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  • An Appraisal of the SEC Proposed Rules on Crowdfunding and its impact on the Fintech Ecosystem in Nigeria | Olisa Agbakoba Legal

    An Appraisal of the SEC Proposed Rules on Crowdfunding and its impact on the Fintech Ecosystem in Nigeria | Olisa Agbakoba Legal

    The Securities and Exchange Commission’s (SEC) proposed rules on Crowdfunding have elicited different reactions from stakeholders, it has rattled the cage of most businesses that leverage on the internet to access credit to finance their business, businesses that create an opportunity for other businesses to access credit on their platforms and operators of financial portals.

    There is no gainsaying that the initiative is laudable and this is because of the three-way regulatory oversight and protection which the SEC seeks to administer on the issuers, the investors and the Crowdfunding Intermediary that operates the Crowdfunding Portal, where the credits/funds are accessed. 

    The intendment of the proposed rules is to solely cater to investment-based/equity crowdfunding thereby alienating other forms of Crowdfunding, such as debt-based crowdfunding and donation-based crowdfunding in Nigeria, from its control. However, this is not to say that debt-based crowdfunding or donation-based crowdfunding are alien to our laws in Nigeria, as Section 58 (1) of the Banks and other Financial Institutions Act has put any form of debt-based crowdfunding under the purview of the Central Bank of Nigeria, as it reads as follows;

    • Without prejudice to the provisions of Part I of this Act, no person shall carry on other financial business in Nigeria other than insurance and stockbroking except it is a company duly incorporated in Nigeria and holds a valid license granted under section 59 of this Act. 

    On the other hand, donation-based crowdfunding which is a vehicle for philanthropic causes is spearheaded by NGO’s registerable under the Companies and Allied Matters Act, as an Incorporated Trustee. 

    The purpose of this article is to essentially comb through some of the provisions of the Rules, put them through a viable or non-viability test and then assist the fintech companies in making informed decisions, as a result of this exposition. 

    An Overview of the Rules

    Eligibility to Raise Funds

    SEC, through these rules, has set eligibility parameters for MSMEs (Medium, Small and Micro Enterprises) who seek to raise funds to finance a project, business or venture on a Crowdfunding portal, as it posited that any such MSME must present a minimum of two (2) years’ operating track record to the Crowdfunding Intermediary before it can utilize the Crowdfunding Portal. The rationale behind this parameter is not far-fetched, as it ultimately seeks to sift through companies that might be set up as shell companies for Ponzi schemes, in pursuance of its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) outlook.

    Nature of the Investment Instruments issued on a Crowdfunding Portal by an Issuer

    A point worthy of deliberation in the Rules is the type of investment instruments that issuers, being MSMEs and unlisted public companies, can offer to investors in exchange for funds raised on the portal. The Rules specifies which instruments are permissible and they are as follows-Ordinary shares, plain vanilla bonds/debentures and simple investment contracts. However, the confusion that is likely to arise from these investment instruments takes root in the features of a private company limited by shares vis-à-vis a public company limited by shares, as encapsulated in the Companies and Allied Matters Act; To wit, Section 22 (5) of CAMA prevents a private company from inviting the public to subscribe for any shares or debentures of the company while a public company is authorized to issue shares and other debt securities to the public. 

    The import of the foregoing is that a private company limited by shares, cannot issue shares or other debt securities on a Crowdfunding Portal, but can enter into a simple investment contract between itself and the investors, insofar as the salient clauses regulating the investment are properly constituted in the agreement. Investment contracts are transactions whereby one or more parties, agree to invest or shell out a specific amount of money, to a particular business or company, with the expectation of getting returns from the income or profit generated by the business or company, as and when due.

     

    Certain Exemptions to the Provisions of the Investment and Securities Act

    The Rules also hint at a departure from the requirement of registration of Securities under the provisions of Section 54 of the Investment and Securities Act, as it stipulates that an issuer may offer or sell securities or other investment instruments, without the need for prior registration pursuant to the Act, provided the issuer is an entity incorporated in Nigeria and has been accredited/approved by the Crowdfunding Portal to utilize its platform. Furthermore, it states that the issuer will be exempted from registering its securities or other investment instruments, if the aggregate amount of shares and investment instruments offered and sold by the issuer within a twelve (12)-month period, complies with the following thresholds-

    1. The maximum amount that a Medium Enterprise may raise will not exceed N100 million.
    2. The maximum amount that a Small Enterprise may raise will not exceed N70 million.
    3. The maximum amount that a Micro-Enterprise may raise will not exceed N50 million.

    However, the above limits do not apply to Digital Commodities Investment Platform which are companies who leverage on an online electronic platform to offer agricultural produce, livestock and its derivative products and all other goods and articles to investors.

    It is noteworthy to state that the Commission in calculating the maximum amount of shares or investment instruments offered and sold by an issuer, within the thresholds and time limit, will take into account entities controlled by or under common control with the issuer and any predecessors of the issuer. This means that the Commission will take into account, any Holding Company and its subsidiaries, any Group Company and its sister companies, as well as companies under new management as a result of a merger or acquisition, in determining whether an issuer is keeping or has kept with the conditions set in the Rules for the utilization of any Crowdfunding Portal.

    Crowdfunding Portal Requirement for Portals located Outside Nigeria

    The Rules also makes provisions for a litmus test to determine when a person is said to be operating, providing or maintaining a Crowdfunding Portal in Nigeria and the main point of concern in this test, is the reference to platforms outside Nigeria, that actively targets Nigerian Investors and mandating that such platforms will be a crowdfunding portal in Nigeria. The reservation that this brings to the fore, is the issue of choice of law with respect to an investor who decides to invest in a platform outside Nigeria, knowing fully well that the choice of law as evidenced in the terms of use of that platform, will be the law of the jurisdiction of its area of operation and then proceeds to submit to the jurisdiction, by subscribing to the services of that platform outside Nigeria. The decision to make platforms outside Nigeria, that targets Nigerian Investors, subject to the Rules of the Commission, will not be a sustainable one because of the rule of party autonomy—the power enjoyed by litigants to choose the law applicable to their cross-border legal relationship.

    Assuming without conceding that the decision by the Commission through the Rules, to subject Crowdfunding Portals outside Nigeria to its Rules is somehow sustained, its metrics for determining active targeting through the direct or indirect promotion of the Portal in Nigeria fails to take into consideration online/social media marketing and its borderless nature, which is the modus operandi of most businesses today. The Rules only makes provision for direct or indirect promotion in Nigeria, which connotes physicality. It is almost as if the Proposed Rules has refused to give cognizance to the impetus of online/social media marketing/promotion in this current day and age.

     

    Registration Requirements for a Crowdfunding Portal

    According to the Rules, a crowdfunding portal can only be registered and operated by a Crowdfunding intermediary and the only entities that can be licensed as a Crowdfunding Intermediary are Exchanges, Dealer, Broker, Broker/Dealer or Alternative Trading Facility as prescribed under the Act and the SEC Rules and Regulations.

    The Rules also permit a category for a Restricted Dealer, which caters for Dealers who are registered by the Commission for crowdfunding activities simpliciter.

    Furthermore, certain persons do not fall under the microscope of the Commission with respect to these rules on Crowdfunding and they are as follows;

    1. A technology service provider who merely builds an infrastructure, software or system for an operator, being a Crowdfunding Intermediary. This encompasses tech companies who build solutions to enable Crowdfunding Intermediaries leverage on technology to reach a wider audience.
    2. An operator of a Communication Infrastructure that merely routes an order to an approved stock market.
    3. An operator of a financial portal that merely aggregates content and provides links to financial sites of service and information provider. This category covers fintech companies that serve as a digital investment marketplace, that connects investors to investment opportunities offered by Broker/Dealers, who are either a Crowdfunding Intermediary or a Restricted Dealer.

    The Rules also prescribe the minimum paid-up capital of N100 million for any entity interested in being Crowdfunding Intermediaries, as well as a Restricted Dealer. Additionally, the Commission requires such other requirements to satisfy itself that either the Chief Executive Officer of the Crowdfunding Intermediary, its board of directors or any of its officers are not unfit to operate the Crowdfunding portal, by reason of being adjudged dishonest or fraudulent by a Court or other Self-Regulatory Organization in the Nigerian capital market; among many other requirements.

    Operation of a Crowdfunding Portal

    The Commission empowers the Operators of a Crowdfunding Portal, through the Rules, to take appropriate actions against any person in breach, either the issuer or any investor, by directing that such person takes the appropriate remedial measures as the circumstances require. The measures may include but not limited to suspension or expulsion of such persons after consultation with the Commission. The rules also provide for an avenue whereby such expelled or suspended persons may appeal against the decision of the operator to the Commission. This provision is especially important to ensure that issuers, who misrepresent facts or information in their offering documents, upon filing with the portal, are penalized.

    Revocation of Registration

    To ensure that no crowdfunding portal is redundant, the Rules have set a six (6) months period of inactivity, which will necessitate a revocation of the registration of any Crowdfunding Portal. Also, the Commission can revoke the Registration of any Crowdfunding portal on the occasion of non-payment of prescribed fees, failure to meet any requirements prescribed by the Rules or where the intermediary contravenes any of the provisions of the Act, the rules and regulations and the code of conduct for capital market operators.

    Operation of a Trust Account

    The Rules specifies that every crowdfunding portal shall appoint a custodian, who shall establish and maintain a separate trust account for each funding round on the portal, with a financial institution registered by the Commission as a Custodian. This presupposes the existence of a trust deed on the portal, which would essentially simplify how the funds invested will be disbursed to the issuer and the rights of the trust beneficiaries (being the investors) to the trust property (being the monies invested).

    Participation of the Issuer on the Crowdfunding Portal

    All issuers seeking to raise funds on the portal are expected to file a standardized offering document with the Crowdfunding portal and it will essentially include details relating to the issuer, such as the use of the proceeds, the issuers business plan, the project or business to be funded, the minimum amount required, the target amount and such other salient information about the investment opportunity the issuer is offering on the portal.

    Every issuer shall have its funding offer live on crowdfunding portal for not more than sixty (60) days which means at the end of the sixty (60) days, if the issuer does not raise the minimum amount it requires, it will be required to withdraw the offer and wait until after ninety (90) days from the date of such withdrawal to list a new offer.

    However, in the event that the amount raised meets the minimum amount required by the issuer but not the target amount, the issuer will be required to present to the portal and the investors, a revised business plan, which will show how it intends to maximize the use of the amount raised, though falling short of its target, without negatively impacting operations of the issuer. 

    Participation of the Investor

    The Rules provide investors with a forty-eight (48) hours cooling off period to withdraw their investments on a Crowdfunding portal, from the date of close of an offer from an issuer. Any amount which must have been debited to the account of the investor prior to the withdrawal shall be refunded to the investor within forty-eight (48) hours of such withdrawal date.

    Non-permitted Issuers 

    There are certain entities that are prohibited from raising funds through a Crowdfunding Portal and they are as follows;

    1. Complex structures-These are companies with no immediate transparency of the beneficial owners of the company.
    2. Public listed companies and their subsidiaries- These are companies whose securities are listed and trading on the floor of the Nigerian Stock Exchange. 
    3. Companies with no specific business plan or a blind pool- These are companies with business plans which are solely for merging with or acquiring unidentified entities.
    4. Companies that propose to use the funds raised to provide loans or invest in other entities;
    5. Such other entity as may be specified by the Commission. 

    Requirements for Digital Commodities Investment Platforms (DCIP)

    According to the Rules, a DCIP is a platform that connects investors to specific agricultural or commodities projects, for the purpose of sponsoring such projects in exchange for a return.

    The provisions of Rules 43 (a) of the Proposed Rules, reveals that such agritech companies shall be permitted to provide crowdfunding portal services but then Rules 43 (d) contradicts with the provision, namely; DCIP shall only host commodities investment projects on crowdfunding platforms other than a platform which it controls whether directly or indirectly. The Commission with this contradiction is seen to be approbating and reprobating because if it says they are permitted to render crowdfunding portal services, why then is it saying they can only host their projects on other crowdfunding platforms that they do not control, in another breath. This contradiction needs to be resolved by the Commission.

     

    The Way forward for Fintech Companies in view of these Rules

    It appears from the Rules that Fintech Companies have only two alternatives open to them;

    1. They can aggregate content from certified Crowdfunding Intermediaries and provide links to their portals on their websites, application or other similar modules, thereby making themselves out to simply provide a digital investment marketplace that connects investors to curated offerings of certain Crowdfunding Intermediaries.
    2. Register a cooperative society under the Cooperative Societies Law of their respective states. For instance, the Lagos State Cooperative Federation under the Cooperative Societies Law of Lagos State 2014 makes provisions for a Cooperative Multipurpose Society (CMS). The CMS is a cooperative society that goes beyond just encouraging savings and giving out loans to members, it can buy and sell goods, venture into businesses and service members and non-members. The Director of the Cooperative Society is saddled with the responsibility of ensuring that all cooperative societies run their operations in accordance with the cooperative principles, which means the SEC does not regulate the activities of the Cooperative Society. 

    Suffice to say, that the overall outlook of the SEC Rules on Crowdfunding is to give adequate protection to investors who wish to take part in the Crowdfunding Market, as it ensures that the investors have access to clear information on any investment vehicle offered by an issuer. This allows them to assess the risk and make informed decisions based on the information at their disposal. 

    Furthermore, the Rule also enjoins the Crowdfunding Portals to have risks disclosures on their portals as a result of the volatility of the Nigerian financial market, whilst ensuring that they operate an orderly, fair and transparent market activity on their platforms.

    The feature of MSME’s in the Rules shows that there is now a recognition of the pivotal role they play in our economy, as they are the bedrock of Nigeria’s industrialization and inclusive economic development, as once described by the Vice President, Prof. Yemi Osinbajo. The import of their inclusion guarantees their access to much-needed capital which would foster productivity and boost innovation whilst allowing the economy to tap into the entrepreneurial prowess of our youthful population. 

    Sadly, the tenor of the rules foretells the exclusion of many fintech companies’ and this means that they either merge with companies with the requisite wherewithal or they reinvent themselves. The Commission has created a centralized community which would largely be filled with major players in the finance industry who have the required capital base to run a crowdfunding portal. They have failed to appreciate the ingenuity reposed in the fintech companies and their ability to foster financial inclusion through their people-centric business model.

    Written By: Olaseni Aka-Bashorun (Entertainment and Technology Associate – Olisa Agbakoba Legal)

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  • Legal Ramifications of COVID-19: Force Majeure and the Doctrine of Frustration

    Legal Ramifications of COVID-19: Force Majeure and the Doctrine of Frustration

    Legal Ramifications of COVID-19 on the Sports and Entertainment Industries

    The most significant incident to impact the planet in the last four months has been the outbreak of COVID-19 popularly known as the novel coronavirus. This outbreak has reinforced the need for appropriate legal and risk management measures and systems.

    The pandemic which has now spread to 146 countries and counting, first emerged in Wuhan, Mainland China and yet the world would never have imagined the extent to which the outbreak would travel; becoming classified as a global pandemic by the World Health Organisation. It has caused global disruption of mobility, chaos on the lives of billions around the world and has had a considerable negative impact on macro and microeconomics.

    The threat which the novel coronavirus presents to various industries and business sectors has been numerous and far-reaching; from significant disruptions to essential services in banking and finance to disruption to major fixtures in the international sporting calendar from the F1 Australian Grand Prix, cancellation and postponement of a number of high profile sporting conferences and tournaments including the much-awaited Edo Sports Festival 2020, World Football Summit Africa 2020 and a host of others.

    Over 110 showpiece sporting events across Europe and Asia stand cancelled or postponed due to the COVID-19 outbreak: affecting over 2,000 highly anticipated match-ups across various sports like football, NBA, Euro basketball, Mixed Martial Arts, Golf, Tennis, Formula One and so on.  The progression or otherwise of the virus in the coming days will determine whether the Olympics event scheduled to take place this summer would go on as planned. The world of Esports has also seen its fair share of cancellation and postponement of events: The Software Association’s 2020 E3 Video Game Convention and the annual Games Developers Conference have been cancelled due to COVID-19.

    Famous sporting personalities have also been infected by the virus. Danielle Rugani and Blaise Matuidi of Juventus, Rudy Gobert of Utah Jazz, Ezequiel Garay and five other football players in the Valencia CF roster to mention a few. The virus has also claimed the life of Francisco Garcia, a Spanish Football coach after a pre-existing health condition was exacerbated by the infection- The only casualty in the sporting world as of today.

    The entertainment industry has also felt the sting of the virus as thousands of entertainment events have been called off: Music concerts, tours and award shows like the GidiFest scheduled for this April in Lagos, Tribeca Film Festival, Billboard Music Awards, Glastonbury Music Festival, Coachella, Stormzy’s ‘Heavy is the Head’ album tour, The Kid’s Choice Award’s amongst others. Movie productions and Premieres of highly anticipated movies have also been put on hold; theme Parks and Amusement parks are fast shutting down in China, Korea and other hard-hit countries. Top celebrities like Tom Hanks, Rita Wilson and Idris Elba have also tested positive for the virus.

    Beneath this mess of cancellations and postponements are complex commercial and sentimental interests arising out of various entertainment and sports contracts. Performance of contracts has become near-impossible as at when due. To be specific, Fans who have bought tickets as well as paid travel costs and made hotel reservations with respect to a certain concert or movie premiere will definitely be affected by its cancellation or rescheduling. Sporting clubs may be liable for possibly breaching their contracts with Season ticket holders who would be robbed of the spectacle paid for, in the event of a cancellation, postponement or a decision to play matches behind closed doors.

    Suffice it to say, most businesses around the world big or small will by now be affected in some way by the novel coronavirus and that being said it is still not too late for business owners, leaders, etc to take steps to mitigate the impact or prepare to insulate from shocks at best. There will be legal ramifications and risks arising from the pandemic, which all individuals and businesses will now have to seriously consider. It is highly probable that there will be fallouts and unfortunate contractual disputes as a consequence of the health crisis the world is currently facing: Non-Performance being a major fall out, as the ability to perform contracts will be severely affected and tested in the next few months considering the stringent regulatory policies now in place. These include widespread lock-downs which has curtailed mobility whether domestically or internationally as well as the practice of social distancing to flatten the curve and reduce the transmission rate.

    As we will come to find out; the inclusion or otherwise of a Force Majeure Clause in sports and entertainment contracts could prove instrumental in periods like this. So, the question is what exactly is a ‘force majeure’? And what events will give rise to a ‘force majeure or ‘vis major’ as it is also known?

    Legal Ramifications of COVID-19: Understanding the doctrine of Force Majeure

    The doctrine of Force Majeure takes root in French civil law and applies to situations where an external event or occurrence beyond reasonable control prevents parties or a party from performance of obligations under a contract. It is expressly provided for as a term of the contract between parties and usually lists out a number of acts, the occurrence of which would constitute a force majeure with respect to the contract.

     

    In the reported Nigerian case of Diamond Bank Ltd V Ugochukwu, the court held that for a Force Majeure to occur there must be an event which significantly changes the nature of the contractual rights of the parties, such that it would be unjust to expect the parties to perform those rights such as;

    • Where the subject matter of the contract has been destroyed or is no longer available.
    • Death or incapacity of a party to a contract
    • The contract has become illegal to perform as a result of new legislation.
    • A contract can be frustrated by the outbreak of war.
    • Where the commercial purpose of the contract has failed.

    The provision of Force Majeure is one that has strict application and can only be relied upon, based on the express provision in the contract and the qualifying events which successfully triggers the provision. The applicability of Force Majeure can cover any situation, provided that provision has been made for it.

    What type of events can give rise to a Force Majeure?

    Natural events also are known as ‘Act of God’ can give rise to a Force majeure.  Actus Dei nemini facit injuriam: interpreted literally, an act of God injures no one. To further buttress, the maxim simply stresses that no one is responsible for an act of God and cannot be said to have injured an adverse party by the occurrence of such. Acts of God can include adverse weather conditions e.g. hurricanes, thunderstorms, earthquakes. These are unexpected events which cannot be predicted by contracting parties to a large extent, nor prevented by them.

    As this writer has earlier mentioned, Force Majeure is a term of the contract. This means, that it must be provided for expressly in the contract. So, it is the practice for parties to include acts or events which would generally inhibit the performance of obligations in a contract or work hardship in the process of performing the same. These events may not be Acts of God per se, but they are abnormal incidences which are inherently unfavourable to the terms of the contract. These include epidemics, pandemics and other man-made or politically related events such as riots, civil unrest and war due to instability in a government or national leadership or other ‘Acts of Government’.

    All in all, these are events that can unduly occur beyond the control of the parties, making it difficult or near impossible for the parties to fulfil a contract. Impossibility in itself is subject to the interpretation given that the circumstances that arise in the event of a medical pandemic will be quite different from that which arises during a riot. Whereas during the war there is a total shut down of operations and clearly normal business affairs will be non-existent, in the case of a medical pandemic, business operations, meetings, etc will be curtailed due to non-movement and not necessarily because the parties cannot perform.

    An outbreak of highly Infectious disease, such as COVID-19, H1N1 virus and/or the Ebola virus could fall under the category of medical pandemic or epidemic in a Force Majeure. However, to qualify as such, its category must be included in the Force Majeure clause especially where other acts or events are listed, so as not to be caught up by the ejusdem generis rule. The necessary Government regulations or directives which have been promulgated as a result of the outbreak such as social distancing, and the ban on large gatherings, are strong performance barriers which could bring COVID-19 under the category of Acts of Government, in the ilk of the items mentioned earlier. Careful construction of Force Majeure clauses, therefore, require equally careful consideration and need to be wide enough to accommodate events that may not be life-threatening but clearly not advisable to still carry on normal business operations.

    Parties are also at liberty to state the consequences of a Force Majeure. This could include suspension of contractual obligations, renegotiation of terms, non-liability, an extension of time to fulfil obligations, mitigation of losses, and termination of contracts amongst others. Considering the effect of COVID-19 on Sports and Entertainment events, where there is a Force Majeure Clause in the contract, parties may trigger the same.

    Broadcasting companies like Supersports which holds exclusive license to broadcast a wide array of sporting events in West Africa could reach out to the organisers and reach a favourable decision on the strength of the Force Majeure clause, Fans who have bought tickets could demand a refund from organisers, and athletes signed up to sports clubs may rely on the Force Majeure clause to justify why it was impossible for them to attend training or partake in games for their teams, which would ordinarily represent a breach of contract.

    Recently, Nigeria’s ex-skipper, Mikel Obi ended his contract with his former club, Trabzonspor of Turkey by mutual termination, days after he criticised the Turkish FA for allowing games to go on in the circumstances. While the specific details of termination are not yet public, one may infer from the situation that he would only have been able to walk away from his contract without incurring a heavy cost for breach if there were relevant Force Majeure provisions in the player contract to that effect.

    However, in the absence of express Force Majeure provisions in a contract, parties in Common Law jurisdictions have an alternative which is the reliance on the common law doctrine of Frustration.

    Legal Ramifications of COVID-19: Understanding the Doctrine of Frustration

    The doctrine of Frustration is based on the English common law doctrine which seeks to set aside the obligation of parties under a contract due to unforeseen events. It can apply in circumstances where there is no underlying provision for Force Majeure. The doctrine of frustration was well propagated in the case of Taylor v Caldwell From the decision in this case; the following elements of Frustration may be gleaned where:

    • External events not contemplated by the parties arise which are beyond their control.
    • The event was unforeseeable and it occurred post-formation of the contract.
    • The unforeseeable events make the contract impossible to perform

    Legal Ramifications of COVID-19Thus where a force majeure clause has not been included in a contract and no risk has been allocated by such a clause in the occurrence of stated mishaps, where an unforeseeable event occurs which may render the contract impossible to perform, parties may rely on the doctrine of frustration to bring an end to the contract or obtain a remedy from the court where due.

    An example of such an event would be where the subject matter or the crux of the main condition of the contract ceases to exist. This was established in the celebrated case of Henry v Krell, where the Coronation event, which was the foundation of the contract between the parties, was cancelled due to the unexpected sickness of the incoming king; the Courts deemed the contract as impossible to perform due to the non-existence of the subject matter of the contract. Thus, parties were excluded from any future obligations arising from the contract.

    Also, frustration could also occur where there is a delay or interruption which duration is indeterminate and was unforeseen by contracting parties. This was the decision of the Court in The Sea Angel Case. Thus, when applied to sport and entertainment events that have been postponed indefinitely, for now, this could constitute an act of frustration of the contract. Fans could get refunds; Insurance policies for players could be terminated with future obligations cancelled. Footballers who are in their last few months of contracts with their clubs – especially clubs in the top five leagues where the season ends in the summer- could exercise the option of cancelling their contracts to the club where the season is resumed and the matches drag beyond June 30, the final day of contracts for most players.

    Event planners of concerts may have to refund all or a part of the funds received from artists and their managements due to cancellation of events. The fallouts are endless.

    A change of law can also qualify as an unforeseeable event, which can also act as an additional layer to another unforeseeable event such as a medical pandemic. A change of law may be temporary or long-lasting such as the temporary imposition of travel restrictions, self-isolation measures and quarantine to name a few which can further make the contract impossible to perform; likely resulting in termination of a contract.

    The consequence of invoking the doctrine of frustration is that it brings the contract automatically to an end and either maintains the status quo or restores the parties to the status quo antebellum as the justice of the case demands.  In the event that a contract is frustrated, one party will be relieved of the obligation to perform and another, who would have relied on the service or goods emanating from the contract, will be left disappointed. It is ideal that both parties reach a mutual agreement and fair conclusion. However, the law of damages which is normally applicable in contract, will not be applicable under frustration, due to its strict Common law background.

    Conclusions

    The instance of COVID-19 gives rise to a series of unpredictable and unfortunately, dynamic changing events. So far, we have witnessed industries, notably the international aviation and sports industry, take initiatives to secure the health and safety of millions which would otherwise be compromised through gatherings and continuous mobility. This means that businesses will need to take more care when entering into any contracts from this point onwards until the threat abates, especially whilst other obligations persist such as payment of wages, medical insurance. Adopting a cautious approach and obtaining full legal clearance on new contracts will be highly advisable at this point.

    It is evident that in one form or another, individuals and businesses will be affected, not only directly by COVID19 but also by the disruption emanating from it.  Practical steps to stem this threat include:

    1. Carefully reviewing all existing contracts. This applies to main and subcontracts with third parties, to determine the level of risk exposure involved and what performance is expected.
    2. Review the contracts/agreements and check if the relevant force majeure clauses are already in place and determine if they are couched properly.
    3. During the intense period of social distancing and travel bans, the performance of contracts will likely be negatively impacted. It is necessary to ascertain to what degree performance is affected and what remedies are available. Can the contractual performance be delayed or postponed? Or will it have to be cancelled, leading to a significant reliance on force majeure contracts in order to minimize further liabilities or losses? This activity should typically be handled by the legal officer within your organisation or the company secretary.
    4.  Prompt communication of non-performance must be made as soon as it is clear contractual obligations cannot be performed by one party to the other party in the contract. This is necessary to mitigate losses as well as seek remedies such as refunds, etc.
    5. It is necessary to correctly ascertain whether the event arising falls under the provision of Force Majeure or frustration, in order to be released from performing obligations under existing contracts.
    6. There is also the need to explore ADR mechanisms, especially negotiation, in case of conflicts over the performance of contracts. Parties like sports clubs and player unions or Sports Organisations could also commence negotiations as a pre-emptive measure in order to arrive at solutions for more extreme situations.

    Written By: Beverley Agbakoba-Onyejianya, Senior Associate/ Head, Sports Entertainment and Technology Practice Group 

  • OAL Announces Synergy With India-based Capstone Legal

    OAL Announces Synergy With India-based Capstone Legal



    We are delighted to announce our strategic collaboration with Capstone Legal, one of India’s fastest-growing law firms. The total trade between the two growing economies was put at between US$10- 11 Billion in recent times and bilateral trade relations are likely to increase in the near future.
    The two firms have recognized the growing commercial interaction between Nigeria and India are collaborating to provide innovative legal solutions to enhance seamless commercial transactions and relations between both countries.
    Speaking at the signing and public announcement of the collaboration, Dr. Olisa Agbakoba SAN, Senior Partner at OAL, stated that the Synergy between the two leading law firms is a very significant development in the context of growing Indo-Nigerian trade and bilateral relations which is now topping $10 billion annually.
    With the collaboration structured in the form of a “Best Friends Agreement” (BFA) /“Memorandum of Understanding” (MOU), both law firms will be able to attract/provide legal services to new clients in respective jurisdictions.
  • OAL Sports, Entertainment and Technology Practice (SET) hosts a Session at Social Media Week Lagos 2020 (#SMWLagos)

    OAL Sports, Entertainment and Technology Practice (SET) hosts a Session at Social Media Week Lagos 2020 (#SMWLagos)

    The Sports, Entertainment, and Technology (SET) team at OAL, participated at the just concluded Social Media Week Lagos which held from Monday 24th – Friday 28th February 2020.  Social Media Week Lagos is the largest, tech, new media, and business conference on the continent of Africa. It is significant because it creates an avenue for thought leaders, key stakeholders, investors and entrepreneurs to meet, discuss, collaborate and explore issues that are important for the modern business world. 

    Our session titled “Design Thinking in the Legal Industry” was jointly hosted by Amaka and I and was one of just 2 legal panels that were hosted at this year’s edition. The session afforded us the opportunity to highlight key areas where design thinking can be adopted in legal practice and what it means to today’s clients. 

  • Third Party Ownership in Football Explained

    Third Party Ownership in Football Explained

    Despite FIFA’s outright prohibition on third-party ownership in football 2015, to remove unethical practices and mitigate the controversy surrounding this type of investment in football, TPO, as it is more commonly known, remains a regular occurrence in the football industry in places such as Nigeria.

      

    A short precise definition of third party ownership also known as TPO  is “A financial interest in the future transfer of a player’s registration”. 

     

    It is a practice, previously widespread in South America, whereby an investor i.e. an individual, a company or a fund otherwise known as the third party would ‘invest’ in a player, in return for a right to enjoyment of future economic rights in the said player or club or academy i.e. take a percentage of the future transfer fees or fees that the player who is the subject of the investment attracts. This practice is peculiar to football because football is one of the only global sports with an open transfer market whereby players are traded domestically and internationally between clubs, and because of the substantial sums that can be exchanged in football transfer fees.

     

    Third-party ownership in football is a business model whereby instead of Club A owning 100% of the player’s economic rights, these rights are shared with a third party who may either own a percentage share or on rare occasions all of the economic rights. This agreement is created through a private legal contract between the third party and Club A. The controversy in the practice of TPO is that it permits the TPO to be kept secret from those not privy to the private contract, even from the player concerned. 

     

    The issue of Third-Party Ownership in football (TPO) is one that has always attracted mixed reactions and has generated a lot of discussion and controversy. The drama surrounding Neymar’s transfer to Barcelona spiked general awareness on TPO. Neymar was signed to Santos Football Club in the beginning before he reached international stardom: In a bid to retain him on their squad and simultaneously leverage on his fast-rising superstar status, the club sought to increase his wages to the level of his counterparts in Europe.

     

    However, since the club did not have the financial capacity to do so, a sports agency called DSI undertook to pay these high wages to Neymar on behalf of the Club. As a result, they owned 60% of the player’s economic rights. By the time Barcelona FC paid the transfer fees for the signing of Neymar, Santos FC only received 40% of the full fee. 

     

    TPO was a common practice in many parts of the world before FIFA banned it – in particular in Latin America whilst in Europe it was practiced in Spain, Portugal, and Italy. It enabled many smaller clubs to compete for side by side with bigger clubs by being able to purchase players with the help of third party investors holding some of the economic rights of the player. 

     

    Typically, a young promising player could be signed on to or from a club because a third party (with a right to the future transfer value of the player )would cover some of the costs the club or investment in the player. This would enable the player to perform on a bigger stage, provide the club engaging him with a promising player at a reduced price enabling it to compete with bigger clubs and often lead to the sale of the player to an even bigger club to the benefit of the selling club, the third party, and the player.  

     

    The fact remains that since Third-party ownership in football represents an investment, the investor’s primary interest is recouping a return on investment as fast as he can which can often conflict with the welfare of the player. Thus, it does not matter whether the player or the club wants something different, the will of the investor reigns supreme on whether the player moves on or stays. On the flip side, TPO actually helped a lot of smaller clubs to compete favorably with bigger clubs especially as it concerns transfers. With more funding from investors, smaller clubs could dream of signing players who could improve them on the sporting front as well as commercially. 

     

     

    Different Ways TPO Can Arise

    TPO can arise in different ways. One of these ways involves the club selling a percentage of the economic rights of a player to a third party in order to raise funds. This is known as a ‘Financing TPO’. Sometimes, clubs obtain loan facilities using a percentage of economic rights of a highly valued player as collateral. In this case, the bank has acquired third-party ownership interests in the player. 

     

    Secondly, where a club cannot afford the transfer fee of a player, they could enter into TPO agreements with an investor who will fund a part of the transfer in exchange for a percentage of the Economic Rights of the player. This is known as investment TPO. A popular investor in this regard is Doyen Sports Investment owned by super-agent Jorge Mendes. 

     

    Thirdly, there is a form of Third-party ownership in football known as Recruitment TPO. This entails where a club wants to recruit a player who is not yet a professional. A third party could come in to finance the training and development of such a player on behalf of the club so as to make recruitment affordable for the club. It goes without saying that the third party then acquires economic rights in the player. 

     

     

    FIFA’s Ban on TPO in Football 

    The main problem with Third-party ownership in football, however, was the risk of Third Party influencers, i.e. the risk of third party investors unfairly influencing the playing or trading rules and regulations and policies of the engaging club. Third-party influence leads to a number of other problems – potentially undermining the integrity of the sport of football, especially where a third party has an interest in a number of players in the same competition, and undermining team stability where third parties are incentivised to force multiple transfers for economic and not purely sporty reasons. 

     

    In 2015, FIFA extended the ban on Third Party Influence to a total worldwide prohibition on Thrid-Party Ownership in Football.  Article 18ter, the prohibition on TPO, reads as follows: 

    “No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation”. 

     

    FIFA noted that the legitimate objectives for the ban are as follows: 

    • Preservation of contractual stability
    • Preservation of the independence and autonomy of clubs’ recruitment policy
    • Securing the integrity of football and prevention of the loyalty and equity of competitions 
    • Prevention of conflicts of interests and securing transparency in the transfer market.

     

    The Nigerian Position on Third-party Ownership

    The practice of Third-party Ownership in Football in parts of Africa especially in West Africa where many of the talents are exported from to the west is on the rise. This is not surprising given the economic hardship and financial challenges faced by the talented footballers who majorly still come from less privileged backgrounds.

     

    For these reasons, it is also not uncommon to find many players including some underaged ones ‘sponsored’ by a wealthier relative or even a stranger purely for the sake of benefitting from future financial or economic gains in the said player. A major reason we have seen why this practice is being perpetuated is simply for lack of awareness and because there are very few specialist sports lawyers who understand the rules and regulations surrounding football law.

     

    TPO is akin to placing a bet on a wildcard in the hope that all upfront expenses and investments will be repaid with more once the player ‘makes it’.  This practice though has some benefits creates too many unequal playing fields and grey areas and one can begin to understand why FIFA had to place a global ban on TPO because there was a clear danger of TPO becoming a form of ‘modern-day slavery’ or economic slavery.

    Despite the ban on TPO, it has not totally eradicated the practice perhaps due to ignorance and also desperation.  

     

     

    Written By:

    Beverley Agbakoba-Onyejianya

    Beverley is an Associate Partner and the Head of Sports, Entertainment & Technology (SET) group at OAL. She is a regulatory and compliance professional and a lawyer with over twelve years professional experience in the banking and capital markets sectors

    View Beverley’s Profile >

     

  • A National Policy on Arbitration in Nigeria | Olisa Agbakoba Legal

    A National Policy on Arbitration in Nigeria | Olisa Agbakoba Legal

    A National Policy on Arbitration in Nigeria – A publication of the Arbitration and Dispute Resolution Practice Group of Olisa Agbakoba Legal

    I.  INTRODUCTION

    Nigeria generates a significant volume of commercial transactions, both domestic and international with about 80 percent of these transactions originating and or terminating in Nigeria especially Lagos, Port Harcourt, Kano, etc.

    Unfortunately, disputes arising from these transactions that are basically Nigerian and can be termed ‘DOMESTIC’ are ultimately arbitrated in foreign countries. The flow of these Domestic (i.e. purely Nigerian) arbitration cases to arbitral seats/venues outside Nigeria is unhelpful to Nigeria. It also translates to the loss of revenue in billions of dollars to the majority of practitioners and revenue generation for Nigeria.

    In Nigeria, there is a considerable number of Arbitration Institutions such as the Nigerian Institute of Chartered Arbitrators (NICArb), Chartered Institute of Arbitrators UK (Nigeria Branch) Lagos Regional Centre for International Commercial Arbitration (LRCICA), Lagos Court of Arbitration (LCA), Lagos Chamber of Commerce International Arbitration Centre (LACIAC), and International Centre for Arbitration and Mediation Abuja (ICAMA). All these Arbitration bodies are dedicated to the common goal of the promotion of arbitration in Nigeria.

    There is a significant number of qualified Nigerians that are capable of being appointed as arbitrators or arbitration counsel. In the groundbreaking 2018 SOAS Arbitration in Africa Survey, which surveyed African arbitrators over a five-year period, data obtained by SOAS from the Chartered Institute of Arbitrators (UK) CIArb revealed that 2,483 of its 15,000 members are domiciled in African States, while more than half of this number – 51.3% (i.e. 1,250), are Nigerians. Undoubtedly, this figure confirms that Nigerian arbitrators are available to be appointed as members of an arbitral tribunal or arbitration counsel, either domestically or internationally.

    Considering that Nigeria has capacity in relation to the good number of arbitration institutions and arbitrators, and the prominence of arbitration as a contemporary dispute resolution mechanism, it is evident that Nigeria possesses the knowledge and framework for a vibrant arbitration regime for the resolution of both international and domestic disputes with Nigeria as the seat of arbitration.

    However, contrary to the expectation above, it is unfortunate that Nigeria’s potential as a regional arbitration hub has not been significantly realised. Given the fact that growth in domestic arbitration will encourage investment, drive economic development and improve Arbitration practice and culture amongst Arbitrators and relevant professionals in Nigeria and understanding that Nigeria as a developing country requires underpinning legal frameworks in certain areas to encourage growth, we hereby propose a National Policy on Arbitration.

    II.  OBJECTIVE

    The flow of purely Domestic arbitration cases to arbitral seats/venues outside Nigeria is unhelpful to investment dispute resolution, growth of arbitration practice, culture and militates against the EASE OF DOING BUSINESS in Nigeria. It also translates to the loss of revenue in billions of dollars to the majority of practitioners and revenue generation for the federation. It is within this context that the need for a National Policy on Arbitration is derived.

    The overall goal and objective of a National Policy on Arbitration Is the growth of arbitration practice.

    III. NATURE OF THE NATIONAL POLICY ON ARBITRATION

    National Policy on ArbitrationThe National Arbitration Policy is premised upon the concept that arbitration agreements in respect of all disputes arising from contractual relationships in Nigeria, will have Nigeria as the seat of arbitration.

    The thrust of the policy is represented by a two-pronged approach. The first is that the policy will apply in circumstances where the transactions from domestic contractual relationships involve either only Nigerian parties or both Nigerian and foreign parties.

    The second is that the policy will apply in circumstances where the transactions arising from international contractual relationships involve Nigerian parties and foreign parties, provided that there are strong connecting factors or links warranting or justifying that Nigeria should be made the seat of arbitration.

    The policy will be achieved by a statutory enactment providing that arbitration arising from all domestic contractual relationships and international contractual relationships, will be arbitrated in Nigeria as the seat of arbitration.

    What follows below is the consideration of instances in which the proposed statutory enactment, will apply in respect of the domestic contractual relationships and international contractual relationships, for the purpose of actualizing the policy.

    a. Domestic Contractual Relationship under National Arbitration Policy

    There are two crucial forms of transactions that create domestic contractual relationships in Nigeria. These transactions are private commercial transactions and government contracts/transactions that are to be solely performed in Nigeria. These forms of domestic transactions will be considered in light of the National Arbitration Policy.

    i. Domestic Private Commercial Transactions

    Domestic private commercial transactions largely stem from the contractual relationships arising between Nigerian parties or Nigerian parties and foreign parties. These private commercial transactions or contracts are termed domestic because they are originated and largely executed in Nigeria, irrespective of the nationality of the parties.

    Nigeria generates a significant volume of domestic private commercial transactions. Unfortunately, a significant number of disputes arising from these transactions are ultimately arbitrated in foreign jurisdictions. Undoubtedly, the flight of domestic arbitration cases to arbitral venues outside Nigeria is unhelpful to our economic development as a country, and also to arbitration practitioners. This misnomer accounts for the loss of revenue on both levels and requires a national arbitration policy to reverse the trend.

    Consequently, there is a need to be proactive in respect of the National Arbitration Policy by ensuring that its roots are embedded in Nigeria’s domestic commercial relationships and dealings with foreign entities. This will require the statutory intervention of the established principle of arbitration that parties can mutually choose the seat and venue of their arbitration. This proposed statutory intervention will be represented by the enactment of a law that will expressly provide that arbitration in respect of private commercial transactions originating from Nigeria shall be determined in Nigerian institutions of arbitration. Ultimately, parties involved in any contractual agreements arising from any transaction performed in Nigeria will be bound to ensure that any arbitration provision in their agreements must comply with the proposed statute. This will require amending the Arbitration and Conciliation Act (Repeal and Re-Enactment) Bill 2019 currently undergoing consideration at the House of Representatives, to incorporate provisions that will promote the National Arbitration Policy.

    ii. Federal and State Government Contracts and Transactions

    Federal and State government contracts or transactions largely stem from commercial relationships that arise between the Federal and State Governments of Nigeria or their agencies and private entities. The numbers of these government contracts or transactions are usually very significant, which means that the success of the National Arbitration Policy will obviously depend upon the ability to bring such contracts or transactions within the scope of the policy.

    Consequently, in giving full effect to the national arbitration policy, it is expected that the policy will be promoted in respect of government contracts, such that arbitration agreements in respect of all disputes arising from governmental contracts, especially with foreign entities will have Nigeria as the seat of arbitration. Consequently, Federal and State government agencies will need to adopt a policy to be applied to all agencies, which will encourage domestic arbitration and curtail the flight of arbitration to other countries.

    From a larger perspective, all Federal and State government agencies will require to incorporate include in their arbitration clauses in agreements, a specification that the arbitral seat of such arbitration would be Nigeria. It is hoped that when this policy is implemented, the practice of arbitration in Nigeria will be significantly improved for greater economic development.

    b. International Contractual Relationships under National Arbitration Policy

    There are two notable forms of International Contractual relationships in Nigeria. The first is international private commercial transactions involving a Nigerian based party and a party based in a foreign country. The second is represented by the commercial transactions entered into between the Federal government of Nigeria and other foreign countries or the nationals of such foreign countries, which are generally regarded as Bilateral Investment Treaties (BITs). Given that these transactions permeate the Nigerian economy, there is a crucial need to consider their position in respect of the National Arbitration Policy.

    i. International Private Commercial Transactions

    A notable feature of international private commercial transactions is that such transactions usually involve the performance or execution of a part of the transaction outside Nigeria. For instance, in a contract of carriage by sea to deliver certain goods to Nigeria, the shipping process will entail the loading of the cargo in a port of departure, which will be discharged upon arrival at a Nigerian port.

    National Policy on ArbitrationIn such cases where the whole of the contract or transaction will not be performed in Nigeria as identified above, the National Arbitration Policy represented by the statutory intervention will still be applicable as long as a significant aspect of the contract will be executed in Nigeria. If the connecting factors in relation to the contract show that it is closely connected to Nigeria, then it is logical to say that any arbitration by the parties should be conducted in Nigeria as the seat. In the case of The Noordwind (1987) All N.L.R. 54, the Supreme Court extensively considered the issue of connecting factors in relation to a failed contract that ought to have been performed in Nigeria and came to the conclusion that it would amount to absurdity to permit the case to be litigated in a foreign country when all the factors were in favour of it being litigated in Nigeria. Given this position, it is arguable that the rationale for the proposed statutory intervention that will designate Nigeria as the seat of arbitration can be considered in light of the principles on connecting factors as decided by the Supreme Court in the Noordwind. 

    However, it is noteworthy that the approach suggested above may raise concerns whether it is possible for the proposed National Arbitration Policy represented by statutory intervention, to compel parties in a dispute to select Nigeria as a seat of arbitration by compulsion, as it may conflict with the core arbitration principle of party autonomy i.e the choice of seat of arbitration is by consent of the parties. It is submitted that legislation can definitely be utilised in superseding or overriding established arbitration principles. This is because statutes can generally be enacted to override established legal principles in order to achieve certain results that are premised on public policy considerations. In this regard, one can take a cue from maritime law, whereby statute represented by the Nigerian Ports Authority Act (NPAA), s 54, was enacted to render a shipowner vicariously liable for the wrongful actions of a compulsory pilot, irrespective that there is no employer-employee relationship between the parties. This law is a clear supersession and suppression of the established common law principle that vicarious liability can only arise where such a relationship exists.

    Following the above, the proposed statutory intervention will be in order by serving as a protectionist law to ensure the growth and advancement of arbitration in Nigeria.

    ii. Bilateral Investment Treaties

    Nigeria currently has 30 Bilateral Investment Treaties signed with various foreign countries; however, only 15 of them are in force. All of these BITs explicitly afford various protection in cases of disputes and provide a right of recourse to international arbitration. The BITs with France, Germany, Korea, the Netherlands, and the United Kingdom provide for exclusive ICSID arbitration. All other BITs allow investors to pursue an arbitration claim through ICSID or ad hoc arbitration in accordance with the UNCITRAL rules or any other rules mutually agreed by the parties. It is pertinent to note that these seats of arbitration are all foreign seats of arbitration. Furthermore, it must be noted that Nigeria is bound by these provisions as the BITs have the force of law by virtue of being treaties as identified under Article 2 (1) (a) of the Vienna Convention on the Law of Treaties (VCLT), to which Nigeria is a party.

    There is an urgent need that these BITs and all other future BITS be reviewed and negotiated to include a dispute resolution provision encouraging Nigeria as the seat of arbitration. It is pertinent to note that some countries have already taken steps to advance their arbitration institutional framework by enacting national laws, that ensure that domestic arbitration is conducted in their countries as the seat of arbitration in respect of their BITs. For instance, South Africa has enacted its Protection of Investment Act (PIA) 2015, which has the effect of creating a framework for the resolution of investment disputes in South Africa. In this regard, PIA 2015, s 13 deals with investment disputes by shifting the resolution of such disputes from international arbitration to two domestic remedies. Under the domestic regime, an aggrieved investor may submit a request to the Department of Trade and Industry for a mediator to be appointed for the resolution of an investment dispute with the government. Alternatively, the investor may approach any competent court, independent tribunal or statutory body within South Africa for the resolution of such an investment dispute.

    Taking a cue from the South African law identified above, and given that investment treaty arbitration is statute driven, the relevant statutes governing investment arbitration in Nigeria i.e the Nigerian Investment Promotion Commission Act (Cap N117, Laws of the Federation of Nigeria 2004) can be reviewed to accommodate the National Arbitration policy. Specifically, section 26 of the NIPC Act, which provides that disputes between Nigeria and foreign investors shall be determined in accordance with the provisions in the BITs, which as earlier mentioned gives the investor the right of recourse to international arbitration. It is posited that such provisions on dispute resolution procedures should be amended to include a proviso that the seat of the arbitration must be Nigeria where the dispute arises between an investor and the Government of Nigeria.

    Also, it is recommended that the provisions of Arbitration and Conciliation Act (Cap A18, Laws of the Federation of Nigeria 2004) (“the ACA”) which defines international arbitration in section 57(2)(b)(i) and (d) to include an arbitration that has its place in a foreign country and where the parties agree that the arbitration should be treated as an international arbitration should be amended. Also, section 16 of the ACA which allows the arbitral

    tribunal to determine the place of arbitration should be amended. It may be preferable for the Act to provide that the venue or place of the arbitration must be Nigeria unless the circumstances require otherwise.

    Alternatively, in view of the fact that the adoption of this policy may require the amendment of a number of statutes, it may be expedient to enact a new statute on the National Arbitration Policy with a provision that the statute amends the relevant provisions of all other statutes on arbitration and dispute resolution in Nigeria.

     IV. The Nigerian Arbitration Covenant

    A National Arbitration Policy now appears to be a crucial step that must be taken for Nigeria’s arbitration development. It is noteworthy that Africa has already recognized the need to promote the active participation of African arbitrators in international arbitration. In this respect, the African Promise was devised by Dr. Emilia Onyema (SOAS University of London), Dr. Stuart Dutson (Simmons and Simmons LLP London), and Mr. Kamal Shah (Stephenson Harwood LLP London), as a means of securing the signature and commitment of interested and relevant stakeholders to the African agenda.

    In similar respect to the position above, there is a crucial need to secure the commitment of interested and relevant stakeholders in Nigeria to the National Arbitration Policy, in order for it to be a success. To this end, it is important that stakeholders should reflect their commitment to the enactment of the statute that will promote the Policy, by endorsing by signature the Nigerian Arbitration Covenant, which represents the resolve to advance arbitration in Nigeria.

    To this end, the Nigerian Arbitration Covenant states as follows:

    THE NIGERIAN ARBITRATION COVENANT

    We are persons professionally qualified to act as Arbitrators from reputable arbitral institutions in Nigeria with years of experience and are committed to improving the profile and representation of Nigerian Arbitrators in arbitral matters that are purely domestic. We acknowledge that there is a divide in the number of professionally qualified arbitrators in Nigeria and the number that are actually appointed to preside over a dispute. We also believe that this divide is a result of the appointment of foreign arbitrators to sit over matters that are purely domestic and also taking out such matters for resolution outside the country. We believe that there is a system which if adopted, would ensure that domestic disputes are arbitrated by Nigerian Arbitrators and in Nigeria as the seat of arbitration, thereby growing the Nigerian Arbitration practice.

    To achieve this, we propose a Nigerian Arbitration Covenant which seeks to improve arbitration practice in Nigeria by seeking support for the enactment of a statute that will ensure the arbitration of domestic disputes in Nigeria.

    The Nigerian Arbitration Covenant seeks to achieve the following objectives in purely domestic disputes;

    • To put a stop to arbitration flight to other countries by enacting a statute to promote this cause;
    • To mandate parties to have the seat and venue of arbitration in Nigeria;
    • To appoint Nigerians as arbitrators in such disputes;

    To achieve these objectives, we propose a National Policy on Arbitration where arbitration flight would be restricted to say that where a dispute which is domestic arises, to be submitted to arbitration, it is mandatory for its resolution to have its arbitral seat and venue in Nigeria. We also propose that for Nigerian participants to such proceeding, their appointment of an arbitrator be restricted to the pool of highly qualified Nigerian arbitrators with the expertise to handle the matter.

    This National policy will, if enacted, ensure the following;

    • The constitution of an arbitral tribunal, where a dispute is between Nigerians/a Nigerian and a foreigner, there would a mix of Nigerian arbitrators and foreign arbitrators;
    • Nigerian arbitrators are appointed by Nigerian parties in domestic disputes, thereby growing the level of expertise of Nigerian arbitrators
    • The arbitral seat and venue of domestic disputes would be Nigeria, thereby growing the Nigerian economy at large.
    • The Nigerian Arbitration Covenant is a positive step in taking back the Nigerian Arbitration practice from the hands of foreign arbitrators as it establishes a formidable plan in the form of; ‘The National Policy on Arbitration’ which if adopted would make for a better arbitration practice.

    V. Conclusion

    In conclusion, the proposed national arbitration policy should be seen as presenting an opportunity for Nigeria to devise legislative transformations that will position Nigeria as the seat of arbitration in respect of disputes emanating from Nigeria’s BITs and domestic private commercial transactions.

    To affix your signature to this arbitration covenant, click here

    Written By:

    Dr. Oluwole Akinyeye(Senior Associate) &  Ridwan Bello MCIArb(Associate)  & Ginika Ikechukwu (Trainee Associate) – (Arbitration and Dispute Resolution Practice Group)

     

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  • Dr. Olisa Agbakoba (SAN) Delivers a Paper at the Access Bank Risk Management and Compliance Retreat

    Dr. Olisa Agbakoba (SAN) Delivers a Paper at the Access Bank Risk Management and Compliance Retreat

    Our Senior Partner, Dr. Olisa Agbakoba (SAN) was a guest facilitator at the Forum on Non-performing Loans at the Access Bank Risk Management and Compliance Retreat which took place at the Access Bank Contact Center, Victoria Island, Lagos on Friday, January 17, 2020. He spoke on the topic “Loopholes in Banking Practices: Reducing the Incidence of Non-performing Loans”. Also in attendance were Babatunde Ogungbamila, Partner/Head of Dispute Resolution Practice Group and Victor Nwakasi, Partner/Head, Corporate and Business Strategy Group. OAL is a recognised industry leader in Debt Recovery and Insolvency practice.

  • The Interplay of Intellectual Property Rights and Sports: A Conduit of Commercial Opportunities For the Nigerian Sports Industry

    The Interplay of Intellectual Property Rights and Sports: A Conduit of Commercial Opportunities For the Nigerian Sports Industry

    Intellectual Property Rights and Sports: A Paper Presented by Beverley Agbakoba-Onyejianya, Sports & Entertainment Lawyer at the World Intellectual Property Organisation “Reach for Gold” Event Hosted by The Friends of the Creator Artistic Foundation – April 26, 2019, Lagos.

    Asides from Game of Thrones, I’m certain everyone here will agree with me that the Olympics, the Federation Internationale de Football (FIFA) World Cup, UEFA Champions League, and Premier League are the other activities that bind the world in a heartbeat, these popular sports events blur cultural, political and ethnic differences by promoting dialogue and dousing tensions. The excitement that comes with the spirit of competition in these sports events, is what makes sports such a highly enjoyable and popular activity and past time. I remember a time when sports were just for viewing pleasure, when our fathers and uncles assumed the jobs of off-site assistant coaches in the living room, shouting and yelling, almost as if they had telepathic skills through which they could instruct the players on who to pass the ball to or how to flank the competitors on the pitch. At present, the sports sector has evolved, beyond ordinary viewing pleasure, it has become a commercially viable sector, and contributes immensely to the economies of mature markets, yet emerging economies like Nigeria still grappling to realise the untapped potentials that lie in the sports industry.

    The incubation of ideas and its dissemination in varying forms within the sports industry has made sports a viable stimulant for growth and development in the sports economy and the common denominator that the success story of the sports economy is attributable to, is the permeation of intellectual property rights through avenues of Patents, Trademarks, Copyrights and Trade Secrets.

    The underlying feature of the Intellectual Property rights is hinged on the popular saying “ideas rule the world”, it is a mechanism put in place to reward creators/innovators for their ingenuity and also provides a platform for them to be able to reap the fruits of their labor.

    Now in order to demonstrate what the interplay of Intellectual Property rights and sports is, I will take us through an expository journey into the make-up of the intellectual property rights mechanism as earlier stated, that has made countries like the United Kingdom and the United States the talk of the town, starting with Patents.

    Patents may be defined as legal rights that confer on inventors of new and useful products and processes, the right to exclude others from the commercial exploitation of the invention. It confers legal protection and recognition on the outcome of inventive work in diverse areas useful to human existence and progress. Its very essence beckons; Imagine it, and it can be so.

    Take the inception of Nike for instance; a running coach named Bill Bowerman decided to take on the task to improve traction and shock absorption in training shoes. He began his experiment by using his wife’s waffle maker to mold rubber spikes on the soles and created a superior running shoe he named Waffle Trainer. The innovation revolutionized the sneaker industry and that man founded Nike alongside a student of his, Phil Knight, which today is a multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. As of date, Nike has obtained thousands of patents worldwide and now has a patent portfolio that rivals that of many leading companies across other industries.

    It is noteworthy to state that once a patent has been registered in Nigeria as well as the world over, it prevents others from taking advantage of the invention, in a manner that is not authorized by the patentee or permitted by law. In this way, a properly operated patent system provides a conducive environment for an inventor of a new and useful product to benefit from the intellectual effort exerted and also the investment of time and resources, free of the hindrance of copiers or imitators. Once the patent has been registered, the patentee has exclusive right to enjoy his or her invention until the expiration of the twentieth year from the date of filing of the patent application. (Section 7(2) of the Patents and Designs Act)

    In Nigeria today, our technological brilliance is exerted on financial solutions, with companies like Paystack and Flutterwave blazing the trail and that suggests one thing, that we are indeed lovers of money. However, in the sports industry, we are yet to blossom into industrialization and technological development, instead, we are comfortable beneficiaries of the inventions of the mature markets.

    Consequently, it is safe to say that Patent is the most underutilized and untapped area of intellectual property rights in Nigeria. Although I am optimistic and my optimism is rooted in the throng of tech-savvy generation we are breeding today, they have the penchant to change the narrative when it comes to innovation in the sports industry. However, we cannot get to that promised land if we don’t create an environment that encourages and incentivizes creators to bring their imaginations to life.

    The trail of patents in the sports industry in the world over has heralded technologies that help athletes jump higher, swim faster, cycle longer and hit a ball harder and farther, these pockets of innovations are all products of ideas conceived by forward-thinking individuals coupled with the platform afforded them by an enabling environment with robust intellectual property protection systems.

    Copyright is also another potent revenue generator for the sports economy, it maintains the vitality of sports by keeping fans interested and inspired. This arm of intellectual property rights protects the expression of an idea in a definite form and bestows on the creator or owner, the right to produce, reproduce, make replica copies, market, sell and adapt the work into several formats, to the exclusion of others except through assignment, testamentary disposition or the grant of a license. The areas of sports where copyright abounds are the literature contained in game-day programs sold to fans and supporters, the merchandise, the broadcasting and media rights, ticket sales, the software of computer and online games.

    The infringement of copyright is almost the order of the day in the Nigerian sports industry, with thousands of fake jerseys flooding the markets and digital piracy. It seems almost as if our system indulges the copiers to the detriment of the creators and it has harmed the society and dampened our creative capacity because many are discouraged to flourish in the face of the knowledge that creativity isn’t fully protected. The only way an economy can flourish and the public prospers is when governments recognize the value of placing a robust IP system at the core of their legislative, regulatory and judicial frameworks.  Although, we have these laws, however, we are lax in enforcement.

    We need to transcend from a government-run sports ministry to a more commercialized football industry because as long as government continues to ‘spoon-feed’ the football federation and professional clubs in Nigeria, it may be difficult to discover all the business potentials of the industry and that would ultimately stifle the exploitation of copyright in the sports industry by stakeholders.

    We also need to indulge in sports marketing by strategically promoting our domestic matches through various media campaigns and ticketing models which would eventually translate to increased gate takings. Consistent fans patronage and support will definitely pull higher shirt sponsorship bargains, TV rights, stadium signage advertisements, licensed merchandise deals, and players endorsements.

    Furthermore, trademark as an intellectual property right abounds in all the sectors that make up the sports sector, namely teams & leagues, sporting goods, broadcasting and apparel & sportswear. It is in the brand identity reposed in each brand participating in the sports industry or sports economy and provides protections for marks, symbols, logos, slogans, names and so on, that distinguishes the products (goods/services) of one business to another.

    Trademarks let customers recognize the products of a particular business, and they’re an essential part of branding. It is no gainsaying that strong branding increases prices, customer loyalty, revenue, and growth. For example, Nike’s swoosh symbol or Adidas’s three stripes make merchandise like shoes, shirts, and jackets more valuable because they guarantee quality. There are a lot of use for trademark protection in the world, chief of which are registering of nicknames by sports celebrities, catch-phrases, mascots and this goes to show that in Nigeria, we are merely scratching the surface. We need to build commercially potent brands that would compete transnationally.

    At a time, the legendary football club, Real Madrid signed a deal to promote Spain and Madrid as tourist destinations, what was seen in play with respect to this move was that Real Madrid leveraged on the goodwill the club had amassed over the years and projected Spain and Madrid to a potential audience of 300million people because of its worldwide fan base. Just imagine, with the cult followership Cristiano Ronaldo has, he should do a video where he promotes our jollof rice as the best he’s ever had, we would be vivid to the world and Ghanaians would have no choice than to throw in the towel. This instance typifies the opportunity of a domino effect in the trademark value creation. We all know Cristiano Ronaldo is a dominant player who has developed his own individual brand and that has opened the floodgates for business opportunities for him.

    In sports, the competition is ever so intense, that athletes and their coaches meticulously explore any competitive advantage they can achieve land that includes gathering proprietary information in the form of statistical analysis, scouting reports, dietary regimens, physiological metrics, and psychological assessment techniques. This is what is termed Trade Secret, it is the modus operandi of a business that it can’t divulge else it gets torpedoed in the business world. Sports gear often features secret new compounds and materials to allow athletes to perform better. Companies invest heavily in elaborate focus groups to find the right mix of features and designs to make their products more attractive and marketable. In Nigeria today, we haven’t fully blossomed to the level where we see trade secrets as properties worth protecting, I don’t even think we are conscious of the underlying essence of trade secrets, we just play the sports. Although trade secrets are not intellectual property rights in themselves, they involve practices through which a business seeks to gain an advantage over its competition.

    In the U.S Chamber International IP Index 2018, Nigeria ranks 42 out of 50 countries in the assessment of economies whose intellectual property systems provide a reliable basis for investment in the innovation and creativity lifecycle. The report opined that the enforcement environment in Nigeria is highly challenging and that the rates of physical counterfeiting and online piracy remains high and public awareness of the value of IP remains low.

    Although the Nigerian Copyright Commission (NCC) continues to be an active voice of the importance of protecting copyright and fighting piracy there is still a lot to be done to engrave the importance of intellectual property rights in the minds of the populace, starting from everyone seated here today. In 2017, the agency continued with its enforcement activities, including arrests, seizures, and antipiracy operations.

    In a bid to adopt international best practices of Intellectual Property Rights Protection cum Enforcement, Nigeria ratified the WIPO Internet Treaties in 2017. Nigeria first signed these treaties in 1997. The ratification of the WIPO Internet Treaties shows Nigeria’s commitment to upholding the highest standards of protection and enforcement of copyright and related rights. Nigeria is also a signatory to and has ratified the Patent Law Treaty. Nigeria is not a contracting party to the Singapore Treaty on the Law of Trademarks and has not concluded a major FTA post-TRIPS membership that includes substantial provisions on IP rights.

    In all, we have taken decisive steps but we need to commit to its implementation because at a time such as now, when oil, the nation’s principal source of foreign exchange earnings is facing a precarious future, the time to transform the nation from a traditional commodities-based and import-driven economy to a knowledge- economy exporting expertise, talents, value-added products and tech-savvy inventions is ripe. We need to invest in the youths by creating an environment where they can hone their skills and an enabling environment that will stimulate sports innovation thereby benefitting the innovators and the sports community at large.

  • Piracy and Armed Robbery in the Gulf of Guinea & the Suppression of Piracy & Other Maritime Offences Act (SUPMOA) 2019.

    Piracy and Armed Robbery in the Gulf of Guinea & the Suppression of Piracy & Other Maritime Offences Act (SUPMOA) 2019.

    The increasing rise in piracy in the Gulf of Guinea has become alarming. Until recently, the concern about piracy has been the Gulf of Eden operated by Somalia pirates; however, piracy has witnessed a drastic shift to the Gulf of Guinea. Armed robbery against ships and cargo theft has also risen uncontrollably within Nigerian territorial and internal waters. These activities pose a serious threat to national, regional and global security and economy.

     cargo theft within Nigerian watersEarlier this year, the Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Dakuku Peterside attended a major maritime security conference at the International Maritime Organization (IMO) Headquarters in London. The conference discussed the increasing high risk of piracy in the Gulf of Guinea with an emphasis on piracy off the coast of Nigeria. The Head of Security for BIMCO, Jakob Larsen, noted that Nigeria holds the key to resolving maritime offenses within the coast of Nigeria and this requires Nigeria to work with the international navy. On the part of Nigeria, Dr. Dakuku Peterside acknowledged that there is a high-security risk of piracy in the Gulf of Guinea but stated that NIMASA and the Nigerian Navy are doing their best to help curb the problem.

    As part of curbing the problem of piracy, armed robbery against ships and other Maritime offenses, the President assented to the piracy bill, sponsored by NIMASA titled; The Suppression of Piracy and Other Maritime Offences Act (SUPMOA) 2019. The Act gives effect to the United Nations Convention on the Law of the Sea (UNCLOS) 1982, the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA) 1988 and its Protocols.

    This article discusses the SUPMOA 2019, notes some of the pitfalls and offers some recommendations.

    PIRACY, ARMED ROBBERY AND CARGO THEFT IN THE GULF OF GUINEA VIS-À-VIS NIGERIA’S TERRITORIAL WATERS

    According to the International Maritime Bureau (IMB), 2019 Q3 report on piracy and armed robbery against ships covering January 1 – September 30, 2019, the Gulf of Guinea was reported to be the world’s most dangerous trade route and piracy hotspot in the world. The report noted that 119 incidents of piracy and armed robbery against ships occurred worldwide, with 95 ships boarded, 10 ships fired upon, 10 attempted attacks, and 4 ships hijacked. The Gulf of Guinea accounted for 43 of the actual attack and 10 attempted attacks, 86% of the crew taken hostage and 82% of crew kidnappings worldwide. The report further revealed that of the 9 ships fired upon worldwide, 8 were off the coast of Nigeria.

    Undisputedly, these statistics reflect that Nigeria is currently at the epicenter of piracy attacks in the Gulf of Guinea. This position is reinforced by the IMB Q3 report which shows that the Lagos seaport appears to have the highest number of incidents in the world so far in 2019, with 11 of the incidents reported occurring within Lagos port. Interestingly, the IMB Q3 report reveals that there was not a single incident of piracy in Somalia and in the Gulf of Eden from January 1 – September 30, 2019. This clearly shows that the tide of piracy has indeed shifted to the Gulf of Guinea in general and Nigeria in particular.

    Apart from piracy and armed robbery against ships, one other prevalent attack against ships within Nigerian waters is the theft of crude oil and other essential cargoes and properties.  The IMB Q3 report revealed several incidents of actual and attempted cargo theft within Nigeria waters. For instance; on March 24, 2019, two armed robbers boarded an anchored tanker at Lagos secured anchorage area and stole oil cargo using hose pipes. Prior to this, on January 7, 2019, two armed robbers boarded an anchored tanker during STS operations in Lagos, the hoses were connected to the ullage ports of the forward cargo tanks to steal cargo, but an alarm was raised and the robbers escaped but on July 25, 2019, ten armed robbers boarded a berthed ship during cargo operations and stole the ship’s stores from the paint locker. On August 14, 2019, two robbers boarded a berthed Offshore Supply Vessel at Onne Port and stole the ship’s properties from the pump room. Some of the key driving factors behind armed robbery against ships and cargo theft within Nigeria waters include weak law enforcement, corruption, poverty, and an unregulated oil market. Due to the high risk associated with Nigerian territorial waters, insurance providers now require ships coming to Nigeria to obtain extra cover/security. Unfortunately, this is an added significant primary cost to ship owners and charterers which makes Nigerian ports expensive and unattractive.

    THE SUPPRESSION OF PIRACY AND OTHER MARITIME OFFICES ACT (SUPMOA) 2019

    The Suppression of Piracy and Other Maritime Offices Act (SUPMOA) 2019 was enacted at a time when the coast of Nigeria is being described as the new haven for piracy in the world, the “Somalia” of the present day by the international maritime community. The Act is timeous, innovative and far-reaching.  

    Purpose of the Act

    The SUPMOA 2019 seeks to prevent and suppress piracy, armed robbery and other unlawful acts against a ship, aircraft, and other maritime craft, howsoever propelled, including fixed or floating platform.

    Application of the Act

    The act applies to any person on board a ship or aircraft navigating in, on or above the territorial and internal waters of Nigeria or on above international waters; or fixed or floating platform in, on or above the territorial and internal waters of Nigeria or on or above international waters.

    It also includes circumstances where the offender or alleged offender is found outside Nigeria but is in the territory of a State who is a party to other International Maritime Conventions.

    Piracy Defined

    Section 3 of the SUPMOA 2019 provides the definition of piracy and practically adopted the definition provided under Article 101 of the United Nations Convention on the Law of the Sea (UNCLOS) 1982.  It provides that piracy consists of any;

    (a)    Illegal act of violence, act of detention, or any act of depredation, committed for private ends by the crew or the passengers of a private ship or a private aircraft and directed:

         (i) In International Waters against another ship or aircraft, or against a person or property on board such ship or aircraft;

      (ii)  Against a ship, aircraft, persons or property in a place outside the jurisdiction of any State;

    (b)  Act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate ship or aircraft; and

    (c)  Act of inciting or of intentionally facilitating an act described in subparagraph (a) or (b)

    Flowing from the definition of piracy, it is evident that any acts of violence committed against a ship within the territorial or internal waters of Nigeria will not be considered piracy. It is pertinent to distinguish between piracy from armed robbery against ships. Armed robbery against ships is often misinterpreted and misconstrued as piracy, these two criminal concepts are categorized differently. While the crime of piracy takes place on the High seas (international waters) and must fulfill some essential elements, the crime of armed robbery against ships, on the other hand, takes place within the territorial and internal waters of a Coastal State i.e Nigeria. The offense of piracy is provided under Section 3 of SUPMOA, while the offense of armed robbery against ships is covered under section 4.

    Section 4 provides that a maritime offense includes armed robbery at sea and any other act, other than piracy which is committed by any person or group of persons where that person or group of persons or their sponsors unlawfully within the Nigerian Maritime Zone or jurisdiction commit the following acts or offenses such as Hijacking of a ship, destruction of a ship, theft of cargoes on a ship, demanding ransom, receiving proceeds from the offenses of piracy, permitting pollution of water from the ship, threat to life whether or not to solicit for ransom, providing false claim of a piracy and other maritime offenses under the Act.

    Prosecution

    One aspect of the act that is commendable is the fact that it empowered NIMASA to prosecute offenses under SUPMOA albeit with the consent of the Attorney General. Section 5 (1) provides that the Attorney General; any law officer so designated by the Attorney General; or the Nigerian Maritime Administration and Safety Agency (NIMASA) with the Attorney General’s consent are empowered to prosecute offenses under SUPMOA.

    Jurisdiction

    As with other Maritime related offenses, Section 5(2) of the Act gives exclusive jurisdiction to the Federal High Court to hear and determine any matter under the Act irrespective of other elements of the crime that may appear to be non-maritime related contained in the offense.

    Punishment

    Section 12 provides that any person who commits an act of piracy, armed robbery at sea or any other unlawful act under SUPMOA, whether or not the person was armed with a firearm or other weapon during the commission of the offense shall be liable on conviction to life imprisonment and payment of N50, 000,000.00 (Fifty Million Naira) and in addition to restitution to the owner.

    SUPMOA 2019 PITFALLS

    The Piracy and Other Maritime Offences Fund

    Section 19 of the Act provides that a fund known as the Piracy and Other Maritime Offences Fund (POMO Fund) shall be created by the Nigerian Maritime and Safety Agency (NIMASA). The POMO fund is to be used for the implementation of the Act and the Fund shall be credited from money approved by the Federal Government for the implementation of the Act; gifts, financial contributions by beneficiaries of the services of the maritime enforcement agencies; 35% of the proceeds of sales of any property seized and anything forfeited under the Act including instruments used in the commission of crimes and criminal activity under the Act; the contribution from the maritime fund under NIMASA Act; and contribution from the Cabotage Vessel Financing Fund (CVFF) under the Cabotage Act 2003. Furthermore, the POMO fund is to be managed by NIMASA.

    It is hoped that the POMO fund will not suffer the same fate as the undisbursed Cabotage Vessel Financing Fund (CVFF) created under the Cabotage Act. Suffice to say that the POMO fund is to be disbursed judiciously for the successful implementation of the SUPMOA 2019.

    Piracy Definition

    With the full adaptation of the definition of piracy under Article 101 of UNCLOS, the challenges associated with that definition were also adopted.  For instance, section 4 of SUPMOA provides that for piracy to be established, the act must be committed for private ends or for personal gain. However, any acts that are politically motivated do not fall within the definition of piracy. This principle is flawed because, in Nigerian political climate, political rivals could go as far as committing a criminal act of violence against a ship or crewmen, unfortunately, it will not amount to piracy.

    Failure to define a Ship

    Another pitfall observed, is the failure of the Act to expressly define a ship or what constitutes a ship. A similar lacuna was also created in the Cabotage Act 2003. The failure of the Cabotage Act to expressly describe an oil rig as a ship has been used by foreign shipowners as an avenue for contesting the statutory powers of NIMASA to levy its statutory fees on oil rigs employed by these shipowners in their drilling operations until the Court finally interpreted the act to include oil rigs that are propelled.  The issue of what constitutes a ship could have easily been averted if the definition given by the Act was all-encompassing and sufficient to cover all ships like the Jones Act 1929 did. It is hoped that this lacuna will not affect the effective prosecution of offenses under the Act.

    Receiving proceeds from the crime under the Act

    Section 4(g) of the SUPMOA 2019 provides that it is an offense to receive proceeds from the crime of piracy, armed robbery against ships and other maritime offenses at sea. The Act expressly lumped individuals receiving proceeds from the crimes under the Act and Corporate entities such as banks and other financial institutions.  There is a need to revisit this section because the proceeds of crimes including maritime crimes usually find its way to banks and other financial institutions without the banks knowing the actual source of the funds.  With the enactment of this Act, banks and other financial institutions are advised to upgrade their KYC tools and procedure.

    Punishment

    The Act under section 12 (1) provides that any person who commits an act of piracy, armed robbery at sea or any other unlawful act under the Act, whether or not the person was armed with a firearm or other weapon during the commission of the offense shall be liable on conviction to life imprisonment and a fine of N50, 000,000.00 (Fifty Million Naira) and restitution. However, section 12 (2) also provides that if during the commission of an armed robbery at sea, the offender was in possession of or had under his control any firearm, explosive or BRCN weapon, the offender will be liable on conviction to at least 15 years imprisonment.  There is a need to revisit the punishment section because of the disparity and ambiguity.

    RECOMMENDATION

    The aim of SUPMOA 2019 is to prevent and suppress piracy, armed robbery and other unlawful act against ships, aircraft, and other maritime craft. But these may be difficult to achieve if the necessary tools are not put in place for the effective implementation of the Act. The following tools are recommended;

    1. Establishment of a National Coast Guard

    NIMASA has been empowered under the Act to enforce the SUPMOA 2019. However, NIMASA being a civil entity is not fully equipped to effectively carry out the enforcement of SUPMOA 2019. For this revolutionary Act to be effective and cure the menace of sea crimes, it, therefore, calls for the establishment of a national Coast Guard empowered by law according to international maritime best practices. The role of the national Coast Guard is to safeguard the territorial and internal waters of a Coastal State while the Navy patrols the High Seas and protects the Coastal State against external aggression. The time to establish a national Coast guard is no.

         2. Funding

    The Nigerian navy needs to be fully supported and funded and there should be a collaboration between the Nigerian navy and international navy in safeguarding the high seas around the coast of Nigeria and the Gulf of Guinea.

         3. Creating Maritime Division Court

    Maritime matters are of specialized knowledge as such, there is an urgent need to create a specialized divisional court to handle maritime matters presided over by trained maritime judges for the speedy dispensation of offenses under the Act. With NIMASA’s powers to prosecute albeit, with the consent of the Attorney General, offenses under the Act will be prosecuted swiftly, hence the need to have a maritime court readily available to dispense justice.

    CONCLUSION

    The Suppression of Piracy and Other Maritime Offences Acts (SUPMOA) 2019 is a much-needed intervention in the Nigerian maritime sector and for the security of Nigerian territorial and internal waters. With the Act criminalizing the offenses of piracy, armed robbery against ships, cargo theft and other related maritime offenses, Nigeria will be taken seriously in the international maritime community. Nigeria has taken the necessary steps not only to improve security within her territorial waters, but this Act will also help to curb the menace at seas internationally.

    Written By: Caroline Tokulah-Oshoma (Mrs), Associate Maritime Practice Group at Olisa Agbakoba Legal 

  • Dr.Olisa Agbakoba (SAN) Featured in Who is Who Legal 2019

    Dr.Olisa Agbakoba (SAN) Featured in Who is Who Legal 2019

    Our Senior Partner, Dr Olisa Agbakoba (SAN) was recently featured in Who is Who Legal 2019 as a National expert in Arbitration.

    He is a seasoned arbitrator and the brain behind the first law firm annexed arbitration/mediation centre in Lagos (Nigeria), the Olisa Agbakoba Legal (OAL) Arbitration & Mediation Centre. He has showcased his brilliance as a counsel and an arbitrator in major national and cross-border disputes relating to aviation (airport terminal concessions) vessel charter, maritime collision, oil wells and rigs, telecommunications, housing development and construction. He sat as an arbitrator on the multimillion-dollar maritime arbitration tribunal in London involving a secured credit transaction with an FSPO.

    Dr Agbakoba participated in the arbitration and mediation proceedings in a multimillion-dollar case involving a multinational oil company, and in the claim against a foreign-owned vessel, for the non-delivery of petroleum products financed by a major commercial bank in Nigeria. The claim was based on a bill of lading endorsed to the Nigerian bank.

    He designed the ADR mechanism and rules for asset management and recovery for Asset Management Corporation of Nigeria (AMCON).

    He is a fellow of the Chartered Institute of Arbitrators and the second vice president of the institute. He is also the legal adviser to the Institute of Chartered Mediators and Conciliators (ICMC) and a life member of the Body of Benchers.