processes encourage foreign investment in comparison with other countries. Specifically
it “provides objective measures of
business regulations and their enforcement across 190 economies and selected
cities at the subnational and regional level.”

We
will now examine some key findings of the Ease of Doing Business report below:

Starting
a business:

The report
using Lagos and Kano as case studies states that it would take approximately 15
days to register a company in Nigeria. Specifically, for a private company it
would cost N5000 for every 1Million share capital. Additional costs include: N
500 for incorporation forms, N 3,000 for certified true copy of Memorandum and
Articles of Association, N 2,000 for certified true copy of form CAC 1.1. On
average lawyers would charge N60,000.00 for incorporation depending on the size
of the firm. Companies are also required to register at the Federal Inland
Revenue Service; this can be completed in one day according to the report.

Building
and Construction Permits: In Lagos, obtaining the relevant licenses for a new
building according to the report would take approximately 116 days and cost
approximately N6.4 Million to complete. In Kano however it would take about 91
days and cost about N377,566.

Getting
Electricity: To calculate the cost of obtaining electricity in Nigeria, the
report uses a warehouse as a case study. The process would be completed in at
least 166days and cost approximately N336000. In contrast, in Kano it takes
about 94 days and costs about N328000.

Registering
Property:  According to the Ease of Doing
business report registering a property in Lagos takes 76 days and cost
approximately N2,723,874 Million but in Kano it takes about 45days with a
charge of N3,182,347 Million.

Getting
Credit: This indicator measures the effectiveness of the credit reporting
systems and collateral/bankruptcy laws in Nigeria. Concerning legal rights
Lagos scored 10 out of 12 while on the depth of information about credit, it
scored 8 out of 8.

Paying
Taxes: The Ease of Doing Business report considers the taxes a small or medium
sized company would need to pay annually. The findings are that in Lagos about
59 payments need to be made yearly requiring a total of 366 hours.

Trading
across borders: The report considers the time and cost implications of
exporting and importing goods. The procedures examined in detail include
documentary compliance, border compliance and domestic transport. Additional
parameters include the availability and status of implementation of Electronic
Data Interchange (EDI) and Single Window (SW) systems. According to the study
it will take at least 135 hours to export and cost approximately $786.

Enforcing
Contracts: The amount of time spent resolving a commercial dispute from the
court of first instance and the quality of the judicial process is another
indicator examined in detail in the report. It concluded that in Lagos a claim
with a value of  N1,010,472.00 instituted
at the Magistrate Court would be resolved in about 447 days and cost at least
N424,398.

Conclusion

Irrespective
of the fact that significant strides have been made in the ease of doing
business in Nigeria, a lot of work still needs to be done by various government
institutions and agencies. First and foremost infrastructural deficits need to
be addressed for example the Apapa Gridlock caused by bad roads and unruly
behavior of tanker drivers has had an adverse impact on the import and export
industry. In spite of the executive order on the decongestion of the ports
there is still a long way to go. Port congestions and delays have made it
difficult for parties to meet their contractual obligations and foster
corruption at the ports.

 Importantly, to ensure the sustainability of
the ease of doing business reforms, the National Assembly should quickly pass
the Omnibus Bill which consolidates all the ease of doing business reforms by providing
a robust legal framework.

 In addition, Government should mitigate the
cost of doing business. For example in Lagos there are issues of multiple
regulation and taxation specifically, the new Land use Charge Law seems to be
worsening the situation. Going forward a uniform fiscal policy that is investor
friendly should be applied to all states.

Finally,
there needs to be a drastic change in the area of settling disputes. To this
end, government should design and implement proper case management procedures
in the various courts; furthermore modern infrastructure is urgently required
at all levels. Concerning arbitration, there should be a limit to the challenge
of arbitral award in the courts this can be done by conducting an enlightenment
campaign for judges on international arbitration.

Olisa
Agbakoba Legal

The world is often been referred
to as “a global village’. Countries are interdependent on each other in the
area of trade and commerce. More than 80 percent of global trade measured in
volume is carried by sea to ports worldwide. Shipping or maritime transport is
an economic enabler and fosters trade competiveness even in landlocked
countries that do not have the advantage of coastal states. Seaborne trade
reached over 9 billion tons in 2013 a record high due to the opening up of
markets in China and increased trade with Asian countries.

As maritime transportation
has increased many countries have seen the need to safeguard their economies by
enforcing strict cabotage regimes to build local or indigenous capacity in
shipping and derive revenues from inland and coastal shipping transportation.
Cabotage traditionally refers to shipping along coastal routes, port to port.
Cabotage policies are intended to protect the domestic shipping industry from
foreign competition, preserve domestically owned shipping infrastructure for
national security purposes, and ensure safety in congested territorial waters.

The Coastal and Inland Shipping
(Cabotage) Act was passed in 2003 and its objective was to reserve commercial
transportation of goods and services within Nigerian coastal and inland waters
to vessels registered in Nigeria  and
owned by Nigerians. The Act primarily sought to encourage indigenous ship
ownership and restrict foreign vessels from trading in Nigeria’s inland waters.
Alas, twelve years after the Cabotage Act we have seen a decline in shipping
activities by our indigenous shipowners who have been excluded from the
lucrative oil sector for lack of sea-worthy vessels. Most of our shipowners
have been impoverished and frustrated by the lack of commitment by government
to heed their call for reforms in the cabotage regime.

The Nigerian Maritime
Administration and Safety Agency Act, 2007 established the Nigerian Maritime
Administration and Safety Agency (NIMASA) to promote and develop indigenous
commercial shipping in international and coastal trade and regulate and promote
maritime safety, security, marine pollution and maritime labour. At the
commencement of the Act, all assets, liabilities, rights and obligations of the
Nigerian Maritime Authority (NMA) and the Joint Maritime Labour Industrial
Council (JOMALIC) were transferred to NIMASA. It is under NIMASA that Cabotage
is to be enforced.

A keen look at the Cabotage
Act highlights salient provisions for the growth of a vibrant shipping sector.
Carriage of petroleum products between oilrigs, platforms and installations
whether off shore or on shore or within any ports or points in Nigerian waters
has been restricted to Nigerian citizens. In fact, the Act is far reaching and
must have caused some excitement by those who promoted its enactment. In the
United States of America, the Merchant Marine Act, 1920 also known as the Jones
Act did a lot to restrict the operation of foreign vessels in American coastal
waters. By Section 27 of the Jones Act all goods transported by water between
U.S. ports are to be carried on U.S. flag
ships, constructed in the United States, owned by U.S. citizens, and crewed by
U.S. citizens and U.S. permanent residents. Although the Jones Act has been
amended on several occasions, it still provides for a strict cabotage regime
worthy of emulation.

The
intention of the American Congress to ensure a vibrant maritime industry is
clearly stated in the most recent revision of the United States Code, a
consolidation and codification of American laws. The objectives of cabotage are
stated to be necessary for the national defense and the development of domestic
and foreign commerce of the United States, to ensure that the United States has
a merchant marine that is sufficient to carry the waterborne domestic commerce
and a substantial part of the waterborne export and import foreign commerce of
the United States. In addition it is to provide shipping service essential for
maintaining the flow of waterborne domestic and foreign commerce at all times
that will be capable of serving as a naval and military auxiliary in time of
war or national emergency. It is mandatory that these vessels are operated by
citizens of the United States and composed of the best-equipped, safest, and
most suitable types of vessels constructed in the United States and manned with
a trained and efficient citizen personnel; and  supplemented by efficient facilities for
building and repairing vessels. It was stated that the policy of the United
States is to encourage and aid the development and maintenance of a merchant
marine satisfying the objectives described in this Code.

Though
we cannot compare our development in this area with that of the United States
of America we can aim to be serious by implementing policies and strengthening
institutions in Nigeria’s maritime industry  that will impact positively on revenue
generation and economic growth. Nigeria’s potential for growth and poverty
reduction are yet to be realized and will never be realized if Government
policies are not fully implemented. Like the United States of America we should
constantly review policy relating to cabotage to ensure that our institutional
and legal framework is updated to suit modern trends.

Malaysia’s
cabotage policy dates back to January 1, 1980. Like the Nigerian Maritime
Administration and Safety Agency, Malaysia set up the Domestic Shipping and
Licensing Board to implement its cabotage policy. It should be noted that all
Malaysia’s oil and gas fields are located offshore.

Section
65A of Part 11B of Malaysia’s Merchant Shipping Ordinance of 1952 defines “domestic
shipping” as the use of a ship to provide services in the territorial waters of
Malaysia and the exclusive economic zone for the shipment of goods or the
carriage of passengers from any port of place in Malaysia to any port or place
in Malaysia or the exclusive economic zone. A vessel that services the
Malaysian oil and gas fields must be registered as a Malaysian ship and must
hold a domestic shipping license, unless exempted under the Ordinance or by the
Minister of Transport.

Malaysian
cabotage laws are similar to those in Nigeria and it is evident that the
Malaysian indigenous shipping sector has been supported by the Government’s
will to turn this sector into a multi-billion dollar revenue generator for
Malaysia. Likewise in China the China Shipping Group owns over 500 ships with a
capacity of 30m dwt.

A
big loophole in the Cabotage Act, 2003 is the provision of waivers for foreign
owned vessels which some may say has been responsible for the failure of
cabotage in Nigeria. Section 9 of the Act provides that the Minister for
Transport may grant a waiver to a registered vessel, to be wholly owned by
Nigerian citizens, where he is satisfied that there is no wholly Nigerian owned
vessel that is suitable and available to provide the services or perform the
activities described in the application. This provision has been a big cog in
the wheel for Nigerian shipowners. The reason being that they have been excluded
largely from participating in transporting oil in coastal and inland waters.
This trade is exclusively foreign and has given rise to the flight of foreign
exchange, the non-development of local capacity in the sector and the loss of
trillions in revenue terms.

It
is also apparent that applications for waivers have been made in respect of
foreign tanker ships and anchor handlers both of which our local ship owners
are able to provide. Most of the foreign vessels are involved in the
transportation of oil without obtaining waivers. This has placed our indigenous
shipowners among some of the poorest in the world.   In
fact this critical state of affairs has necessitated the drafting of new waiver
guideline for foreign vessels wishing to participate in coastal shipping. The
new guidelines when implemented will require that foreign vessels submit a Cabotage
Waiver Form 60 days before the arrival of the vessel in Nigerian waters.

In the United States, the  United States Maritime Administration reviews waiver
requests on a case-by-case basis. Waivers have been granted in cases of
national emergencies or in cases of strategic interest. In the wake of Hurricane Katrina, Homeland Security Secretary Michael Chertoff temporarily waived
the coastwise laws for foreign vessels carrying oil and natural gas from
September 1 to 19, 2005. Similarly the Department of Homeland Security issued a
temporary blanket waiver of the Jones Act for the shipment of petroleum
products following widespread fuel shortages caused by Hurricane Sandy.

The Cabotage Act has done little to
build indigenous capacity in shipping. Our shipowners are largely indebted to
banks in a bid to stay in business. The Cabotage Vessel Finance Fund (CVFF)
designated as a special fund to develop local shipping has about N5o billion
still waiting to be disbursed to Nigerian shipowners. One reason advocated by
industry analysts for this has been brought about by policy inconsistency. It
should be noted that NIMASA has been riddled with controversy by the frequent
appointments of several director- generals over the years. NIMASA is one of the
richest government agencies that is overburdened with a plethora of functions
including, cabotage enforcement, safety and security of inland and coastal
waters, administration of the CVFF, licensing etc. The time has come to
unbundle NIMASA such as was done with the National Electric Power Authority for
better administration and function. 

Though there have been several attempts
by the Indigenous Shipowners’ Association (ISAN) to enforce cabotage Nigerian shipowners
have, to coin a phrase, ‘been left up the creek without a paddle’. There are
two landmark cases that exemplify the resolve of the Indigenous Shipowners’
Association (ISAN) to take the bull by the horn as interested parties to
enforce cabotage. In the case of Indigenous Shipowners’ Association (ISAN) &
Another vs.  Lovell Sea & 3 Others the
plaintiffs, ISAN, challenged the propriety of the use of the 1st defendant, a
foreign vessel by the 2nd – 4th defendants to carry out cabotage trade within
the cabotage jurisdiction of Nigeria. It was the plaintiffs’ contention that
the 1st defendant not being registered as a cabotage vessel or granted a waiver
or restricted license to operate within the cabotage jurisdiction had infracted
on their guaranteed rights under the Cabotage Act, 2003. The Federal High Court
judge in this case held that the defendants were in deed in violation of
cabotage and gave judgment to ISAN for the loss suffered by it.

However, in
the case of the Indigenous Shipowners’ Association (ISAN) vs. M.T Makhambet,
ISAN commenced an
action at the Federal High Court Lagos and sought inter alia an order of injunction restraining the Defendants from
further carrying on cabotage trade within the Nigerian Exclusive Economic Zone
prior to or without their complying with the Cabotage Act. The defendants
challenged ISAN’s locus (right) to institute the action. The Federal High Court
held that the plaintiff did not prove that the defendants contravened the
provisions of the Cabotage Act and struck out the case of the plaintiffs.
Though this case went on appeal to determine two fundamental issues relating to
the right of the plaintiffs to reliefs not sought by them, this case still
represents the position taken by our indigenous shipowners and against all odds
their determination to enforce cabotage in Nigerian waters.

These two cases show the effort made by
the Indigenous Shipowners’ Association to safeguard their business by enforcing
cabotage. As the regulatory body NIMASA has an inherent duty to enforce
cabotage, unfortunately this duty has been ignored in the face of the huge sums
of money that NIMASA realizes annually from waiver levies.

In conclusion, we see that cabotage has
failed woefully to build indigenous capacity in shipping which has resulted in
the loss of trillions of Naira in revenue for the government. To turn things
around will require a cabotage enforcement action plan which will involve a
review of the Cabotage Act especially Sections 2, 3, 5, 9, 10, 11,
12, 15, 22, 23, 29, 33 and 39. The maritime industry needs a total overhaul of
legal and regulatory framework. It is crucial that stakeholders come together
to seriously discuss the industry and lay down an ACTION PLAN that will be
presented to government for immediate implementation. Cabotage presently is not
working and will not work until certain parameters are reviewed, revised and
restructured.

There is no rocket science required to understand the
fundamentals of having a vibrant and robust shipping sector. Job opportunities
such as Seafaring, Stevedoring, Operators, Managers, Brokers, Dockers, Ship-builders,
Charterers, Freighters, Cargo handlers, Insurers, legal services etc the list
goes on and on, will eventually be created and contribute to the Nation’s GDP. There is a dire need to transform
infrastructure in the sector for better cabotage effectiveness. Our ports
system will have to be re-evaluated which may necessitate the quick passage of
the Ports and Harbour Bill by the National Assembly. The Bill will give legal
backing to the privatization of the ports and will encourage foreign and
domestic investment when passed into law. A wind of change is blowing through
the maritime industry and it is crucial that all stakeholders are emboldened to
collaborate in order to revamp the sector.

BISI
AKODU IS A PARTNER AT OLISA AGBAKOBA LEGAL AND HEADS THE CORPORATE/COMMERCIAL
GROUP AT OAL

The Nigerian Bar as an Entity is in need of a Leader who knows the purpose of being an instrument of change and influence. A man who understands that philanthropy and service go hand in hand, a man who knows that as much as the rule of law seeks to engender order and compliance in a society, it is also meant to speak to the heartbeat of society and connect with them fostering concern and brotherhood.

This I believe is exemplified in the person of Paul Usoro, SAN. The learned silk in a visit conducted sometime earlier in the year to the internally displaced person’s camp in Maiduguri, Borno State was not under any obligation to seek votes from the IDPs who are everyday Nigerians. Rather on the contrary, he was moved by the plight of the society and reached out and showed what it means to be one who gives back to the society within which one lives and operates. He gave a goodwill gift to the IDPs cumulatively valued at three million naira (N 3,000,000:00) in bedding wears and food supplies. This and more which he has exhibited, I believe is an unfettered example of what Corporate Social Responsibility reflects.

I have watched fellow colleagues and seniors raise arguments and counter arguments on different platforms as to the propriety or otherwise for his eligibility to lead the bar and I have even engaged recently a person who was trying to put to task the philanthropist side of the learned silk. Blindly seeking to create a connection between two independent claims that have no bearing whatsoever to his capacity to lead. I say, let us look at the truly innate elements of the bar that need to be addressed to which the learned Silk has been bold enough to speak up on.

One of such key issues bordered on the state of our Law officers and their exclusion from contesting for the national office solely on the premise of their being found by fate to be working in the Ministry of Justice. He made a point to state that they cannot because of their position of practice be put in the back burner when it comes to the determination of the fate of their parent association.

The learned Silk held an interactive session
with young lawyers in Uyo. The session was well attended by passionate youth
Lawyers. Issues, concerns &  ideas
were discussed with those present; it was a success.

Thereafter,
Paul Usoro met with the NBA Eket Branch Team after the friendly football match
with their opponents, the Federal Road Safety team.

The
learned silk is expected to attend the 2018 Eket Bar dinner which would also be
graced by Hon. Ita Mbaba, the Justice of the Court of Appeal, Owerri division.
 Paul Usoro is scheduled to deliver a speech at the dinner.

#PaulUsoroConnect

#PuttingTheBarFirst

The learned silk was warmly received by the
Chairman of the Eket Branch to his home. In company of Paul Usoro was the
Chairman of the Young Lawyers’ Forum Ogoja, Uwem Uko Umoh. 

A comment from one of the attendees stated
“Paul Usoro, SAN our incoming President of the Nigerian Bar Association is in
Eket Branch, displaying his Excellent spirit of Sportsmanship.

The learned silk attended the football match
between the NBA Eket branch team and the Federal Road Safety Corps team earlier
on, showing support to the cause of the NBA & Young Lawyers in Eket.

According to Ifiok Idemudo, “Straight from
the Young Lawyers Forum Uyo Branch meeting where the mega law-lord did what he
knows best to do (addressing the audience). Both supporters and opposition were
held spellbound. In his words “Paul Usoro is a good brand to invest in.” 

The Senator representing Lagos East
Senatorial District, Senator Gbenga Ashafa has urged all Muslims to pray for
the continued peace and prosperity of Nigeria, as they observe the Holy Month
of Ramadan.

 In a Ramadan message released by the
Senator, he joined all Muslim faithful in welcoming the Holy Month of Ramadan.
In his words, Ashafa stated that “I join my fellow brothers and sisters of the
Islamic faith in welcoming another Holy period of Ramadan. The month of
Ramadan is the ninth month in the lunar (Islamic) calendar; in which Almighty
Allah instructed all Muslim Faithful to observe a month of fasting.” 

“In Qur’an chapter 2 verse 183, Allah
prescribed fasting as an obligation for Muslims and tells us the reason at the
end which is for us to restrain from evil, learn God’s consciousness and learn
to be God fearing.”

Ashafa stated further that “The period of
Ramadan teaches us self control, self restraint, tolerance for one another
irrespective of religion or tribe. It is also a month for extreme prayers, love
and generosity.”

In his conclusion, he urged all Muslim
faithful to remember the area’s that are experiencing pockets of Violence
across the country, in addition to their prayers for the peace and prosperity
of the country. He stated that “While using this period to share love, forgive
and reflect spiritually I implore us all to pray for the continued peace and
prosperity of our dear country, while also remembering the pockets of violence
happening in certain parts of the country. It is my prayer that all our
supplications and Ibada throughout this period be acceptable to Almighty
Allah.”