A discretion too far

Author: | Published: 18 Oct 2018
Email a friend

Please enter a maximum of 5 recipients. Use ; to separate more than one email address.

www.uubo.org

The various tiers of government in Nigeria (federal, state and local) often enter into contractual arrangements with third parties, usually for public procurement, construction and infrastructure developments. Both the federal government of Nigeria (FGN) and state governments regularly seek and obtain loans from local and foreign lenders to undertake projects. However, these contractual relationships sometimes go awry with the result that the FGN and/or its ministries, departments and agencies (MDAs) are on the receiving end of unfavourable monetary judgments or arbitral awards.

Enforcing a monetary judgment or arbitral award against any MDA in Nigeria can prove challenging. The legal requirement for a judgment creditor is to obtain consent or fiat from the appropriate attorney general (ie the attorney general of the Federation or of a state) where the money liable to be attached by a garnishee proceeding is in the custody or under the control of a public officer in their official capacity.

This article discusses the challenges associated with attaching funds under the control or custody of a public officer.

Served with a garnish

The key legislation that regulates the procedure for enforcing judgments under the Nigerian legal system consists of the Sheriffs and Civil Process Act, Cap. S6 Laws of the Federation 2004 (SCPA), the SCPA's Judgment Enforcement Rules and the Nigerian High Courts' Civil Procedure Rules.

A monetary judgment can be enforced using garnishee proceedings, a writ of sequestration, a writ of fieri facias, an order of committal or judgment summons.

The most frequently used (and perhaps the most effective) method of enforcing a monetary judgment is the garnishee proceeding: a judicial process by which a judgment creditor applies to the court to order a third party that is indebted to the judgment debtor to pay to them (the judgment creditor) a sum of money belonging to the judgment debtor in satisfaction of a judgment debt.


Attorney generals tend to use the consent requirement to block the execution of monetary judgments against the government


Under section 83 of the SCPA, a judgment creditor may apply to the court by an ex parte motion seeking an order of interim attachment, known as a garnishee order nisi, of the judgment debtor's funds in the hands of any third parties (garnishees).

Typically, a garnishee order nisi will require the garnishee to, within a specified period, show cause as to why the order nisi should not be made absolute (final) against the garnishee. In practice, the garnishee will file an affidavit indicating whether or not they have in their custody money belonging to the judgment debtor. For banks and other financial institutions, the affidavit would also disclose the bank account(s) of the judgment debtor (if any) and the credit balance(s) on those account(s) and whether or not there is any third party interest or claim to the account(s).

Where the garnishee discloses that they have funds belonging to the judgment debtor, the court would, in the absence of any third-party claim to the funds, make a final order (known as garnishee order absolute) commanding the garnishee to pay over to the judgment creditor the judgment debtor's funds in their custody, or so much of such funds as will be enough to satisfy the judgment debt.

What is required of a garnishee is to make the required disclosure (ie whether or not they have funds belonging to the judgment debtor and if there is any reason why the funds should not be paid over to the judgment creditor). The law does not allow a garnishee to assume the role of a knight errant in the character of Don Quixote to fight the judgment debtor's proxy war by trying to protect the funds of the judgment debtor in his custody or challenging the garnishee proceedings (see the 2017 court decision in Guaranty Trust Bank Plc v Innoson Nigeria Limited). In the case of Central Bank of Nigeria v Interstellar Communications Ltd and Ors, the Supreme Court held that the role of a garnishee in any garnishee proceeding is limited and that it is not envisaged that after a judgment creditor has gone through the rigours to establish his rights through the legal system, he would be engaged in another bout of litigation by the garnishee.

Section 84: attorney general consent

Section 84 (1) of the SCPA stipulates that where the funds sought to be attached in a garnishee proceeding are in the custody or control of a public officer in his official capacity, the judgment creditor must seek and obtain the consent of either the attorney general of the Federation or State (as the case may be), before the court can grant a garnishee order nisi. Under section 84(3) an appropriate officer means the attorney general of the Federation or that of a state, depending on whether the money to be attached is in the custody of a public officer in the public service of the Federation or that of a state.

Section 18 of the Interpretation Act defines a public officer as a member of the public service of the Federation, within the meaning of the Constitution of the Federal Republic of Nigeria 1999, or the public service of a state.

In other words, the courts have been deprived of the jurisdiction to make a garnishee order nisi attaching funds in the custody or under the control of a public officer, where the consent of the appropriate attorney general has not been obtained. In the 2004 case Government of Akwa Ibom State v Powercom Nigeria Limited, the Court of Appeal held that, obtaining a fiat from the attorney general is a condition precedent which must be complied with and that the failure of the judgment creditor in that case to obtain the necessary fiat meant that the court did not have the jurisdiction to entertain the action.

Rationale for the consent requirement

It would appear that the rationale behind the requirement of the consent of the attorney general before a garnishee order nisi can be made against funds in the custody of a public officer is to ensure that funds that have been earmarked for a specific public purpose are not used to pay a judgment debt.

In Christopher Onjewu v Kogi State Ministry of Commerce & Industry (2003), the Court of Appeal explained that the rationale behind the consent of the attorney general under section 84 of the SCPA is 'to ensure that moneys that have been voted by the House of Assembly of a State for a specific purpose in the Appropriation Bill presented to that House and approved in the Budget for the year of appropriation does not end up being the subject of execution for other unapproved purposes'. This principle was recently restated by the Court of Appeal in the Federal Government of Nigeria v Interstellar Communications Limited (2015).

In practice, however, the attorney generals of the various states of the Federation as well as the attorney general of the Federation tend to use the consent requirement prescribed in section 84 of the SCPA to block the execution of monetary judgments against the government or any of its MDAs.

As a result, the consent provision in section 84 of the SCPA is widely perceived as a clog in the wheel of justice because attorney generals at all levels tend to deny requests to attach funds in the custody or under the control of public officers. There have been several attempts to invalidate section 84 of the SCPA on the grounds that it is unconstitutional. However, those attempts were unsuccessful, as the courts have consistently upheld the constitutionality of section 84 of the SCPA.

When is consent not required?

Nigerian courts have evolved three exceptions to the requirement for attorney general consent before funds in the custody of or under the control of a public officer can be attached through judicial decisions:

  • where the attorney general whose consent is required is himself/herself the judgment debtor and has been sued in that capacity;
  • where the funds sought to be attached are in a bank; or
  • where implied consent arises from part payment of the judgment debt by the government or attorney general who were being sued as judgment debtors.

Suing an attorney general

In Central Bank of Nigeria v Interstellar Communications Limited & Ors (2017), Interstellar Communications and Obi Barth Thompson obtained a judgment against Nigerian Telecommunications (NITEL, the judgment creditors) for breach of contract. NITEL failed to pay the judgment debt and, as of 2008, the judgment debt stood at NGN23 billion ($64 million approximately) and $48 million, respectively. Following the report of an inter-ministerial committee that was set up by the FGN to negotiate an amicable settlement of the matter, the FGN and the federal attorney general then made an offer to the judgment creditors to pay the sum of NGN12 billion in full and final settlement of the entire judgment sum. This offer was accepted by the judgment creditors. Terms of settlement were drawn up and made a consent judgment. Although the parties to the consent judgment remained the judgment creditors, the consent judgment recorded the agreement of the FGN and the federal attorney general to step into the shoes of NITEL and pay the agreed settlement sum to the judgment creditors on behalf of NITEL.

The FGN and the attorney general then commenced payment of the settlement sum and having paid the sum of NGN2.7 billion, they were unable to make further payments. Consequently, the judgment creditors commenced garnishee proceedings, this time against the Central Bank of Nigeria (CBN), the FGN and the federal attorney general as judgment debtors. The CBN, the FGN and attorney general raised a preliminary objection to challenge the proceedings on the grounds that the consent of the federal attorney general was not obtained pursuant to section 84 of the SCPA but the trial court dismissed the objection and made the garnishee order absolute. The CBN was aggrieved by the decision and lodged an appeal in the Court of Appeal, which dismissed the appeal. The CBN further appealed to the Supreme Court. The Supreme Court, in its decision, affirmed the judgment of the Court of Appeal and held that for section 84 of the SCPA to apply, the attorney general must be a neutral/nominal party to the transactions and the proceedings giving rise to the garnishee proceedings and that their consent will not be required where they are the judgment debtor themselves.

Funds in commercial banks exempted

The courts have also held that the consent of the attorney general is not required to attach funds deposited with commercial banks because a bank does not qualify as a public officer, as defined in section 318(1) of the Constitution. In Purification Techniques Nigeria Limited v attorney general of Lagos State (2014) the Court of Appeal held that there is no basis for treating government bank accounts differently from bank accounts of any other juristic personality or customers. The Court further held that given the nature of the relationship between a banker and a customer and the contract that exists between them, the customer has neither the custody nor the control of monies standing to his credit in an account with the banker and that what the customer possesses, is a contractual right to demand repayment of such monies. The Court concluded that monies in the hands of a garnishee banker are not in the custody or under the control of the judgment debtor customer. Such monies remain the property in the custody and control of the banker.

More recently, in Central Bank of Nigeria v. Interstellar Communications (2017), the Supreme Court of Nigeria affirmed that monies in the hands of a banker can be attached without the consent of the attorney general. Before the decision of the Supreme Court in the Interstellar case, it was not clear whether the CBN came within the definition of a public officer and or whether the consent of the attorney general was required before funds deposited with it can be attached due to conflicting decisions by the Court of Appeal on the matter. In Central Bank of Nigeria v Shipping Company Sara, and Central Bank of Nigeria v Hydro Air Pty Limited (2015 and 2014, respectively) the Court held that the CBN is a public officer for the purposes of garnishee proceedings and that the consent of the attorney general is a condition precedent to attachment of any funds deposited with the CBN. On the other hand, in Central Bank of Nigeria v Njamenze and FGN. v Interstellar Communications Limited (2015) the same Court of Appeal decided that the CBN was not a public officer for purposes of garnishee proceedings and that the consent of the attorney general was not a condition precedent to attaching monies standing to the credit of the government or any of its agencies in the custody of the CBN.

However, the Interstellar case went on further appeal to the Supreme Court and in a decision that was handed down on December 15 2017, the Supreme Court held that the CBN acts as a banker to the FGN with respect to government funds in its custody and that the relationship between the CBN and the government in such a circumstance is that of banker and customer relationship; that the CBN is not a public officer in that context and the consent of the attorney general under section 84 of the SCPA was not required before the court could make a garnishee order nisi attaching funds standing to the credit of the FGN in the custody of the CBN.

Consent implied by conduct

One of the reasons why the Supreme Court held that the consent of the attorney general was not required in the Interstellar case was because the FGN and the attorney general had conceded that the judgment creditors were to be paid the sum of NGN12 billion in full and final payment of the judgment debt and had in fact made part-payment of the agreed sum. Based on these facts the Court held that it would be improper, in the circumstances, to allow the FGN and the attorney general to renege on their commitment to the judgment debtor to pay the agreed lesser sum in full and final settlement of the judgment sum.

It would appear from the Supreme Court's judgment that in appropriate circumstances, the consent of the attorney general could be implied from the conduct of the Government or the attorney general in the matter. Such circumstances would include where a government or its attorney general has been involved in negotiating settlement of the judgment debt or, as in the Interstellar case, even made part-payment of the judgment debt.

A call for repeal of section 84

In practice, the requirement for consent from the Federal or State attorney general before the attachment of funds in the custody or under the control of a public officer in his official capacity poses a great challenge to the enforcement of a judgment of court against the Government and its agencies in Nigeria.

The consent requirement subjects the enforcement of the judgment of a court of competent jurisdiction to the whims and caprices of the attorney general, who is a political appointee. As indicated above, the rationale for attorney general consent appears to be to ensure that government is aware of the judgment being enforced and to avoid a situation where monies earmarked for a specific public purpose or project are not attached to pay judgment debts without the knowledge of the attorney general. This being the case, what one would expect from an attorney general whose consent has been requested is that he/she should advise the judgment debtor after liaising with the relevant government departments, such as the Ministry of Finance and the Office of the Accountant General, whether or not funds are available to satisfy the judgment debt. As the chief law officer of the State or the Federation, as the case may be, the attorney general should examine the judgment to confirm that it is genuine and that there is no appeal or motion for stay of its execution that is pending in any court.

A situation where some attorney generals simply turn down an application for their consent or, as often happens, do not respond to a request for consent pursuant to section 84 of the SPCA, leaves much to be desired and amounts to an abuse of power. That attitude portrays the government in a bad light and gives the impression that the government does not wish to comply with the judgments and orders of courts of competent jurisdiction, particularly where the judgment in question is not being challenged on appeal. As was held in the case of Jallo v Military Governor of Kano State (1991):

'It ought to be the duty of the attorney general, Federal or State to consult quickly with the Minister/Commissioner of Finance or Budget, to provide funds to satisfy judgment debts lawfully obtained against the State.'

The consent requirement under section 84 of the SCPA and the manner in which the attorney generals exercise their powers under that section could send the wrong signal to potential foreign investors who would otherwise want to enter into transactions with the government or any of their agencies.

We recommend the repeal of section 84 of the SCPA as well as similar provisions contained in the State Proceedings Laws of some of the States of the Federation. This would enable judgment creditors to freely reap the fruits of their judgments in circumstances where there is no appeal or motion for stay of execution of the judgment that is sought to be enforced. The policy that underlies section 84 of the SCPA must be balanced against the countervailing policy that requires respect for judgments of courts of competent jurisdiction.

About the author
 

Uzoma Azikiwe
Partner, Udo Udoma & Belo-Osagie

Lagos, Nigeria
T: +234 1 4622307-10
E: Uzoma.azikiwe@uubo.org
W: www.uubo.org

Uzoma Azikiwe is a partner and the head of the firm's dispute resolution practice. He provides advice on maritime, aviation, employment and energy matters, and specialises in advising multinationals on oil and gas law, environmental matters, the provision, manning and maintenance of vessels, cabotage issues, telecommunications, construction and infrastructure, administrative and constitutional law.

He trained as an international commercial arbitrator with several Nigerian and international arbitration organisations, including the ICC Institute of World Business Law, the Chartered Institute of Arbitrators in the UK, Chartered Institute of Arbitration (Nigeria), and the Chartered Institute of Mediation and Conciliation. He obtained a Diploma in International Commercial Arbitration at St Anne's College, Oxford, UK, and has benefitted from PIDA training in International Commercial Arbitration, PIDA training in International Commercial Contracts and training by the Chartered Institute of Taxation of Nigeria.

His articles have been published in reputable international journals, such as The European, Middle Eastern and African Arbitration Review, The Middle Eastern and African Arbitration Review, IFLR Dispute Resolution Guide, Chambers International Arbitration Country Practice Guide etc.


About the author
 

Festus Onyia
Partner, Udo Udoma & Belo-Osagie

Lagos, Nigeria
T: +234 1 4622307-10
E: Festus.onyia@uubo.org
W: www.uubo.org

Festus Onyia (FCArb) is a partner in the firm's dispute resolution practice and specialises in civil, corporate and commercial litigation, arbitration and alternative dispute resolution. His other practice areas include labour law, employment and industrial relations law and tax litigation.

He has attended several seminars, conferences and training sessions across his core practice areas and has trained as an international commercial arbitrator with several Nigerian and international arbitration institutions, including the International Chamber of Commerce (ICC) in Paris, where he attended the Advanced PIDA Training in International Commercial Arbitration.

He is a member of the International Task Force appointed by the ICC Commission on Arbitration and ADR on the Revision of the ICC rules as appointing authority in UNCITRAL and other Ad Hoc proceedings.

His articles have been published in multiple issues of reputable international journals such as: The European, Middle Eastern and African Arbitration Review; The Middle Eastern and African Arbitration Review; IFLR Dispute Resolution Guide; Chambers International Arbitration Country Practice Guide and Dealmakers Africa.