Appeal Court Affirms FHC’s Jurisdiction Over Statutory Contracts In Nigeria

The Abuja Division of the Court of Appeal has declared that the Federal High Court has jurisdiction over simple contracts “regulated by statute,” and entered into by the Central Bank of Nigeria (CBN) with an engaged contractor.

Justice Okong Abang, in a unanimous judgment, held that the CBN appeal was unmeritorious.

The judgment was delivered in an appeal filed by the CBN against Adani Mega System Ltd, and its certified true copy was made available to newsmen on Wednesday in Abuja.

Adani Mega System Ltd had acted as a service provider/vendor of a screening platform for inspecting all inbound and outbound cargo.

The dispute, however, arose from an executed “build, operate and own agreement” dated March 3, 2017.

Adani Mega System Ltd, by a project engagement mandate from the CBN dated Feb. 16, 2017 and a build, operate and own agreement dated March 20, 2017, held a valid and duly executed contract with the CBN Technical Committee of the Comprehensive Import Supervision Scheme (CISS).

This was done on behalf of the Federal Government of Nigeria, the exclusive service provider/vendor for the enterprise screening platform for inspecting all inbound and outbound cargo.

In compliance with the relevant due process of laws of Nigeria, the CBN at the time, sought and obtained a letter of no objection from the Bureau of Public Procurement (BPP) regarding the contract between the company and the Federal Government through the CBN’s Technical Committee of the Comprehensive Import Supervision Scheme (CISS).

After obtaining the certificate of no objection, the company said it began expanding its capital, including borrowed funds running into millions of dollars, and completed extensive work on the project.

Subsequently, the company alleged that the CBN suspended its contract without any reasonable ground despite its completion.

As a result of the suspension, the CBN Technical Committee on the Comprehensive Import Supervision Scheme terminated the company‘s contract in a letter dated Sept. 18, 2017.

Aggrieved by the development, the company challenged the unlawful termination of its concluded contract at the Federal High Court, Abuja.

The company’s legal team relied, among other authorities, on the provisions of the Pre-Shipment Inspection of Import Act Cap 26, Laws of the Federation, and the Pre-Shipment Inspection of Export Act Cap 25, Laws of the Federation of Nigeria 2004.

In the judgment, the parties argued their case, and Justice J. Mohammed faulted the CBN’s suspension and agreed with the company’s legal team’s submission.

Dissatisfied, the CBN counsel, S.K. AbdulSelam, approached the Appeal Court, asking it to interpret relevant laws regarding whether or not the Federal High Court has jurisdiction over simple contracts.

He prayed the court to determine whether the trial court lacked the competence and jurisdiction to hear and determine the respondent’s suit, which was based on a simple contract.

The court, therefore, urged the appellate court to quash the company’s suit.

Delivering the lead judgment, Justice Abang upheld the lower court decision on the matter.

The judge held that the Appeal Court‘s conclusion was based on due consideration of the facts of the case and the interpretation of various statutory provisions cited by the parties.

He said, “having regard to the agreement of the parties that led to the execution of Exhibit PL3 (build, operate and own agreement) for the provision of the scanning services infrastructure required for Pre-Shipment Inspection of all inbound and outbound cargo as prescribed by Nigerian law, the contract is not an ordinary simple contract.”

The judge held that the contract, which the CBN regarded as “simple,” was a contract with “statutory flavour.”

“In other words, it is a contract regulated by statute; that is, regulated by the provisions of the Pre-Shipment Inspection of Import Act Cap 25 Laws of the Federation of Nigeria 2004 and the Pre-Shipment Inspection of Export Act Cap 26 Laws of the Federation of Nigeria,” the judge added.

Abang held that where a dispute arises from a contract regulated by statute, the statute will determine the forum where the aggrieved party will ventilate its grievance.

He referred to Section 20(3) of the Pre-Shipment Inspection of Export Act Cap 25 Laws of the Federation 2004.

“Every proceeding under this Act shall, subject to the applicable procedure, be commenced at the Federal High Court, and any reference in this Act to ‘Court’ shall be construed accordingly.”

The court unanimously found the appeal unmeritorious and dismissed it.