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The Contractual Function of a Choice of Court Agreement in Nigerian Jurisprudence
Many international commercial parties usually provide for a choice of court agreement as a term of their contract. This is done to enhance predictability, certainty and reduction of costs in the event a dispute arises between the parties. Since a choice of court agreement is a term of the contract, does the principle of contract law apply to determine a choice of court agreement? Though this is a matter of controversy in Nigerian law,[1] some recent appellate courts (Court of Appeal and Supreme Court) have given a foreign choice of court agreement a contractual function.[2]
Kashamu v UBN Plc[3] is a most recent Court of Appeal decision that analyses a foreign choice of court agreement exclusively from the principles of contract law. In this case, The Banque International Du Benin (“BIDB”), a limited financial institution in Benin Republic, granted medium term loan facilities, in different sums, to the Societe d’ Egrenage Industrial De Cotonu du Benin (“SEIC-B”), a private limited company registered in Benin Republic, for construction of its Cotton Ginning factory. The facilities were secured by, inter alia, SEIC-B’s goodwill, factory and land. In addition, the defendant/appellant, the alter ego of SEIC-B, personally guaranteed the facilities in a personal guarantee agreement. The loan agreement between BIDB and SEICB provided that the law and courts of Benin Republic should determine their dispute. However, the guarantee agreement between BIDB and the defendant/appellant did not explicitly provide for a choice of court agreement.
SEIC-B defaulted in the repayment of the loans despite repeated demands. As a result, BIDB appointed the plaintiff/respondent, a public limited financial institution in Nigeria, as its attorney to recover the outstanding facility. Further to the donated power of attorney, the plaintiff/respondent claimed recovery of the debt from the defendant/appellant in the Lagos High Court, Nigeria. The defendant/appellant counter-claimed and also challenged the jurisdiction of the Lagos High Court as being the wrong forum to institute the action. The Lagos High Court held that it had jurisdiction.
The defendant/appellant was dissatisfied with this decision and appealed to the Court of Appeal. The defendant/appellant argued that the proper forum for the action was the Courts in Benin Republic, given that the loan agreement between BIDB and SEICB provided that the law and courts of Benin Republic should determine their dispute. He argued that the choice of court agreement in the loan contract should also be incorporated into the guarantee agreement, so that it was the intention of the parties that the courts of Benin Republic should determine their dispute. He also argued that the execution and performance of the contract were to be in Benin Republic hence the agreement was in French Language.
The plaintiff/respondent argued that the loan agreement and guarantee agreement were distinct. It observed that the parties were bound by the terms in the guarantee agreement. It added that the parties in the guarantee agreement did not agree that the court in Benin Republic would have exclusive jurisdiction over disputes arising from it. It asserted that the guarantee agreement was not expressly incorporated in the loan agreement. It opined that the defendant/appellant was not privy to the loan agreement and would not take a benefit from or enforce it for want of privity of contract. It claimed that the content of the guarantee agreement was clear and must be given its literal meaning.
The Court of Appeal unanimously dismissed the appeal. In construing the loan and guarantee agreement to determine if the parties chose the courts of Benin Republic, it applied the principles of Nigerian contract law to the effect that courts are allowed to read a document holistically so as to reach and garner harmonious results of its content. In construing a document, the court is enjoined or mandated by law to apply the literal rule as a canon of interpretation, that is, to accord the words employed there in their ordinary grammatical meaning without any embellishment.[4] It then held that for the document of parties to a private contract to confer jurisdiction on a court, the words used must be clear and explicit and devoid of woolliness and ambiguity. In the instant case, the guarantee contract did not precisely confer jurisdiction on the Benin Republic court.[5] It further held that loan contract did not in any way allude to the guarantee to benefit from the doctrine of incorporation by reference. The doctrine of incorporation could not be invoked because of the want of connection between the two documents.[6]
Kashamu’s case demonstrates the recent attitude of some Nigerian appellate courts to treat choice of court agreements as a term of the contract which should be construed strictly according to the literal and ordinary words used in the contract. In effect in the absence of vitiating circumstances, the parties are bound by the terms of a choice of court agreement, and a Nigerian court will not add or subtract from the way the parties drafted the contract. The Court of Appeal’s approach in Kashamu reflected Nigeria’s law that interprets contractual documents strictly. Kashamu is a modern approach that applies the principles of contract law to choice of court agreements.
[1]For an extended analysis see generally CSA Okoli and RF Oppong, Private International Law in Nigeria (Hart, 2020) 107 – 125.
[2]Nika Fishing Company Ltd v Lavina Corporation (2008 ) 16 NWLR 509, 542 (Tobi JSC); Conoil Plc
v Vitol SA ( 2018 ) 9 NWLR 489 – 490 (Nweze JSC); 497 (Kekere-Ekun JSC); 500 (Okoro JSC); 501 – 2
(Eko JSC); Captain Tony Nso v Seacor Marine ( Bahamas) Inc ( 2008 ) LPELR-8320 (CA); Megatech Engineering Limited v Sky Vision Global Networks Llc (2014) LPELR-22539 (CA); Beaumont Resources Ltd v DWC Drilling Ltd ( 2017 ) LPELR-42814 (CA); Kashamu v UBN Plc (2020) 15 NWLR (Pt. 1746) 90. See also Felshade International (Nig.) Ltd v Trafugura Beheer BV Amsterdam (2020) 14 NWLR (Pt. 1743) 107, 144.
[3]Kashamu (Ibid)
[4] Kashamu (Ibid) 114-5 (Ogbuinya JCA).
[5] Kashamu (Ibid) 115 (Ogbuinya JCA).
[6] Kashamu (Ibid) 116 (Ogbuinya JCA).
HCCH a|Bridged – Edition 2020: 50th Anniversary of the 1970 Evidence Convention
The HCCH and the German Presidency of the Council of the European Union have the pleasure of announcing that registration is now open for HCCH a|Bridged – Edition 2020, which will mark the golden anniversary of the HCCH Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters (HCCH Evidence Convention). This year’s edition builds upon the success of HCCH a|Bridged – Edition 2019, which revolved around the theme ‘The HCCH Service Convention in the Era of Electronic and Information Technology’.
The event will be hosted entirely online on Wednesday 2 December from 2:15 p.m. CET. It will feature a keynote speech by Professor Dr Michael Stürner entitled “50 years of the HCCH Evidence Convention – Facilitating cross-border proceedings” as well as two panels that will discuss the very latest in the cross-border taking of evidence under Chapter I and II of the HCCH Evidence Convention.
Participants will be able to follow the event via a livestream on a dedicated website. While participation is free of charge, the number of registered participants will be limited, and registrations will therefore be handled on a first come, first served basis.
After registration, participants will receive a password which will also enable them to interact with other participants via a chat function and ask questions during the panel discussions. This password will be distributed to registered participants a few days before the conference. We also encourage participants to submit their questions before the meeting, preferably at the time of registration. Please note that the working language of HCCH a|Bridged – Edition 2020 will be English, and there will be no French interpretation.
The deadline for registrations is Friday 27 November 2020 at 5:00 p.m. CET. A Concept Note, the Programme, and registration information is available on the HCCH website.
This post is published by the Permanent Bureau of the Hague Conference of Private International Law (HCCH).
Out now: RabelsZ 4/2020
Issue 4 of RabelsZ is now available online and in print. It contains the following articles:
MAX-PLANCK-INSTITUT FÜR AUSLÄNDISCHES UND INTERNATIONALES PRIVATRECHT, Die Frühehe im Rechtsvergleich: Praxis, Sachrecht, Kollisionsrecht (Early Marriage in Comparative Law: Practice, Substantive Law, Choice of Law), pp. 705–785
Early marriage is a global and ancient phenomenon; its frequency worldwide, but especially in Europe, has declined only in recent decades. Often, early marriage results from precarious situations of poverty, a lack of opportunities and education, and external threats, for example in refugee situations. However the concepts and perceptions of marriage, family, identities, and values in different societies are diverse, as the comparison of regulations and the practice of early marriage in over 40 jurisdictions shows. Even if early marriage appears generally undesirable, for some minors the alternatives are even worse. Some countries set fixed ages for marriage; others use flexible criteria such as physical or mental maturity to determine a threshold for marriage. All, however, until very recently provided for the possibility of dispensation. In Western countries, such dispensations have rarely been sought in the last decades and have consequently been abolished in some jurisdictions; elsewhere they still matter. Also, most countries bestow some legal effects to marriages entered into in violation of age requirements in the name of a favor matrimonii.
Early marriage has an international dimension when married couples cross borders. Generally, private international law around the world treats marriages celebrated by foreigners in their country of origin as valid if they comply with the respective foreign law. Such application is subject to a case-specific public policy exception with regard to age requirements, provided the marriage has some relation to the forum. Recent reforms in some countries, Germany included, have replaced this flexible public policy exception with a strict extension of the lex fori to foreign marriages, holding them to the same requirements as domestic marriages and thereby disabling both a case-by-case analysis of interests and the subsequent remediation of a violation of the forum’s age requirements. As a consequence, parties to a marriage celebrated abroad can be treated as unmarried, meaning they derive no rights and protection from their marriage, and their marriage may be limping – valid in one country, invalid in another.
The extension of domestic age requirements to foreign marriage without exception, as done in German private international law, is problematic in view of both European and German constitutional law. The refusal to recognize early marriages celebrated abroad can violate the European freedom of movement. It can violate the right to marriage and family (Art. 6 Grundgesetz) and the child’s best interests. It can violate acquired rights. It can also violate the right to equality (Art. 3 Grundgesetz) if no distinction is made between the protection of marriages validly entered into abroad and the prevention of marriages in Germany. Such violations may not be justifiable: The German rules are not always able to achieve their aims, not always necessary compared with milder measures existing in foreign laws, and not always proportional.
Edwin Cameron and Leo Boonzaier, Venturing beyond Formalism: The Constitutional Court of South Africa’s Equality Jurisprudence, pp. 786–840
[Excerpt taken from the introduction]: After long years of rightful ostracism under apartheid, great enthusiasm, worldwide, embraced South Africa’s reintegration into the international community in 1994. The political elite preponderantly responsible for the Constitution, the legal profession, and the first democratic government under President Nelson Mandela were committed to recognisablyliberal principles, founded on democratic constitutionalism and human rights.
This contribution is an expanded version of a keynote lecture given by Justice Edwin Cameron at the 37th Congress of the Gesellschaft für Rechtsvergleichung at the University of Greifswald on 19 September 2019.
Chris Thomale, Gerichtsstands– und Rechtswahl im Kapitalmarktdeliktsrecht (Choice-of-court and Choice-of-law Agreements in International Capital Market Tort Law), pp. 841–863
The treatment of antifraud provisions in international securities litigation is a salient topic of both European capital markets law and European private international law. The article sets the stage by identifying the applicable sources of international jurisdiction in this area as well as the situations in which a conflict of laws may arise. It then moves on to give a rough and ready interpretation of these rules, notably construing the “place where the damage occurred”, according to both Art. 7 Nr. 2 Brussel Ibis Regulation and Art. 4(1) Rome II Regulation, as being equivalent to the market where a financial instrument is listed or is intended to be listed. However, as the article sets out in due course, this still leaves plenty of reasonable opportunity for a contractual choice of court or choice of law. This is why the article’s main focus is on creating a possibility to utilize choice-of-court and choice-of-law agreements. This is feasible either in the issuer’s charter or, notably in the case of bonds, in the prospectus accompanying the issuance of a given financial instrument. The article shows that both arrangements satisfy the elements of Art. 25 Brussel Ibis Regulation on choice-of-court agreements and Art. 14(1) lit. b Rome II Regulation on ex ante choice-of-law agreements.
Moritz Hennemann, Wettbewerb der Datenschutzrechtsordnungen – Zur Rezeption der Datenschutz-Grundverordnung (The Competition Between Data Protection Laws – The Reception of theGeneral Data Protection Regulation), pp. 864–895
The General Data Protection Regulation (GDPR) has granted the European Union an excellent position in the “competition” between data protection laws. This competition goes along with a gradual convergence of data protection laws worldwide, initiated and promoted by the European Union. In this competition, the European Union benefits not only from the so-called Brussels Effect (Bradford), but also from distinct legal instruments: The GDPR rules on the scope of application and on data transfer to non-EU countries are of legal importance in this competition, and the adequacy decision under Art. 45 GDPR creates further de facto leverage for negotiations on free trade agreements with non-EU countries. The European Union has already been able to use this tool as a catalyst for European data protection law approaches. The European Union should, however, refrain from “abusing” its strong position and not press for extensive “copies” of the GDPR worldwide – and thereby create legislative lock-in-effects. Alternative regulatory approaches – potentially even more innovative and appropriate – are to be evaluated carefully by means of a functional and/or contextual comparative approach.