‘Appeals from Investment and Securities Tribunal should go to Federal High Courts’
WE must be careful to correct the notion that there is a conflict as between courts with respect to the jurisdiction over capital market disputes.
What you have is the Federal High Court exercising original jurisdiction over actions or decisions of the Federal Government or any of its agencies pursuant to section 251(r) of the Constitution on the one hand; and then you have the Investment and Securities Tribunal which is an administrative tribunal established by section 274 of the Investment and Securities Act on the other hand.
The jurisdiction of the Investment and Securities Tribunal (IST) is derived from section 284 of the Investment and Securities Act (ISA) which purports to vest in the IST, jurisdiction over decisions or determinations of the Securities and Exchange Commission inter alia to the exclusion of any court of law; and also over matters relating to the Pension Act.
As an administrative tribunal, appeals ought to lie directly from the IST to the Federal High Court. But that is not the case with the IST. By virtue of section 295 of the ISA, appeals lie directly to the Court of Appeal. The implication of this is that the IST is elevated from an administrative tribunal to a court of coordinate jurisdiction with the Federal High Court, meaning that they enjoy the same status.
When you juxtapose this with the situation under the Tax Appeal Tribunal (TAT) vis-a-vis the Federal High Court, you will find that appeals from the TAT, an administrative body just like the IST, lie directly to the Federal High Court which exercises supervisory jurisdiction over the TAT and from there to the Court of Appeal.
In that way, you find that the jurisdiction of the Federal High Court in relation to tax matters is not being encroached upon by the TAT. This point has been clearly enunciated by the Honourable Justice Buba of the Federal High Court in NNPC v. TAT. One cannot say the same thing regarding the IST because it has a provision that is akin to that of the VAT Act where appeals lie directly to the Court of Appeal.
You will recall that in StabiliniVisioni v. FBIR the Court of Appeal struck down the offensive provision of section 20 of the VAT Act which provided for appeals to lie directly from the VAT Tribunal to the Court of Appeal thereby sidestepping the exclusive jurisdiction vested in the Federal High Court in matters relating to taxation.The issue with the IST is no different from the position under the VAT Act.
Clearly there is a conflict in the sense that the IST has been vested with jurisdiction over administrative or executive decisions arising from the actions or decisions of SEC (SEC being a federal government agency), while section 251(1)(r) of the Constitution, has vested the Federal High Court with exclusive jurisdiction over all administrative or executive actions of the government or any of its agencies. And so, there is a conflict as it were, in the jurisdiction of the IST and the Federal High Court.
That is why, I would have preferred to see a situation where appeals from the IST lie firstly to the Federal High Court. If that was the position, then, the argument could be made that the IST is not encroaching on the jurisdiction of the Federal High Court in the sense that their decisions could be reviewed by the Federal High Court.
There are legal principles to the effect that when a statute creates a process or a procedure for the determination of an issue, that process must first be followed before one can invoke the jurisdiction of a court.
In that way, resolving a dispute by an administrative process is a condition precedent for invoking the jurisdiction of the court. And one can clearly say in such circumstance that it would not amount to an encroachment of the jurisdiction of the court. However, as things currently stand, there is a clear conflict in the jurisdiction of the IST and Federal High Court. And in the event that the jurisdiction of the IST is challenged, it may suffer a similar fate that befell the VAT Tribunal.
Will you propose in the light of your submissions that a division to handle capital market disputes urgently be created for the Federal High Court?
There is nothing wrong in the establishment of the IST. We have such bodies in other jurisdictions such as the Securities Appellate Tribunal in India, the Financial Services and Markets Tribunal (FSMT) in England and others. It is supposed to be a specialist tribunal to deal with specific issues relating to the administration of capital market operations amongst other matters. The problem has to do with the provision of section 295 in the ISA, which says that appeals lie directly from the IST to the Court of Appeal. That provision is unfairly prejudicial to the jurisdiction of the Federal High Court and should be struck out. Once that provision is struck out, appeals will lie directly to the Federal High Court and all these issues of the IST encroaching, sidestepping or bypassing the jurisdiction of the Federal High Court would not arise.
What about the National Industrial Court (NIC) which decision is not appealable?
The general view is that only decisions of the NIC relating to fundamental rights matters under Chapter IV of the 1999 Constitution are appealable. Appeals against the decisions of the NIC in appropriate circumstances lie directly to the Court of Appeal.
So it may not be entirely correct to say that the decisions of the NIC are not appealable. It must be noted that the NIC is constitutionally regarded as a superior court of record and has the same status as the Federal High Court by virtue of the amendments contained in the new Section 6(5)(cc) under the Third Alteration to the 1999 Constitution. The NIC enjoys constitutional appendage.
Under the Third Alteration also, section 243(3) of the Constitution also provides that appeals from the NIC shall lie to the Court of Appeal. That’s a constitutional provision. The IST on the other hand does not enjoy such constitutional appendage.
In the case of the IST, what you see is that there is an Act of the National Assembly which runs in clear conflict with constitutional provisions. And the constitution being the grundnorm, every other law enacted, including the Securities and Exchange Commission Act, is inferior to it.
If appeals from IST goes to the Federal High Courts, what type of court would the IST become? An inferior court of no record such as the magistrate courts?
Let us not create the impression that the IST is a court as I said earlier. The IST is not a court. It is an administrative body. It is clear from the statute creating it that it is an administrative body in the sense that the presiding officers of IST are appointed by the Minister of Finance and not the normal way other judicial officers are appointed upon recommendation by the National Judicial Council.
Furthermore, the presiding officers of the IST are made up of lawyers and non-lawyers. People who also appear before the IST are not necessarily lawyers. And there lies the problem.
In my view, the IST is an administrative body and ought not to enjoy the same status as the Federal High Court. So the issue does not arise as to the IST becoming an inferior court of record where its appeals begin to lie directly to the Federal High Court. The intendment of the law makers was not to create a court as there is a constitutional process for that. The intendment was merely to establish an administrative tribunal.
What is your view on the enforceability of arbitral awards?
I am an ardent believer in arbitration, being an arbitration practitioner myself. There are certain conflicts that are best suited for arbitration such as commercial transactions. An investor who has invested substantial amount of money will always prefer his dispute to be resolved by arbitration for several reasons. The procedure is informal.
The Tribunal for example, in an oil and gas transaction, such as a cost-recoverydispute or a PSC dispute, would want to appoint arbitrators who understand the rudiments of the industry and how it operates. Because of their clear understanding, they are best suited to resolve such disputes. And so, when parties go to arbitration, in my view, it should be for better or for worse. When the award goes their way, they should accept it.
When the award goes against them, they should also learn to accept it. That is not to say that in clear and obvious circumstances where there is an error of law on the face of the award, you should not challenge it. My view is that there should be limited grounds for challenging arbitral awards. Those grounds should be strict and not subject to variety of interpretations. Our courts have done quite well in supporting arbitration and enforcing awards.
In most cases, rather than set aside an award, what they do is to remit the award back to the arbitration tribunal for retrial. Last year, I did a study on enforceability of awards in about 80 cases. Of those 80 cases where applications were brought to set aside awards, if I recall, about 68 of them were refused. In about 10, the awards were remitted back to the arbitral tribunal, rather than the awards set aside. Only 2 of those awards were set aside.
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