Issue 4 winter 2013

LAW

Digest Africa’s Premier Law Journal

Issue 4

Protecting Africa’s Intangible Cultural Heritage Using IPR: Prospects, Perils, and Problems The effect of fraud on arbitration

Winter 2013

Fundamental Human Rights Enforcement Procedure in Nigeria: An Overview Looking behind the corporate smoke-screen. A consideration of Prest –v- Petrodel Justiciability of Chapter II of Nigeria’s 1999 Constitution is the key to governmental accountability

Tribute to Nelson Mandela

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I N M E M O RY

NELSON MANDELA 1918-2013

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Contents

ISSN 2053-3209

PUBLISHER

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EDITOR Seyi Clement editor@nglawdigest.com

DEPUTY EDITOR

EDITORIAL BOARD

Hon Justice S.M.A Belgore, CON, GCON, FNIALS, LLD(Hon) (Former Chief Justice of Nigeria).

Kemi Pinheiro, SAN - Senior Lulu Sianga lsianga@augustineclement.com Partner, Pinheiro & Company.

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Professor Dakas CJ Dakas Ph.D, SAN, Ben Nwabueze Distinguished Professor of Law, Director of Research, NIALS. Dr. Uche Ewelukwa Ofodile LL.M (London, Harvard) S.JD. (Harvard), Professor of Law, University of Arkansas School of Law. Dr Adetokunbo Derek Obadina B.A. (Hons)(Sussex); LL.M (London) Ph.D (Wales), (Solicitor, England & Nigeria), Dean Faculty of Law, Lagos State University.

Dr. Edwin Egede LLB (Hons), BL, LLM, PhD, Senior Lecturer, Cardiff University.

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LEGAL ADVISORS

36 PROTECTING AFRICA’S INTANGIBLE CULTURAL HERITAGE USING IPR: PROSPECTS, PERILS, AND PROBLEMS Indigenous groups in Africa are losing control of their own intangible cultural heritage, from the Maasai in East Africa to the Zulus in South, from the Tuaregs in North Africa to the Edos in the West. We look at the issue of unauthorised commercialisation of Africa’s intangible cultural heritage by companies across the globe and consider how indigenous groups in Africa can begin to protect and control the exploitation of their intangible culture heritage. We look at intangible culture heritage which are most at risk of exploitation and provide examples of best practices across the globe for the protection of intangible cultural heritage.

5. From the Editor 6. Case Review and legal development 26. Tribute to Nelson Mandela PRACTICE AND PROCEDURE 14. Fundamental Human Rights Enforcement Procedure in Nigeria: An Overview.

CONSTITUTIONAL LAW 33. Justiciability of Chapter II of the 1999 Constitutionis the key to governmental accountability.

BUSINESS DEVELOPMENT 48. Gearing up for global opportunities and competition.

LITIGATION 20. Looking behind the corporate ARBITRATION smoke-screen. A consideration 28. The effect of fraud on of Prest –v- Petrodel arbitration.

FROM THE EDITOR

Dear Colleagues, It was Harold Wilson who said that the thing politicians feared more than most are events. This is also true of editors. I had just finished this column and was set to eulogise the successful International Litigation and Asset Recovery Forum held on 5th November 2013 in Lagos. I was going to congratulate the team and our readers on the 1st anniversary of the journal and to tell you about the illustrious lawyer to be profiled in this issue. I was set to wax lyrical over the appointment of Hon Justice Alfa Belgore (Former Chief Justice of Nigeria) to our Editorial Board, but then I woke on 5th December 2013 to an event which puts all my self-congratulations into insignificance. The Great One has gone to sleep forever! Whilst not unexpected, still I was filled with a sense of loss.

Whilst I have been aware of the name Nelson Mandela since my secondary school days, the name didn’t mean much to me then, (apartheid we knew and campaigned against, thanks largely to the Muritala/Obasanjo Government and the active student unions in Nigeria in the 1970s and 80’s). It was the news of his release in 1990 that began my road to Damascus. The hullabaloo which occasioned the event, even in the UK, made me stop and think. Who is this man that has caused the world to stop and take notice? I have always guarded my heart against the so called African freedom fighters.

The African topography is littered with self-serving so called freedom fighters. But I felt there was something different about this one though from his first speech following his release. I set about reading everything that I could lay my hands on about Nelson Mandela. Slowly but surely I came to realise that I was in the presence of greatness.

In 1996, the Great One visited Brixton, London and I was one of the thousands who made the pilgrimage to see him at the Brixton Recreation Centre on Brixton Station Road. All roads to Brixton were choked with others trying to make the same pilgrimage. All I could see from the Oval tube station was a sea of heads, inching towards Brixton, at snail speed some carrying banners declaring their love for the Great One. It had a carnival feel.

As I got closer to Brixton Station Road, my knees felt weak and heavy. My mouth was dry, my palms sweaty.

I was nervous and excited at the same time. All I could hear was the sound of my heart beating hard against my chest. I was grateful for the sea of people whose sheer density probably propped me up. I was carried toward my destination by the tide of people, white, black, brown, all races, and creeds accounted for. Half way down Brixton Station Road, just a few more inches to my destination, the tide which had been carrying me all the way from the beginning of Brixton Station Road stopped; there was no more room to move. We hit a human wall, which couldn’t give way, even if it wanted to. I never made it to the Centre, never saw the Great One, but I was neither sad nor disappointed. I was glad that I made the journey, glad to share the moment with my fellow pilgrims. I walked back home feeling 10ft tall. I was proud to be an African. My faith was restored in the continent’s ability to produce great leaders, I was a confirmed Madiban.

As I watched the BBC’s admirable coverage of his funeral, my eyes welled up with tears. Strange though, these were not tears of sadness, but tears of joy, joy that my life was graced by the Great One, joy that my generation has been enriched by his presence, joy that my faith in the potential of Africa to produce leaders worthy of the title has been restored.

I consider myself privileged to live in this time, to have shared the earth with him, to have known him. As part our tribute to the Great One, I have produced a few of his quotes which I found to contain guiding principles for our generation.

Thank you Madiba.

Goodnight and sleep well.

Seyi Clement Publisher/Editor

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Case Review and Legal Development From the Research Desk

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United Kingdom

Proceeds of Crime Priority of Charges Marshalling Rule Forfeiture Szepietowski (nee Seery) (Appellant) v The National Crime Agency (formerly the Serious Organised Crime Agency) (Respondent) [2013] UKSC 65.

On appeal from [2011] EWCA Civ 856 JUSTICES: Lord Neuberger (President), Lord Sumption, Lord Reed, Lord Carnwath and Lord Hughes FACTUAL BACKGROUND In 2005, the Assets Recovery Agency (“ARA”) obtained an interim receiving order over certain properties acquired

by Mrs Szepietowski’s husband with money allegedly obtained through drug trafficking, mortgage fraud and concealment from the Revenue.

In November 2006, the ARA began civil proceedings against Mr and Mrs Szepietowski (“the Szepietowskis”), seeking to confiscate 20 properties on the basis that they constituted recoverable property within section 266 of the Proceeds of Crime Act 2002 (“the 2002 Act”).

These properties included Ashford House (the Szepietowskis’ home), two properties known as “Thames Street”, two properties known as “Church Street”, and two properties known as “Claygate”. These properties were all registered in the name of Mrs Szepietowski and had been charged to RBS for a debt of about £3.225m (“the RBS debt”).

On 16 January 2008, the Szepietowskis and the ARA settled the proceedings on terms contained in documents attached to a consent order (including a “Settlement Deed”).

Pursuant to the terms of the Settlement Deed, (a) Thames Street and Church Street were sold and the proceeds paid over in part satisfaction of the 6

RBS debt, and (b) in September 2009, Mrs Szepietowski granted a charge over Claygate (“the 2009 Charge”) to the Serious Organised Crime Agency (“SOCA, as the ARA had by this point become) entitling SOCA to recover a sum of up to £1.24m from the proceeds of sale of Claygate. The 2009 Charge (a) was a second charge over Claygate as it was subject to the RBS debt, and (b) contained various provisions including a statement that Mrs Szepietowski had no personal liability to pay any money to SOCA. In late 2009, Mrs Szepietowski sold Claygate for £2.44m and, once the net proceeds of sale of Claygate had been used to pay off the RBS debt, all that was left to satisfy SOCA’s rights under the 2009 Charge was £1,324.16. SOCA then sought to invoke the right to marshal against Ashford House.

The right to marshal classically applies when there are two or more creditors, each of whom is owed a debt by the same debtor, but one of whom has security in the form of a charge on more than one property (“the first mortgagee”), whilst the other has security in the form of an inferior charge on only one of those properties (“the second mortgagee”). If the first mortgagee chooses to enforce his charge against the property which secures both debts (“the common property”), the second mortgagee is able to enforce his charge against the property which only secured the first mortgagee’s debt (“the other property”).

THE ISSUES SOCA argued that, as the proceeds of sale of Claygate (the common property, which was subject to the charge in favour of RBS and the 2009 Charge in favour of SOCA) were used to pay off what was due to RBS, it was entitled under the marshalling principle to look to Ashford House (the other property, which was only subject to the charge in favour of RBS), in order to obtain payment of the sum which it would have obtained on the sale of Claygate if RBS had sold Ashford House and used the proceeds of sale to clear the RBS debt. Mrs Szepietowski argued that SOCA should not be allowed to marshal because (a) the 2009 Charge did not

secure a debt from her to SOCA and/ or (b) the provisions of the Settlement Deed and the 2009 Charge, coupled with the circumstances in which they were executed, demonstrated that marshalling was precluded.

Henderson J held that SOCA’s marshalling claim was well-founded ([2010] EWHC 2570 (Ch)) and the Court of Appeal agreed ([2011] EWCA Civ 856).

THE SUPREME COURT’S JUDGMENT The Supreme Court unanimously allowed the appeal by Mrs Szepietowski.

Lord Neuberger, with whom Lord Sumption and Lord Reed agree, holds that the 2009 Charge did not create, or acknowledge the existence of, any debt from Mrs Szepietowski, or anyone else, to SOCA, save that under its terms, she was bound to pay SOCA an amount of up to £1.24m out of such sum if any, as remained from the proceeds of sale of Claygate after any prior claim had been met [40-43].

As a matter of principle, marshalling is not available to a second mortgagee where the common property does not secure a debt due from the mortgagor, but is merely available as security for whatever amount the second mortgagee can extract from that property. In such a case, there is nothing from which the right to marshal against the other property can arise [46-50]. Not least because marshalling is an equitable remedy, whether it is available in any particular case may depend on the circumstances. However, where there is no surviving debt due from the mortgagor to the second mortgagee after the sale and distribution of proceeds of sale of the common property, in the absence of express words which permit or envisage marshalling, it is hard to conceive how marshalling would be available [56-58]. If, contrary to this conclusion, marshalling is in principle available to a second mortgagee where there is no underlying debt, Mrs Szepietowski’s appeal would still have been allowed. Where facts arise which potentially give rise to the right to marshal, the correct approach is to ask whether, in the perception of an objective reasonable bystander at the date of the grant of the second

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www.nglawdigest.com www.nglawdigest.com mortgage, taking into account (i) the terms of the second mortgage, (ii) any contract or other arrangement which gave rise to it, (iii) what passed between the parties prior to its execution, and (iv) all the admissible surrounding facts, it is reasonable to conclude that the second mortgagee was nonetheless not intended to be able to marshal [6062]. The statutory background to, and the terms of, the 2009 Charge and of the Settlement Deed, coupled with all the surrounding circumstances demonstrate that the parties did not intend SOCA to have the right to marshal [64-72]. The fact that Ashford House was Mrs Szepietowski’s home is one of the relevant background facts for that purpose, but it was insufficient on its own to prevent a right to marshal if such a right otherwise existed.

Where the requirements of the right to marshal are otherwise present, it would require a contractually enforceable obligation, or something close thereto, on the first mortgagee to enforce against the common property in priority to the other property, for the second mortgagee to lose the right to marshal [73-77].

Lord Carnwath and Lord Hughes would allow the appeal on the narrower basis, namely that, read against the statutory background provided by the 2002 Act, and the fact that the 2009 Charge excluded any personal liability on the part of Mrs Szepietowski, that Charge impliedly excluded recourse to any source for payment other than those identified, and in particular excluded the right to marshal.

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Nigeria

Taxation Jurisdiction Interpretation TSKJ Construces Internacionals Sociadade Unipessoal LDA –vFederal Inland Revenue Services SUIT NO: FHC/ABJ/TA/11/12 JUSTICE: Hon Justice A.F.A Ademole – Federal High Court - Abuja FACTUAL BACKGROUND An appeal against the decision of the Tax Appeal Tribunal delivered on the 1st day of August 2012 wherein it dismissed the appeal fi led by the Appellant and ordered the Appellant to pay the total sum of US $ 12,924,947 (Twelve Million, Nine Hundred and twenty Four Thousand and Nine Hundred and Forty Seven United States of America Dollars) as tax liabilities for 1997, 1998, 1999 2000, 2001 and

2002 years to the Respondent.

The Appellant is a non-resident tax payer. The Appellant obtained a contract for the construction of the Nigeria Liquefied Natural gas (LNG) plant from the Nigeria LNG Limited (NLNG). In executing the said contract, the Appellant used TSKJ Nigeria, its subsidiary herein after referred to as TSKJN, to render logistic support service to it in the course of executing the said contract. The Appellant fi led self assessment forms on a deemed profits basis (Turnover Assessment) meaning that the profit of the Appellant could not be ascertained.

The appellant made deduction of what is called recharges being the cost paid to its local subsidiary.

The Respondent disallowed the said deduction on the ground that the deduction is not allowed under the Turnover basis of assessment. As a result, additional assessment was issued by the Respondent in respect of the wrong deduction the Appellant Assessment made.

The Appellant objected to the additional assessment and appealed to the Tax Appeal Tribunal (“TAT”) seeking inter alia, AN ORDER setting aside the Respondent’s Notice of Additional Assessment.

On the 1st day of August 2012 the TAT dismissed the appeal.

Being dissatisfied with the judgment of the TAT, the Appellant appealed to the Federal High Court (“FHC) seeking an order setting aside the judgment of the TAT and the Notice of Additional Assessment. The Appellant subsequently amended the Notice of Appeal to include a further ground that the TAT lacked the jurisdiction to hear and determine issues relating to taxation.

THE ISSUES The court was invited to determine inter alia whether the TAT had the jurisdiction to entertain the matter ab initio. The Appellant argued that the TAT lacked the jurisdiction to entertain the suit. They submitted that the TAT’s jurisdiction created by virtue of the Federal Inland Revenue Service (Established) Act 2007, (hereinafter referred to as the “FIRS Act”) confl icts with the exclusive jurisdiction of the FHC conferred in sections 251(1) (a) and (b) of the 1999 Constitution of the Federal Republic of Nigeria (herein after referred to as the “Constitution”) and urged the court to allow the appeal on this jurisdictional issue.

The Respondent submitted inter alia that the TAT is not a court and not affected by the exclusive jurisdiction of the FHC in section 251(1) (a) & (b) of

the Constitution in relation to federal revenue and taxation of companies.

The Respondent further argued that the TAT is merely an administrative panel and not a Court or Tribunal as set out in section 6 (5) Chapter VII of the Constitution.

THE JUDGEMENT The Learned Judge concurred with Counsels that the jurisdiction of a court is determined by the reliefs sought by the claimant in the writ of Summons and statement of claim or any other originating process, citing Adeyemi –v- Opeyori (1976) 9-10 SC 31, Abdulhamid –v- Akar (2006) ALL FWLR (pt 321) 1191 and Adelusi –vAkinde (2004) ALL FWLR (212) 776 The court cited the provisions of section 251 (1) (a) & (b) of the 1999 Constitution, which provides thus; 251 Jurisdiction “Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil cases and matters – (a) relating to the revenue of the Government of the Federation in which the said Government or any organ thereof or a person suing on behalf of the said Government is party; (b) connected with or pertaining to the taxation of companies and other bodies established or carry on business in Nigeria and all other persons subject to Federal taxation” The court held that by the said provisions of Section 251 (1) (a) & (b) of the Constitution, the FHC exercises jurisdiction to the exclusion of any other court in civil cases and matters connected with or pertaining to the taxation of companies and other bodies established or carrying on business in Nigeria and all other persons subject to federal taxation [pg 12].

The Learned Judge said that the FHC’s exclusivity also affects civil causes and matters pertaining to the revenue of the Federal Government in which the said Government or any organ thereof or a person suing or being sued on behalf of the said government is a party [pg 12].

His Lordship said that a careful perusal of section 50 of FIRS Act 2007 (as well as) the Fifth Schedule, and Tax Appeal Tribunal (Procedure) Rule 2010 made pursuant to paragraph 21 thereof shows a direct conflict with 7

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Section 251 (a) & (b) of the Constitution conferring exclusive jurisdiction on the FHC in federal revenue and taxation matters of companies [pg 14].

The supremacy of the Constitution is enshrined in section 1 of the Constitution as follows; Section 1 Supremacy of the Constitution (1) This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federal Republic of Nigeria.

(2) If any other law is inconsistent with the provisions of this Constitution, this Constitution shall prevail, and

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the other law shall to the extent of the inconsistency be void.

“Accordingly section 59 (1) & (2) of the FIRS Act are therefore invalid in view of its inconsistency with section 251 (1) (a) & (b) of the 1999 Constitution, by virtue of Section 1 subsection 3 of the 1999 Constitution. The cause of Appellant’s action falls clearly within the scope of section 251(1) (a) & (b) of the Constitution of the Federal of Nigeria 1999” [pg. 15].

Consequently the court held that Appellant’s claims and reliefs are beyond argument issues of taxation i.e. tax liabilities of the Appellant companies as well as the revenue

of the Government of the Federal arise falling within the exclusive jurisdiction of the Federal High Court of Nigeria stated in section 251 (1) (a) & (b) of the constitution and other Laws of the National Assembly. The Learned Judge was not persuaded by the Respondent’s argument, which he felt was mere semantics, misconceived and untenable in law in as much as the TAT’s decisions affect the civil rights and obligations of companies in relation to taxation matters and revenue of the Federal Government of Nigeria and held that the TAT lack jurisdiction to entertain the matter ab initio and therefore set aside the TAT’s decision.

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Law Digest Winter 2013

International Litigation and Asset Recovery Forum, Lagos 2013

This year’s International Litigation and Asset Recovery Forum took place on the 5th November 2013 at the Muson Centre, Onikan, Lagos.

It was supported by Augustine Clement Solicitors, Eversheds LLP, Great James Street Chambers, Punuka Chambers, Professor A.B. Kasunmu’s Chambers, Pinheiro & Co and Crowther Solicitors, with speakers from Skye Bank, Access Bank and the Nigerian Institution of Advance Legal Studies. It was attended by over 100 delegates and streamed live by Fusion TV.

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CONSTITUTIONAL LAW

Law Digest Winter 2013

Fundamental Human Rights Enforcement Procedure in Nigeria: An Overview I

Arowolo, G. A., LL.M, LL.B, B.L. Lecturer, Faculty of Law, Lagos State University and Anwo, J.O, LL.D, LL.M, LL.B, B.L. Lecturer, Faculty of Law, Lagos State University.

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ntroduction Nigeria has ratified many international human rights instruments including the International Covenant on Civil and Political Rights (ICCPR)1, the International Covenant on Economic Social and Cultural Rights (ICESCR),2 the Convention Against Torture and Other Cruel and Inhuman or Degrading Treatment or Punishment (CAT),3 the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW)4 and the Convention on the Rights of the Child (CRC).5 Nigeria is also a party to the African Charter on the Rights and Welfare of the Child (ACRWC) and the African Charter on the Rights of Women in Africa.6 The provisions of these and other international human rights

instruments including the Universal Declaration of Human Rights (UDHR)7 have been incorporated into our constitutions beginning from the post independence constitution of 1960,8 the Republican Constitution of 19639 and the 1979 Presidential Constitution.10 Furthermore, in the 1999 Constitution (as amended), two chapters spanning 26 sections are devoted to the human rights subject, for their protection and enforcement.11 Chapter II12 provides for Fundamental Objectives and Directive Principles of State Policy.13 Although section 1314 imposes a duty and responsibility on all organs of government and all authorities and persons to conform to, observe and apply the provisions of this chapter of the constitution, section 6(6) (c)15 of the same constitution makes the obligation non-justiciable.

This non-justiciability of economic, social and cultural rights otherwise known as “second generation rights” in the triology of the general construct of human rights is one of the recurrent themes in political and legal discourse in Nigeria.16 One such argument was that of Professor Osita Eze who opined that to the extent that socio-economic rights are not guaranteed, then to that extent, civil and political rights remain palliatives for the masses.17 Chapter IV of the Constitution18 on the other hand provides for fundamental human rights which are expressly justiciable. The Nigerian Constitution does not provide an enforcement procedure but section 4619 provides that any person who alleges that his fundamental right has been, is being, or likely to be contravened in any state, may apply to a high court in that state for redress while section 46(3) empowers the Chief Justice of Nigeria to make rules with respect to practice and procedure of a High Court for the purpose of this section.20 This article is an overview of the procedure for the enforcement of fundamental human rights in Nigeria. It will examine the highly technical and formally procedural nature of some sections of the 1979 Fundamental Human Rights (Enforcement Procedure) Rules, and the procedural changes made by the 2009 Rules. It will also examine some of the shortcomings of the new 2009 Procedure Rules and suggest the way forward.

Procedure for human rights enforcement Although human rights have been a part and parcel of the successive

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Nigerian Constitutions since independence in 1960, until the return to civil (democratic) rule in 1979, the protection of human rights was largely ineffective.21 A contributory factor to this ineffectiveness is the absence of procedural rules as required by section 32, 1963 Constitution of Nigeria which empowered the Federal Legislature to entertain complaints of an infraction of human rights.22 Since no rules were made by the federal or regional legislature at that time, fundamental rights litigation proceeded in a number of ways. For example in Aoko V Fagbemi,23 it was by way of application under section 30(1) of the 1960 Constitution of Nigeria. In Whyte V Commissioner of Police,24 an action for the protection of the right to a fair hearing commenced by way of an originating motion. In Akande V Araoye,25 it was by a writ of summons.

Fundamental Human Rights Enforcement Procedure Rules were first introduced on October 1, 1979 after the 1979 Constitution came into force pursuant to section 42 (3) of that Constitution.26 The introduction of the 1979 Fundamental Rights Enforcement Procedure Rules was aimed at bringing greater dynamism to the enforcement of fundamental rights in Nigeria.27 However, after emerging from a military regime, Nigerian Courts were not well versed in the enforcement of human rights.28 Two decades later, evidence showed that the judicial interpretation of the 1979 Rules has turned into a highly technical and formally procedural instrument.29 The first example is the requirement of leave. Order 1, Rule 2(1) of the 1979 Procedure Rules require an applicant who intends to enforce fundamental human rights to seek the leave of the High Court to do so. The application is made ex parte and must be accompanied by a statement setting out the name and description of the applicant, the relief sought and the grounds on which it is sought, with an affidavit verifying the facts relied on. In the case of Udene V Ugwu,30 the Court of Appeal held that the requirement of leave is mandatory and cannot be regarded as mere irregularity.

The grant of leave under the 1979 Rules was at the discretion of the trial court and often this discretion was exercised wrongly thereby shutting out credible witnesses.31 Secondly, the 1979 Rules stipulate time limits within which an action must be initiated and this was to be strictly enforced. Under Order 1, Rule

3 of the 1979 Rules, an application for the enforcement of fundamental human rights must be made “within twelve months from the date of the happening of the event, matter or act complained of, or such other period as may be prescribed by any enactment or except where a period is so prescribed, the delay is accounted to the satisfaction of the court or judge to whom the application… is made”.

Another example is the requirement that the motion on notice or summons for an order of the court to protect fundamental human rights must be entered for hearing within fourteen days of the grant of leave. In the case of Ogwuche V Mba 32 and Ezeaduka V Maduka 33 this requirement was held to be mandatory and non-compliance rendered the subsequent proceedings void.34 Thirdly, the judiciary created a threshold principle distinguishing between principal and accessory/ subsidiary claims in human rights enforcement. This distinction was first articulated in Tukur V Government of Taraba State 35 and was followed in a long line of cases36 whereby Nigerian Courts will not entertain an action to enforce fundamental human rights contained in the 1979 Rules unless it is the ‘principal claim’. That is, if an action for the enforcement of a fundamental human right is an accessory or subsidiary claim, the action must be started by a writ of summons.37 For example claims that there was a breach of the right to a fair hearing in the withholding and cancellation of examination results were regarded as subsidiary claims38 and could not be commenced under the 1979 Rules. Conversely the court maintained that a principal claim must be commenced under the 1979 Rules.

Fourthly another principle that severely affected the enforcement of human rights under the 1979 Rules was the requirement of locus standi.

In Adesanya V President, Federal Republic of Nigeria 39 the Supreme Court stated that the relevant person is as set out by section 42(1) 1979 Constitution is the person whose fundamental human rights are in issue. This interpretation was to the detriment of public interest litigation.

Numerous attempts were made to ameliorate the harshness of the principle and it was not until the case of Owodunni V Registered Trustees of Celestial Church 40 that a change became inevitable. In that case, the Supreme Court adopted the opinion of

Ayoola JSC in NNPC V Fawehinmi41 that the majority of the Supreme Court in Adesanya’s case did not decide that section 6(6)(b) laid down a requirement of standing.42 In the case of Fawehinmi V Federal Republic of Nigeria,43 the Court of Appeal decided that the requirement of locus standi was unnecessary in constitutional issues as it will merely impede judicial functions and that every Nigerian should have access to seek an interpretation of the constitution.

The Court of Appeal recognised the limited impact of its judgment above because it suggested future constitutional amendments to provide access to the courts by any Nigerian in order to preserve, protect and defend the constitution.44 It is true that the standing requirement was not part of the 1979 Rules and developed outside but its effect was draconian as Nigerian Courts regarded the principle as fundamental as the requirement of jurisdiction.45

This non-justiciability of economic, social and cultural rights ….. is one of the recurrent themes in political and legal discourse in Nigeria.

The bottlenecks and highly technical nature of the 1979 Rules prompted the introduction of the 2009 Fundamental Rights (Enforcement Procedure) Rules (the “FREP Rules 2009”). They were made pursuant to section 46, 1999 Constitution of Nigeria which like section 42, 1979 Constitution reposes in the Chief Justice of Nigeria,46 power to make rules with respect to the practice and procedure for the enforcement of fundamental human rights in Nigeria.

Significant changes made by FREP Rules, 2009 The new rules, unlike the previous 1979 Rules, guiding the procedure to be followed in Court in applications for the enforcement of fundamental human rights under the 1999 Constitution of Nigeria and the African Charter on Human and Peoples Right (Ratification and Enforcement) Act,47 contain some innovations that will make the process easier for lawyers and litigants.

Some of the procedural changes

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…until the return to civil (democratic) rule in 1979, the protection of human rights was largely ineffective.

A contributory factor to this ineffectiveness is the absence of procedural rules as required by section 32, 1963 Constitution. introduced by the new rules are contained in the overriding objectives of the Rules. The preamble to the 2009 Rules sets out the overriding objectives of the rules as follows: i.

Expansive and purposeful interpretation of chapter IV of the 1999 Constitution. Preamble 3(a) enjoins Nigerian Courts to expansively and purposefully interpret and apply the 1999 constitution especially Chapter IV as well as the African Charter with a view to advancing and realising the rights and freedoms contained in them and affording the protection intended by them. It should be noted that by virtue of Section 6(6)(c) of the 1999 constitution, only civil and political rights provided for in Chapter IV of the constitution are enforceable in a Court of Law while Chapter II is not justiciable.48 However, from the provision of preamble 3(a) the application of the African Charter can be affirmed. An expansive and liberal interpretation should recognise that socio-economic rights contained therein are enforceable in Nigeria.49 The implication is that Chapters II and IV of the constitution as well as the African Charter are enforceable in Nigerian Courts. ii. Respect for Regional and International Bill of Rights.

Paragraph 3(b) of the Preamble to the 2009 Rules provides that for the purpose of advancing but never for the purpose of restricting an applicant’s rights, courts with jurisdiction over human rights cases “shall respect municipal, regional and international bill of rights cited to it or brought to its attention or of which the Court is aware, including human rights instruments in the African regional human rights system as well as the United Nations (UN) human rights system”.

It should be noted however that

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section 12, 1999 constitution requires treaties to be domesticated in Nigeria before they can be implemented. iii.

Public Interest Litigation and Locus Standi. Under paragraph 3(d) of the preamble to the 2009 FREP Rules, courts with jurisdiction over human rights shall proactively pursue enhanced access to justice for all classes of litigants especially the poor, the illiterate, the uninformed, the vulnerable, incarcerated and the unrepresented. Closely connected to this is paragraph 3(e) of the preamble which provides that a court shall encourage and welcome public interest litigation in the human rights field and no human rights case may be dismissed or struck out for want of locus standi.

In particular, human rights activists, advocates or groups as well as any non-governmental organization may institute a human rights application on behalf of any potential applicant.

The applicant may include anyone acting in his own interest, anyone acting on behalf of another person, anyone acting as a member of, or in the interest of a group or class of persons, anyone acting in the public interest, anyone acting on behalf of another person, anyone acting as a member of, or in the interest of a group or class of persons, anyone and associations acting in the interest of its members or other individuals or groups.

The standing rule set out above is a clear departure from the position under the 1979 Rules and suggests that the strict approach exhibited in the Supreme Court Case of Adesanya 50 is no longer good law. This perhaps may be one of the provisions of the 2009 FREP Rules that will be eagerly and happily embraced by potential litigants. iv. Accords Priority to Human Rights Cases. Paragraph 3(g) of the Preamble states that human rights suits shall be given priority in deserving cases. Where there is any question as to the liberty of the applicant or any person, the case shall be treated as an emergency. From the foregoing provisions, it is clear that the 2009 FREP Rules are deliberately designed to enhance the acceleration of the hearing of fundamental rights cases.51 Other significant procedural changes made by the 2009 FREP Rules include the following; a. Enhancement of the applicant’s rights and freedom. Order I, Rule 2 defines a fundamental right to mean any of the rights provided for in Chapter

IV of the Constitution, and includes any of the rights stipulated in the African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act. That is, fundamental rights include all rights guaranteed by both the Nigerian constitution and the African Charter.52 Order II Rule 1 in a similar fashion, stipulates that any person who alleges that any fundamental rights provided for in the Constitution or African Charter on Human and Peoples’ Rights (Ratification and Enforcement) Act, and to which he is entitled, has been, is being, or is likely to be infringed, may apply to the court in the state where the infringement occurs or is likely to occur for redress.

By specifically including breach of fundamental rights provided in the African Charter as a basis for instituting a human rights suit, the FREP 2009 Rules, has expanded an applicant’s rights and freedoms. An applicant’s right is no longer limited to those provided in Chapter IV 1999 Constitution but extends to the socioeconomic rights in the African Charter to which he is entitled.53 b. Fast Tracks Human Rights Litigation through frontloading.54 Under Order II Rule 5 of the new Rules, “every application shall be accompanied by a written address which shall be succinct argument in support of the grounds of the application”. Order XII Rule 2 provides that oral argument of not more than 20 minutes shall be allowed from each party by the court on matters not contained in their written addresses.

In order to ensure that the nonattendance of counsel does not delay proceedings, Order XII Rule 3 provides that when all parties written address have been fi led and come up for adoption and either of the parties is absent, the Court shall either on its own motion or upon oral application by the Counsel for the party present, order that the addresses be deemed adopted if the Court is satisfied that all parties had notice of the date for adoption and a party shall be deemed to have notice of the date for adoption if on the previous date last given, the party or his Counsel was present in court. c. Simplifies mode of commencement of action. Order II Rule 2 provides that an application for the enforcement of a fundamental right, “may be commenced by any originating process accepted by the court…”

This leaves the mode of commencement to the discretion of the judges. However, the exercise of

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The introduction of the 1979 Fundamental Rights Enforcement Procedure Rules was aimed at bringing greater dynamism to the enforcement of fundamental rights in Nigeria. this discretion must not be contrary to the intention and objective of the new Rules.

Order II Rule 2 also dispenses with the prior requirement that an application for the enforcement of fundamental rights must commence with the leave of court.55 In addition, Order II Rule 4 allows any person who has personal knowledge of the facts or who has been informed by the applicant of the facts to make an affidavit on behalf of the applicant whose rights have been infringed upon and seek redress for same. That is the applicant does not have to be personally present (if he is in custody) before the Commissioner for Oaths to swear to his statement or the affidavit. However, it must be stated that the applicant is unable to depose personally to the affidavit.

why delay in hearing the application would cause exceptional hardship. f. Improves service of Court Process. Order V Rule 2 provides that service of the originating process shall be effected on all parties directly. However, service effected on a respondent’s agent shall amount to personal service. Order V Rule 7 also allows substituted service through a range of specified mechanisms “Where it appeared to the Court either after or without an attempt at personal service of the Court process that for any reason, personal service cannot be conveniently effected…” This will invariably save time and checkmate the excesses of respondents who deploy antics to evade personal service.

As good as the 2009 FREP Rules are, they are not without some shortcomings which include the following: i. The overriding objectives of the new Rules57 are not part of the substantive provisions of the new Rules. ii. The liberalisation of locus standi under the new Rules, desirable as it is, could be vulnerable to a charge of over-reaching section 46(1) which states that eligibility to seek redress in the context of human rights litigation is limited to any person who alleges contravention of any rights in relation to him”.58

d. Renders Statute of Limitation in applicable. Order III Rule 1 provides that an application for the enforcement of rights “shall not be affected by any limitation statute whatsoever”.56 The effect of this provision is that an application to secure enforcement of a fundamental right cannot become statute barred so as to extinguish the right of an applicant to institute an action in court.

iii. The language of paragraph 3 (b) of the preamble to the new Rules as desirable as it is, could also be vulnerable to a charge of over-reaching section 12 of the Nigerian Constitution, pursuant to which no treaty between the federation and any other country shall have the force of law except to the extent to which any such treaty has been domesticated into law by the National Assembly.59

e. Mandates speedy and expeditious hearing of cases.

Order IV Rule 1 of the new Rules also provides that an application shall be fi xed for hearing within 7 days from the day the application was fi led. The purpose is to emphasize the urgency attached to the hearing and determination of fundamental rights cases.

Order IV Rule 3 further provides for the expeditious hearing of an applicant’s matter if the Court is satisfied that undue hardship may be caused to the applicant before the service of the application especially when the life/liberty of the applicant is involved. However, the application ex parte shall state sufficient grounds

iv.

The issue of principal and ancillary relief. For an application to succeed in matters for the enforcement of fundamental right, brought under S. 46(1) of 1999 Constitution and Order II Rule 1, FREP Rules, 2009, the applicant’s relief must relate to the principal claim and not a subsidiary or ancillary issue.

The Courts in some decided cases on fundamental human rights have increased restriction on the scope of the application for the enforcement of fundamental human rights cases.

Indeed applications alleging serious human rights violations are routinely struck out or dismissed on the grounds that they are mere ancillary reliefs.60

The violation of the fundamental rights of workers to freedom of association is viewed as an ancillary relief which cannot be enforced under Fundamental Rights (Enforcement Procedure) Rules. In the recent case of Igwe V Ezeanoche,61 the Court of Appeal held that; whenever the Court is confronted with an application brought under the Fundamental Right (Enforcement Procedure) Rules, it is important that the Court should critically examine the relief sought by the applicant, the ground for seeking the relief and the facts contained in the statement accompanying the application relied on for the relief sought. Where the facts relied on disclose infringement of the fundamental right of the applicant or the main basis of the claim, then it is a clear case for the enforcement of such rights through the Fundamental Rights (Enforcement Procedure) Rules, but where the main or principal claim is not the enforcement of a fundamental right, the jurisdiction of the court cannot be properly invoked or exercised as the Court will be incompetent to do so. v. There is also an irregularity between the provision of section 46(1) of the 1999 Constitution (which confers jurisdiction to entertain human right cases for contravention of Chapter IV of the Constitution on the High Court where the violation occurred) and Order II Rule 1, 2009 FREP Rules which confers jurisdiction (for contravention of fundamental rights provided for by the Constitution or Africa Charter) on the Court in the State where the infringement occurred. The Constitution should be amended to reflect the provision of the new Rules on the matter to make clear

The bottlenecks and highly technical nature of the 1979 Rules prompted the introduction of the 2009 Fundamental Rights (Enforcement Procedure) Rules (the “FREP Rules 2009”). that by any court, it meant a court of equal jurisdiction with a High Court.

Aside from the foregoing shortcomings of the FREP Rules, 2009, there are also some challenges that hinder aggrieved persons from

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The Courts in some decided cases on fundamental human rights have increased restriction on the scope of the application for the enforcement of fundamental human rights cases. enforcing their rights. These include: (a) Poverty of citizens where millions live within starvation level.

To them fundamental right to food, education even rights to life are seen as empty rights.62 (b) Lack of physical security in the country with the appreciable escalation of the crime rate and religious fanaticism which has led to the death of thousands of people is a hindrance to the attainment of human rights. (c) Illiteracy. A good number of the population are illiterates who cannot appreciate or understand what rights they have.63 The way forward To make the new Rules achieve the desired purpose, it is hereby suggested; Firstly, that the overriding objectives of the FREP Rules 2009 should be moved away from the preamble to the substantive part of the Rules.

Secondly, the provisions of Section 6(6) (b) of the 1999 Constitution on locus standi should be amended in a manner consistent with preamble 3(e) of the new Rules which has liberalised the right to sue.

Thirdly, the non-justiciability provision of the 1999 Constitution regarding fundamental objectives and directive principles of State Policy contained in its chapter II needs to be amended, so as to reflect the expansive interpretation provided by the new Rules in preamble 3(a) to include rights guaranteed by the African Charter.

Fourthly, the distinction between ancillary and principal claims which is a creation of the judiciary should be done away with so that all human right cases whether involving principal or ancillary relief would be actionable under the new Rules.

Fifthly, the language of the regional and international bill of rights should be construed in a manner consistent with Section 12 of the 1999 Constitution of Nigeria.

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Sixthly, budgetary allocation should be increased towards the education of the large illiterate, masses of the people so as to be educated on what rights they have under the Nigerian Constitution. There should also be adequate provision for security of lives and property.

Seventhly, non-governmental organizations, human rights activists should work pro-actively towards the realisation of human rights of citizens in Nigeria.

Conclusion The Fundamental Rights (Enforcement Procedure) Rules 2009, is definitely a new liberal approach to the application for, and enforcement of fundamental rights as set out in Chapter IV, 1999 Constitution and the African Charter on Human and Peoples’ Rights although there are still some areas to be improved upon in order to create a society devoid of constant human rights abuse.

Apart from this, there are lots of benefits derivable from the Rules which contain new innovations that will make the process easier for lawyers and litigants. Lawyers and other human rights activists are to utilise the new procedure Rules so as to enlarge the frontiers of the law and the constitutional provisions concerned with human rights violations in Nigeria.

Adopted and opened for signature and accession by the General Assembly Resolution 2200A (XXI) of 16 Dec. 1966. Nigeria ratified on 29th July, 1993. See http//treaties.un.orgAccesed 01/10/2012.

2 Adopted and opened for signature, ratification and accession by General Assembly Resolution 2200A (XXI) OF 16 Dec. 1966. Nigeria ratified on 29th July, 1993. http://treaties.un.org. Accessed 01/10/2012 3 Nigeria ratified June 28th, 2001. http://www2ohchr. org. Accessed 01/10/2012 4 Nigeria ratified in 1985. http://www2ochr.org.

Accessed 01/10/2012.

5 Nigeria ratified on April 19th, 1991.

6 See “Nigeria: Defending Human Rights; Not everywhere, not every right. (International fact fi nding Mission Report). http://www.omct.org.

Accessed 06/01/2013 7 Op. Cit at. No. 4 8 Chapter II, 1960 Constitution of Nigeria.

9 Chapter II, 1963 Constitution of Nigeria.

10 Chapter IV, 1979 Constitution of Nigeria.

11 Chapters II and IV, 1999 Constitution of the Federal Republic of Nigeria.

12 Ibid.

13 See specifically sections 14 – 24 of the Constitution.

Ibid. These rights are also known as Economic Social and Cultural Rights.

14 Section 13, 1999 Constitution. Op. cit at no. 16 15 Section 6(6) (c), Ibid. see also the case of Okogie V Attorney General of Lagos State. (1981) 1 NCLR, 218.

16 See Dakas, CJ Dakas, “A Panoramic Survey of the Jurisprudence of Indian and Nigerian Courts on the justiciability of Fundamental Objectives and Directive Principles of State Policy in Epiphany Azinge and Bolaji Owasanoye(eds), “Justiciability and Constitutionalism: An Economic Analysis of Law (Lagos: NIALS Press, 2010, pp. 262 – 263.

17 See Julius Ihonvbere (ed), “The Political Economy of Crisis and Underdevelopment in Africa: Selected Works of Claude Ake (Lagos: Jad Publishers Ltd., 1

1989 at 91. See also Justice Baghwati in Minerva Mills V Union of India (1980) Air SC 1789 at 1843.

18 Chapter IV, 1999 Constitution. Op. Cit at No. 16 19 See Section 46(1), 1999 Constitution. Op. Cit at no.

16 See Section 46(3), Ibid. A similar provision was also made under section 42(3) 1979 Constitution of Nigeria.

20 See section 46 (3),1999 constitution. A similar provision was also made under section 42(3), 1979 Constitution of Nigeria.

21 Nwauche, E. “The Nigerian Fundamental Rights Enforcement Procedure Rules 2009: A fitting response to problems in the enforcement of human rights in Nigeria; African Human Rights Law Journal, Vol. 10, No. 2, 2010, P. 502.

22 Ibid.

23 (1961) 1 All NLR, 400 24 (1966) NMLR, 215 25 (1968) NMLR, 283. See Also Akunna V Attorney General Anambra State 1977 5 SC 161, where the action was commenced by notice of motion.

26 Op. cit at no. 36. The then Chief Justice of Nigeria, Atanda Fatayi Williams Operationalised Section 42(3) of 1979 Constitution, which empowered the Chief Justice of Nigeria to make rules for the Practice and Procedure of a High Court towards the exercise of the original jurisdiction vested in the High Court to hear and determine any application for redress made to it by any person who alleges that any of the provisions of chapter III of the Constitution have been, are being or are likely to be contravened in any state. The Rules came into effect on January 1, 1980.

27 Duru, O.Op. cit at no. 34 28 Nwauche, E., Op. cit at no. 37 29 Ibid 30 (1997)3 NWLR (Pt. 49) 57 31 Nwauche, E. Op. Cit at no. 37 32 (1994)4 NWLR (Pt. 336) 75 33 (1997) 8 NWLR (Pt. 518) 635. See also Umoh V Nkan (2001) 3 NWLR (Pt. 710) 512 and Chukwuogor V Chukwuogor (2006) 7 NWLR (Pt. 979) 302.

34 Din V Attorney General of the Federation (1986) 1 NWLR (Pt. 17) 471 35 (1997) 6 NWLR (Pt. 510) 549 36 For example. Sea Trucks Ltd. V Anigboro, (2002) All FWLR (Pt. 321) 119; Achebe V Nwosu (2003) 7 NWLR Part 818 P. 103 37 Nwauche, E.S. “The dubious distinction between principal and accessory claims in Nigerian human rights jurisprudence” (2008) 52 Journal of African Law, 66 – 68.

38 See West African Examinations Council V Adeyanju (2008) 9 NWLR (Pt. 1092) 270 and West African Examinations Council V Akinkumi (2008) 9 NWLR (Pt. 1091) 151.

39 (1981) 1 All NLR 1. In this case, the Court recognized the requirement of personal standing as fundamental for any action including complaints against human rights abuse on the strength of section 6(6) (b) of the 1979 Constitution.

40 (2000) 6 Sc 60 41 (1998) 7 NWLR (Pt. 559) 598 42 See Ogowewo, T “Wrecking the law: How article III of the constitution of the United States led to the discovery of the law of standing to sue in Nigeria (2000) 26 Brooklyn Journal of International Law, 527; Ogowewo. T, “the problem with standing to sue in Nigeria ”(1995) 39, Journal of African Law 1.

43 (2008) 23, WRN 65 44 Nwauche, E. Op. Cit at no. 37 45 Ibid.

46 Hon. Justice Idris Legbo Kutigi, CJN (as he then was) made the Fundamental Human Rights Enforcement Procedure (FREP) Rules 2009, on 11 December, 2009.

47 The African Charter on Human and Peoples’ Rights was ratified and re-enacted as a Municipal law in Nigeria by the National Assembly on 17th March, 1983. The Charter became part of the Nigerian Law by virtue of the African Charter on Human and Peoples Rights (Application and Enforcement) Act, Cap 10 Laws of Federation, 1990.

48 See Okogie V Attorney General Lagos State. Op. Cit at no 20; Oronto Douglas V Shell Petroleum Development Company Ltd. (1999) 2 NWLR (Pt. 591) 466.

49 Nwauche, E,op.cit at no 37.See also the ruling of the ECOWAS Coticemmunity Court of Jusice in Socio-Economic Rights project V Federal Republic of Nigeria, ECW/CC/APP/08/08 (ruling delivered on 27th October, 2009 that Nigerians have a right to education as provided by sections 17 and 18 1999 Constitution and article 17(1) of the African Charter.

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Adesanya V President, Federal Republic of Nigeria, Op. Cit at no. 55 Falana, F., “Fundamental Rights Enforcement in Nigeria (Lagos: Legal Text Pub. 2010) at 182 – 187.

52 Op. Cit at no. 64 53 The above provision of Order II Rule 1, has also brought the Rules in line with the decision of the Supreme Court in Ogugu V State (1994) 9 NEWLR (Pt. 366) 1 where the Supreme Court held that the provisions of the African Charter on Human and Peoples’ Right is enforceable in the same manner as those of Chapter IV, 1999 Constitution by application made under section 42, 1979 constitution. See also Duru, O.C, Op. Cit at no. 34 54 See Dakas, CJ Dakas, “Judicial Reform of the Legal framework for Human Rights Litigation in Nigeria: Novelties and Perplexities” www.nials.org.

Accessed 20/01/2013.

55 This provision is a clear departure from Order 1 Rule 2(1) and Order II Rule 1(1) 1979 FREP Rules which require that an application for the enforcement of fundamental rights must commence with the leave of court on the basis of an exparte application.

56 This provision is unlike Order 1 Rule 3, 979 FREP Rules which requires that action must commence within twelve months from the date of the happening of the event, matter or act complained of.

57 The overriding objectives of the new Rules include the provision on public interest litigation, locus standi, enhanced access to justice, the expansive and purposeful interpretation and so on.

58 Section 46(1), 1999 constitution of Nigeria and preamble 3(e) of the 2009 FREP Rules.

59 Paragraph 3(b) 2009 FREP Rules.

60 See the cases of Achebe V Nwosu (2003) 7 NWLR Part 818 P. 103 at 14; Tukur V Government of Gongola State (1989) 4 NWLR Part 117 P. 517. Where the Supreme Court upheld the position that for an application to come under Chapter IV of the Constitution, the breach must be principal and not ancilliary to the main claim. It thus held that the deposition of the applicant was the main claim and the absence of fair hearing in the process leading to deposition is merely ancilliary.

61 (2010) 7 NWLR Part 1192, P. 61 at 69.

62 See Minerva Mills Limited V Union of India, op cit at no 22.

63 See Oputa, A, ‘Access to Justice, Law and Practice’ Vol. No. 1, August 1988.

Justice Oputa observed that “… people especially the illiterate masses of our country do not even know what their rights are. They may therefore not even know when those rights have been or are being infringed.”

50 51

HUMOUR

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COMMERCIAL LITIGATION Andrew Legg and Oliver Shipway, Eversheds LLP

Looking behind the corporate smoke-screen.

A consideration of Prest v Petrodel

T

Andrew Legg Senior Litigation Partner

Oliver Shipway - Associate

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he distinction between concealment and evasion lies at the heart of the recent UK Supreme Court decision in Prest v Petrodel Resources Limited,1 a decision which was handed down on 12 June 2013. The case contains an impressive analysis of case law development of the English law principle of piercing the corporate veil; that is where English courts have been prepared to look through corporate structures to identify those who stand behind them, placing aside the doctrine of separate corporate legal personality. However, the real importance of the decision lies in its recognition of the existence of the principle itself, something which had been doubted in some quarters.

The formulation of the principle (albeit obiter) in the judgment of Lord Sumption, has since been considered by lower UK courts (including the Court of Appeal) in both civil and criminal proceedings, but it is a formulation which was not embraced with equal enthusiasm (or in some cases, at all) by the other six members of the judicial panel which heard Mrs Prest’s appeal to the Supreme Court.

The facts of Prest v Petrodel Resources Limited and Others The case concerned divorce proceedings between Michael and Yasmin Prest. Mr and Mrs Prest were married in 1993. They each held dual Nigerian and English citizenship. Mr Prest left employment as a trader with Marc Rich in 2001 and began to run his own oil business. Mrs Prest petitioned for divorce in March 2008, with a decree nisi pronounced in December 2008 and a decree absolute in November 2011.

Mrs Prest sought ancillary relief against members of the Petrodel group of companies under the Matrimonial Causes Act 1973 and, inter alia, the transfer of seven properties held by them. These transfers were sought in partial satisfaction of a lump sum payment that Mr Prest had been

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ordered to make to Mrs Prest. The Petrodel group companies resisted the application on the basis that the properties concerned were owned by them and not Mr Prest and that the court had no jurisdiction to order that properties owned by them should be transferred to Mrs Prest.

At first instance, Mr Justice Moylan found as a matter of fact that the Petrodel group companies were owned and controlled by Mr Prest and that when the properties were transferred, Mr Prest did so with the intention of gifting them to the companies concerned. He also found that the Petrodel group corporate structure was set up for conventional reasons including wealth protection and tax avoidance.2 Despite these findings of fact, the application was determined in favour of Mrs Prest.

Whilst Mr Justice Moylan held that he could not reach the companies’ assets by “piercing the corporate veil” on general principles, he concluded that on an application for financial relief ancillary to a divorce under the Matrimonial Causes Act, a wider jurisdiction to pierce the corporate veil was available.3 He ordered, inter alia, that the seven properties concerned be transferred by the Petrodel group companies to Mrs Prest.

On appeal by the Petrodel group companies, the Court of Appeal reversed the first instance decision, holding that the Family Division had no such jurisdiction under the Matrimonial Causes Act and that, in view of the findings of fact made by Mr Justice Moylan, both the legal and beneficial interest in the properties had been transferred to the Petrodel group of companies.

Thereafter, Mrs Prest appealed to the Supreme Court. The legal team representing her argued as they had done before the lower courts that, on the facts of this particular application, the court could pierce the corporate veil either pursuant to the Matrimonial Causes Act or general principles, and make orders directly against the Petrodel group companies in which the seven properties had been vested.

Rather like London buses which tend to arrive in pairs, this case marked the second occasion during the course of 2013 that the UK’s highest national court had considered the principle of piercing the corporate veil. In a judgment handed down on

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6 February 2013, the Supreme Court held in the case of VTB Capital plc v Nutritek International Corpand Others4 that on the facts of that case, there was no basis to pierce the corporate veil. The leading judgment on the question was delivered by Lord Neuberger, who ducked out from opining whether piercing the corporate veil existed as a matter of principle, seemingly because he considered that, even if the veil were pierced, the claim would be unsuccessful. By contrast in Prest, Lord Neuberger took a braver line and concurred with Lord Sumption that the general principle did exist.

The corporate veil The concept of the separate legal personality of incorporated companies in England dates back over 100 years to the decision of the House of Lords in Salomon v A Salomon and Co Ltd,5 which established that a company is to be treated as separate to those who founded, own or control it. As stated

by Lord Halsbury LC in Salomon, a “legally incorporated” company “must be treated like any other independent person with its rights and liabilities appropriate to itself… whatever may have been the ideas or schemes of those who brought it into existence.” 6 This principle of separate legal personality remains the case even if the company is wholly owned and controlled by one person. Further, besides a share of profits of a company declared as a dividend or a return of capital on a restructuring or winding up of the company, this same principle ensures that shareholders and owners have no rights over the assets of a company.7 Also in the context of litigation, documents in the possession or control of a subsidiary have been held not to be in the “power” of its parent company.8 Recognising the existence of the principle of separate legal personality, at paragraph 8 of his judgment in Prest, Lord Sumption said: “These principles are the starting point for the elaborate restrictions imposed by English law on a wide range of transactions which have the direct or indirect effect of distributing capital to shareholders.

The separate personality and property of a company is

sometimes described as a fiction, and in a sense it is. But the fiction is the whole foundation of English company and insolvency law.” 9 Lifting or piercing the corporate veil Whilst the doctrine (referred to below as the “Salomon doctrine”) is central to corporate law and economic activity in the English and other common law legal systems, it does not come without its difficulties.

Separate legal personality has long been a convenient tool for hiding assets in corporate shells or obscuring the true identity of those perpetrating illegal or improper acts – a form of veil to hide behind. It was to combat conduct of this nature that the concept of piercing the corporate veil was first born. In a seminal statement of the law in Woolfson v Strathclyde Regional Council,10 referred to by Lord Sumption in Prest, Lord Keith of Kinkel expressed the need to balance the integrity of the Salomon doctrine with preventing the abuse of corporate structures for spurious purposes and said: “it is appropriate to pierce the corporate veil only where the special circumstances exist indicating that it is a mere façade concealing the true facts.” 11 This statement recognised that piercing the corporate veil would only be appropriate in cases which on their particular facts merited such intervention. Examples of cases and behaviours which raised questions for the courts in the past included the following: an ex-employee seeking to avoid the restriction of a non-compete clause binding on him personally by running a competing business in the name of a separate company;12 an individual agreeing to sell a property to a third party but seeking to frustrate the sale following a change of heart by transferring it to a company wholly owned by him;13 and ex-company directors siphoning off funds to offshore companies in breach of fiduciary duty.14 Historical uncertainty However, as related by Lord Sumption, the earlier cases provided no clear rules as to when and how the corporate veil would be lifted or pierced. Some, including the decisions in the courts below in Prest, referred to the abuse of the separate legal personality of a company for a

purpose that was in some relevant respect improper;15 some to shams or facades, which in Lord Sumption’s view begged “too many questions to provide a satisfactory answer.” 16 He added: “The question is heavily burdened by authority, much of it characterised by incautious dicta and inadequate reasoning.” 17 The lifting or piercing of a corporate veil might be considered a metaphor in the sense that it is not an exact phrase and could be used to describe either an outcome or a legal principle.

Lord Sumption sought to explain the previous inconsistencies in the earlier case law by drawing a distinction between concealment and evasion. In his view, confusion had arisen as a result of these two approaches having been applied indistinctly.

Lord Sumption’s examination of the previous case law appears to reveal a tension between the need to define exactly any exception to the Salomon doctrine and a tendency of the courts to use the veil metaphor to label any situation where companies were to be associated with egregious actions and intentions of their controllers, and vice versa.

Lord Sumption gave examples of where confusion had arisen. He referred to Gencor ACP Ltd v Dalby, where Mr Justice Rimer (as he then was) had held that a company wholly owned and controlled by a fraudulent director, which received funds which had been misappropriated by him, was liable to account to the claimant for those funds. This was stated by Mr Justice Rimer to be an example of piercing the corporate veil. Lord Sumption thought differently and pointed out that this had been a case in which funds had been transferred to a company which was in substance the wrongdoer’s nominee.18 It was not truly a case in which the corporate veil had been pierced, but rather the funds were held on trust for the wrongdoer and, accordingly, the company had no beneficial interest

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In a civil case, the Court of Appeal in Antonio Gramsci Shipping Corporation v Recoletos Ltd, handed down a judgment on 19 June 2013 which held that it was not possible to pierce the corporate veil in that case. in them. This analysis similarly underpinned the ultimate outcome in the Supreme Court’s decision in Prest.

There are other situations in which a company might be held responsible for the actions of its controllers, for example through the rules of agency and the “directing mind.” 19 Controllers might also be liable as agents or joint actors with the companies they control. These are normal rules, however, resulting from the fact that a company, an artificial creation, can only act through its human controllers. These rules might also be characterised as a metaphorical lifting or piercing of the corporate veil in the sense that they look behind a company structure to its controllers.

In light of the above, it is not surprising that there was a school of thought that lifting or piercing the veil was not in fact a legal principle at all. As Lord Walker said in Prest: “I consider that “piercing the corporate veil” is not a doctrine at all, in the sense of a coherent principle or rule of law. It is simply a label – often, as Lord Sumption observes, used indiscriminately – to describe the disparate occasions on which some rule of law produces apparent exceptions to the principle of the separate juristic personality of a body corporate reaffirmed by the House of Lords in Salomon.” 20 Lord Sumption’s judgment, as summarised below, expressed the opinion that lifting the corporate veil as a legal principle has a narrower, more technical meaning than this.

Clarity - Lord Sumption’s formulation Whilst Lord Sumption considered that the previous case law on the topic was confused, he also felt that there was a clear weight of authority in favour of the principle existing.21

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The Supreme Courts decision in Prest may not be the last word on this issue.

He then took the opportunity to formulate a clear approach.

He grounded the principle of piercing the corporate veil in general law, invoking the general doctrine that fraud unravels everything and citing with approbation the following dictum of Lord Justice Denning in Lazarus Estates Ltd v Beasley:22 “No court in this land will allow a person to keep an advantage which he has obtained by fraud.

No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud.

Fraud unravels everything. The court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved, it vitiates judgments, contracts and all transactions whatsoever…..”

In short, where a benefit from a law was obtained by dishonesty, the general law should disregard it. On examining the authorities Lord Sumption concluded that this outcome applied equally to the dishonest use of corporate legal personality.23 Lord Sumption sought to explain the previous inconsistencies in the earlier case law by drawing a distinction between concealment and evasion. In his view, confusion had arisen as a result of these two approaches having been applied indistinctly. In certain cases the

corporate structure had been used to conceal the wrongdoing of the controller; in others, the controller had used the corporate structure to evade an existing obligation. In the concealment cases, this was not really piercing the corporate veil at all: the controller had been independently liable all along and had simply used the company structure to try and escape detection. The evasion cases involved the wrongdoing of controllers but an independent remedy was to be provided against their companies so that the controllers did not escape the law. This, said Lord Sumption, was the true case of piercing the corporate veil, in the sense of an independent legal principle. He expressed this principle in the following terms: “I conclude that there is a limited principle of English law which applies when a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The court may then pierce the corporate veil for the purpose, and only for the purpose, of depriving the company or its controller of the advantage that they would otherwise have obtained by the company’s separate legal personality.

The principle is properly described as a limited

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one, because in almost every case where the test is satisfied, the facts will in practice disclose a legal relationship between the company and its controller which will make it unnecessary to pierce the corporate veil. .....But the recognition of a small residual category of cases where the abuse of the corporate veil to evade or frustrate the law can be addressed only by disregarding the legal personality of the company is, I believe, consistent with authority and with long-standing principles of legal policy.” 24 This formulation is to be welcomed in that it seeks to clarify the law in this area and it breaks new ground by stating, once and for all, that the principle exists. The judgment emphasises the primacy of the Salomon doctrine by setting clear parameters to its exception, which it bases on the fundamental legal principle that fraud unravels everything. In doing so, Lord Sumption has managed to maintain the sensitive balance between the need to do justice in cases of fraud and abuse and the Salomon doctrine, which is the foundation of our economic and corporate legal system.

What is also clear, however, is that the principle (as Lord Sumption has said) may have limited application, as on the particular facts of any case, other remedies may well be available.

The Supreme Court was not unanimous in adopting Lord Sumption’s formulation. Only Lord Neuberger and Lord Mance agreed with him and Lord Mance was not so ringing in his endorsement as Lord Neuberger; he thought it was dangerous to circumscribe the rule exactly. As for the other members of the Panel, Lady Hale, with whom Lord Wilson agreed, did not seem to want to decide the point, Lord Clarke expressly did not wish to and Lord Walker disagreed that piercing the corporate veil was a distinct principle of law. The outcome in Prest was determined in favour of Mrs Prest by the Supreme Court applying principles of trust law rather than by application of the legal principle of piercing the corporate veil, but despite the range of views expressed by members of the Panel, Lord Sumption’s obiter formulation of the principle has been considered and applied subsequently.

Judicial reception In a civil case, the Court of Appeal in Antonio Gramsci Shipping Corporation v Recoletos Ltd,25 handed down a judgment on 19 June 2013 which held that it was not possible to pierce the corporate veil in that case, Lord Justice Beatson referring with approval to the formulation of the legal principle enunciated by Lord Sumption and expressing the following opinion: “....it is clear from the decision of the Supreme Court that, in the present state of English law, the Court can only pierce the corporate veil when “a person is under an existing legal obligation or liability or subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control.” 26 In this case, a judgment had been obtained against a number of companies in respect of an alleged fraudulent scheme in chartering vessels from the Claimant. The relevant charterparties contained exclusive jurisdiction clauses in favour of the courts of England and Wales. The Claimant also sought to pursue the alleged controllers of those companies in England, including Aivars Lembergs. Mr Lembergs resisted the jurisdiction of the English court. An initial attempt to argue that the corporate veil was pierced as against him so as to make him party to the underlying charterparties (and, in consequence, the exclusive jurisdiction clauses) failed following the decision of the Court of Appeal in VTB,27 which had, in the meantime, rejected such an argument. On appeal the Claimant argued that, notwithstanding Mr Lembergs was not a party to the underlying contracts, the corporate veil should be pierced so that he could be treated as having consented to the exclusive jurisdiction clauses under Article 23 of the Brussels Regulation. On finding that the piercing of the corporate veil was a matter for English national law,28 the court held that the principle was not applicable.

Notwithstanding his approval for Lord Sumption’s formulation in Prest¸ Lord Justice Beatson highlighted that the Supreme Court had not been unequivocal in adopting

In R v Peter John Sale , the Court of Appeal considered Lord Sumption’s formulation of the principle in a criminal context it.29 He referred to the fact that the Panel as a whole had not wanted to settle the question once and for all and said (obiter): “As to further development of the law, doing so by classical common law techniques may not be easy.

In Prest’s case Lord Sumption (at [28]) identified two underlying principles which he called “the concealment principle” and “the evasion principle”.

But Lord Neuberger was of the view (at [75] that there is a “lack of any coherent principle in the application of the doctrine of “piercing the corporate veil”, and Lord Walker’s view (at [106]) was that it is not a doctrine in the sense of a coherent principle or rule of law but a label. Lady Hale (at [92]) was “not sure whether it is possible to classify all of the cases in which the courts have been or should be prepared to disregard the separate legal personality of a company neatly into cases of either concealment or evasion”. Absent a principle, further development of the law will be difficult for the courts because development of common law and equity is incremental and often by analogical reasoning.” 30 One might, however, say that it is Lord Sumption’s formulation in Prest which provides the clarity and principle which has hitherto been missing; Lord Neuberger’s reference to the “lack of coherent principle in the application of the doctrine” seems to refer to the application of the law prior to Prest. However, it remains the case that Lord Sumption’s statement was obiter and it followed that the Court of Appeal in Gramsci did not adopt it without reservation.

In R v Peter John Sale,31 the Court of Appeal considered Lord Sumption’s formulation of the principle in a criminal context.

The case concerned confiscation proceedings against the accused under Section 6(4)(c) of the Proceeds of Crime Act 2002. The accused had

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In the light of the contrasting judicial responses in Gramsci and Sale, it remains to be seen whether Lord Sumption’s formulation will settle the broad principle of the doctrine and whether the lower courts will endorse it. It does have the appearance of a definitive statement of law. already pleaded guilty to corruption and fraud. Payments had been made by him to an employee of Network Rail in order to corruptly obtain contracts for the company of which he was the sole shareholder and managing director. The proceedings concerned the value of the confiscation order and the question whether the Court should take into account the benefit obtained by the company (the value of the contract in revenue terms) when determining what benefit the accused had obtained from his specific criminal conduct. In other words, could the benefit to the company be attributed to the accused? Did this require the corporate veil to be pierced, whether metaphorically or actually?

Lord Justice Treacy in delivering the judgment of the Court of Appeal handed down on 25 July 2013 referred to Lord Sumption’s formulation in Prest, sweeping aside any concerns about its obiter status: “Whilst strictly speaking the discussion in Prest about piercing the corporate veil was obiter to the decision, it is plain that the Supreme Court was addressing the issue across the law generally and intended to do so. None of the cases cited to or considered by their Lordships were criminal confiscation order cases, but the principles enunciated apply across the board.” 32 Applying

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Sumption’s

formulation, the Court of Appeal upheld the first instance decision that this was a case in which the corporate veil should be lifted.

Although there was no independent legal obligation of the controller which was being evaded by abuse of the corporate structure, the court held that there had been concealment which would justify the court looking behind the corporate structure.

The total value of the contract to the company in revenue terms was £1.9 million and the gross profit was approximately £197,000. It was considered disproportionate to make a confiscation order equal to the total contract revenues, but an order was made equal to the value of the gross profit.

Sale, and in fact any concealment case, does not really involve an application of the principle of piercing the corporate veil as formulated

by Lord Sumption. So why was it referred to by the Court of Appeal in terms which indicated that it was?

A previous decision of the Court of Appeal, R v Seager & Blatch from 2010,33 had decided in relation to confiscation proceedings under the Proceeds of Crime Act, that the corporate veil can be pierced in a number of circumstances, including “where an offender does acts in the name of a company which (with the necessary mens rea) constitute a criminal offence which leads to the offender’s conviction…” 34 The Court of Appeal found that Sale matched this profile.

The Court of Appeal in Seager had referred to the corporate veil in its metaphorical sense. So the Court of Appeal in Sale had to do some reformulation in the light of Lord Sumption’s trimming of the principle and clarified that the Seager decision was specific to the Proceeds of Crime Act rather than an example of piercing the corporate veil in the strict sense.35 In the light of the contrasting judicial responses in Gramsci and Sale, it remains to be seen whether Lord Sumption’s formulation will settle the broad principle of the doctrine and whether the lower courts will endorse it. It does have the appearance of a definitive statement of law. However, it seems likely that the caution expressed by a number of their Lordships in Prest will resonate in future cases.

The outcome in Prest and looking towards the future Mrs Prest was successful in her appeal and the Supreme Court also endorsed the ruling of the Court of Appeal that the Matrimonial Causes Act 1973 did not give rise to a special jurisdiction to pierce the corporate veil in divorce proceedings, which had been the practice in the Family Division for a number of years.

Although not deciding the case on the basis of the legal principle of piercing the corporate veil as formulated by Lord Sumption, the Supreme Court did hold that, on the facts of the particular case, the Petrodel group companies held the properties on resulting trust for Mr Prest and that he had the sole beneficial interest in them.

Whilst the intention appears to have been to do justice to Mrs Prest in the circumstances of the case, there is a concern that insufficient consideration was given to the case law relating to resulting trusts and when they arise (and importantly, when they do not). It is outside the scope of this article to consider the trust law implications of this case in any detail, but in view of the findings of fact made by Mr Justice Moylan, it is difficult to conceive that the imposition of a resulting trust was appropriate, there having been no impropriety when the properties were transferred. Their Lordships were clearly unimpressed by Mr Prest’s conduct in the course of the proceedings, Lord Sumption noting in his judgment as follows: “The proper exercise of [the court’s powers to order ancillary relief] calls for a considerable measure of candour by the parties in disclosing their financial affairs, and extensive procedural powers are available to the court to compel disclosure if necessary.

In this case, the husband’s conduct of the proceedings has been characterised by persistent obstruction, obfuscation and deceit, and a contumelious refusal to comply with rules of court and specific orders.” 36 Their Lordships were also seemingly influenced by the fact that it was Mr Prest who had provided the cash to purchase the properties, but to base the grant of relief on the existence of a resulting trust could lead to future

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argument that transfers of property to, for example, start-up companies did not involve the transfer of the beneďŹ cial interest. That could have dramatic consequences for those who have advanced credit to such companies in reliance on statements of assets contained in statutory accounts.

It is possible that arguments taking advantage of the lacunae in the Supreme Court decision will be used in future cases to reopen the discussion on such matters. It is notable that whilst there was much discussion in the Supreme Court of Lord Sumption’s bold formulation of the principle of piercing the corporate veil, nothing of note was stated by any of their Lordships in relation to the trust law implications. This remains for consideration on a later occasion.

[2013] UKSC 34; [2013] 3 W.L.R. 1 Yasmin Prest v Michael Prest, Petrodel Resources Limited & Ors 2011 EWHC 2956 (Fam) at [217] 2 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [6] 4 VTB Capital plc v Nutritek International Corp and Others [2013] UKSC 5; 2013 WL 425598 5 Salomon v A Salomon and Co Ltd [1897] A.C. 22 6 Salomon v A Salomon and Co Ltd [1897] A.C. 22 pp 30-31 7 Macaura v Northern Assurance Co Ltd [1925] AC 619 per Lord Buckmaster at pp. 626-627 8 House of Lords in Lonrho Ltd v Shell Petroleum Co Ltd (No.1) [1980] 1 WLR 627 9 Prest v Petrodel Resources Ltd and others [2013] UKSC 34 at [8] 10 Woolfson v Strathclyde Regional Council 1978 SC(HL) 90 11 Woolfson v Strathclyde Regional Council 1978 SC(HL) 90 at p.96 12 Gilford Motor Co Ltd v Horne [1933] Ch 935 13 Jones v Lipman [1962] 1 WLR 832 14 For example, Gencor ACP Ltd v Dalby [2000] 2 BCLC 734 15 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [7] 16 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [28] 17 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [19] 18 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [31] 1 2

Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [92] per Lady Hale 20 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [106] 21 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [27] 22 Lazarus Estates Ltd v Beasley [1956] 1 QB 702, 712 23 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [18] 24 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [35] 25 [2013] EWCA Civ 730; also known as Antonio Gramsci Shipping Corp v Aivars Lembergs 26 Antonio Gramsci Shipping Corporation v Recoletos Ltd [2013] EWCA Civ 730 at [65] 27 Antonio Gramsci Shipping Corporation v Recoletos Ltd [2013] EWCA Civ 730 at [6] - [8] inclusive 28 Antonio Gramsci Shipping Corporation v Recoletos Ltd [2013] EWCA Civ 730 at [64] 29 Antonio Gramsci Shipping Corporation v Recoletos Ltd [2013] EWCA Civ 730 at [65] 30 Antonio Gramsci Shipping Corporation v Recoletos Ltd [2013] EWCA Civ 730 at [66] 31 R v Peter John Sale [2013] EWCA Crim 1306 32 R v Peter John Sale [2013] EWCA Crim 1306 at [20] 33 R v Seager & Blatch [2010] 1 Cr App R (S) 60 34 R v Seager & Blatch [2010] 1 Cr App R (S) 60 at [76] 35 R v Peter John Sale [2013] EWCA Crim 1306 at [41] 36 Prest v Petrodel Resources Ltd and Others [2013] UKSC 34 at [4] 19

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NELSON MANDELA

Law Digest Winter 2013

The World in His Words

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ON AMBITION

There is no passion to be found playing small - in settling for a life that is less than the one you are capable of living

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ON EDUCATION

Education is the most powerful weapon which you can use to change the world. No country can really develop unless its citizens are educated

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There can be no keener revelation of a society’s soul than the way in which it treats its children.

“

ON SUCCESS

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ON CHILDREN

It is not where you start but how high you aim that matters for success

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A nation should not be judged by how it treats its highest citizens, but its lowest ones

ON LIFE

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ON NATIONHOOD

What counts in life is not the mere fact that we have lived. It is what difference we have made to the lives of others that will determine the significance of the life we lead

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ARBITRATION Dr Stuart Dutson - Partner, Eversheds LLP

The effect of fraud on arbitration D

Dr Stuart Dutson Partner, Eversheds LLP

“..allegations that a contract was tainted by fraud or corruption which if proven might well invalidate the main contract will not necessarily affect the existence or validity of the arbitration clause itself.”

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isputes arising out of international transactions are often resolved by arbitration.

In recent years there has been a notable increase of the number of arbitrations involving fraud. This has given rise to some difficult issues for arbitration practitioners. For example, when issues of illegality are raised as a form of defence to a claim brought in the arbitration, the arbitral tribunal must consider initially whether the nature of the illegality, such as fraud, invalidates the arbitration clause thereby depriving the tribunal of jurisdiction over the dispute. Further, fraud claims are notoriously difficult to prove. Questions such as whether arbitral tribunals would have sufficient power to compel production of evidence, impose necessary interim measures and recover assets subject to fraud have become the subject of heated debate among the arbitration practitioners. This article set out to address the effect of fraud on international arbitration.

Does The Tribunal Have J u r i s d i c t i o n?

It is widely accepted that a tribunal’s ruling on its own jurisdictional power is not final and subject to review by the courts. However, the effect of the doctrine of KompetenzKompetenz vary from jurisdiction to jurisdiction.

In England, the Supreme Court established that the last word on the jurisdiction of an arbitral tribunal will lie with a court rather than the tribunal itself.1 A challenge on the arbitral tribunal’s jurisdiction can often be raised either before the courts of the arbitral seat in an application to stay court proceedings (commenced in breach of an arbitration agreement) or to set aside the award, or during the proceedings

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for recognition or enforcement of the award abroad.

The doctrine of separability is another principle which is relevant in this connection. It requires that an arbitration agreement is treated as a distinct agreement and can be void or voidable only on grounds that relate directly to the arbitration agreement. This means that the invalidity of the main contract does not necessarily entail the invalidity of the arbitration agreement.3 In English law, the leading case on this issue was Premium Nafta Products Ltd v Fili Shipping Co Ltd,2 also known as Fiona Trust.

This case concerned an allegation that an arbitration agreement was invalid because the main contract containing the arbitration clause was induced by bribery. The HL held that section 7 of the Arbitration Act 1996 means that the “arbitration agreement must be treated as a ‘distinct agreement’ and can be void or voidable only on grounds which relate directly to the arbitration agreement and not merely as a consequence of the invalidity of the main agreement” Accordingly, allegations that a contract was tainted by fraud or corruption which if proven might well invalidate the main contract will not necessarily affect the existence or validity of the arbitration clause itself. Therefore, despite the subsequent invalidity or rescission of the main contract, the validity of the arbitration agreement between the parties may remain intact. In this circumstance, the issues whether fraud or corruption affects the parties’ rights or obligations under the main contract are therefore capable of being determined by the tribunal in arbitration. In other words, attacking on the validity of an arbitration clause merely on the basis of the invalidity of the main contract is ill-premised.

However, if a challenge directly goes to the arbitration clause itself as well as the main contract, one may be able to annul an arbitration clause. As an example, if it can be proved that the main contract has in fact never been made, e.g. because the signatures on it had been forged, this would constitute a direct attack on the effective formation of the arbitration agreement itself, as there

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was no agreement to arbitrate in the first place.

Therefore, it is generally accepted that an arbitral tribunal will retain jurisdiction to determine the dispute in a case involving allegations of illegality of the underlying transaction including fraud, corruption or money laundering etc.

An arbitration agreement may be invalidated on public policy grounds.

National laws may decide that certain

“investments made in accordance with the law”. Therefore, disputes relating to an investment procured through fraud will not be recognised as an investment made in accordance with the law. They will as a result fall outside the jurisdiction of any tribunal established pursuant to the treaty.7

Tribunal’s Duty to Investigate In certain circumstances, international tribunals have a duty to A claimant would be particularly may investigate fraud cases.

Generally speaking, concerned about the effective a tribunal cannot preservation and/or freezing determine matters beyond claims that the of assets in an arbitration have expressly involving fraud. Unlike national parties or impliedly submitted courts, arbitral tribunals do not to its jurisdiction.

Equally, as opposed automatically have the right to to state judges, the primary role of order these interim remedies. arbitrators is to enforce issues involve public interests which contract and not to defend public are too important to be left to private policy. Therefore, arbitrators have no determination, such as patent duty to investigate possible breaches rights,4 or claims based on breaches of criminal law of which there is no of criminal laws. It may be that an evidence and which were not raised arbitration clause is impeachable by the parties in their submissions.8 on public policy grounds due to the Nonetheless, failure to investigate overtly illegal nature of the principal reasonable suspicions of illegality contract, such as agreements may cause the tribunal to act so involving terrorism or slavery, may as to facilitate that illegality. For not be arbitrable at all. Arbitrating instance, a sham arbitration may the participants’ rights or obligations be used to launder the proceeds of under a terrorism plot would in itself crime, and in this circumstance, constitute a criminal offence as it a knowing arbitrator may have would arguably facilitate a universal an obligation to report.9 Moreover, criminal activity anywhere in the some arbitrators and commentators world. However, these do not extend have advocated that arbitrators to fraud or corruption cases.5 may have a general duty to render However, in the investment treaty a binding, final and enforceable arbitration context, if an investor award.10 Failure to address evidence has engaged in fraud or corruption of illegality may also expose the in relation to its investment, it award to the risks of being set aside may be prevented from resorting or enforcement challenges which will to arbitration, as the host State’s be contrary to such general duty of consent or open offer to arbitration arbitrators. Accordingly, arbitrators contained in the relevant investment may well have a positive duty to treaty arguably does not extend investigate suspicions of fraud if the to investment tainted by fraud. circumstances require so.

Therefore, fraud would fall outside the scope of the arbitration agreement Can Arbitral Awards Survive between the investor and the host Fraud?

State. In this case, a tribunal would If an arbitral award is obtained not have jurisdiction to hear the through fraud, the enforcement of the dispute.6 arbitral award may be refused on the Equally, some investment ground of being contrary to public treaties may limit the protection to policy at the place of enforcement.

Likewise, a party can also seek to set aside an arbitral award on the basis that it has been obtained by committing a fraud on the tribunal.

In England, this is a scenario section 68(2)(g) of the Arbitration Act 1996 primarily envisages. The test under section 68(2)(g) requires that there be evidence of an actual fraud, for example a deliberate concealment of a key document, and the award must have been caused by the fraud.

In Chantiers de L’Atlantique SA v Gaztransport,11 the applicant (A) applied to set aside an arbitration award on the ground that it was obtained by fraud on the part of the respondent (R). R licensed its technology to A for use in construction of the vessels. There was a problem with the bonding of the materials. A was concerned that the problem might be inherent in the design of the technology. R carried out laboratory tests on materials supplied from the shipyard to try to identify the problem. The test samples suffered some adhesive failures. R then carried out further tests on materials obtained from the manufacturers. The results of those tests were satisfactory. R failed to disclose the initial test results in the subsequent arbitral proceedings between the parties. A claimed that R had deliberately given misleading evidence to arbitrators, and it was argued that this amounted to fraud for the purposes of the section 68(2) (g). However, the court found that if the true position (i.e. the initial test results) had been disclosed to the arbitrators, that would not have affected the result of the arbitration.

It was therefore held that the award was not “obtained” by fraud and that it had not caused substantial injustice within the meaning of section 68.

Effect of Fraud on The Merits of The Claim At the merits stage, the tribunal may be asked to consider the question of whether any alleged illegality renders the contract void, voidable and/or unenforceable, thereby cutting off the claimant’s claim at root. This is ultimately a question for the applicable law under which the contractual rights and obligations are to be determined.

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Even if a tribunal has the power to order interim remedies, it would still lack the coercive ability to enforce an injunction against third parties.

In practice, however, the answer may depend on the interplay of several legal systems, including the criminal laws or public policies in the place of performance, any requirements of the law or public policy of the seat of arbitration, and any considerations of international public policy.

Breach of applicable law The situation is relatively straightforward if the alleged illegality is to be considered under the governing law of the contract. For instance, if a contract is governed by English law, and was performed in England, the question will be simply what contractual effect the alleged breach of English law or public policy has on the contract and/or the enforceability of rights under it.

Breach of foreign law The applicable law is usually, but not always, the law chosen by the parties. In certain circumstances, certain mandatory rules of the place of performance may have an overriding effect that they cannot be derogated from by agreement.

In this case, the law chosen by the parties may have to give way to such mandatory laws on this particular point, and the question then becomes what is the effect, under the governing law of the contract, of the foreign illegality? Different jurisdictions answer this question differently. For example, under English law, if the contract breaks a mandatory foreign law, especially of “a foreign and friendly state”, the contract will not be enforced in England on public policy grounds.12 This may not be the case under the laws of other jurisdictions, such as Swiss law.

An arbitral tribunal is bound to render an award that does not offend

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Fraud does not automatically invalidate an arbitral award.

against the public policy of the seat of arbitration. Many jurisdictions construe the public policy exception narrowly, requiring violation of international public policy to justify setting aside or refusal to enforce an award.13 An award that is in conflict with such public policy is liable to be set aside on appeal.

The clean hands doctrine under international law is a principle according to which a claimant’s involvement in activity illegal under either municipal or international law may bar the claim. Under this principle, if an investor is shown to have engaged in significant misconduct directly related to its investment, it should not be able to pursue its claim.14 Under this doctrine, engaging in significant fraud or corruption in relation to its investment by a claimant, would be sufficient to prevent it from pursuing claims which have been tainted by that conduct. For instance, in Plama Consortium Limited v. Republic of Bulgaria, ICSID case No: ARB/03/24, the investor’s illegality involved fraud in the procurement of necessary approvals

from a Bulgarian authority. The tribunal deemed that the claimant’s claims were inadmissible. A similar principle has been adopted in many domestic laws, e.g. English equitable principle to the same effect. To the extent that such a principle is reflected in the domestic law, it will likely bar any claims in arbitration where the claimants have engaged in fraud or corruption in relation to the disputes. Equally, if a contract procured through fraud has been held void by the tribunal, the claimant having engaged in such conduct will lose the premise on which his claim is placed.

Limitations of Arbitration in Dealing With Fraud Cases Fraud claims are particularly onerous to prove, especially, if the alleged fraudster is a reluctant participant in the arbitration, as the case usually turns out to be. There are a number of inherent limitations of arbitration which cast doubt on the effectiveness of arbitration in resolving fraud claims. These include the following:

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Accelerated procedural timetable A prominent feature of arbitration which appeals to commercial people is that parties are normally free to agree to an accelerated procedural timetable resulting in considerable time and cost savings for both sides. However, the flip side of this feature of expedience is that arbitration procedures often do not allow sufficient time for arbitrators to thoroughly examine evidence in order to fully identify the hidden issues. This would be one of the major disadvantages for using arbitration in fraud claims where key evidence would be more likely than not to be concealed by defendants.

Limited powers of the tribunal – more difficulties in securing effective interim remedies A claimant would be particularly concerned about the effective preservation and/or freezing of assets in an arbitration involving fraud. Unlike national courts, arbitral tribunals do not automatically have right to order these interim remedies. This is an issue largely decided by the lex arbitri. For instance, in England, the Arbitration Act 1996 provides that unless otherwise agreed by the parties, the tribunal has the same powers as the court to order a party to do or refrain from doing anything (Section 48(5)).

Even if a tribunal has the power to order interim remedies, it would still lack the coercive ability to enforce an injunction against third parties. A tribunal’s power to compel parties is limited, but its power to compel nonparties is even more limited, given that they will not be contractually bound by the arbitration agreement.

Inability to obtain evidence preaction or from third parties The same reasoning applies to obtaining evidence pre-action before the tribunal is formed or from third parties. It might be thought that where necessary, the courts could step in to assist a potential claimant by ordering pre-action disclosure. However, this might not be the case in England. In EDO Corporation v. Ultra Electronics Ltd,15

the applicant applied to the court for pre-arbitration disclosure in relation to certain tender documents containing information which the respondent might have provided to a third party in breach of the confidentiality clause contained in a contract between them. The contractual terms required any disputes arising out of the contract to be referred to arbitration. The applicant argued that the disclosure was necessary for it to ascertain whether there was any substantive dispute with the respondent. It was held that the court’s power to order pre-action disclosure in this manner would not be available where the underlying dispute arises out of a contract which requires any dispute to be determined by arbitration. Accordingly, English courts may decide that they do not have jurisdiction to order pre-action disclosure in support of the arbitral process.

In order to obtain evidence from third parties, under English law, parties to arbitration will have to resort to the court. Sections 43 and 44 of the AA 1996 provide the court with power to make the same orders in relation to arbitral proceedings as legal proceedings, in respect to a number of specific matters including taking of evidence of witnesses, and the preservation of evidence and assets. However, there is no power for the court to order general disclosure of documents from a third party (other than ordering a person to attend before the tribunal to produce specific documents) and there are also restrictions on when the court could exercise its powers in support of arbitral proceedings.

These will be discussed in more detail below in connection with English courts’ powers to assist with compelling evidence in support of foreign arbitral proceedings.

Narrow disclosure of documents In English court proceedings, a party is required to disclose all directly relevant (and admissible) documents including those that may be harmful to that party’s case and the existence of which may not even be within the other side’s knowledge.

This sort of extensive disclosure is of

particular assistance to a claimant in fraud, who may find it difficult to uncover documentary evidence of the alleged wrongdoing and may benefit when such evidence is unearthed in the most unexpected or unlikely places.

The arbitral process does not normally provide for such an extensive disclosure exercise.

Parties will often agree to carry out a disclosure exercise in accordance with the IBA Rules on the Taking of Evidence in International Commercial Arbitration (“IBA Rules of Evidence”) whereby the parties submit all the documents they rely on and the opponent party can request specific documents. A “Redfern Schedule” may be used by the parties to submit to the tribunal and the other parties such a “Request to Produce”, which must contain a description of each requested document or a description in sufficient detail of a narrow and specific requested category of documents that are reasonably believed to exist together with a description of how the documents are relevant and material to the outcome of the case.16 If the documents are not produced voluntarily, the tribunal will determine what evidence should be disclosed according to the guidelines provided in Art 9 of the IBA Rules of Evidence. The factors the tribunal should take into account under Art 9.2 in exercising its discretion include whether the evidence is of “sufficient relevance to the case”, whether it would be an “unreasonable burden to produce the requested evidence”, “grounds of commercial or technical confidentiality”, and “considerations of procedural economy, proportionality, fairness or equality of the Parties” etc. It might be said that a claimant pursuing a fraud claim will take greater benefit from the more demanding and extensive disclosure requirements in English court procedure, than from those that arbitral proceedings normally adopt.

Burden of Proof As a general rule, the party alleging fraud bears the burden of

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proving the fraud. The standard of proof for fraud claims will ultimately be a matter for the applicable law of the case. There is no uniformity in the approaches international tribunals have taken in respect to the standard of proof for proving fraud. In general terms, it will be the same as the normal standard of proof in proving a civil claim which in the arbitration context will be the “preponderance of evidence” or “balance of probability” test. This was demonstrated by a survey of twenty-five arbitral awards regarding bribery, where only five tribunals ruled that “clear and convincing” evidence (i.e. those tribunals apparently required a higher than normal standard of proof) was needed to declare the agreement invalid because of corruption, whereas the other tribunals all adopted a lower standard.17 The same can certainly be applied to cases of fraud.

Regardless of the standard of proof, a tribunal is normally free to determine the weight and credibility to be given to the evidence presented.

Art. 9.1 of IBA Rules on the Taking of Evidence in International Commercial Arbitration (“IBA Rules of Evidence”) provides that “the arbitral tribunal shall determine the admissibility, relevance, materiality and weight of evidence”. Therefore, tribunals may find circumstantial evidence of fraud to be sufficient, in the circumstances where direct evidence would otherwise be difficult to be obtained.

Shifting burden of proof In a fraud claim, it is usually very difficult for the claimant to obtain direct evidence of fraud, and it may be that countervailing evidence is easily accessible to the party accused of fraud. For these reasons, some arbitral tribunals have

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adopted an approach which shifts the onus of proof from claimants to defendants and thereby take away the undue advantages defendants enjoy in defending a fraud claim. For instance in an ICC arbitration, (ICC Case no. 6497 (1999)), the tribunal explained: “The “alleging Party” has the burden of proof [to demonstrate the existence of bribery ... The “alleging Party” may bring some relevant evidence for its allegations, without these elements being really conclusive. In such case, the arbitral tribunal may exceptionally request the other party to bring some counterevidence, if such task is possible and not too burdensome.

If the other party does not bring such counter-evidence, the arbitral tribunal may conclude that the facts alleged are proven (Article 8 or the Swiss Civil Code). However, such change in the burden of proof is only to be made in special circumstances and for very good reasons.”

Use of adverse inference – Art.9 of IBA Rules of Evidence In fraud cases, a party already having engaged in wilful misconduct, may have every incentive to continue to conceal relevant evidence. As such, in order to ensure fair adjudication arbitral tribunals may take the approach of adverse inferences. This is especially so when arbitrators lack other powers to compel evidence.

Art. 9 of the IBA Rules of Evidence provides that in the event that a party fails to produce or make available evidence ordered to be produced “the Arbitral Tribunal may infer that such document would be adverse to the interests of that Party.” The associated commentary to the IBA Rules of evidence indicated that “arbitral tribunals routinely create such inferences in current practice.”18

1 Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46 2 [2007] UKHL 40 3 Ibid at paras 17 and 18.

4 Gary Born, page 781 5 Ibid, pages 802-805 6 Phoenix Action ltd. v. The Czech Republic (ICSID Case No. ARB/06/5), Award of 15 April 2009: “The purpose of the international mechanism of protection of investment through ICSID arbitration cannot be to protect investments made in violation of the laws of the host State or investments not made in good faith, obtained for example through misrepresentations, concealments or corruption, or amounting to an abuse of the international ICSID arbitration system. In other words, the purpose of international protection is to protect legal and bona fide investments.” (para 100). The tribunal denied jurisdiction on other grounds in this case.

7 In Fraport v. The Philippines, an ICSID tribunal denied jurisdiction on the basis that the investment had not been acquired in conformity with Philippine laws: “Fraport was consciously, intentionally and covertly structuring its investment in a way which it knew to be a violation of the[Anti-Dummy Law].”

8 Alexis Mourre, Arbitration and Criminal Law: Reflections on the Duties of the Arbitration, 22 Arbitration International 95, 2006, para 111 9 Sham arbitration will be regarded as money laundering. Arbitration may be more attractive for this purpose than litigation due to its private nature. “Claimant” and “Respondent” would settle and request a consent award, which legitimises any settlement payment.

10 Günther Horvarth, ‘The Duty of the Tribunal to Render an Enforceable Award’ (2001) 18 Journal of International Arbitration 135, 136. See also Art. 32.2 of the LCIA Arbitration Rules where such a duty of tribunals is expressly stated.

11 [2011] EWHC 3383 (Comm) 12 Foster v Driscoll [1929] 1 KB 470, 518 13 In Westacre Investments Inc. v JugoimportSDPR Holdings Co. Ltd [1999] 3 WLR 811, for instance, the court referred to the distinction drawn between international public policy - rules of public policy which if infringed will lead to non-enforcement by the English court whatever their proper law and wherever their place of performance, and English domestic public policy, and held that only violation of the former can justify interference with an award.

14 C. Lamm, Fraud and Corruption in international arbitration, TDM Vol 10, Issue 3, May 2013, pages 720-721 15 [2009] EWHC 682 (Ch) 16 Art. 3 of the IBA Rules of Eveidence.

17 Antonio Civellaro, Arbitration Case Law on Bribery: Issues of Arbitrability, Contract Validity, Merits and Evidence, in Arbitration: Money Laundering, Corruption And Fraud 114, 117, Kristine Karsten, Andrew Berkeley eds., 2003 18 IBA Working Party, «Commentary on the New IBA Rules of Evidence in International Commercial Arbitration», Bus. L. Int’l Issue 2, 16, 36 (2000)

CONSTITUTIONAL LAW Lekan Oladapo Esq. LLB (Ife) BL.

Justiciability of Chapter II the 1999 Constitution is key to governmental accountability.

P

Lekan Oladapo Esq. LLB (Ife) BL.

“..the Constitution as the grundnorm restricts the judicial authority from considering the provisions of Chapter II of the Constitution and in effect, renders it non – justiciable.”

REAMBLE The 1999 Constitution as a byproduct of 1979 Constitution provides for Fundamental Objectives and Directive Principles of State Policy as captured by Chapter II of the 1999 Constitution of the Federal Republic of Nigeria. The said Chapter II by virtue of Section 6 (6) (c) of the Constitution is non - justiciable as it reads as follows: “The judicial powers vested in accordance with the foregoing provisions of this section – shall not, except as otherwise provided by this Constitution, extend to any issue or question as to whether any act or omission by any authority or person or as to whether any law or any judicial decision is in conformity with the fundamental objectives and directive principles of state policy as set out in Chapter II of the Constitution”.

Therefore, the Constitution as the grundnorm restricts the judicial authority from considering the provisions of Chapter II of the Constitution and in effect, renders it non – justiciable. Nevertheless, the provisions serve as guide to the executive arm in shaping and directing the policy of the state, though, it cannot be compelled by Courts, even, if the state has failed in observing these salient provisions.

In this context, these rights can be categorised or likened to Economic, Social and Cultural Rights (“ESC”) otherwise known as second generation rights. Nigeria is a signatory to the International Covenant on Economic, Social and

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Cultural Rights of 1966 by virtue of Article 27, Nigeria became a member in 1993. Moreover, ESC Rights equally contained in the African Charter on Human and Peoples Rights domesticated by the National Assembly. Therefore, it becomes necessary to apprise Chapter II of the 1999 Constitution, particularly, Economic, Social and Educational Objectives which are in pari matarial with ESC Rights. The foreground to this is Section 14 (1) of the 1999 Constitution, which provides that “The Federal Republic of Nigeria shall be a State based on the principles of democracy and social justice”. It is on this premise that subsection 2 of Section 14 relies upon and hence provides that: (a) Sovereignty belongs to the people of Nigeria from whom government through this Constitution derives all its power. (b) The security and welfare of the people shall be the primary purpose of the government; and (c) The participation by the people in their government shall be ensured in accordance with the provisions of the Constitution.

Section 16 of the same Constitution expresses economic objectives of the government. It mandates the government not only aiming at the prosperity of the nation towards application of the national resources but in doing so it should create level grounds for the full participation of all citizens in building a prosperous national economy. It sounds a caveat to the government not to be operating the economy in such a way that concentration of wealth or the means of exchange will be concentrated in the hands of a few. Subsection (d) of Section 16 is more explicit as it mandates the government to provide “suitable and adequate shelter, suitable and adequate food, reasonable national minimum living wages, old age care and pensions, and unemployment, sick benefits and welfare of the disabled are provided by all citizens.”

Section 17 of the same Constitution outlines the Social Objectives of the government and declares by the provision of Subsection (1) of section 17 that “The state social order is founded on ideals of Freedom, Equality and Justice.” In this circumstance, every citizen is subject to the Rule of Law, the rights of the citizens must

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be guaranteed, the independence of the judiciary, judicial impartiality and accessibility to courts shall enjoy protection. Provision of employment and good life must be ensured, a good working environment furnished with facility for leisure, and for religious, social and cultural life. The government should ensure adequate provision of health facilities, safety and welfare for workers in the work place. Medical facilities shall equally be extended to all persons, not necessarily in employment. There should be commensurate payment for work done. Children, young persons and the aged shall enjoy protection against exploitation, with the government giving necessary assistance with all of the above as occasion demands. The promotion of family life shall be encouraged.

Section 18 of the same Constitution provides for the educational objective which in its subsection (1) states that the, “Government shall direct its

and enhance human dignity that is consistent with the objectives. It equally encourages the development of science and technology which enhance cultural values.

THE NON – JUSTICIABILITY ARGUMENT Reasons are abound, for the non – justiciability of these provisions.

Following the Report of the Constitution Drafting Committee (“CDC”), Vol. 1 (Lagos: Federal Ministry of information 1976) at XV – XVI, the CDC considered it unwise to enforce the provisions on the grounds of (i) bifurcation of obligation, (ii) the resource constraint argument, (iii) the institutional illegitimacy/ democracy deficit argument, etc.

Having perused these arguments as proffered by the CDC, it follows that enforcement of these rights would be contingent upon the availability of facilities that would make such rights realisable. For example, the right

“We do not believe that the grounds for non – justiciability of ESC Rights or Directive Principles of State Policy are still tenable based on the popular clamour for constitutionalism in Nigeria We believe take a bold justiciability shall explain

that our courts should step in seeing to the of these rights as we further.

GROUNDS FOR JUSTICIABILITY. We do not believe that the grounds for non – justiciability of ESC Rights or Directive Principles of State Policy are still tenable based on the popular clamour for constitutionalism in Nigeria. This era of global advocacy for

Whilst rights to liberty and freedom against torture and degrading treatment are justiciable, economic and social rights such as right to education and clean water are not

policy towards ensuring that there are equal and adequate educational opportunities at all levels.” This can be done through the provision of S.18 (3) (a) free, compulsory and universal education; (b) free university education; (c) free adult education literacy programme.

Section 20 of the same Constitution provides for the protection of the environment, land, water, air and wild life, whilst section 21 ensures the protection, promotion and preservation of Nigerian culture

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to health requires the provision of medical facilities for such right to be realisable. From another perspective, the judiciary is said to be incapable of reviewing social economic policy.

This is asserted on the premise that such an area requires technical skills. It is even contended that judicial action on those rights is a breach of the separation of power.

Judicial pronouncement on social economic rights by implication is usurping the rights of the executive as policy makers.

good governance cannot overlook the reality of evolvement of a generation of rights such as the 2nd generation of ESC Rights, the 3rd generation of Community and Solidarity Rights, the 4th generation of Sustainable Development, the 5th generation of Democracy and good Governance etc. Nevertheless, the arguments canvassed above are fallacious on the basis that it is the primacy of the government to provide adequate facilities to the citizenry. It can also be argued that right to life or dignity

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of man cannot be fulfilled without the existence of necessary facilities to keep the life going.

It is equally posited that Nigeria, as signatory, to the African Charter and International Covenant of Economic, Social and Cultural Rights, nevertheless, finds itself in a moral difficulty by paying lip service to the enforcement of these rights through its non – enforcement policy.

It is our contention that the courts can creatively explore all these provisions as done by the Indian courts to bring these ESC right within the jurisdiction of the court.

Moreover, in as much the Constitution is an organic document, it is expected to be interpreted broadly and liberally. It is our contention that the Preamble of the 1999 Constitution sets out the purpose and intendment of the Constitution of where it unequivocally stated that “…AND TO PROVIDE for a Constitution for the purpose of promoting the good governance and welfare of all persons in our country on the principles of Freedom, equality and justice, and for the purpose of consolidating the unity of our people.”

It sounds paradoxical for the Preamble which is part of the Constitution, which is not non – justiciable by virtue of Section 6 (6) (c) (supra) cannot be construed by our courts to give judicial force to Chapter II of the Constitution.

It can be argued that the proviso “except as otherwise provided by this Constitution,” which provides for exemption in Section 6 (6) (c) gives judicial authority for construing Chapter II of the Constitution as justiciable.

It is of relevance here that the position of Professor Ephiphany Azinge in his paper at the Justice Idigbe Memorial Lecture, on issues of Fundamental Rights, in May 2012, is instructive from the standpoint that the said provision of Section 6 (6) (c) cannot restrict the courts from looking at whether the legislature and the executive have failed in conforming with the provisions of Chapter II of the Constitution against the background of Section 13 which provides that all organs of the government must conform with the observance and application of this chapter. We however note the limitation of this argument as the said S.13 is itself captured under

Chapter II of the Constitution which is inclusive in the restriction placed

by Section 6 (6) (c) of the Constitution.

Nevertheless, the argument is plausible if the Court can look beyond the said Section 13 as it did in Inakoju V. Adeleke & OTRS (2007) ALL FWLR (Pt 353), where the Supreme Court construed section 188 (10) that restricts the jurisdiction of the Court from considering the provisions of section 188 (1) – (9). The Court affirmed that it can only be restricted or the ouster clause could be invoked only on the substantial compliance to section 188 (1) – (9), i.e. the the Court in determining jurisdiction or otherwise is competent to consider whether it has jurisdiction or not.

Having said this, it is equally important that our judges as custodian of justice are not unduly limited in the discharge of their functions. Cases are abounding outside Nigerian shores where the judiciary has been more creative in dealing with non – justiciability provisions. For example in India, the courts have taken radical departure by setting this aside. Borrowing leaf from India were cases where the courts had elevated some of these provisions of Directive Principles of the State Policy to the justiciable level of Fundametal Rights as similar to Chapter IV of Nigerian 1999 Constitution. For example Art. 12 of the International Covenant of Economic, Social and Cultural Rights which stipulates right to health has been interpreted as Right to life under the Fundamental Rights in the case of Bandhsa M. Morca v.Union of India SC (1984) 5 SCC 161. The court pined that: “The rights to live with human dignity enshrined in Article 21 derives its breath from the Directive Principles and State Policy and particularly clauses (e) and (f) of Articles 39 44 and 42 at least it must include protection of health and strength of workers men and women and of tender age against abuse opportunities and facilities for children….. to develop in healthy manners, freedom and dignity, education facility must exist before a man will live in dignity”.

In Vishaka v. State of Rafasthan (1997) 6 SCC 241 the Court of India held that the Rights to shelter under the International Covenant for Economic, Social and Cultural

..it is equally important that our judges as custodian of justice are not unduly limited in the discharge of their functions.

Rights finds no corresponding expression in Directive Principles and State Policy, it was said that the rights form part of Article 21 . The right to life can be interpreted to mean right to food and reasonable accommodation.

The case of State of Madras V. Champaka AIR,1951,SC226 the Supreme Court of India ruled that the communal order enforced by the Madras University denying the applicants admission on the ground of tribe is a violation of Articles 15 (1) and 29 (2) that forbid discrimination on the ground of race, religion and caste. The Court overruled Article 46 that restricts it from judicial review of the stated articles. It is equally true that the South African Constitutional Court tows the same line with Indian courts in the adjudication of ESCR. In the case of South Africa there are no provisions declaring the Bill of Rights, which is equivalent of Directive Principles of the State Policy as non – justiciable.

CONCLUSION In true fulfillment of democratic dividends and good governance it is imperative that our legislature should reconsider Chapter II of the Constitution to allow unhindered access to courts by the citizens towards encouraging all organs of the government to observe and apply Chapter II of the Constitution. It is our suggestion that Corporate Social Responsibility which is of a moral persuasion will be elevated to the deliverable, effective and beneficial pedestal for the good of all Nigerians.

Apart from this, the pronounced impunity and corruption in the high place tend to justify aggressive enforcement of Chapter II through radical review of government actions in the observance, application and full conformity of these laudable provisions.

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Protecting Africa’s Intangible Cultural Heritage in the Era of Globalization: Prospects, Perils, and Problems

T

Uche Ewelukwa Ofodile, SJD (Harvard) Professor, University of Arkansas School of Law. ViceChair, International Intellectual Property Committee, American Bar Association Section of International Law.

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he Louis Vuitton Spring/ Summer 2012 Menswear Fashion Show must have come as a big surprise to the Maasai people.

On display were various designs made from Maasai Shukas, and they looked lovely. Louis Vuitton neither obtained permission from the Maasai group to display the Shukas nor did the company share any proceeds from the show with the group. Was this “theft” of valuable intellectual property or flattery? Could the Maasai group have done anything to stop Louis Vuitton from putting the group’s cultural expression on display? Can the Maasai group do anything today to prevent the unauthorised exploitation of their cultural heritage? What chance does the Maasai ethnic group or any other indigenous group in Africa have against unauthorised commercial exploitation of valuable cultural

heritage particularly when the use is by a multinational corporation with resources to hire the best lawyers in the world? These questions are pertinent largely because creations of the mind, such as literary and artistic works; inventions; designs; and symbols, names and images, have become valuable commodities in the global marketplace. The questions are also pertinent in part because Louis Vuitton is a company that aggressively protects its intellectual property rights (IPRs). In the past, Louis Vuitton has sued a company for using the term “Chewy Vuitton” in relation to dog toys,1 has sued a car manufacture for running a television commercial that featured, for less than 30 seconds, a basketball that had what appeared to be the Louis Vuitton monogram,2 and has even sued a Darfur fundraiser, Nadia Plessner, over t-shirts the artist made to raise money for the victims of genocide in Darfur. The t-shirts in question had the image of a Darfur victim carrying what appeared to be a Louis Vuitton bag. However, instead of the well-known “LV” monogram, Plessner used an “LS” monogram – LS standing for Living Simple.

Louis Vuitton is not the only company cashing in on the Maasai name. “Masai” is the brand name of Masai Omega Automotive Ltd, a company in Staffordshire, U.K, that manufactures Masai Land Rover Accessories and Parts.3 A search of the trademark registered with the United States Patent and Trademark Office (USPTO) reveals at least six pending or abandoned applications to register the Maasai name as a trademark. For example, an application filed on August 28, 2013 (Serial number 86050092), seeks to register the term MAASAI HONEY BEER on the principal register.

Since January 1, 2008, the term MAASAI-GRASS has functioned as a registered trademark in the United States (Registration Number 3362030). Although the trademark application for MAASAI-GRASS was published for opposition on October 16, 2007, there is no indication that the Maasai group opposed this

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SPECIAL FEATURE

application or was even aware that such an application had been filed.

Throughout Africa, ethnic and indigenous groups are fighting, against all odds, to hang on to their cultural heritage. Cultural symbols such as the Ashanti Gold Stool (Ghana), Eyo Masquerade (Nigeria), and Edo Ivory Mask (Nigeria) are either seriously threatened or are already massively exploited by outsiders. In Nigeria, shrines are routinely raided and valuable cultural artifacts stolen and shipped overseas. The Ghanaians have lost control over the Adinkra and Kente textiles, as have the Kenyans over Kiondos and Kikoys; increasingly these products are mass produced in countries like China. Cultural symbols belonging to the Sans and the Zulus in Southern Africa are also up for grabs. Several trademarks incorporating the Zulu name are now registered with the USPTO including, ZULU (Reg. No. 4093844), ZULU LOUNGE & BISTRO, ZULUGUARD (Reg. No. 4416897), ZULUTRADE (Reg. No. 4157819), and ZULUDAWN (Reg. No. 3345816).

Before anyone goes up in arms against Louis Vuitton or other companies and individuals that may be profiting from the use of African images, names and symbols, several questions must be asked and answered. Is intangible cultural heritage (ICH) taken seriously in Africa and effectively protected? Are contemporary traditional cultural expressions (TCEs) protected in the continent? Who is to be blamed for the failure to fully and effectively safeguard, preserve and protect Africa’s ICH and TCEs? Does the problem lie with the global system of IPRs or with the failure of laws, institutions and imagination in Africa? How can individuals and groups in Africa be equipped to protect their traditional knowledge and intellectual creations? How can individuals and groups in Africa be equipped to secure maximum financial benefit from their creative endeavors that are rooted in culture and tradition? What is the appropriate role of law (domestic,

regional, and international) in Means of Prohibiting and Preventing the protection of Africa’s cultural Illicit Import, Export, and Transfer property? What are the legal barriers of Ownership of Cultural Property to effective protection of ICH and (1970); (iii) the Convention for the TCEs in Africa? Going forward, Protection of the World Cultural what are the best approaches to and Natural Heritage (1972); (iv) the protection of intangible cultural the Convention on the Protection of the Underwater Cultural Heritage property in Africa?

While organisations such as (2001); the Convention for the the World Intellectual Property Safeguarding of the Intangible Organization (WIPO) and the World Trade Organisation (WTO) Preserving and protecting struggle to reach a consensus ICH is a worthwhile policy on the appropriate international instrument for protecting ICH, objective from the standpoint countries in Africa must be of environmental protection, very proactive in protecting conservation, cultural the continent’s vast cultural resources. Policy makers in survival, cultural diversity, Africa cannot afford to wait respect for human rights, for the outcome of debates in and economic development. international policy circles but must use a multiplicity of tools preserve and protect Africa’s ICH. Cultural Heritage (2003); (v) the on the Protection For some countries, using existing Convention IP laws, with modifications, may be and Promotion of the Diversity of the best strategy. For many other Cultural Expressions (2005); and (vi) countries, a new and different system The Swakopmund Protocol on the of protection (a.k.a. a sui generis Protection of Traditional Knowledge system) may be the better option. and Expressions of Folklore (2010).

To effectively protect traditional Whether using existing IP laws or a sui generis legal mechanism, knowledge in Africa, legal, regulatory customary law rules relating to use and institutional reform is necessary. and protection of cultural heritage Traditional knowledge and heritage must not be ignored. Non-legal studies must be fully integrated into mechanisms such as advocacy, public policy. Countries must strive education, and diplomacy can be to do a complete inventory of their very useful. Above all, it is very resources. To date, few countries in important for countries in Africa to Africa have done a complete inventory address a host of factors that have of their ICH, few countries have contributed to the poor state of affairs made the protection of traditional in the continent. Furthermore, knowledge a priority, few countries with renewed emphasis on regional have devoted adequate resources integration in Africa, the possibilities to the protection of traditional of enhanced regional cooperation in knowledge, and few countries have the task of protecting and preserving fully appreciated the immense development benefits associated with Africa’s ICH must be fully explored.

Overall, offensive and defensive traditional knowledge. This must approaches to protecting traditional change. A comprehensive framework knowledge in Africa are necessary. for protecting traditional knowledge For a start, countries in Africa must address the tensions and should ratify and implement the key contractions in intellectual property international and regional treaties law. Such a framework must go well that aim to protect cultural property beyond intellectual property law and including: (i) the Hague Convention look at heritage law broadly conceived. for the protection of Cultural Property Customary law, criminal law, unfair in the Event of Armed Conflict competition law, safeguarding and (1954); (ii) the Convention on the preservation law, contract law,

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Safeguarding of the Intangible Cultural Heritage (hereinafter “the ICH Convention”) defines intangible cultural heritage as “the practices, representations, expressions, knowledge, skills – as well as the instruments, objects, artefacts and cultural spaces associated therewith – that communities, groups and, in some cases, individuals recognize as part of their cultural heritage.”10 ICH can be in a variety of formats including: oral traditions and expressions; performing arts; social practices, rituals and Indigenous groups in Africa festive events; knowledge must be encouraged and given and practices concerning nature and the universe; and the capacity to assert claims traditional craftsmanship.11 over their cultural heritage ICHs are part of what is broadly and traditional knowledge. referred to as “traditional knowledge.”

WIPO makes Beyond legislative solutions, a distinction between traditional communities and groups in Africa knowledge (TKs), genetic resource must be encouraged to explore (GRs) and TCEs. TKs are “knowledge, judicial solutions. Cases such as know-how, skills and practices that Calder v. British Columbia (1973 are developed, sustained and passed – Canada),4 Mabo v. Queensland on from generation to generation (1992 – Australia),5 Alexkor Limited within a community, often forming v. The Richterveld Community part of its cultural or spiritual (2003 – South Africa),6 Sesana v. identity”.12 GRs “refer to genetic Botswana (2006 – Botswana),7 material of actual or potential value,” Endorois v Kenya (2010 – Kenya),8 while TCEs cover all expressions of and The Mayagna (Sumo) Awas culture “and may include music, Tingni Community v. Nicaragua dance, art, designs, names, signs and (2001 – Nicaragua),9 suggest that in symbols, performances, ceremonies, general, indigenous groups in Africa architectural forms, handicrafts and and the world over have been more narratives, or many other artistic or forceful in asserting their right to cultural expressions.”13 land and other natural resources than they have been in asserting 2. Why Protect Intangible Cultural claims over their cultural heritage. Heritage?

This must change. Indigenous Preserving and protecting ICH and groups in Africa must be encouraged TCEs is a worthwhile policy objective and given the capacity to assert from the standpoint of environmental claims over their cultural heritage protection, conservation, cultural and traditional knowledge. survival, cultural diversity, There are downsides to integrating respect for human rights, and and mainstreaming traditional sustainable economic development. knowledge into public policy. The By adequately and appropriately groups that such measures aim protecting ICH, states advance a to protect may ultimately lose number of goals including: rural control over their cultural heritage. development, cultural diversity, The disputes that could erupt if women empowerment, empowerment the benefits of commercialising of local communities and indigenous traditional knowledge are not groups, boost in tourism (for distributed fairly can destabilise example through, cultural heritage already fragile states in Africa. tourism and historical tourism), boost in export trade, and poverty 1. What Is ICH? What Are reduction. ICH implicates rights that Traditional Cultural Expressions? are guaranteed under international The UNESCO Convention for the human rights law as well as under custom and export control law, as well as immigration law can and must be used to address the threats to Africa’s cultural heritage. Thus, countries must strengthen their IP system and make the system more accessible to individuals, communities and groups in Africa. In addition, countries must also explore and promote alternative approaches to protecting Africa’s ICH taking into account the needs and expectations of ICH and TCE custodians.

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the African Charter on Human and People’s Rights.14 Article 22 of the Charter declares that “All peoples shall have the right to their economic, social and cultural development with due regard to their freedom and identity”.15 In Article 15(1) of the International Covenant on Economic, Social and Cultural Rights, State Parties are obliged to recognise the right of everyone “[t]o take part in cultural life”.16 To achieve the full realisation of the right to culture, State Parties are obliged to take various steps including “those necessary for the conservation, the development and the diffusion of… culture.17 Finally, the International Covenant on Civil and Political Rights declares that “In those States in which ethnic, religious or linguistic minorities exist, persons belonging to such minorities shall not be denied the right, in community with the other members of their group, to enjoy their own culture, to profess and practice their own religion, or to use their own language.”18 Overall, the unauthorised use, and reproduction of indigenous TCEs and ICH by non-indigenous entities raise legal questions as well as economic, cultural and spiritual concerns.

3. Why Is Intangible Cultural Property Not Effectively Protected in Africa?

Why have countries in Africa done little to safeguard, develop, preserve and promote the continent’s rich cultural heritage? Who takes the blame for the failure to fully protect Africa’s ICH and TCEs? The slave trade, colonialism, imperialism, and other exploitative encounters with external actors undoubtedly contributed to the neglect, destruction and marginalisation of ICH in Africa. However, today, a number of other factors also contribute to the poor state of affairs in the continent. These factors include failure by governments in Africa to prioritise ICH; inadequate conceptualisation of the link between ICH and development; the adoption of economic development models that prioritise tangible natural resources over intangible assets; poor and largely inaccessible legal frameworks that make it difficult if not impossible for communities

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to be active participants in the effort to preserve and protect their ICHs; marginalisation of culture in development policy and practice; marginalisation of heritage studies and museology in education policy; weak borders and weak border protection measures; corruption, particularly as regards customs enforcement and border patrol; and destructive ethnic/identity politics when it comes to identifying ICH that merit national protection and preservation. In post-colonial Africa, with urbanisation and globalisation, youths are also fleeing villages and clans and are leaving behind valuable cultural heritage.

ensure compliance, State Parties are required to submit periodic reports.

Article 2(3) defines “Safeguarding” to mean measures “aimed at ensuring the viability of the intangible cultural heritage, including the identification, documentation, research, preservation, protection, promotion, enhancement, transmission, particularly through formal and non-formal education, as well as the revitalisation of the various aspects of such heritage.”

To date, about 37 countries in Sub-Saharan Africa have ratified the ICH Convention.20 The safeguarding framework is important but has its limitations. One major limitation is

framework for protecting qualifying ICH in Africa. The IP framework can be used offensively as well as defensively.

Four main types of IPRs recognized under international law and by most jurisdictions in Africa are Patents, Copyrights, Trademarks, Industrial Designs, and Trade Secrets (Industrial Design and Patent will not be discussed in this paper as they have limited application to ICH). There are many advantages to using the IP framework to protect Africa’s cultural heritage.

First, most countries in Africa already have laws and institutions in place to protect different types of IP

The Maasi, Zulu Tuareg ICH have been extensively exploited by foreign companies without much benefit to the groups.

4. Preserving and Protecting Africa’s ICH and TCEs: The Safeguarding Framework The safeguarding framework flows from the ICH Convention. The ICH Convention requires State Parties to identify and safeguard ICH within their territory. Pursuant to Article 11, State Parties undertake to “take the necessary measures to ensure the safeguarding of the intangible cultural heritage present in its territory.” Specifically, each State Party undertakes to “identify and define the various elements of the intangible cultural heritage present in its territory, with the participation of communities, groups and relevant non-governmental organisations.”19 Article 12(1) requires each State Party to “draw up … one or more inventories of the intangible cultural heritage present in its territory.” To

that the framework does not address the thorny issue of ownership of ICH and the scope of the rights of the owners of ICH. Article 3(b) of the ICH Convention stipulates that nothing in the Convention “may be interpreted as affecting the rights and obligations of State Parties deriving from any international instrument relating to intellectual property rights” A second problem is that the ICH Convention lacks a strong enforcement mechanism.

Moreover, the Convention itself has not been widely publicised in the continent making it difficult for individuals and groups to hold their governments accountable.

5. Africa’s Cultural Heritage and The Intellectual Property Rights Framework Intellectual property (IP) law offers a

thus extending protection to cultural heritage may not require additional outlay of resources. Second, the IP framework is recognised globally and has the imprimatur of institutions such as WIPO and WTO. Given its globalised character, it would be easier to enforce IP rights outside of Africa than it would be to enforce sui generis rights that other countries do not recognise. Third, using the IP system to protect relevant aspects of Africa’s ICH could promote the advancement of the art in Africa and help spur creativity. Fourth, the IP framework could incentivise local communities in Africa and encourage them to commercialise their intellectual creations. Finally, because IP protection helps to monetise IP assets and is designed to make it easier for IP owners to generate revenue from their work,

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the IP framework could ensure that indigenous groups in Africa receive fair and equitable benefit from their intellectual creations.

As a framework for protecting ICHs and TCEs in Africa, the IP framework has many disadvantages.

The IP framework is Western in origin, individualistic in orientation, and was not created with ICH and TCEs in mind. Given its Western origin and bias, communities, groups and individuals in Africa wishing to utilise this framework face major hurdles and challenges.

With its emphasis on monopoly privileges and commercialisation, the IP framework is arguably not well-suited for protecting community interests. For indigenous groups in Africa, the IP framework could mean loss of control over the management, dissemination, and use of traditional knowledge. The extension of IP to indigenous knowledge and art could lead to shameless commercialisation and would ensure that these works are taken from private domain established by customary and indigenous laws, to the public domain of the IP system. To effectively use the IP framework to safeguard and protect Africa’s ICH and TCEs, countries will have to make some changes to their IP laws.

Just how effective is trademark law and copyright law in protecting and preserving Africa’s ICH and TCEs? As will be seen, the modern IP regime has its shortcomings as far as protecting ICH and TCEs is concerned. The IP system is difficult to maneuver and costly to access.

Moreover, the standard for protection is framed in ways that privilege certain types of knowledge and disqualify others. Although acknowledging that “[t]he innovations and creative expressions of indigenous and local communities are also IP,” WIPO notes that “because they are ‘traditional’ they may not be fully protected by existing IP systems.” (see www.wipo. int/about-ip/en/index-new) a. Trademark Law and Africa’s ICH and TCEs A trademark is any word, name, symbol, or device, or any combination used by a person “to identify and distinguish his or her goods… from

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those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.”21 Most countries in Africa have laws that protect trademarks and most have established trademark registration procedures. Words (e.g.

Jambo), names (e.g. Maasai), and symbols (e.g. the picture of the golden stool) can all serve as trademarks.

As a tool for protecting Africa’s ICH and TCEs, trademarks offer many advantages. A trademark can help a group distinguish their goods in the global marketplace. Certification marks can help indigenous groups in Africa to distinguish their products.

Certification marks are specially designated and are typically used to certify the origin, quality, accuracy or other characteristic of goods so certified.22 In many countries, a group can use trademark law to prevent third parties from using certain names and symbols to market their goods and services.

For example, in the United States, the Lanham (Trademark) Act Art 2(a) prohibits the registration as trademark of marks that “Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute”. For terms that third parties have already registered as their trademarks, the relevant indigenous groups in Africa can initiate cancellation proceedings in jurisdictions where their mark is in use. Another advantage of trademarks is that they do not have fi xed duration but can literally last forever as long as other legal requirements are satisfied.

Some indigenous groups have successfully used trademark law to protect their interests. In The Navajo Nation v. Urban Outfitters Inc. et al.,23 a federal court in the U.S. dismissed a motion to dismiss Navajo trademark claims against Urban Outfitters. The Navajo Nation (Navajo) in the U.S. is suing retail giant Urban Outfitters alleging inter alia trademark infringement and trademark dilution. The case stems from Urban Outfitters’ 2011 Navajo collection. In the Navajo collection,

Urban Outfitters applied Navajo inspired designs and names to products ranging from clothing and beaded bracelets to geometric-print24 flasks. Urban Outfitter tried to have the case dismissed and argued inter alia that the term “Navajo” was not distinctive but was a “generic descriptor” for “a type of design and style of clothing and clothing accessory.” In a 26th March 2013, decision, a district court held that the Navajo Nation sufficiently stated trademark infringement claims.

To prevail, the Navajo Nation had to demonstrate that the tribe had acquired trademark rights in the term “Navajo” and that the tribe has marketed clothing, housewares and jewellery using the “Navajo” name and marks. Establishing trademark rights was relatively easy in this case because the Navajo Nation has registered about 86 different trademarks with the USPTO and has been using the “Navajo” name to sell goods since 1941.

There are challenges to using trademark law to protect Africa’s ICH. These challenges include: complex and costly trademark registration processes; stringent conditions that must be satisfied before trademark rights are acquired; the high cost and complexity of mounting a successful trademark infringement action; the limitations and exceptions to trademark rights; and the defences available to an alleged infringer under the trademark law of most countries. In some countries (e.g.

Nigeria), registration is required before an action for trademark infringement is allowed. Article 3 of Nigeria’s Trade Marks Act 1990 states that “No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark.”

Trademark rights are limited.

The right in a trademark does not give the owner of the mark the exclusive right to use the mark in every context and every country. On the contrary, a trademark confers on an owner the limited right to prevent third parties from using marks that are identical or similar in ways that create a likelihood of confusion or deception.25 Likelihood of confusion

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is hard to prove. In countries like the United States, courts recognise a free speech (first amendment) defence to trademarks. Finally, many countries recognizes the right of prior users of a term to continue to use such

There are many advantages to using the IP framework to protect Africa’s cultural heritage. a term even after another person acquires trademark rights in such a term. This means that even if a group like the Maasai group successfully registers the term “Maasai” as its trademark, the group cannot stop prior users from continuing to make use of the mark.26 To acquire trademark rights, a name, symbol or devise must be

mark that was previously registered.

Thus, the trademark framework could force an indigenous group to enter into the market place long before they are ready. For sacred names and symbols, the trademark framework is very problematic.

Application to register a term as a trademark can be opposed by third parties.29 Furthermore, even after registration, a trademark can be cancelled.

Acquiring trademark rights can be a daunting experience. Even after trademark rights are acquired, the rights must be maintained.

Maintaining rights in a trademark entails routinely monitoring the official gazette of trademark offices around the world to ensure that third parties do not register similar or identical marks. It also entails checking to ensure that

the word “redskin(s)” as part of the team’s name. To date, the Native American plaintiffs in Harjo have been unsuccessful in their attempt to have the trademarks that the team registered cancelled.

Some countries have made changes to their trademark law and system of trademark administration in order to accommodate the needs and interests of indigenous groups.

For example, the Trademark Act of New Zealand prohibits the Commissioner from registering a trademark or part of a trademark if the Commissioner “considers that its use or registration would be likely to offend a significant section of the community, including Maori.”31 b. Copyright Law and Africa’s ICHs Copyright law can also be used to protect Africa’s ICH and TCEs. A

The Ghanaians have lost control over the Adinkra and Kente textiles, as have the Kenyans over Kiondos and Kikoys*

used to sell specific products and/ or services. To successfully register a mark, most countries require a showing that the mark is either in use already or that there is an intention to use such a mark.27 Use of a trademark must be in respect of particular goods and services.28 Under the Nigerian Trademark Act (Article 32) and Kenya’s Trade Marks Act 2001 (Article 29), non-use of a mark is grounds for cancelling a

unauthorized uses of the mark are not occurring and bringing legal action once unauthorized uses are discovered. The case of Harjo v.

Pro-Football, Inc. demonstrates the limits of trademark law as a tool for protecting indigenous names, symbols and songs.30 Harjo is the story of over a decade long struggle by Native Americans to prevent a famous football team (The Washington Redskins) from using

copyright is a bundle of rights that arises when works of authorship that are original are fi xed in a tangible medium of expression. The subject matter of copyright varies from one country to another but typically include literary works, musical works, dramatic works, pictorial and graphic works, sculptural works, sound recordings, and even architectural works. Provided other conditions are met, African songs,

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dances, and masks can enjoy copyright protection because they fall within the recognised subject matter of copyright. Copyright confers certain exclusive rights on a copyright owner (e.g. right to reproduce a work, display a work, produce adaptations of the work, and perform the work). Copyright is relatively easy to acquire as most countries do not require copyright to be registered.

In Australia, indigenous groups have successfully used copyright law to protect their interests. In Milpurrurru & Ors. v. Indofurn Pty Ltd. & Others,32 the Federal Court of Australia (General Division) held that it was copyright infringement to engage in the unauthorised manufacture, import and sale in Australia of carpets that reproduced images belonging to the Rirratingu Clan and works of indigenous artists from this clan.

As a tool for protecting Africa’s ICHs, copyright has many shortcomings.

First, to enjoy copyright protection, some countries (e.g. South Africa) require that a work must be written down, recorded or otherwise reduced to a material form33 and that the work be original.34 The problem is that many ICHs are not fi xed but exist only as oral and performance art. Second, the limited duration of copyright (typically the life of author plus fifty years) is a problem for most indigenous groups; just as groups and communities do not die, there is an expectation, in many quarters, that rights in cultural heritage should be perpetual. Based on the notion of fi xed duration, most of the ICHs belonging to groups in Africa are now in the public domain. Third, to enjoy copyright protection, a work must have an identifiable author or authors. For many of Africa’s ICH, particularly ICHs that are very old, establishing who the exact authors are can be difficult if not impossible.

Fourth, the limitations and exceptions to copyright also pose a challenge for indigenous groups in Africa. The “fair dealing” or “fair use” defence, recognised in many countries, permits third parties to make limited uses of copyrighted works without the permission of right owners. Fifth, in many jurisdictions,

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a defendant can defeat a copyright infringement action by proving independent creation or disproving substantial similarity.

Finally, proving copyright infringement in a court of law is a costly endeavour – one that many communities, groups and individuals in Africa cannot afford.

Copyright claims brought by indigenous groups are not always successful. In Yumbulul v. Reserve Bank of Australia (1991) 21 IPR 481, the court dismissed a case brought by an indigenous artist (author of Morning Start Pole sculptor) alleging that the Reserve Bank of Australia violated his copyright by using an image of his sculptor on a new ten-dollar note. Ultimately, while copyright confers certain rights on the author of a work, copyright also ensures that such a work ultimately enters the public domain when the term of protection expires. Given the limited duration of copyright, many valuable images, symbols, songs and dances belonging to indigenous groups in Africa are now in the public domain. To receive new copyright protection, authorised indigenous authors will need to add new expression to pre-existing materials. Non-indigenous and nontraditional persons who add new and original expression to old TCEs also enjoy the same protection under the copyright system.

6. Sui Generis Framework Rather than force indigenous arts and culture to fit within the established IP framework, some countries are using sui generis intellectual property system to protect traditional knowledge. The sui generis framework offers an alternative form of protection – a protection that is like intellectual property rights and yet is different and unique in many respects.

There is no agreement on what constitutes an appropriate or optimal sui generis system. While there has been much discussion by WIPO’s Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (“the Committee”), a consensus on the subject has been elusive.35 The advantage of sui

generis protection is that it is adapted to the unique characteristics of ICH. The disadvantage of a sui generis system is lack of uniformity among countries. The result is that the sui generis system differs from country to country. Thus, a work that enjoys protection under one country’s sui generis system may not necessarily enjoy the same protection in another country.

There are a few model laws on the sui generis system. These include the Pacific Regional Framework for the Protection of Traditional Knowledge and Expressions of Culture 2002 (Model Law for the Pacific) and the WIPO-UNESCO Model Provisions for National Laws on the Protection of Expressions of Folklore against Illicit Exploitation and Other Prejudicial Actions (1982). The Model Law for the Pacific defines who can be “traditional owners” of traditional knowledge or expressions of culture, creates a sui generis rights called “traditional cultural rights,” defines the meaning and scope of traditional cultural rights, and provides exceptions to the traditional cultural rights (see Pacific Regional Framework for the Protection of Traditional Knowledge and Expressions of Culture 2002 Part 1 Section 4).

How do traditional cultural rights differ from intellectual property rights? At least four differences can be discerned. First, the Pacific Model Law dispenses with the need for fi xation and provides that traditional cultural rights exist whether or not the knowledge or expressions are in material form. Second, under the Pacific Model Law, traditional cultural rights are inalienable.

Third, under the Pacific Model Law, traditional cultural rights are perpetual.

Designing a sui generis system is a challenging undertaking for any country; it will often require that new agencies be established to manage and run the system. While there is no consensus on what an ideal sui generis system looks like, a good system must aim to preserve and protect traditional knowledge and provide safeguards against third party uses. A good sui generis system should address a broad range of

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issues including: ownership, control, access to traditional knowledge, disclosure and use of traditional knowledge, prior informed consent of local communities before third party uses, and fair and equitable returns for use of traditional knowledge.

7. Unfair Competition/Consumer Protection Framework Outside the realm of IP law, other legal doctrines can be used to prevent the unlawful exploitation of traditional cultural expressions.

Unfair competition law, a passing off cause of action, false advertising claims, as well as a defamation cause of action can also be used.

In Australia, the Competition and Consumer Act 2010 makes it an offence to engage in misleading and deceptive marketing. Such a law could be used to prevent the sale of products as “Maasai Made” or “Indigenous Made” when such attribution is false and/or misleading.

The Australian Consumer and Competition Commission has in the past successfully prosecuted those who falsely market products as “Aboriginal-made,” authentic Aboriginal merchandise,” “certified authentic” and/or “Australian Aboriginal art.” See ACCC v.

Australian Icon Products Pty Ltd 36 and ACCC v. Australian Icon Products Pty Ltd, Henry Peter De Jonge, Bruce Leslie Read 37 In the United States, some indigenous groups have used defamation law with some success.

Crazy Horse malt liquor is marketed widely in the U.S. by SBC Holdings (formerly Stroh’s Brewing Co.) using the name and image of Lakota leader, Chief Crazy Horse. In 2001, descendants of Chief Crazy Horse settled a defamation lawsuit against SBC Holdings Inc. and its chairman John W. Stroh III over the commercial use of his name. The settlement included a public apology by the Chairman of SBC Holdings to Rosebud Sioux. Under the terms of the agreement, Stroh offered, as a symbolic gesture of peace a number of items including: 32 Pendleton blankets, 32 braids of sweet grass, 32 twists of tobacco and 7 thoroughbred horses. Hornell Brewing reportedly settled a similar lawsuit in 2004.

8. Private Law Mechanisms: Contract Law It is important that indigenous and ethnic groups in Africa as well as individual indigenous artists are equipped with the capacity to enter into meaningful negotiations over the use of their knowledge. Presently, information gap, knowledge gap, as well as lack of negotiation skills make it difficult for groups to conclude equitably benefit sharing agreements.

Using contractual agreements, indigenous groups in Africa could gain greater control over their TCEs and ICH and secure income from third party uses of their cultural property. Although the Zia tribe, a Native American group, has been unsuccessful in the effort to stop the state of New Mexico from using the group’s sacred sun symbol on the state flag, letterhead and license plate, the group has negotiated a few agreements with commercial entities in the U.S. including Southwest Airlines regarding the use of the symbol. Technical assistance and education can help groups improve their bargaining power, secure greater benefit from their works, and ensure that third parties exploit ICH and TCEs in ways that are culturally appropriate. “Artists in the Black” (AITB) is a legal service for Indigenous artists, communities and arts organisations in Australia.

AITB is operated by the Arts Law Centre of Australia which is the national community legal centre for the arts.38 9. Regional Framework In 2010, African states adopted the Swakopmund Protocol on the Protection of Traditional Knowledge and Expressions of Folklore (Protocol). The Protocol was adopted within the Framework of the African Regional Intellectual Property Organisation (ARIPO), an organisation made up of seventeen (17) countries. The adoption of the Swakopmund Protocol was seen as a landmark event in Africa. WIPO’s Director General, Francis Gurry, called the Protocol “a significant milestone in the evolution of intellectual property.” However, three years after its adoption, the Protocol

To effectively safeguard, protect and preserve Africa’s traditional knowledge, countries in Africa must go back to the drawing board. is still not in force because it has not received the six ratifications needed for it to go into effect. Although any state that is a member of the African Union or the United Nations Economic Commission for Africa can ratify the Protocol, most have not.

Worse, most people in Africa know nothing about the Protocol. The limited response of African States to the Protocol is troubling, raises a lot of questions, and deserves closer analysis.

10. Learning From Other Countries On the 26th December 2007, Taiwan adopted the Protection Act for the traditional intellectual creations of indigenous peoples. The aim of the law is to protect “intellectual creations” defined to include “traditional religious ceremonies, music, dance, songs, sculptures, weaving, patterns, clothing, folk crafts or any other expression of the cultural achievements of indigenous peoples.” The law provides a system for recognizing and registering intellectual creations. To enjoy protection under the Act, an intellectual creation must be registered with the appropriate agency. Article 4 of the 2007 Act stipulates that “Intellectual creations shall be recognized by and registered with the competent authority so as to be protected by the Act.” Under the Act, aboriginal groups or tribes (but not individuals) can apply for the registration of an intellectual property creation.

Successful registration confers on the applicant “the exclusive right to use such intellectual creations” that has been registered. Upon registration, competent authority are authorized to “issue an intellectual creation exclusive user certificate and certification marks.”

In the United States, laws such as the Indian Arts and Crafts Act 1990 (“IACA”) and the Native

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American Graves Protection and Repatriation Act 1989 (“NAGPRA”) have been passed to provide some protection to indigenous groups in the country. The IACA is particularly directed at protecting cultural expressions by preventing third parties from passing off their goods as the product of a Native American tribe. The statute creates a cause of action “against a person who offers or displays for sale or sells a good, with or without a Government trademark, in a manner that falsely suggests it is Indian produced, an Indian product, or the product of a particular Indian or Indian tribe or Indian arts and crafts organization, resident within the United States.”

that will catalogue traditional knowledge in the country. The goal is to “protect, preserve and promote South Africa’s indigenous knowledge (IK) by documenting and recording it.”39 Although the new system only supports IK on African traditional medicine and indigenous foods, the plan is to expand the program to also cover arts, crafts and farming practices.

Some countries have worked successfully with indigenous groups to create unique trademark programs. The goals of such trademark programs are to enable indigenous groups to control their brand, to protect the works of indigenous artists and certify the

11. Facing History; Confronting the Past As a result of the slave trade, colonialism, corruption and porous borders in post-colonial Africa, a vast amount of Africa’s ICH embodied in material form is now in museums, art galleries, and private collections in major capital cities in the West.

A challenge for most countries in Africa today is how to stop more artefacts from leaving Africa’s shores and how to recover works that have been taken from the continent in the past. Domestic laws must be reviewed to ensure that all loopholes that make the export of valuable cultural heritage possible are closed.

Governments must also review the

The Ashanti Gold Stool (Ghana), Eyo Masquerade (Nigeria), and Edo Ivory Mask (Nigeria) symbols are either seriously threatened or are already exploited by outsiders

Under the IACA, civil action by be commenced “by the Attorney General of the United States upon request of the Secretary of the Interior on behalf of an Indian who is a member of an Indian tribe or on behalf of an Indian tribe or Indian arts and crafts organization.” The law also allows civil action to be commenced “by an Indian tribe on behalf of itself, an Indian who is a member of the tribe, or on behalf of an Indian arts and crafts organization.”

Countries are putting more effort into inventorying and cataloguing their traditional knowledge. On 24 May 2013, the Department of Science & Technology (DST) in South Africa launched the National Recordal System (NRS) for indigenous knowledge (IK) – a system

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authenticity of such works, and to prevent unauthorised third parties from passing off their products as authentic indigenous products.

Examples are the Igloo Trade Mark system (Canada) and the Toi Iho Trade Mark system (New Zealand).

The Igloo trademark was created in 1958 and is registered with and administered by the Department of Indian Affairs and Northern Development (DIAND). Qualifying individuals with qualifying products can apply to DIAND for license to use the Igloo trademark on their products. The toi iho Maori Made Mark was established in 2002.

Trademarks under the toi iho Maori Made Mark system and can only be used on authentic Maori art, craft and performances.

policy regarding grant of excavation rights and must review standard excavation agreements.

In general, countries in Africa must double their rectification efforts (efforts to recover artefacts taken out of Africa) using every legal means available including, diplomacy, litigation, media, and public opinion.

The challenges to rectification efforts are many including: (i) difficulty proving that a particular artifact was wrongly taken from Africa and never belonged legally or morally to the country that now has possession of the said artefact; (ii) existence of laws in art-rich countries that that bar museums from outright deaccessioning; and (iii) arguments that stress common heritage as opposed to national patrimony and

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free trade in heritage as opposed to national retention. The recent Hopi masks saga demonstrates the difficulties indigenous groups encounter in the effort to recover cultural heritage “stolen” or “taken” by outsiders. In April 2013, the Hopi Indians in the U.S. tried unsuccessfully to halt the sale of priceless masks in Paris, France.

Despite the tribes best efforts, the sale of the masks went ahead and fetched about 750,000 euros ($984,500). Most of the masks were reportedly taken many years ago by people who found them unattended in shrines and on altars along the mesas of the Southwest.

Just as the Greeks have had problem getting the British to repatriate the famous Elgin Marbles, countries in Africa are likely to have problem getting art-importing countries to return ICH that belong to the continent. Rather than repatriate the Elgin Marbles, in 2009, the British Museum offered to “lend” the collection to Greece on the condition that Greece relinquish its claim to them and acknowledge the museum as the rightful keeper of the Marbles. Regarding laws that prohibit deaccessioning, in Attorney General v. Trustees of the British Museum 40 the issue was whether the trustees of the British Museum could on moral grounds return four old master drawings that were stolen by the Nazis before the Second World War. The Attorney General of the UK sought a judicial opinion on whether the drawings could be returned to the rightful owners on moral grounds. The conclusion reached was that the return of the drawings was prohibited by statute, can only be done “by reference to a statutory exception,” and that no moral obligation could justify a disposition of an object forming part of the collection of the Museum in breach of a statute Countries in Africa could push for “colonisation exceptions” to deaccessioning laws in art-rich countries. Such exceptions are possible.

Increasingly, Nazi-era exceptions are appearing in the statute books of some European countries. An example is the Holocaust (Return of Cultural

Objects) Act 2009. The Holocaust Act applies specifically to claims based on “Nazi-era circumstances.”

their intellectual property interests; (ii) assess the types of IP protection available for the different types of traditional knowledge the group

12. The Museum Culture in Africa Countries in Africa will need Rectification efforts are to decide whether to protect meaningless and a waste of valuable resources if artefacts traditional knowledge using are not properly preserved existing IP laws or whether to and protected once they are establish a sui generis system returned to Africa. Are artefacts repatriated to Africa returned to their ancestral home or displayed in has produced or plan to produce museums? Do the artefacts become in the future; (iii) conduct IP due private property of top government diligence investigations to identify officials? The Afo-A-Kom statue saga the different countries where the is a lesson. The priceless Afo-A-Kom groups intellectual creations are statue was taken from Cameroon being exploited and the individuals (iv) and subsequently appeared on behind those exploitation; sale at a New York Art Gallery. devise strategies for protecting and Although a combination of efforts commercialising the IP interests of led to the repatriation of the statue the group now and in the future; (v) back to Cameroon, the same statue negotiate and prepare agreements appeared again on the international for possible licensing or assignment market a few years later clearly of IP interests; (vi) prepare, file and raising questions about corruption prosecute trademark, copyright, design and patent and official complicity in the industrial disappearance of Africa’s cultural applications locally and in every other jurisdiction where protection is heritage. sought; (vii) offer IP advice on future 13. Legal Services, Legal Education joint ventures with third parties; and and Protection of Traditional (viii) provide adequate representation in IP litigation in Africa and around Knowledge in Africa Urgently needed in Africa are law the globe. firms specialising in IP law and willing to serve the domestic constituency in 14. Going Forward: Five Critical Africa. In many countries in Africa, Steps to Take existing law firms specialising in IP Countries in Africa will need to law typically serve foreign clients decide whether to protect traditional and have yet to turn their attention knowledge using existing IP laws or to the needs of ordinary individuals whether to establish a sui generis and groups in Africa. Indeed, the IP system. If a country choses to laws operating in most countries in use existing IP laws, a decision Africa are inherited colonial laws must be made whether and to that are yet to be revised and adapted what extent the law needs to be to African needs and circumstances. modified to accommodate traditional Indigenous artists and groups in knowledge. The sui generis approach Africa need legal services in every also presents a lot of challenges. area of IP. Going back to the Maasai Implementing a sui generis system group and their struggle to preserve requires that answers be sought to and protect their intangible cultural a host of questions, some of which heritage, to operate successfully are raised in this paper. With the within the IP framework, the group exception of South Africa, countries will need the services of lawyers to in Africa have been slow to explore protect their rights in East Africa, alternative policy and legal options in the rest of Africa and globally. for protecting traditional knowledge The Maasai group and other groups in the continent. However, South wishing to assert their right will need Africa’s recent experiences suggest to find lawyers willing to: (i) assess the that the task of devising the best potential liability for infringement of legal framework is far from easy.

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A bill (the Intellectual Property Laws Amendment Bill) which essentially opted for IP framework with modification proved to be very controversial, was condemned by many in the business community and the IP community in South Africa, and ultimately failed to receive the signature of the President. Also circulating in South Africa is an alternative bill (The Draft Protection of Traditional Knowledge Bill) which essentially embraces the sui generis approach.

However, after numerous debates and countless studies, the fate of traditional knowledge in South Africa remains in limbo. Protecting ICH is important from the standpoint of cultural diversity and survival and economic development. The issues surrounding preservation and protection of ICH draw attention to the plight of minority groups and indigenous communities in Africa and raise important questions about cultural rights, cultural imperialism, and the adequacy of IP laws in postcolonial Africa. Countries in Africa must: • Study the problem. Policy makers should consider commissioning focused studies aimed at better understanding the scale of the problem and assessing the position of relevant stakeholders on key issues outlined in this paper. In the U.S., Section 302 of the Trademark Law Treaty Implementation Act 1998 required the Commissioner of Patents and Trademarks to “study the issues surrounding the protection of the official insignia of federally and State recognized Native American tribes.” As a result of the study, the USPTO established a database of official insignia of all State and federally recognised Native American tribes.

• Seek input from relevant stakeholders particularly the ICH and TCE custodians in Africa on the way forward. The IP Australia and the Office for the Arts has sought feedback from indigenous peoples in Australia on future directions for indigenous knowledge and intellectual property and in 2012 released a brochure, Finding a Way: A Conversation with Aboriginal and

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Torres Strait Islander People.

• Consider adopting special laws for indigenous cultural and intellectual property.

In the alternative consider making specific changes to existing IP laws.

• Expose African judges to developments in IP law and to relevant decisions by courts in other countries. Cases such as Bulun Bulun v. R & T Textiles (Australia),41 Milpurrurru & Ors. v. Indofurn Pty Ltd. & Others, supra and The Navajo Nation v.

Urban Outfitters Inc. et al. supra can be used to educate Judges and policy makers in Africa about the role of law in the protection of cultural property in the continent.

• Consider adopting a developmentoriented national policy on intellectual property. South Africa is taking steps in this direction. On 29 August 2013, the Department of Trade and industry (DTI) of South African released the country’s Draft National Policy on Intellectual Property, 2013 and invited the public to comment on the Draft National Policy.42 One of the broader objectives of the policy is to develop a legal framework on IP that empowers all strata of the citizens of South Africa and contributes to the economic development of the country.

Conclusions The United Nations Declaration on the Rights of Indigenous Peoples (“Declaration”) declares in Article 11 that “Indigenous peoples have the right to practice and revitalize their cultural traditions and customs” and that this includes “the right to maintain, protect and develop the past, present and future manifestations of their cultures, such as … artefacts, designs, ceremonies, technologies and visual and performing arts and literature.”43 Regarding cultural, intellectual, religious and spiritual property taken without their free, prior and informed consent, the Declaration states that States “shall provide redress through effective mechanisms.”

Article 13 of the Declaration declares that “Indigenous peoples have the right to maintain, control, protect and develop their cultural

heritage, traditional knowledge and traditional cultural expressions” and also “have the right to maintain control, protect and develop their intellectual property over such cultural heritage, traditional knowledge and traditional cultural expressions.” Although no country in Africa voted against the Declaration, it is interesting that three countries in Africa (Burundi, Kenya, and Nigeria) abstained and did not vote in favor of the said Declaration.

Although the Declaration is not a binding treaty, it arguably provides a very important starting point for conversation on how best to protect indigenous cultural and IP rights in Africa.

To effectively safeguard, protect and preserve Africa’s traditional knowledge, countries in Africa must go back to the drawing board.

Do existing IP laws undermine rather than encourage domestic innovation? Are existing IP laws helping countries in Africa to effectively and adequately protect their cultural heritage? Are existing laws and regulations out of step with broader national development plan?

Are existing laws primarily driven by external (foreign) actors and foreign interests rather than domestic stakeholders and what, if anything can be done to reverse this trend?

Communities, groups and individuals must be made active participants in the effort to preserve, protect and promote Africa’s ICH. Article 15 of the 2003 UNESCO Convention requires State Parties to “endeavour to ensure the widest possible participation of communities, groups and, where appropriate, individuals that create, maintain and transmit such heritage, and to involve them actively in its management.” Technical assistance and international cooperation is important and must be sought. In October 2013, the UNESCO Bureau of the Intergovernmental Committee for the Safeguarding of Intangible Heritage approved an emergency assistance package of $307,307 for the preparation of an inventory of the Mali’s ICH. Other countries in Africa must explore other avenues for technical assistance and capacity building with respect to safeguarding

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and protecting traditional knowledge.

In the final analysis, the future of Africa’s ICH and TCEs truly lies with Africans. In February 2013, the French Embassy in Abuja returned certain Nok Terracotta pieces that were stolen from Nigeria but subsequently seized in France.

During the Nok Terracotta handingover press conference, the French Ambassador to Nigeria, Jacques Champagne De Labriolle, disclosed that France will also be returning a soapstone statuette of Esie origin that was also reportedly seized by custom officials in France. This development begs the question: how did the priceless and valuable items escape the attention of Nigerian custom officials? To what extent were Nigerian officials involved in the scheme to ferret the art works out of the country? What is the fate of the Nok Terracotta pieces since they were returned to Nigeria?

The views expressed in this article are those of the author and do not necessarily represent the views of any organization associated with the author.

1 Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 2007 U.S. App. LEXIS 26334 (4th Cir. Nov. 13, 2007).

2 Louis Vuitton Malletier, S.A. v. Hyundai Motor America, 2012 WL 1022247 (S.D.N.Y.) 3 http://www.masai-land-rover.com/ (describing the Masai® as “an exclusive range of high quality vehicle enhancement accessories and parts – mainly for the iconic Land Rover Defender 90 and 110.” Emphasis omitted.

4 [1973] S.C.R. 313, [1973] 4 W.W.R. 1 5 (No. 2) (1992) 175 CLR 1.

6 (CCT19/03) [2003] ZACC 18; 2004 (5) SA 460 (CC); 2003 (12) BCLR 1301 (CC) 7 AHRLR 183 (BwHC 2006) 8 Centre for Minority Rights Development (Kenya) and Minority Rights Group (on behalf of Endorois Welfare Council) v. Kenya, African Commission on Human and Peoples’ Rights, Comm. No. 276/03 (2010).

9 Judgment of August 31, 2001, Inter-Am. Ct. H.R., (Ser. C) No. 79 (2001).

10 Convention for the Safeguarding of the Intangible Cultural Heritage (17 October 2003), Article 2.

11 Id., Article 2(2).

12 http://www.wipo.int/tk/en/tk/ http://www.wipo.int/tk/en/folklore/ African [Banjul] Charter on Human and Peoples’ Rights, adopted June 27, 1981, OAU Doc. CAB/ LEG/67/3 rev. 5, 21 I.L.M. 58 (1982), entered into force Oct. 21, 1986.

15 Adopted June 27, 1981, OAU Doc. CAB/LEG/67/3 rev. 5, 21 I.L.M. 58 (1982), entered into force Oct. 21, 1986.

16 Adopted and opened for signature, ratification and accession by General Assembly resolution 2200A (XXI) of 16 December 1966 entry into force 3 January 1976, in accordance with article 27 17 Id. 18 Adopted and opened for signature, ratification and accession by General Assembly resolution 13 14

2200A (XXI) of 16 December 1966 entry into force 23 March 1976, in accordance with Article 49 19 ICH Convention, supra note 10, Article 11(3).

20 UNESCO, States Parties to the Convention for the Safeguarding of the Intangible Cultural Heritage (2003), http://www.unesco.org/culture/ich/index. php?lg=en&pg=00024 21 The Lanham (Trademark) Act (Pub.L. 79–489, 60 Stat. 427, enacted July 6, 1946, codified at 15 U.S.C. § 1051 et seq. (15 U.S.C. ch. 22)) 22 Nigerian Trademark Act 1990, Article 43.

23 Case No. 1:12-cv-00195-LH 24 Lanham Act, supra note 22, Article 2(a). Article 14 of the Nigerian Trademark Act prohibits the registration of scandalous designs.

25 Nigerian Trademark Act 1990, Article 5 (2).

26 Nigerian Trademark Act 1990, Article 7.

27 Nigerian Trademark Act 1990, Article 31(2).

28 The Trade Marks Act of Kenya 2001, Article 29.

29 The Trade Marks Act of Kenya, Article 21; The Nigerian Trademark Act 1990, Article 20.

30 Pro-Football, Inc. v. Harjo, 415 F.3d 44 (D.C. Cir. 2005); 130 S.Ct. 631 (2009)(mem.).

31 Trade Marks Act 2002, Article 17(1)(c).

32 (1994) 130 ALR 659.

33 Article 22(3)(b) of The Copyright Act, 2001, Chapter 130, Laws of Kenya. See also, Copyright Act, Chapter 68, Laws of the Federation of Nigeria 1990, Article 1(2)(b).

34 Nigerian Copyright Act, Article 1(2)(a).

35 WIPO/GRTKF/IC/3/8, Elements Of A Sui Generis System For The Protection Of Traditional Knowledge 36 Federal Court Proceedings Q33 of 2003.

37 Federal Court Proceedings Q131 of 2003.

38 http://www.aitb.com.au/index.php 39 Department of Science and Industry, Republic of South Africa. which aims to protect, preserve and promote South Africa’s indigenous knowledge (IK) by documenting and recording it. Press Release, 27 May 2013.

40 [2005] Ch. 397 41 Bulun Bulun v. R & T Textiles (1998) 41 IPR 513 42 The General Notice (Notice 918 of 2013), 43 A/Res/61/295 (2 October 2007). *Designs by OHEMA OHENE

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BUSINESS DEVELOPMENT

Gearing up for global opportunities and competition I

Malcolm Dowden – Director Gwentian Consulting Limited & Law2020 LLP

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recently conducted a two-day seminar in Lagos, Nigeria on the 25th and 26th of November on Financial Management and Business Development for Law firms. The event was part of the Law Society of England & Wales’ International Lawyers Training Programme (ILTP) and supported by the Nigerian Bar Association’s Section on Business Law. The topics were suggested by the Nigerian Bar Association, reflecting an acute awareness among the country’s law firms of the pressing need both to strengthen themselves against competition from large international law firms and, more positively, to take advantage of opportunities in the vibrant and rapidly growing African markets.

The inescapable background to the Lagos event was international law

firms’ increasingly visible interest in Africa’s market opportunities.

Without doubt, major global law firms can bring huge resources to bear on establishing their presence in the market, whether by establishing a network of connected firms or by setting up practices in the region.

There are regulatory constraints, including the requirement for lawyers to be qualified in the jurisdiction.

Perhaps more significant, and durable though, is the need to understand local market conditions, constraints and culture. For the moment, at least, that gives local firms a clear edge.

In the light of increasing competition however, local knowledge will not be enough to fend off determined competition, African law firms must focus on core areas of practice management, pricing and business development. The central question is: how should law firms develop their business to enable them to compete effectively in the local and global market?

A key point to take from the discussions in Lagos is that business development is a journey, not a destination. More than that, it may even be a race without a finishing line. Asked to identify the biggest challenge facing firms that are serious about business development, delegates rapidly came to an agreed answer: “as we improve, so do our competitors”. As even the best ideas become commonplace through imitation, many felt themselves under increasing pressure to come up with an unending stream of innovation - all the time balancing the imperative of business development against professional conduct rules that prohibit advertising and restrict writing, speaking and other activities to those which are consistent with the dignity of the profession.

For any firm embarking on a business development plan, the key elements are: • understanding your client’s business, • knowing their pain points, and • clearly identifying with their view of what is important.

With that in mind, perhaps the

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single most important change that a law firm can make to improve its business development is not to keep up on a “me too” basis with every move of its competitors, but to break from the lawyer’s default mode of imparting information, giving advice and leading with solutions. Lawyers should learn to listen.

That “one firm” approach represents a key challenge for law firms in Africa Business development is far more than marketing Some of the effective areas of business development already being achieved in African firms include: • Website redesign, including far more information about individual lawyers, • Training programmes designed for clients and contacts, • Disciplined and structured “trend spotting”, monitoring legal and commercial developments to identify threats and opportunities for existing clients and target sectors, and • Secondments and other forms of close liaison with clients The list extends far beyond basic “marketing” activities, and in many cases reflects a fundamental review and reshaping of business processes of African law firms. Many firms are providing, or seem determined to provide, their clients and contacts with the most up to date information, the most forward-looking analysis and the most impressive array of alerts. However, I still find that for many, the focus remains on the lawyer’s treasured role, and comfort zone, as a fount of wisdom and provider of information.

The Evolution and Modern Character of Legal Services Legal services are, in most cases, a grudge purchase. Clients seek advice through fear of adverse consequences. One result is that lawyers tend to present issues overwhelmingly in terms of risks

and mitigation, concepts that are inherently negative and defensive.

Globally, that tendency has allowed other professionals to seize from lawyers the central role of trusted business advisor.

The major global accountancy practices have successfully reinvented themselves as business consultants, offering services ranging from structuring and management advice, to sustainability and even marketing initiatives.

Listening lies at the heart of that approach. The major consultancy practices make time and opportunities to demonstrate their determination to learn not just about the risks but also about the positive side of the business.

As those consulting practices secure the role of trusted business advisor, law firms are left to scramble for instructions when the client has an immediate need, rather than engaging in a constant, constructive and ongoing relationship.

That dynamic can be changed.

Law firms have the expertise, resourcefulness and vision to play a far more positive part in their target market sectors. Delegates at the Lagos event offered some inspiring examples, such as training sessions and round-table discussions with clients on key legal and economic developments. However, few could offer examples of events that included opportunities for clients and contacts to give their perspectives. Law firms should be learning organizations, and clients are often very willing teachers. Lawyers should not be afraid to ask questions. It is not a sign of weakness, but of confidence and genuine interest in the client’s business.

Large international law firms have gradually learned that lesson, even in jurisdictions where there is no mandatory requirement for continuing professional development (CPD) training. For many, market intelligence and close understanding of market sectors and of particular segments within those sectors has become the key to effective business development. News and financial information is every bit as important as legal content. For firms with sufficient resource, subscriptions to

news feeds and analysis, government procurement portals and trade press provide a constant stream of information.

Perhaps even greater resource is required to sift and identify from that torrent of information the items that matter to the firm in question. That has led to the development of functions within law firms such as professional support lawyers or knowledge management teams with a remit that is expressly aligned with the firm’s overall business plan, and with responsibility for equipping their fee earning colleagues with the legal and market information required to seize new opportunities.

Again, key lessons can be learned from other professionals. One major global accountancy and consulting practice developed its South-East Asia business by adopting a model that divided its team into “pursuit” and “engagement” groups.

The “pursuit” team was made responsible for spotting opportunities, collating and analysing relevant market

Legal services are, in most cases, a grudge purchase.

Clients seek advice through fear of adverse consequences. intelligence and then finding points of contact with target clients. Once instructions were secured, the baton would pass to the “engagement” team, fully training by their colleagues and ready to process matters with maximum efficiency.

Then came the truly significant innovation.

Members of the “pursuit” team would at regular intervals exchange places with the “engagement” team.

Every member of the team was expected to build and hone their business development skills, but also to remain close to the day to day pressures of practical fee earning work. Law firms, still too-often stuck in a “silo” mentality, seem to find it extremely difficult to embrace such

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A timely and wellconsidered message certainly helps to establish the lawyer as a trusted business advisor an agile business model.

Who is responsible for business development?

It is unrealistic to expect lawyers magically to acquire business development skills once they have become partners.

Business development skills, including the vital but under-rated skill of asking for work, should be an explicit element of a junior lawyer’s professional development from the outset - preferably forming part of every lawyer’s initial induction into the firm.

Even that is not enough. Business development can, and should, involve all members and employees of the firm. For example, a client’s first impression of a firm is very often the reception staff. Given an explicit awareness of the firm’s overall business plan and aspirations, support staff can also become business ambassadors, projecting

the firm’s brand to great effect. That is not to say that all lawyers and all support staff should be engaged in the same business development activities.

The sheer diversity of those activities means that firms should look to involve everyone at an appropriate level.

That “one firm” approach represents a key challenge for law firms in Africa.

It represents a major shift in the ethos and culture of firms that, historically, have tended to behave more like a loose grouping of independent practices than a single organisation.

To compete effectively, firms must have a coherent and cohesive approach to pricing, presentation and processing of legal work. Increasingly, clients will have the choice between the slick presentation of international law firms and the knowledge and insight of local firms. That local knowledge and insight is, and will remain, tremendously valuable.

However, it must be presented in a way that bears comparison with the marketing output of resource-rich international firms.

Fortunately, advances in subscription models for online publishing mean that industry-standard software suites can be highly cost-effective, while local design and copywriting skills can be harnessed to great effect.

Glossy brochures with compelling prose and arresting images are no longer the preserve of highly-funded marketing departments.

The message, not the medium There is a lot of buzz about the use of social media as a tool for business development. As firms think about launching blogs and tweets into the ether, there is significant concern that competitors might be stealing a march by having an early online presence. While the concern might have merit, again, it does not follow that firms should simply adopt a “me too” approach. Like all media, social media such as Twitter, Linkedin or Yammer are useful only if there is something useful to say. Messages, in whatever form, have greatest effect if they are properly targeted and demonstrate a clear understanding of the client’s needs.

A timely and well-considered message certainly helps to establish the lawyer as a trusted business advisor. A “scattergun” approach risks the opposite result, condemning the lawyer to the waste bin, and whether physical or electronic the damage is the same.

However, to return to the delegates’ opening point: “as we improve, so do our competitors”. On that reading, the challenge is only beginning.

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