Introduction
In
this era of increased international trade and foreign direct investment,
enforcement of foreign judgments has become very significant in our legal
system. Investors are more comfortable doing business with foreign
partners knowing that if they obtain a judgment from a superior court in their
home country, it can be enforced against the judgment debtor in another
country.
this era of increased international trade and foreign direct investment,
enforcement of foreign judgments has become very significant in our legal
system. Investors are more comfortable doing business with foreign
partners knowing that if they obtain a judgment from a superior court in their
home country, it can be enforced against the judgment debtor in another
country.
Fortunately, Nigerian courts recognize judgments from superior courts
of commonwealth countries and countries with which she has bilateral
agreements. This has increased the confidence of foreigners and foreign
companies to do business with Nigerians and Nigerian companies. However, the
current legal regime for the enforcement of foreign judgments especially tax
judgments calls for an urgent review.
of commonwealth countries and countries with which she has bilateral
agreements. This has increased the confidence of foreigners and foreign
companies to do business with Nigerians and Nigerian companies. However, the
current legal regime for the enforcement of foreign judgments especially tax
judgments calls for an urgent review.
Legal Framework
There
is an imprecision on the particular statute that regulates the registration of
foreign judgments in Nigeria. For instance, the Foreign Judgment (Reciprocal Enforcement) Act, Cap.
F35, Laws of the Federation of Nigeria, 2004 (“the Act”)
and the Reciprocal
Enforcement of Judgments Ordinance, CAP 175, Laws of the Federation of Nigeria,
1958 (“the Ordinance) exist side by side and both
legislations are in conflict with each other with regard to the time
within which to register a foreign judgment. Whereas under the Act, the time
within which to register a foreign judgment is 6 years[1], under the Ordinance, the time is 12 months. The
Supreme Court in this regard has not been very helpful, when it held in the
case ofGrosvenor
Casinos Ltd v. Ghassan Halaoui[2]that
both the Act and the Ordinance are relevant statutes in the enforcement of
foreign judgments in Nigeria.
is an imprecision on the particular statute that regulates the registration of
foreign judgments in Nigeria. For instance, the Foreign Judgment (Reciprocal Enforcement) Act, Cap.
F35, Laws of the Federation of Nigeria, 2004 (“the Act”)
and the Reciprocal
Enforcement of Judgments Ordinance, CAP 175, Laws of the Federation of Nigeria,
1958 (“the Ordinance) exist side by side and both
legislations are in conflict with each other with regard to the time
within which to register a foreign judgment. Whereas under the Act, the time
within which to register a foreign judgment is 6 years[1], under the Ordinance, the time is 12 months. The
Supreme Court in this regard has not been very helpful, when it held in the
case ofGrosvenor
Casinos Ltd v. Ghassan Halaoui[2]that
both the Act and the Ordinance are relevant statutes in the enforcement of
foreign judgments in Nigeria.
Ordinarily
the Act would have been the legislation regulating enforcement of foreign
judgments but the Supreme Court in the case of Macaulay v. R.Z.B of Austria[3] held
that the Minister of Justice had not made an order extending the Act to
judgments of the United Kingdom and other countries with bilateral agreements
with Nigeria pursuant to Sections 3 (1) and 9 (1) of the Act, as such the first
part of Act is inapplicable.
the Act would have been the legislation regulating enforcement of foreign
judgments but the Supreme Court in the case of Macaulay v. R.Z.B of Austria[3] held
that the Minister of Justice had not made an order extending the Act to
judgments of the United Kingdom and other countries with bilateral agreements
with Nigeria pursuant to Sections 3 (1) and 9 (1) of the Act, as such the first
part of Act is inapplicable.
Another
unfavourable provision in both the Act and Ordinance is the provision that
foreign judgments in respect of fine, taxes and penalties cannot be enforced in
Nigeria[4]. This defeats the whole essence of the reciprocity in
enforcement of foreign judgments and may afford a safe haven for tax evaders.
unfavourable provision in both the Act and Ordinance is the provision that
foreign judgments in respect of fine, taxes and penalties cannot be enforced in
Nigeria[4]. This defeats the whole essence of the reciprocity in
enforcement of foreign judgments and may afford a safe haven for tax evaders.
Cross Border Stance
The
requirement in both the Act and the Ordinance is that foreign judgments in
respect of taxes cannot be enforced in Nigeria. This is against the whole
concept of reciprocal treatment of judgment because it may give a safe haven to
tax evaders. With the increase in tax evasion by foreign businesses and
multinational companies, inability of states and government bodies to recover
judgment in respect of taxes in foreign countries would lead to a great loss of
revenue. The role of fines, taxes and penalties is invaluable in the economic
development of states in the 21st Century[5].
requirement in both the Act and the Ordinance is that foreign judgments in
respect of taxes cannot be enforced in Nigeria. This is against the whole
concept of reciprocal treatment of judgment because it may give a safe haven to
tax evaders. With the increase in tax evasion by foreign businesses and
multinational companies, inability of states and government bodies to recover
judgment in respect of taxes in foreign countries would lead to a great loss of
revenue. The role of fines, taxes and penalties is invaluable in the economic
development of states in the 21st Century[5].
In
recent years, the long-standing principle that the courts of one country will
not enforce the penal and revenue laws of another country has been
significantly eroded. A range of international agreements have increased tax
authorities’ powers to exchange information and give mutual assistance to
collect tax debts. This has resulted in a widening of the tax net beyond
domestic borders. However, these powers must be exercised within the confines
of domestic legislation and the provisions of relevant international treaties.
In each case, it must be determined whether the enforcement action is within
the confines of the law.
recent years, the long-standing principle that the courts of one country will
not enforce the penal and revenue laws of another country has been
significantly eroded. A range of international agreements have increased tax
authorities’ powers to exchange information and give mutual assistance to
collect tax debts. This has resulted in a widening of the tax net beyond
domestic borders. However, these powers must be exercised within the confines
of domestic legislation and the provisions of relevant international treaties.
In each case, it must be determined whether the enforcement action is within
the confines of the law.
As
corporations and individuals find themselves in a global environment and tax
authorities look for ways to proactively recover taxes due outside their
jurisdictional borders, spreading the tax net by involving the powers of
another tax authority is becoming increasingly prevalent and co-operation with
other countries has become a strong area of focus.
corporations and individuals find themselves in a global environment and tax
authorities look for ways to proactively recover taxes due outside their
jurisdictional borders, spreading the tax net by involving the powers of
another tax authority is becoming increasingly prevalent and co-operation with
other countries has become a strong area of focus.
For
instance, in the United Kingdom (UK), the general principle of non-cooperation
with foreign jurisdictions in the collection of taxes has been significantly
eroded with the introduction of EU
Directive 2010/24/EU, which imposes an obligation on the UK to
assist any Member State of the European Union in the recovery of tax[6], together with the joint Council of Europe/Organisation for
Economic Co-operation and Development Convention on Mutual Administrative
Assistance in Tax Matters. However, the lifespan of this
obligation depends on when the UK invokes the Lisbon
Treaty[7] to practically leave the European Union.
instance, in the United Kingdom (UK), the general principle of non-cooperation
with foreign jurisdictions in the collection of taxes has been significantly
eroded with the introduction of EU
Directive 2010/24/EU, which imposes an obligation on the UK to
assist any Member State of the European Union in the recovery of tax[6], together with the joint Council of Europe/Organisation for
Economic Co-operation and Development Convention on Mutual Administrative
Assistance in Tax Matters. However, the lifespan of this
obligation depends on when the UK invokes the Lisbon
Treaty[7] to practically leave the European Union.
No
doubt, it will be beneficial to Nigeria to accord other states the opportunity
to recover taxes against evading offenders. This it can do by either amending
the extant legislations in this regard or entering into Multilateral and
Bilateral treaties with other states to assist one another in the recovery of
tax judgments.
doubt, it will be beneficial to Nigeria to accord other states the opportunity
to recover taxes against evading offenders. This it can do by either amending
the extant legislations in this regard or entering into Multilateral and
Bilateral treaties with other states to assist one another in the recovery of
tax judgments.
Conclusion
In
conclusion, there is a need for the lingering crisis on the law regulating
enforcement of foreign judgment in Nigeria to be settled, especially those
relating to recovery of tax judgments. The legal conditions for the enforcement
of foreign judgment have been interpreted too broadly to adequately protect the
interest of foreign judgment creditors. Therefore, the law and rules should be
amended to reflect modern realities. The Courts should be proactive in breaking
new grounds and developing the jurisprudence on enforcement of foreign judgment
in Nigeria in accordance with the essence of reciprocity of judgments. This
will improve the prospects of Nigeria as a business destination and enhance the
growth of her economy.
conclusion, there is a need for the lingering crisis on the law regulating
enforcement of foreign judgment in Nigeria to be settled, especially those
relating to recovery of tax judgments. The legal conditions for the enforcement
of foreign judgment have been interpreted too broadly to adequately protect the
interest of foreign judgment creditors. Therefore, the law and rules should be
amended to reflect modern realities. The Courts should be proactive in breaking
new grounds and developing the jurisprudence on enforcement of foreign judgment
in Nigeria in accordance with the essence of reciprocity of judgments. This
will improve the prospects of Nigeria as a business destination and enhance the
growth of her economy.
___________________________________________________________________
[1] Section 4(1) of the Foreign Judgment (Reciprocal
Enforcement) Act, Cap. F35, Laws of the Federation of Nigeria, 2004
Enforcement) Act, Cap. F35, Laws of the Federation of Nigeria, 2004
[2] (2009) 10 NWLR (Pt. 1149) p. 309
[3] (2003) 18 NWLR (Pt. 852) p. 282
[4]Section 3(2) (b) of the Foreign Judgment (Reciprocal
Enforcement) Act, Cap. F35, Laws of the Federation of Nigeria, 2004
Enforcement) Act, Cap. F35, Laws of the Federation of Nigeria, 2004
[5]http://www.ng.pathlegal.com/An-Appraisal-Of-Challenges-Of-Enforcing-Foreign-Judgments-In-Nigeria-blog-707,
accessed on Friday, October 7, 2016
accessed on Friday, October 7, 2016
[6]http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:084:0001:0012:EN:PDF,
accessed on Friday, October 7, 2016
accessed on Friday, October 7, 2016
Osiri Ndukwe is an associate at Stark Legal.
Ed”s Post – This article
was originally published here
was originally published here