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Quote: Lord Lugard’s opinion of the average African/Nigerian

by Legalnaija | Mar 9, 2017 | Uncategorized

“In character and temperament”
wrote Lord Lugard, the typical African of this race-type is a happy, thriftless,
excitable person. Lacking in self control, discipline, and foresight.
Naturally courageous,and naturally courteous and polite, full of personal
vanity, with little sense of veracity, fond of music and loving weapons
as an oriental loves jewelry. His
thoughts are concentrated on the events and feelings of the moment, and
he suffers little from the apprehension for the future, or grief for the
past.

His mind is far nearer to the animal
world than the that of the European or Asiatic, and exhibits something of
the animals placidity and want of desire to rise beyond the State he has reached.
Through the ages the African appears to have evolved no organized religious creed,
and though some tribes appear to believe in a deity, the religious sense seldom
rises above pantheistic animalism and seems more often to take the form of
a vague dread of the supernatural”.He lacks the power of
organization, and is conspicuously deficient in the management and control
alike of men or business. He loves the display of power, but fails to
realize its responsibility ….he will work hard with a less incentive
than most races. He has thecourage of the fighting animal -an instinct rather
than a moral virtue……In brief, the virtues and defects of this
race-type are those of attractive children, whose confidence when it is
won is given ungrudgingly as to an older and wiser superior and without envy…….Perhaps
the two traits which have impressed me as those most characteristic of the
African native are his lack of apprehension and his ability to visualize
the future”

Pg 70
of The Dual Mandate by F. D. Lugard 1926

Photo Credit – www.wikipedia.com

Central Bank of Nigeria’s Draft Guidelines on Direct Debit and Billing Payments in Nigeria

by Legalnaija | Mar 9, 2017 | Uncategorized

E-commerce
has made tremendous growth in Nigeria since the massive penetration of internet
services in Nigeria and with it came lots of gaps in the Nigerian payments
system. The Central Bank of Nigeria (“CBN”) which is responsible for the
overall management of Nigeria’s financial system has the specific power to
regulate, promote and facilitate payments. Section 47 (2) and (3) of the
Central Bank of Nigeria (Establishment) Act (the “Act”) empowers the CBN to
promote and facilitate the development of efficient and effective systems for
settlement of transactions (including development of electronic payment
systems).

The CBN is also empowered to prescribe
rules and regulations for the effective operations of all clearing and
settlement systems.[1] In line with this mandate, the CBN has continued
to develop regulations, guidelines and circulars that define, regulate and
control payment activities within and beyond the traditional banking system.
Some of these regulations and guidelines have been discussed in my previous
articles.

On January 30th 2017, the CBN published an
exposure draft of the ”Guidelines for the Direct Debit Scheme (Revised),” and
”Guidelines Bills Payments in Nigeria”. The CBN explains that the revised
version of the guidelines on direct debit “recognizes the existing and emerging
multi-channel options (Online platforms, Instant Payments etc.) applied for
Direct Debit instructions in Nigeria. In addition, the provisions of these
guidelines are harmonized with developments in the payments system since the
release of the last version.”[2]

According to Wikipedia, “[a] direct debit
or direct withdrawal is a financial transaction in which one person withdraws
funds from another person’s bank account. Formally, the person who directly
draws the funds (“the payee”) instructs his or her bank to collect
(i.e., debit) an amount directly from another’s (“the payer’s”) bank
account designated by the payer and pay those funds into a bank account
designated by the payee. Before the payer’s banker will allow the transaction
to take place, the payer must have advised the bank that he or she has
authorized the payee to directly draw the funds. It is also called
pre-authorized debit (PAD) or pre-authorized payment (PAP).”[3] As such, once the payer has given an initial
authorisation to the payee to collect funds from an account he holds with a
financial institution (a commercial bank), that authorisation is continuous and
the right of the payee to keep collecting that sum (or an expected variation of
the sum) becomes running except the payer stops or revokes the authorisation.

When you think of a direct debit,
subscription fees for your LinkedIn account, Netflix etc. quickly comes to
mind. Some important features of a direct debit are that 1), the amount to be
debited is does not have to be fixed, it may vary from one payment to another,
2) the date that the debit is to occur is known and fixed, 3) the bank is not
an integral part of the contract and 4) the payment is usually initiated by the
payee and not the payer/account owner. Please note that a direct debit is not
direct deposit or a standing order, which are instructions by the account owner
or payer to his bank to credit a certain amount of money to a payee at a
pre-determined date.

This initiative by the CBN is ripe and
commendable, considering the volume of online transactions in Nigeria and our
participation in international e-commerce transactions on a daily basis. It is
important to note that the CBN already had an existing guideline for direct
deposit and Nigerians have been able to utilize their bank cards, (both
MasterCards and Visa Cards) to make direct debit payments to both foreign and
local merchants. However, this revision is aimed at bringing the said
guidelines up to date with trends in the payments industry and to ensure that
all parties to such transactions are protected, regulated and monitored.

The provisions of the two guidelines are
standard and comparable to those of other developed countries. However, some of
them are noteworthy:

1. Biller’s
bank must be a member of the clearing system or integrated with Payment Service
providers that accept Direct Debit for processing.

2. The
Biller’s bank shall hold an account for the Biller to receive proceeds of
Direct Debit.

3. Payer’s
bank must be a member of the clearing system or integrated with Payment Service
providers that accept Direct Debit for processing.

4. Payment
Service Providers must be duly licensed by the Central Bank of Nigeria and
subject to electronic payment guidelines.

5. Direct
Debit transactions are of 2 types: a. Fixed Direct Debit: allows fixed amounts
to be debited from a payer’s account. b. Variable Direct Debit: allows variable
amounts to be debited from a Payer’s account. Typically used for payments where
amounts cannot be predetermined in advance. In this instance, there is need for
the service provider to intimate the subscriber (payer) of the invoice amount before
the debit is sent to his/her bank.

6. A
penalty should be applied to the payer for Direct Debit instructions not
honored due to insufficient funds. The penalty prescribed for dud cheques shall
apply.

Point 1 through 4 above suggests that the
merchant’s (biller’s) bank must be a Nigerian bank or the merchant must employ
the services of a local payment service provider. As such, one would imagine
that international merchant that intend to continue to use this medium must
comply with these requirements, if that have not been the case.

The CBN has called for comments from
stakeholders before the final version of the two guidelines are issued. The
draft guidelines can be downloaded athttps://www.cbn.gov.ng/Out/2017/BPSD/GUIDELINES%20FOR%20THE%20DIRECT%20DEBIT%20SCHEME%20AND%20BILL%20PAYMENTS%20IN%20NIGERIA.pdf

[1] Section 47 (3) of the Central Bank of Nigeria
(Establishment) Act.

[2] Debit Guidelines for Direct Debit Scheme in
Nigeria, 2017 (revised)

[3] Wikipedia, Direct debit, https://en.wikipedia.org/wiki/Direct
debit Retrieved on 07/02/2017

Magnus Amudi

Corporate, Energy and Environmental Law
Practitioner.

Ed’s Note – This article was first posted here.

The Indolent Generation of Talkatives| Magnus Amudi

by Legalnaija | Mar 9, 2017 | Uncategorized

“No
generation can choose the age or circumstance in which it is born, but through
leadership it can choose to make the age in which it is born, an age of
enlightenment, an age of jobs and peace and justice.” Jesse Jackson.

I write today with a heart full of gloom,
filled with questions whose answers may strike me like an archer’s bow, passing
and piercing through my heart, leaving me broken. I write to my fellow
compatriots to ask what joy, what fulfilment, and what luxury lie in dormant
silence.

What pleasure in abject penury? Do we all but fold our hands, and wait
for the second coming of our lord, who promised to build our power plants,
plough our lands and rise against those that have made what is ‘ours,’
‘theirs.’ Have we not heard the raging trumpet of hunger ravaging the land. In
few years, we shall be but that generation of Nigerians that sat like
spectators, watching a gloomy soap opera, but can neither help the characters
to escape impending doom. Except in reality, we truly are both the spectator and
the characters. We have chosen not to act and that is a choice.

A generation
that frequently decry and vehemently condemn our predecessors for the
mediocrity of their actions and choices. A generation that ride a high horse of
criticism and satire. Standing in the safe havens of homes to throw diatribes
at those that dare to do. Sitting on fences, observing decades speed by, like a
drunk okada rider. A generation of underaged-adults.

Like Jesse Jackson, I say, “only
leadership – that intangible combination of gifts, the discipline, information,
circumstance, courage, timing, will and divine inspiration – can lead us out of
the crisis in which we find ourselves. The leadership can mitigate the misery
of our nation. Leadership can part the waters and lead our nation in the
direction of the Promised Land. Leadership can lift the boats stuck at the
bottom.”

That change will not come to us. We will
not wake up from sleep one morning to discover this change wrapped in gift bags
like Easter eggs or Christmas gifts from santa. If anything, we must become
santa to deliver this desired leadership and change to our children, born and
unborn. To the future generation. It is our duty to give the next generation of
Nigerians a country to be proud of, a country that would not demand but earn
their devotion. A country whose flags and anthems will mean more than the
colours on the fabric and the words of the lyrics. We must agree that this
generation has watched on for far too long. We must today stand and engage in
profitable activities, activities that would be the harbinger of national
reawakening, precursors to industrialisation and economic independence. The
time to sit on the fence is long gone. As Malcom X stated: “Nobody can
give you freedom. Nobody can give you equality or justice or anything. If
you’re a man, you take it.”

Has activism died? If it did, it
certainly did of apathy, starvation, and neglect. Today, grown men with
certificates cannot assert any rights or challenge any unfavourable policy or
decision. Whether it is as a result of dissonance or lack of will power, the
result is the same: indolent and dormant adults. Those that we have constantly
berated and condemned did a lot as young men, right or wrong, but they acted. I
dare say that refusal to take action is cowardice. And it is said, a coward
dies several times before his death. We have expended so much energy in
analysing and discussing the problem with our country, are we all but pundits?
Common commentators? No pun intended. What we require today are not talks but
walks, not conversations but construction, we need not champagnes but campaigns
to disdain mediocrity. In no better time did the words of Theodore Roosevelt
resonate more to us, compatriots, than now, “It is not the critic who counts;
not the man who points out how the strong man stumbles, or where the doer of
deeds could have done them better. The credit belongs to the man who is
actually in the arena, whose face is marred by dust and sweat and blood; who
strives valiantly; who errs, who comes short again and again, because there is
no effort without error and shortcoming; but who does actually strive to do the
deeds; who knows great enthusiasms, the great devotions; who spends himself in
a worthy cause; who at the best knows in the end the triumph of high
achievement, and who at the worst, if he fails, at least fails while daring
greatly, so that his place shall never be with those cold and timid souls who
neither know victory nor defeat.”

If the story of our nation is told
today, we would regretfully be remembered, as the giant that never woke, as the
mighty oak that never grew, and as the sun that never rose! A stich in time,
has to save nine! We must go beyond asking questions to taking actions, to
filing law suits, to demanding that the most reasonable and the most good is
done to the most people. That people are held accountable to their words and
their pledges. And that government remains a trust for the benefits of
citizens. That goods and services, that properties and resources belonging to
the people are managed and appropriated for the benefit of the people, this is
the essence and the primary fiduciary of government. That elections become a
system of choosing representatives and not a national project, whose planning
commences immediately at the completion of the last.

Lastly, I believe as a people, we are bound
by shared passions and aspirations. Shared dreams of a peaceful, economically
vibrant, educationally glorious and religiously tolerant country. A home to
technological innovations as well as a culturally enriched modernity. In this
great task of nation building, we must not allow our differences define us. We
must accept the existence of such differences, respect them and capitalise on
the visible strengths of these different people to build a nation that will be
deserving of our God-giving nomenclature, the most populous black nation on
earth and the giant of Africa.

Magnus Amudi

Corporate, Energy and Environmental Law Practitioner.

Ed’s Note – This article was first posted
here.

Photo Credit – www.jimidisu.com

Ivie Omoregie: Here Are Vital Things to Consider If You’re Thinking of Coming Into Nigeria to Set Up a Business

by Legalnaija | Mar 9, 2017 | Uncategorized

Recently someone called me with excitement
about the new value of the Naira. She had been hearing about Nigeria’s economic
challenges, but had never really considered what this meant to her, as she was
not directly affected by it (her entire immediate family are spread across
America and the UK).

It was when she sent some money to her aunt
that she realised that $1000 was now almost N500,000. Oooh boi! To say she was
excited was an understatement. She started calculating the things she could now
afford to do in Nigeria. At the top of the list was buying property and
starting a small business.

She called me to discuss some of her ideas;
however, when I cautioned that many popular businesses are actually running at
a loss she was confused. I had to break it down for her and explain that many
business owners simply do not understand the basic principles of accounting and
tend to run their limited liability companies as sole traders (I know some
people will be reading this and thinking ‘huh!’)

Small and Micro Businesses

Over the years I have seen many people
doing business in Nigeria without the proper training or even a basic
understanding of the various types of structures available for their business
operations.

The obstacles faced by small and micro
businesses are universally established; entrepreneurs in this sector inherently
face many challenges that limit their long-term survival and the rate of their
development.

There are currently many high-profile
initiatives and training programs available to empower and support small and
micro businesses. Uunfortunately, many entrepreneurs are not aware or do not
have the skills or network to take advantage of these developmental aids. As
you can imagine, where the promoter of a business is cash rich but knowledge
and experience poor, the likelihood of the business succeeding is slim to none.

In this article I will briefly run through
the things that one needs to do when thinking about doing business in Nigeria.

Why Nigeria?

For many Nigerians in diaspora, most of
which might have spent most of their adult lives abroad, a question which
resonates is “Why Nigeria?”

To this my answer is always: –

1. Nigeria has the largest population in
Africa, thus a relatively cheap labour force and a large market for initial
sales;

2. We have abundant natural resources (not
just oil and gas, coal, copper, livestock, poultry etc);

3. We have vast and fertile land for
agricultural projects;

4. There are significant government
incentives for small and micro businesses, as well as for foreign investors;

5. We have the largest economy in Africa
and have been identified by Goldman Sachs as being amongst the “next eleven”
economies.

Things to Consider

The following are things to consider when
setting up a business in Nigeria

a.
Incorporation

Local
incorporation is compulsory in most instances. Investors may consider
registration of a business name or forming a private limited company. There are
pros and cons to either option. The final choice will be largely dependent on
the nature of business you wish to set up. Where you decide to incorporate a
private limited company, it would be advisable to outsource the companies
secretarial and accounting needs. This tends to be menial, but the correlation to
the success of the business unquantifiable.

b.
Importation of Capital

This
may be done by either importing the raw cash, or done in kind (i.e equipment,
plant, machinery). Either way, prior to the importation of the required
capital, business promotors should research and obtain a Certificate of Capital
Importation (“CCI”). The CCI is required by investors who plan to remit profits
for either non-resident shareholders or loan and interest repayments
attributable to the investment. It enables the holder, by presenting the CCI,
to purchase foreign currency from the official foreign exchange market.

c.
Registration with NIPC

Any enterprise in
which there is foreign participation (foreign here means a non-Nigerian
national) must be registered with the Nigerian Investment Promotion Commission
(“NIPC”). NIPC provides services and facilitates the grant of business permits,
licenses, authorizations and incentives.

d.
Business and immigration permits

These are necessary
where there is foreign participation in the undertaking of any business in
Nigeria. The relevant companies would also need an expatriate quota for each
expatriate it wishes to employ; this could be either a Temporary Work Permit
for expatriates engaged in short term assignments or a Combined Expatriates
Residents Permit and Aliens Card for expatriates wishing to stay in Nigeria for
longer periods of time; and

e.
Industry permits and registrations

The type of permits
and registrations one would typically apply for is determined by the nature of
the proposed business, I would advise that the applicable permits and
registrations be thoroughly researched beforehand to avoid unnecessary
governmental intervention. Tax registrations are necessary at both federal and
state level, and a Tax Clearance Certificate tends to be a prerequisite for
most applications for regulatory approvals.

Key
Investment Issues

There are some
areas where there is a statutory requirement that the business is owned by a
certain percentage of Nigerians in order to be eligible for certain government
incentives. These include the oil and gas sector, as well as the Nigerian
maritime sector. When intending to partner with a foreigner for any project, it
is important to research if the proposed venture is caught within these
exceptions and discuss ways around it.

Other investment
issues which most people do not factor into their business plans, are the
mandatory contributions required by eligible organisations.

These
are specifically: –

i. Industrial
Training Fund – 1% of payroll for organisations with more than 5 employees
and an annual turnover in excess of N50,000,000 (fifty million naira);

ii. Pension
fund – applicable where the employer has up to three employees in any
sector. The employer is to contribute 7.5 – 10%, and the employee is to
contribute 7.5 – 8.5% of the employee’s monthly emolument;

iii. Employee
Compensation Fund – the minimum monthly contribution of 1% of the total
monthly payroll;

iv. National
Health Fund – An employer with a minimum of 10 employees is to contribute
at a rate of 10% whilst the employee pays 5%, thus representing 15% of the
employees’ basic salary; and

v. National
Housing Fund – A Nigerian worker earning an income of N3,000 (three
thousand naira) and above per annum in both the public and the private sectors
of the economy shall contribute 2.5% of his basic monthly salary to the Fund

Lastly, I cannot over stress insurance.
Many people don’t believe in insurance in Nigeria, as they don’t think the
insurance companies pay out. This is a popular misconception; insurance
companies do.

Conclusion

On a funny note, one time I was discussing
with a group of friends, some of which were business owners. They mentioned
that one of the main reasons businesses fail in Nigeria is because of people
owe the business money.

I disagreed with them and said it was due
to mismanagement. When I went on to say that, in balancing the books of any
business a debt is an asset to the company, the whole room lit up in debate.

Many simply could not fathom this;
generally a debt is not a favourable thing nor would the lay man consider it an
asset. It took a while for the room to understand that for a company, a debt is
an asset and that it is when this debt remains unpaid that it then becomes a
bad debt. Only then is it recorded as a loss in the company’s accounts.

(P.S. Abeg if you are working for a small
organisation and they are not paying any of the above mentioned mandatory
contributions… report them )

Ivie Omoregie

Ed’s Note – This article was first
published here.

Photo Credit – www.lawpadi.com

Nigeria’s Nuclear Energy Programme and the Question of Legality under International Law

by Legalnaija | Mar 9, 2017 | Uncategorized

Introduction

The history of Nigeria’s nuclear technology
started after her independence when the Federal Radiation Protection Service
was established in 1964 (Mundu & Umar, 2004). However, Nigeria’s nuclear
programme emerged tentatively in 1976 with the establishment of the Nigerian
Atomic Energy Commission (NAEC), primarily as a response to South Africa’s
acquisition of nuclear weapons and India’s test of a nuclear device
(Lowbeer-Lewis, 2010).

By 1979, about 617,000 km2 of land area had
been covered by aerial radiometric surveys and another 90,000 km2 had been
covered by other surveys around potential Uranium basins (Energy Commission of
Nigeria, 2003). The government also established two pilot nuclear research
centers at the Obafemi Awolowo University, Ile-Ife and the Amadu Bello
University, Zaria to fast-track the nation’s nascent nuclear energy programme.

In 1995, the Nigerian Nuclear Regulatory
Authority (NNRA) was created as national regulator and licensing authority
empowered to develop and enforce regulations governing all operations in the
nuclear industry (Ibitoye, 2014). With the number of nuclear research centers
having risen to six, Nigeria acquired its first reactor which was commission at
the Ahmadu Bello University in 2004 (Lowbeer-Lewis, 2010). The Nigerian energy
policy, 2003 which included nuclear energy to the national energy basket set in
motions chains of evens that culminated in the approval of sites at Geregu,
Kogi State and Itu, Akwa Ibom State for the construction of the country’s
pioneer nuclear power plants.

Nigeria’s determination to harness nuclear
energy has not been without fears and questions. The announcement of the
proposed nuclear plant sites was greeted with protest and stiff opposition that
resonates to this day. Questions bothering on the legality of such programme in
international law, safety and security of nuclear materials and possible
diversion to military use have been and continue to be raised. The research
investigates the legality of Nigeria’s nuclear programme under international
law.

Nigeria’s Nuclear Energy Programme
and the Question of Legality.

The Non Proliferations of Nuclear Weapons
Treaty and the Statute of the International Atomic Energy (IAEA) constitutes
the primary legal frameworks for international nuclear programme, whether for
weapons or for energy. The NPT which was opened for signature in 1968 and
ratified in 1970 is built around three pillars: non-proliferation,
disarmament and peaceful use of nuclear technology (Arsalan, 2008).

Nigeria joined the first wave of countries
that signed and ratified the NPT in 1968. Having concluded a Comprehensive
Safeguard Agreement (CSA) , with the IAEA in 1988, the country continues
played host to IAEA inspectors ( on inspection and verification tour) in
compliance with the CSA. The country’s nuclear programme is built on the
questionable NPT pillar of peaceful utilization of nuclear energy by states.
Article IV of the NPT recognizes the inherent right of Nigeria to “develop,
research, production and use of nuclear energy without discrimination…”
(NPT.1968).The only restriction placed on this right is that, it must be
exercised in strict compliance with article I and II of
the NPT which prohibits the proliferation of nuclear weapons. In the absence of
breach of the said articles, Nigeria is qualified to participate in, the
fullest possible exchange of equipment, materials and scientific and
technological information for the peaceful uses of nuclear energy (NPT, 1968).

Article 4 of the CSA between the IAEA and
Nigeria reconfirms Nigeria’s right to develop nuclear energy by providing that
the safeguards contained in the CSA shall be implemented in a manner that does
not hamper the economic and technological development of Nigeria
international co-operation in the field of peaceful nuclear activities (CSA,
1988). Furthermore, Nigeria effectively renounced nuclear weapons proliferation
when it ratified the African Nuclear Weapons Free Zone Treaty (Treaty of
Pelindaba) in 1996. The treaty of Pelindaba however encourages the peaceful use
of nuclear science and technology for economic and social development by member
states.

Finally, the establishment of nuclear
energy regulatory agencies (NAEC & NNRA) meets IAEA’S requirement of the
existence of a national system of accounting for and control of all nuclear
materials.

CONCLUSION

With the exception of the threat to build
nuclear weapon in the 80’s, Nigeria’s nuclear energy programme has been
developed within the permissible parameters of international nuclear law. The
country now stands as a responsible but budding nuclear player in the
international community. The question that remains to be answered is how long
can Nigeria sustain its compliance with international nuclear law?

The road to acquisition of nuclear weapons
usually commences with supposed peaceful nuclear energy programmes. Hence,
there is need for the strengthening of nuclear energy institutions in the
country to allow for greater supervision and regulation of nuclear
technologies. This is to guard against the diversion of nuclear materials for
military purposes or proliferation of such materials to other non-nuclear
weapons states.

References

African Nuclear-Weapons-Free Zone Treaty
(Treaty of Pelindaba) 1996

Agreement of 29 February 1988 between
Nigeria and the Agency for the Application of Safeguards in Connection with the
Treaty on the Non-Proliferation of Nuclear Weapons. IAEA-INFCIRC/358

Arsalam, S. (2008) Arsalan Suleman, “The
NPT, IAEA and the Nuclear Non-Proliferations Negotiations “,(2008) Berkeley
Journal of International Law. Vol.28. Iss.1.p.206

Energy Commission Nigeria (2003), National
Energy Master Plan. Federal Republic of Nigeria: Abuja.

Ibitoye, F.,(2014) An Overview of Nigeria’s
Nuclear Energy Programme in the INPRO Methodology area of Infrastructure .
Seminar Paper, 8th INPRO Dialogue Forum, Vienna, Austria. 26-29 August,
2014.

Lowbeer-Lewis Nathaniel (2010 ), Nigeria
and Nuclear Energy: Plans and Prospects Nuclear Energy Futures Paper No.
11 January 2010, the Centre for International Governance Innovation.

Mundu A., & Umar, A.M (2004), The Quest
for Nuclear Technology and the Challenges of Knowledge Management in
Nigeria. Proceedings of the International Conference on Nuclear on
Nuclear Management, 7-10 September, Saclay, France. IAEA-11-CN-123.

Statute of the International Atomic Energy
Agency, 1956.

The Treaty on the Non-Proliferation of
Nuclear Weapons-NPT- (1 July 1968) 729 UNTS 161,

Anemuyem Akpan

Anemuyem Akpan is a Lagos-based Legal Practitioner. For
feedback, send an sms/mail to08063624048,
aloyanem@gmail.com

Ed’s Note – This article was first published here.

An Overview of Oil and Gas Contracts| Anemuyem Akpan & Uduak Nsungwara

by Legalnaija | Mar 9, 2017 | Uncategorized

Introduction

The public and
private arrangements under which oil production is authorised have gone through
a variety of phases since the emergence of petroleum as an internationally
traded commodity in the middle decades of the last century (Smith, 1991).
International oil companies (IOCs) and host states (HSs) have over the years
adopted various schemes of arrangement to project and protect their interests.
The relationship between the IOCs and the HSs forms the substratum of the
petroleum industry and is accountable for the birth of various types of
contracts in industry.

It is through
these contracts that IOCs acquire the right to embark on Exploration and
Production (E&P) projects within the territory of the HSs. In particular,
they define, in case, commercial petroleum discoveries are developed and
exploited, how the production, income and risks will be allocated between the
government and the investor.

Types of E&P
Contracts

1. Concession

2. Production
Sharing Contract

3. Joint Venture

4. Service
Contract

1. Concession

Under this form
E&P contract, the government grants the IOC ( concessionaire) the exclusive
right natural resources in a given area for a specified period of time, in
exchange for payment of royalties and taxes (Cotula, 2010). Contemporary
practice indicates the modification of concession agreement to ensure greater
participation by host states. This modification finds expression in modern
concession contracts. In practice, allows for varying shades of government
supervision and participation.

2. Production
Sharing Contract

Production
sharing contract (PSC) is a distinct petroleum arrangement that has been
developed by many countries in the exploration and production of their
petroleum resources as it guarantees the sovereign right of the state over these
resources and meet their economic desires by providing capital and technology
for their production ( Ogunleye, 2015).

Introduced by
Indonesia in 1966, in opposition to the one-sided classical concession regime,
this form of E&P arrangement offer HSs greater participation in E&P
projects. PSC arrangements are resorted to when HSs seeks to reduce their
financial obligations in E&P projects, while not losing ownership and
participatory rights. The entirety of commercial risks is borne by the IOC who
executes the project on behalf of its self and the HS represented by its
National Oil Company (NOC).

On the project
becoming economically viable, both parties, both parties take their share of
the oil in accordance with the formula laid out in the law or contract. Royalty
oil is first allocated to the NOC in accordance with agreed quantum. Cost oil
which represents an IOC’s operating cost is then allocated to the contractor.
Tax oil, being the balance of oil after deducting royalty and cost oil is then
allocated to the NOC. The residue ( being what is left after the above
deductions is then shared between the IOC and NOC as profit oil according to
the terms of the PSC.

3. Joint
Venture Contract

Under this
arrangement, both the IOC and the NOC contribute to funding E&P operations
in the proportion of the JV equity holdings, and generally receive crude oil in
the same ratio (KPMG, 2014). A JVC creates a partnership agreement, in which
both parties interests somehow are balanced by jointly bearing the rights and obligations
in the petroleum operations (Ghadas & Karimsharif, 2014).

A key feature and
requirement in a JVC is that the HS should be able to participate in the
venture by meeting its full financial obligation. The inability of most HSs to
meet this requirement perhaps informs the resort to PSC. For example, the PSC
regime currently obtainable in Nigeria was a reaction of the government its
inability to discharge its financial obligations in many of its JVs.

JVCs can be
created either by contract or by incorporation. Within the regime, the joint
venture is created and managed through contractual agreements of the parties.
Both parties own the equipment and facilities of the project, as well as the
oil and gas productions (Al-Emadi, 2010). In the alternative, a separate legal
entity is formed with venture partners as shareholders with the objective of
carrying out E&P as set out by the JVC.

4. Service
Contract

Where a state (
as is the case with most oil producing states) lack technological capabilities
to exploit its resources), it may contract IOC to provide highly technical
E&P services in return for payment of a pre-determined fee. This is
arrangement is referred to as Service Contracts. Here, the IOC undertakes to
explore for petro carbons at its own risk and expense on behalf of the NOC and
by which it is reimbursed and remunerated in cash depending on the success of
the exploration (Guirauden, 2004).

This scheme of
arrangement can be categorised into either ‘pure service contract’ or ‘risk
service contract’. IOCs in pure service contract execute the E&P project in
exchange for a flat fee. Recovery of their operational cost is not tied to the
commercial viability of the project. An example of this is a contract to
construct at oil platform offshore. Once construction is completed and payment
is made to the IOC, the service contract comes to an end.

Risk service
contract incorporates an undertaking on the part of the IOC to bear all the
attendant risk of exploration, development and production of oil and gas. The reimbursement
of the IOC is predicated on the commercial viability of the project. Once there
is a declaration of commercial productivity, the company has a right to be paid
for its services and to additional compensation for the risk it has undertaken
(Smith, 1991).

Conclusion

The evolution of
oil and gas contracts reflects decades of struggle by HSs to obtain favourable
financial conditions and the desire of IOCs to maximise their profits. The
choice of a particular scheme should not be informed its wide international acceptance
and applicability. Rather, attention should be paid to factors like finance,
technology, political environment etc.

Currently, it may
appear as though oil and gas contracts have achieved apotheosis. However,
opportunities the development of newer schemes remain limitless. As events
around continue to re-shape the oil and gas industry, affecting prices, fiscal
policies and legal regimes, a new type of oil and gas contract may just be in
the waiting.

References

Smith, Ernest
(1991) From Concessions to Service Contracts, 27 Tulsa Law Review 493-524.

Leuch Honore ,
‘Recent Trends in Upstream Petroleum Agreement : Policy, Contractual, Fiscal
and Legal Issues ‘ in Andreas Goldthaw (ed) ‘ The Handbook of Global Energy
Policy.

Cotula L, (2010).
Investment Contracts and Sustainable Development; How to make Contracts for
Fairer and more Sustainable Natural Resources Investment (1st ed) International
Institute for Enviroment and Developmemt

Ogunleye Taiwo,
(2015), A Legal Analysis of Production Sharing Contract Agreements in the
Nigerian Petroleum Industry,5 Journal of Energy Technologies and Policy

KPGM Professional
Services Nigeria (2014) Nigeria’s Oil and Gas Industry Brief.

Ghadas Zuhairah
& Karimsharif Sabah, (2014) Types and Features of International Petroleum
Contracts. 4 South East Asia Journal of Contemporary Business,
Economics and Law, 34-40

Al-Emadi
Talal(2010) Joint Venture Contracts (JVCs) among Current Negotiated Petroleum
Contracts: A Literature Review of JVCs Development, Concept and Elements.Geo.
J. Int’l Law: The Summit 645-667.

Guirauden, D.
(2004). Legal, Fiscal and Contractual Framework. In J.-P. F.-R.-R. Denis
Babusiaux, & N. F.-P. Bret-Rouzaut (Ed.), Oil and Gas Exploration and
Production; Reserves, Costs and Contracts (3rd Edition ed., pp. 170-210).
Paris, France: Editions Technip.

Disclaimer: This article is only intended to provide general
information on the subject matter and does not by itself create client/attorney
relationship between readers and the authors. Specialist legal advice should be
sought about the readers’ specific circumstances when they arise.

Anemuyem Akpan
& Uduak Nsungwara

Anemuyem Akpan is a Lagos-based Legal Practitioner. For
feedback, send an sms/mail to08063624048,
aloyanem@gmail.com

Ed’s Note – This article was originally published here.

Doing business in Nigeria: how foreigners can set up businesses in Nigeria| Hightower Lawyers

by Legalnaija | Mar 6, 2017 | Uncategorized

Nigeria is ever-ready to welcome foreigners
to its shores, for business. There are many foreign controlled/owned businesses
contributing to her prosperity.

An important step which precedes a
foreigner’s ability to do business in Nigeria is setting up a viable business
structure. This text describes how a foreigner can register a company in
Nigeria.

According to Section 54, The
Company and Allied Matters Act,1990, (CAMA), every foreign company
incorporated outside Nigeria and having the intention of carrying on business
in Nigeria shall take all steps necessary to obtain incorporation as a separate
entity in Nigeria and until so incorporated, the foreign company shall not
carry on business in Nigeria.

The procedure of registering a foreign
company is the same as that of indigenous companies in Nigeria subject to
Section 22,24 and 25 CAMA, except that it shall not invite subscription for
shares without the prior approval of the Securities and Exchange Commission.

However, a company may be exempted from the
provision of Section 54,CAMA, after it has applied to the Federal Executive
Council through the office of the Secretary of the government in certain
instances, such as;

Where the foreign company was invited to
Nigeria by the federal government to execute any specified individual project.

Where the foreign company is in Nigeria for
the execution of specific individual loan project on behalf of a donor country
or international organisation.

Where foreign government owned companies
engage solely in export promotion activities.

A foreign company exempted from
registration under Section54, CAMA, shall have the status of an unregistered
company.

Furthermore, foreign companies just like
all other companies in Nigeria that intends to operate in Nigeria must be
registered with the Corporate Affairs Commission(CAC). The minimum share
capital which a Company must have is 10,000 (Ten thousand Naira). While for
foreign owned companies, the minimum share capital is 10,000,000 (Ten million
Naira).

It is compulsory that after registration,
the Tax Identification Number (TIN) of the company is obtained. The newly
registered company must also register for Value Added Tax (VAT) at the nearest
Federal Inland Revenue Service to its proposed office address.

Another crucial aspect is the funding of
the newly registered business. The newly registered business must open and
operate a domiciliary bank account with a commercial bank in Nigeria and obtain
certificate of capital importation.

The Company must concurrently register
at the Nigerian Investment Promotion Council (NIPC), and obtain a
business permit from the Ministry of Internal Affairs.

Requirement for obtaining NIPC
registration

1. Application to the Nigeria Investment Promotion Commission

2. Completed copies of the NIPC Form 1 (in triplicates)

3. Original copy of receipt of purchase of NIPC Form 1 (and 3 copies)
d Copy of Certificate of Incorporation

4. Memorandum and Article of Association

5. Evidence that the Company has a minimum share capital of 10million (3
copies)

6. Company’s allotment of shares- Form CO 2 (3 copies)

7. Company’s particulars of directors – Form CO 7 (3 copies)

8. Details of the shareholding structure of the company (3 copies)

9. Shareholders agreement , where applicable (3 copies)

10. Registration with FIRS (Federal Inland Revenue Service)

Requirements for Business Permit

·
Purchase
NIPC form I for N10,000.00. Completed form submitted with original receipt.

·
Certificate
of Incorporation.

·
A
minimum share capital holding in the joint venture.

·
Details
of share holding in the joint venture.

·
Joint
venture/partnership Agreement where applicable.

·
Memorandum
and Articles of Association.

·
CAC’s
Form CO2 and CO7 duly certified.

·
Evidence
of capital importation for wholly foreign companies.

·
Approval
from the appropriate professional bodies where applicable.

·
We
recommend that you carefully read the information contained in this blog post
to understand what the procedure entails. In addition, you can engage a
reliable and experienced solicitor to guide you through the process.

·
Are
you interested in setting up a Company in Nigeria? Need any help with the process?
Get in touch via email at hightowerlawyers@gmail.com or call +2347014979879.
You will be glad you did.

HightowerLawyers

mail@hightowerlawyers.com

This post was first published here.

Did you know these legal facts | Ahudiya Ukiwe

by Legalnaija | Mar 6, 2017 | Uncategorized

That
“419” is actually a section of the Nigerian Criminal Code that
indicates the offence of obtaining goods by false pretence and its punishment.

That
it is an offence to dig/construct a borehole without a valid licence from the
Minister of Natural Resources. So when considering to dig a borehole or go
fetch water from that Oga’s house, be aware that you both
could be arrested, courtesy of Sections 9-11 of the Water Resources
Act.

The
shortest law in Nigeria is possibly the Financial Year Act. The
Law simply defines what consists of a Financial Year (January 1- December 31)
and “datsall”, finish!

The
Nigerian Constitution expressly encourages inter-ethnic
marriage. Sec. 15 (3)(c) of the 1999 Constitution says ” …it
shall be the duty of the State to encourage inter-marriage among persons from
different places of origin, or of different religious, ethnic or linguistic
association or ties;… This should provoke thoughts on the traditions of some
states or tribes to only intra marry and never marry “outside”.

The
Nigerian Government’s primary purpose is “provision of security, welfare”. It
is therefore not a favour granted Nigerians but our rights. So says Sec.
14(2)(b) of the 1999 Constitution.

There
is a law expressly against use of Army colour green on regular vehicles.
Whenever we are tempted to swag in camouflage or Army colour
green, remember you are contravening Section 1 of
the Army Colour Prohibition of Use Act.

That
all forms of corrupt practices and abuse of power actually ought to be
abolished by the Government. Sec 15(5) of the 1999 Constitution states
that this is a political objective of the State.

There
is no existing law or statute providing for the display of pictures of the
President and Governors on the walls of organizations.

Gaming
machines are illegal in Nigeria. So when you watch those Hollywood movies with
scenes of jackpot being played, be reminded that you cannot afford such a
“luxury” in Nigeria. Gaming Machines (Prohibition) Act.

That
it is illegal to not display signboards of companies. Section 548 of
CAMA provides that every company is to have painted and affixed (and
very legibly too), its name and registration number placed in a very
conspicuous position for all to see and know who and what you are. However,
certain omissions (not failures o) probably should be considered. This is given
the level of insecurity and exorbitant taxes levied against companies of
certain status and located in certain areas; the ubiquitous presence of the agberos, ever
willing to squeeze out irrelevant fees solely assessed by them.

It
is illegal to appoint persons predominantly of a particular State, region. Section
14(3) and (4) of the 1999 Constitution state that such appointments
(Federal or otherwise) should be done to “reflect the federal character of
Nigeria… to promote national unity… to command national loyalty, thereby
ensuring that there shall be no predominance of persons from a few States or
from a few ethnic or other sectional groups in that Government or in any of its
agencies.” Also, “The composition of the Government of a State, a local
government council, or any of the agencies of such Government or council, and
the conduct of the affairs of the Government or council or such agencies shall
be carried out in such manner as to recognise the diversity of the people
within its area of authority and the need to promote a sense of belonging and
loyalty among all the peoples of the Federation”.

By – Ahudiya Ukiwe

Photo Credit – www.ukfieldvolunteer.org.uk

Hague Rules: Autonomy and Superiority over Domestic Legislation in Nigeria | Adebanke Ajayi

by Legalnaija | Mar 6, 2017 | Uncategorized

At the onset of the second millennium, the
position of the Nigerian Jurisprudence pertaining to the hierarchy of
international treaties vis-avis domestic laws was that the former had no
superiority over the latter. Additionally, pursuant to section 12 (1) of the
1979 constitution in pari materia with Section 12(1) of the
1999 Constitution as amended, international treaties or conventions can only
assume the force of law in Nigeria following ratification by the National
Assembly. Section 12(1) of the Constitution provides as follows:

“No treaty between the Federation and any
other country shall have the force of law except to the extent to which any
such treaty has been enacted into law by the National Assembly.”

Furthermore, the Supreme Court in the case
of Abacha v Fawehinmi (2000) 6NWLR (Pt.660) 228 held
that an international treaty has no such force of law as to make its provisions
justiciable in our courts before its enactment into law by the National
Assembly. In the case under reference, the Apex Court examined the application
of the African Charter to the domestic enforcement of fundamental human rights
and concluded that the African Charter had the force of law in Nigeria having
been domesticated into our municipal law by the African Charter on Human and
Peoples’ Rights (Ratification and Enforcement) Act Cap. 10 Laws of the
Federation of Nigeria 1990. The Court further held that treaties which have
been incorporated into the body of the municipal laws such as the African
Charter ranks at par with the municipal laws.

Recently however, a different dimension
appears to have been introduced into this laid down principle in the case of JFS
Investment Limited V Brawal Line Limited & 2 Ors (2010) 18
NWLR [Pt.1225] 495, thus creating a dichotomy in its application to pre 1960
treaties and post 1979 treaties as between Nigeria and the international
community. A relevant example of a pre-1960 treaty is the Hague Rules 1924. The
Hague Rules 1924, codified in the Carriage of Goods by Sea Act Cap C2 Laws of
the Federation 2004 (COGSA), was an existing law in Nigeria at the time the
1979 Constitution came into force. Given that laws generally do not have
retroactive powers, the Supreme Court held that Section 12 of the 1979
constitution cannot affect the applicability of the Hague Rules 1924 in
Nigeria.

The reason for this exception is that by
October 1960 at the Nigerian Independence, the Government of the Federation
assumed all obligations and responsibilities of the colonial regime of the
government which arose from valid international instruments such as the Hague
Rules 1924. Nigeria became a party through exchange of letters between Hague,
the United Kingdom and the Government of Nigeria on October 1, 1960. The Hague
Rules 1924 was extended to Nigeria as a legislation which formed part of our
laws before independence, and was received as our laws after independence. As
such, the Supreme Court held that it does not require any further ratification
as stipulated in Section 12 of the 1979 Constitution before it can be applicable.

The Supreme Court further held that the
Hague Rules 1924 must be deemed to be an Act of the National Assembly having
assumed the force of law in Nigeria and that the principle in the case of Abacha
v Fawehinmi is only applicable to post 1979 treaties and not
pre-1960 treaties. Finally, the Apex Court per Adekeye JSC at page 436, held as
follows:

“The Hague Rules is autonomous and above
domestic legislation of the subscribing countries and the provisions cannot be
suspended or interrupted even by the agreement of the parties”. [Emphasis
Added].

From the foregoing, it would appear that
the Hague Rules have been elevated to a position superior to other domestic
legislations including the Constitution. However, we cannot seem to reconcile
this position with Section 1(1) of the Constitution which provides as
follows:

“1 (1) This Constitution is supreme and its
provisions shall have binding force on all authorities and persons throughout
the Federal Republic of Nigeria.

It is our considered opinion that the
Supreme Court ought to have held that the autonomy of the Hague Rules and their
superiority to domestic legislations subsisted up until the enactment of the
1979 constitution. Thereafter, it became subsumed under the hierarchical
structure of statutes in Nigeria with the Constitution at the topmost echelon
as established in the case of Labiyi v. Anretiola (1992)
NWLR (Pt. 258) 139; (1992) LPELR-1730(SC). We hope the Supreme Court will have
the opportunity to again revisit this issue in the nearest future to give
effect to the provisions of Section 1 of the Constitution.

Adebanke Ajayi is a Legal
Practitioner writing from Lagos.

This
post was first published here

Photo Credit – www.jux.law

In The Interest Of Justice | Eberechi Okoh

by Legalnaija | Mar 3, 2017 | Uncategorized

“…visiting the sin of
counsel on his client is not permitted by the law courts. What is not however
tolerated is where a counsel committed all unforgivable a fundamental blunder
which affects his case, such as filing a wrong or an incompetent originating process,
there is no way the court can blind its eyes to allow the process have its way,
as such.” Okpe v. Fan Milk Plc & Anor [2017] 2 NWLR (PT 1549)
310-311

On this note, the Supreme
Court gavelled the case to rest. The Appellants in the case cited above had
urged the Supreme court to set aside the judgment of the Court of Appeal
given in favour of the Respondents on the ground that it was predicated on a
Notice of Appeal which did not state the Respondent counsel’s name but bore
only the name of the law firm. The 1st Respondent on its part argued that
neither the parties nor the Court of Appeal was misled by the content of the
Notice of Appeal and urged the Supreme Court to consider what was in the
interest of justice in determining the issue. The Supreme Court allowed the
appeal and set aside the judgment of the Court of Appeal. Clearly, the Justices
had a definition of “justice” different from what counsel to the 1st respondent
had envisaged. For them, justice was a three-way traffic – justice to the
plaintiff/appellants, the defendants/respondents and the court itself. This is
a stance which counsel are all too familiar with.

It remains that lawyers
and non-lawyers will always disagree on what constitutes justice. While
non-lawyers see justice to be served by simply considering the facts and
rewarding the deserving party, lawyers consider procedural correctness which
means that proceedings, no matter how well conducted, will amount to a nullity
if there is a breach of a cardinal rule of procedure. In the words of Lord
Denning “You cannot put something on nothing and expect it to stand”.

The real question becomes,
not whether the interest of justice is the highest consideration, but what
constitutes justice in each case. In the case of Odom v. PDP [2015] 6
N.W.L.R (PT 1456) 527, the Supreme Court emphasized that the attitude of
the Supreme Court is that whenever it is possible to determine a case on the
merit, the court will do so by refusing to cling to technicalities.
Consequently, litigants can expect that procedures and technicalities are not
so sacred as to upturn perceived justice all the time. However, prudent counsel
will ensure that their clients are not left hanging in the balance or at the
mercy of the Judge’s decision on how a procedural error will be treated.
Counsel must pay close attention to procedural matters, in the interest
of justice.

Eberechi
Okoh

Senior Associate at Streamsowers & Kohn

Ed’s Note – This article was originally posted
here.

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Eberechi Okoh Senior Associate at Streamsowers & Kohn Ed’s Note – This article was originally posted here.

Eberechi
Okoh

Senior Associate at Streamsowers & Kohn

Ed’s Note – This article was originally posted
here.