Chaos

Random patterns

vague designs

confusing displays

In stock markets

in wars 

In international distribution of patents 

in wealth allocation 

The 1% and the 99

yes even in disease patterns

no form, no order.

Awaiting “let there be light”.

it is either low in occurrence

or 

too just too many that one doesn’t bother to check again.

Between tragedy and statistics.

“one death i am told is a tragedy but a million deaths is statistics “

Chaos 

seemingly of no value to normal observers

easy to blush at, frown at or simply ignore

Have you wondered 

This is the point where the learned mind gives up.

The end of the wisdom of the wise 

Their euphemism for ignorance’

And the rational calls any explanation of what is observed ‘conspiracy theory’ 

tis because you view from the expected sideline.

a narrow view point that refuses to show the connections clearly

when tired, one blames it on God or the Devil

Kindly pause and 

If you fail to grasp my treatise 

Please do not call it ‘literary chaos’

Poets

Poets! 

The conscience of society

At times telling things in brevity

Often getting one to wonder the place of naivety.

These poets,

Seemingly impartial

But like erring soldiers they will be courtmartialed

Oh these poets;

Playing with words to talk of love

If one didn’t know lust one will think their love is from above.

These poets;

Hiding meaning in figures of speech,

Farther than the simple can reach,

straining minds not only ears.

having fun while people grope in darkness.

I love these poets,

Higher moral mortals

Wondering if they could be immoral immortals, as they dissolve the barriers between good and bad, Sane and insane.

Codes Regulations and Laws

Abortion is Illegal.

Why do people have miscarriage?

is that nature’s way of carrying out the ‘illegal’?

or maybe nature does not have legal codes to abide by?

why should abortion be illegal? even when it appears it could help save a woman’s life. maybe or maybe not? i leave that to the medical pundits to argue.

In certain parts of the world where abortion is legal, one could get fined for breaking a bald eagle’s egg.

The bald eagle is endangered, human  fetus Isn’t.

but then, it is not about preferences, it is about codes, regulations and laws.

in some places people vote to choose which union they want to be part of, in certain other places we hear

“people lost their lives to keep this nation together we cannot allow it to break up.”

One nation considers it a matter of negotiation, another considers it treason and justifies the death of over three million people including women and children who were starved to death.

In houses identified by colors “ LGBT can flaunt banners” yes rainbow.

In rocks – 14 years awaits them.

Pls i remind you it is not about preferences but codes, regulations and laws.

i was having a nice meal of kilishi (red hot well spiced and dried beef).

i was on board a plane that arrived another location where they didn’t like my beef.

i was told, “we do not permit any kind of beef”. so sad.

my kilishi was thrashed.

kai. but then it is not about preferences,

not even mine.

 

You can have an opinion,

but your opinion may not have dominion.

you have a right to a choice but your choice may not be considered right.

Some instructions we need,

We may not like how it feels when we heed.

You don’t have to obey the laws.

But if you choose not to,

Make sure you can deal with their claws.

if you are good at it, after a while, you will be called to negotiate your peculiar disobedience, circumstances or preference.

At such points;

You could have wasted  lives

spilled brains on the sidelines,

busted many pipelines.

Yes

you may just have have created a new pathway

A new code, regulation or law.

till then ,

thread carefully.

 

THE 21ST CENTURY LAWYER AND COMMERCIAL CONTRACT MANAGEMENT: BEYOND TRADITIONAL LEGAL DRAFTING

by Nwoye Ifeanyi Daniel Esq.

ABSTRACT

Commercial relationships and transactions are usually documented in writing in form of contracts. Companies and businesses normally employ the services of legal practitioners in creating legal documents to govern and evidence their relationships and transactions. The next time the services of legal practitioners will be required will be in the event of a dispute between the parties. This is the traditional way of thinking and conducting commercial transactions. However, emerging trends in the business world look beyond just the drafting of the legal contract and now extend to the management of the entire process and cycle of the commercial transactions and relationships; from initiation through to the bid, award, execution and closure of the contract.

The 21st century lawyer must evolve and reinvent himself to be relevant in the system of commercial contract management beyond just the drafting of contract documents. This article briefly examines the traditional roles of lawyers in commercial transactions and then breaks down in a simple, concise and yet comprehensive manner, the gamut of commercial contract management and the place of the 21st century lawyer. The focus here will not be on the legal aspects and ingredients of contracting (though we would highlight them in passing), as every lawyer worth his salt should be grounded in those. Focus will rather be on the practices and components of commercial contract management.

INTRODUCTION

The terrains of the business world are fast changing and every player in it must remain innovative so as not to be drowned by the ever-changing tides. More so for the legal practitioner whose services are seen as protective walls around his clients’ business and thus, must be at the vanguard of events in order to provide timely and tailored legal solutions packaged in a business-efficient manner.

A contract, basically, is a legally binding voluntary agreement with a lawful object, between parties that have the capacity and intention of creating one or more legal obligations between them.  A contract can be made in writing or orally or even by conduct. Whatever the mode of creation is, to be valid, the contract must possess the essential ingredients of a valid contract.

“Commercial Contract” refers to any contract that has as its object, the manufacture, supply or/and purchase of goods or services.

What Constitutes a Valid Contract

A contract is basically an agreement, or you could say more aptly, a binding agreement. This is because it is not every agreement between entities that is binding or legally enforceable. A good example of an unenforceable agreement would be an agreement to commit a crime. We will briefly highlight the constituents of a valid contract.

Offer

This is an unequivocal proposition put forward by a party called the “offeror”, to the other party called the “offeree”. It could be in writing, oral or by conduct. The offer could be requesting for or offering a product or service, hence, the “offerror” could be the purchaser or the supplier. The important thing is that the proposition must be made with the intention of creating a binding arrangement once it is accepted by the “offeree”. This makes the marked distinction between an offer and an “invitation to treat”. An “invitation to treat” calls for offers while an offer calls for acceptance, rejection or counter-offers.

Acceptance

When an offer has been made by a party, the other party has to accept the offer for a valid contract to exist. The acceptance has to be unequivocal and clear. It could be oral, in writing or by conduct; however, it must be a clear acceptance of the terms as offered by the “offeror”. Any modification makes it a counter-offer and not an acceptance, thus, a rejection of the original offer. Thus the new terms as modified and re-offered by the initial “offeree” must be accepted by the initial “offeror”. Obviously, the table turns and the initial “offeree” becomes the “offeror” in the counter-offer.

The idea behind the requirement for offer and acceptance is that for a contract to be created, parties to the contract must come to a consensus ad idem; that is a union of minds or mutual assent and this is reached through an offer and an acceptance that does not vary the terms of the offer. It is equally important to note that where a specific method of acceptance is specified, there will be no valid acceptance except through that specified means.

Consideration

A consideration is basically something of value given by a party to another in exchange of another valuable thing received by the giver from that other party. The thing of value need not be money. It could be a product or service or even the forbearance from doing an act. In some jurisdictions, consideration is not a requirement, however in common law jurisdictions, it is deeply entrenched. As Lord Denning famously stated, “the doctrine of consideration is too firmly fixed to be overthrown by a side-wind”.

Consideration need only be “sufficient”. It does not need to be “adequate”. Sufficiency refers to meeting the test of law, while adequacy refers to subjective fairness or equivalence in value. Equally, consideration must be present and not past. This requirement is that consideration must be given as part of entering of the contract and not prior. This means that acts done in the past or past value cannot be furnished as consideration for a contract. This rule also extends to existing legal duties, thus, a promise to refrain from committing a tort or a crime will not be sufficient consideration.

Capacity

The parties must possess legal capacity to enter into binding relation. Generally, minors (persons below 21 years of age in common law jurisdictions) lack contractual capacity. Any contract entered by them (with the exception of contracts for the supply of necessities) could be voided on their attainment of majority. Equally, persons of unsound mind cannot enter into a valid contract.

Intention to Enter Into Legal Relation

For there to be a valid contract, it must be the intent of the parties to create a legal relationship. Thus, a contract can be vitiated where duress, undue influence, misrepresentation or mistake is proved. Hence, where it is proved that it was not the free will and intention of the parties to enter into legal relations, the contract would be vitiated.

Legality of Subject Matter

For a contract to be valid and legally enforceable, the subject matter of the contract must in itself be within the bounds of the law. Where the subject matter of the contract is the commission of a crime or tort, or is in any way illegal, the contract is invalid and cannot be enforced in a court of law.

THE TRADITIONAL ROLES OF THE LAWYER

Since contract is essentially, an agreement between parties, the terms, conditions and general state of affairs between the parties are determinable by the parties. Simple contracts can be drawn up by the parties themselves as simple agreements. However, in complex matters and circumstances, parties usually employ the services of professional ranging from technical experts in different fields to legal practitioners. Hence, traditionally, in a complex commercial transaction, while the technical, financial and other various aspects of the transaction are handled by the different professionals, the legal practitioner is concerned with the strictly legal aspects. Thus, the legal practitioner is traditionally involved in the legal drafting of the contract, conflict management and actual litigation if the need arises.

Legal Drafting

While various experts would be involved in the negotiations leading up to the contract, the drafting of the contract document representing the agreements and understandings between the parties is usually done by the legal practitioners. This is because, once signed by the parties, the terms, as constructed in the contract document, will supersede any previous terms or understandings that were canvassed or reach during negotiations. Thus, great care must be taken to ensure that the contract document accurately represents the true understanding between the parties. Some contract documents in complex commercial transactions may run into scores of pages or more in a bid to effectively capture and provide for every reasonably imaginable situation that may arise. This has been one of the cardinal traditional roles played by legal practitioners in commercial transactions.

Conflict Management

Conflict may arise at any time in the lifespan of the contract. In large commercial transactions, the in-house counsels of the parties usually try to resolve the conflicts using different conflict resolution techniques ranging from negotiation, to mediation, conciliation, expert determination, arbitration, and as a final resort, litigation. We shall further discuss these conflict management techniques later.

Litigation

This is the exclusive preserve of legal practitioners. This is usually a last resort where parties could not settle a disagreement or where a party is in breach of the terms of the contract. These three duties: legal drafting, conflict management and litigation traditionally define the scope of the involvement of the legal practitioner in commercial contracts.

EMERGING TRENDS: CONTRACT MANAGEMENT

To remain relevant and be able to meet the demands of complex commercial contracts in the 21st century, the legal practitioner will need to look beyond the three traditional roles described above. The 21st century commercial lawyer must be skilled in commercial contract management. This is because of the change in perception and mode of conducting business in the 21st century.

Parties (both purchasers and suppliers) now see business beyond the traditional “transactional” perception. Emphasis is now placed on the “relationship” model of business operation. Parties now tend to see their suppliers and purchasers as stakeholders. This makes the management of the relationship between parties as important as the technical delivery of the terms of the current transaction.

An equally important consideration is the nature of complex commercial transactions like long-term service contracts and construction contracts (especially the construct, operate and transfer contracts). These contracts, by their nature, require more than just the three-pronged traditional approach. These contracts demand active meticulous management from bidding and negotiation to contract performance and closure.

For simple contracts, fundamental questions that are usually considered are:

  • Is it clear what is wanted, and when?
  • Will it be at an acceptable price?
  • Can what is promised be delivered?

However, as the situation becomes more complex, so do the questions:

  • Is what is promised what the customer thinks they’re going to get?
  • Does the contract offer an acceptable return?
  • Does the contract make the best use of available resources?
  • Do I understand the risks involved and my part in managing them?
  • When things change, what happens?
  • If it all goes horribly wrong, what are the consequences?

Definition

Contract management is the systematic process of efficiently managing the creation and execution of contracts aimed at maximizing operational and financial performance and minimizing risks. Contract management is the process that enables both parties to a contract to meet their obligations in order to deliver the objectives required from the contract.

It also involves building a good working relationship between customer and supplier which continues throughout the life of a contract. It involves proactively anticipating future needs as well as reacting to situations as they arise. The central aim of contract management is to obtain the services as agreed in the contract and achieve value for money. Contract management also involves striving for continuous improvement in performance over the life of the contract.

Importance

Modern commercial transactions take place in a world of rapid change and high competition. There are high expectations and pressures to reduce cost while increasing the standards of quality on suppliers of goods and services. Different types of commercial relationship are formed to meet these needs, and different types of contracts are required for these various arrangements.

Some frequently used types of relationships requiring contractual arrangements include:

  • Teaming and partnering agreements
  • Franchises, distribution agreements
  • Agency and representative agreements
  • License and right to use agreements
  • General sales agreements
  • Service agreements
  • Outsourcing agreements
  • Engineer, build and install agreements
  • Professional consulting agreements
  • Standard purchase orders

For these business arrangements to be successful, an understanding of the roles, responsibilities and expectations of each party must be in place, and this is the goal of commercial contract management.

Equally, new regulatory requirements, globalization, increases in contract volumes and complexity have resulted in an increasing recognition of the importance and benefits of effective contract management. There is a growing recognition of the need to automate and improve contractual processes.

FACETS

There are different aspects of commercial contract management. In this section, we shall consider the key aspects.

CONTRACT START-UP MANAGEMENT

After the signing of the contract, the contract manager needs to address some foundational issues in order to ensure a successful contract management. The following checklist would help the contract management team in gaining a better understanding of the contract and developing a working relationship with the other party.

  • Analyze the contract and agree on the parties’ understanding of the contract: This would involve Identifying deliverables and how their achievement will be measured; ascertaining timeframes, particularly any critical deadlines; understanding payment arrangements, including links between payments and performance; identifying the roles and responsibilities of both parties.
  • Gain an understanding of the background to the contract and the relationship that has been developed with the other party: This would involve meeting with the other party as necessary to further develop the relationship and address issues that may impinge on effective contract management.
  • Establish any required systems for monitoring and reporting, protocols for communication and recordkeeping arrangements: This would involve establishing data collection systems or processes; drawing up a monitoring plan or checklist covering key timelines, critical deliverables, performance reporting priorities and record keeping arrangements.
  • Obtain or confirm licenses in relation to intellectual property that have not already been obtained or confirmed and store evidence of these matters appropriately.
  • Brief any team members or stakeholders: Confirm stakeholder involvement and their requirements for information and brief them as appropriate.
  • Management of unresolved issues: In some cases, not all issues are resolved at the time of contract signing. The contract manager will need to identify and record aspects of the contract which have been potentially left for future development or which will be subject to some other process, for example, third party approvals.
  • Transition: For some contracts, there will be a transition phase which can range from a few days to several months. Plans should be made for smooth transition without a reduction or loss of services and any negative impact on stakeholders.
  • Governance arrangements: The type of governance arrangement will largely depend on the size and scope of the contract and on the organizational structure of the parties. A usual arrangement is the establishment of working committees made of representatives of both the customer and service provider, with clearly defined roles. There are usually committees at executive, service management, operational/project management levels.

PERFORMANCE MANAGEMENT

Performance management involves: monitoring, that is, the collation of data on performance; assessment, that is, evaluating and deciding whether performance meets the customer’s needs; and taking appropriate action such as and spreading features of good performance, correcting and improving areas of under-performance; or adjusting contract requirements to meet changing needs.

Provisions should be made in the contract for non- or under-performance and their effects on payments.

Monitoring

Monitoring involves the collection and analysis of information in order to provide assurance that progress is being made towards the provision of the contract deliverables in line with agreed timeframes. Information provided by the supplier should be reviewed as necessary, to ensure its accuracy and reliability.

The level and formality of the mode of monitoring should be determined by the complexity of the contract and the degree of risk involved. It is important to collect and analyze all relevant information needed to evaluate performance. After the evaluation, feedback should be delivered to the supplier in accordance with any communication protocol that exists.

Areas that need to be monitored include: quality and time of goods or services delivery; user satisfaction; performance in line with contract requirements; and invoicing and payments.

Performance assessment

Information collected during the monitoring process forms the basis for performance assessment. Performance management is usually more effective when the responsibility is shared between the customer and the supplier, and should be done in such a manner as to contribute to, not distract from, the service provider delivering contract outcomes.

Revisions will need to be made if: data being collected is not providing adequate information to assess performance; performance measures have not been fully developed; or performance measures are found not to be suitable for the particular contract.

It is important not to change performance assessment parameters in a bid to mask poor performance by the service provider or a lack of assessment skill by the customer or purchaser. Technical advice may be needed to assess particular technical aspects of performance, for example, compliance with specified standards for construction or medical related work; or whether IT systems deliver the required functionality.

Under performance

While it is possible that the contract may be completed without problems, the contract manager still needs to be prepared to promptly tackle any problem that may arise in accordance with laid down procedures. If under-performance is detected through the performance assessment protocols, it should be addressed promptly. At the early stages of under-performance, informal remedial action will often be the preferred approach. Such action could include replacing or using additional personnel, reporting back more frequently on progress, modifying processes or systems or clarifying the customer’s requirements.

If the level of under-performance is serious, a more formal line of action may be necessary. Appropriate action may include: withholding payments until performance returns to an acceptable level; involving senior management from both parties in formal discussions or written communications; developing strategies to address the problem and formally documenting them, and tracking whether they are working in practice; and implementing other formal mechanisms included in the contract.

CONTRACT ADMINISTRATION

This aspect of commercial contract management overlaps with the performance management aspect. The various activities that need to be completed under this aspect include: developing and maintaining contact details of key people involved in the contract; understanding the notice provisions; scheduling meetings and other actions required by the contract delivery and acceptance of the goods or services; making payments; maintaining complete records for the contract itself; and establishing and maintaining contract documentation.

 Contact details

Up-to-date records of key personnel, stakeholders, end-users and/or experts and their contact details will have to be maintained in order to facilitate communications between the parties particularly where there are changes in personnel or where personnel are geographically dispersed.

Notice provisions

These are necessary in determining at what time notification is considered to have been given or received. The essential provisions would be: the place at which notice is to be served; the method by which it is to be served; and where and when service is deemed to take place (for instance; at the point of posting).

Scheduling meetings

A schedule of meetings for parties and stakeholders to the contract may need to be established in advance, giving the time, place and purpose of the meeting. The schedule should also list any planned reviews or other key actions.

Delivery and acceptance

Delivery occurs at the receipt of the contracted supplies from the service provider into the customer’s possession in accordance with the provisions of the contract. This should be done at agreed delivery dates and points.

“Acceptance” is the procedure by which the customer determines whether the goods or services meet contract requirements. In complex contracts, acceptance of the deliverables may occur periodically throughout the life of the contract. Goods or services need to be reviewed against the standards specified in the contract, before formal acceptance under the contract is completed. Generally, the contract should set out the procedure and period for acceptance.

Payments

Payments should be made in accordance with the provisions of the contract and evidence may be required that the appropriate and authorized representative of the purchaser has certified that goods and services have been received and have met the specified standard of performance. This should be done within specified timeframes and after receipt of a correctly rendered invoice or other statement of expenditure.

Contract documentation

It is very important that the most up-to-date version of the contract, incorporating all and any variation is formally executed and appropriately stored before the start of contract execution. It is expected that the legal practitioners are very comfortable with the required procedure for this. Recordkeeping system containing all appropriate documentation should be established in line with the purchaser’s recordkeeping policies and as appropriate for the particular contractual arrangement.

RELATIONSHIP MANAGEMENT

Relationship management may be assigned to a nominated individual – the relationship manager – or to a team. The approach to managing the relationship will vary depending on the type of contract. There is no one style that is appropriate for every contract, or for every provider. For some non-strategic contracts, a more tactical approach may be suitable. For long-term strategic contracts, the emphasis on building a relationship will be much greater.

The three key factors for success in relationship management are:

  • mutual trust and understanding
  • openness and excellent communications
  • a joint approach to managing delivery.

As well as measuring performance against financial and service performance measures, a means of assessing other aspects of the working relationship and management processes should be put in place. This will be valuable in highlighting aspects that are perceived to be working well and those that require attention. For example, periodic assessments might address aspects including:

  • the extent to which the provider is involved, or invited to become involved, in internal planning or other activities
  • how well the management structures are seen to be operating
  • how successful communications are seen to be
  • the degree to which information is shared freely and openly between the parties
  • whether feedback channels are seen to be working across boundaries and up and down organizational hierarchies
  • whether conflicts are being avoided or resolved effectively
  • whether financial and performance measurement systems are accessible to both parties
  • the extent to which adequate monitoring information is being provided, and its quality
  • user satisfaction and perceptions of the relationship.

 

The spirit of cooperation and partnership should characterize the relationship throughout. However, this must be tempered with commercial realism. Both parties need to retain a healthy sense of their own and their partner’s objectives and strategies. If done openly in cooperation it will help to build mutual trust.

CHANGE MANAGEMENT

Every contract should have provisions to allow for and regulate contract variations. This would usually be through a formal amendment of the contract in writing on agreement between the customer and the service provider. The reasons for the variation should be clearly documented and the variation procedure should not be used to cover poor performance. Equally, the effects of the variations on the contract deliverables, timeframes and value for money should be assessed.

Customers/purchasers should carefully ensure that through multiple amendments of contract, the overall contract-risk or particular risks are not inadvertently transferred to it. Hence, it is important to critically analyze the effects and implications of a proposed contract change to ensure that there are no unintended consequences.

To ensure that any change management procedure is effective, there are some of issues that should be considered. Three key issues are:

  1. the need for change impact reports;
  2. the pricing principles that will apply to the change; and
  3. the service provider’s obligation to undertake the change.

Change impact reports

The service provider, who will normally be in the best position to assess the likely impact of a variation, may be required to prepare an impact report. The report should present a full description of the change and how it will be implemented; the feasibility of the change; the likely effect of the change on the ability of the service provider to meet its obligations under the contract; any cost implications of the change; any consequential material impact of the change; where appropriate, acceptance testing procedures and acceptance criteria for the proposed change; and any other information likely to be of relevance.

Pricing principles

There may be costs associated with the proposed variation. It is important to specify how these costs will be allocated between the customer and service provider. Normally, the customer should be required to pay where the change falls outside the scope of the current agreement. The change management process may then only stipulate general principle like that the price for any change should be: reasonable; competitive; and no higher than the price at which a customer would be able to procure similar products or services from another service provider.

Service provider’s obligation to undertake the change

The change management procedure should provide that the service provider cannot unreasonably refuse a change requested by the customer. Unreasonable grounds for refusing a change would include: demanding unreasonable charges for the change; imposing unreasonable conditions for undertaking the change; or refusing to include the change under the agreement despite the subject matter being reasonably related to or connected with the services.

Contract change checklist

Key issues to consider in managing contract changes include:

  1. following the procedures required by the contract;
  2. assessing the reasons for the proposed variation and whether these may indicate an emerging or actual performance problem;
  3. assessing the impact of the proposed variation on the contract deliverables, particularly whether the variation or the work it represents is actually required and whether it was part of the original contract deliverables;
  4. determining the effect the proposed amendment will have on contract price;
  5. considering the authority for making the variation;
  6. properly documenting details of the variation and its impact;
  7. meeting any reporting requirements such as updating the customer’s contract register

RISK MANAGEMENT

Risk is defined as uncertainty of outcome, whether positive opportunity or negative threat. In the area of contract management, the term ‘management of risk’ incorporates all the activities required to identify and control risks that may have an impact on a contract being fulfilled. Many risks involved in contract management relate to the provider being unable to deliver, or not delivering to the right level of quality.

Where risks are perceived or anticipated, customer and provider should work  together to decide who is responsible for the risk, how it can be minimised and how it will be managed should it occur. The customer will be aiming for business continuity in all possible circumstances, although it is unlikely to be cost-effective to plan for every possibility, and a certain level of risk will have to be accepted.

Questions to consider for each individual risk include:

  • Who is best able to control the events that may lead to the risk occurring?
  • Who can control the risk if it occurs?
  • Is it preferable for the customer to be involved in the control of the risk?
  • Who should be responsible for a risk if it cannot be controlled?
  • If the risk is transferred to the provider, is the total cost to the customer likely to be reduced?
  • Will the recipient be able to bear the full consequences if the risk occurs?
  • Could it lead to different risks being transferred back to the customer?
  • Would the transfer be legally secure?

When a provider is made responsible for managing a risk, it is referred to as having been ‘transferred’ to the provider. It is important to remember that transferred risks still have to managed by the purchaser, and cannot be forgotten about simply because the contract obliges the provider to deal with them.

Providers will want payment for managing or taking on risks; ideally this will be built into the contract. A key point is that business risk can never be transferred to the provider. It is essential to consider the whole supply chain when analyzing the risks to a contract.

DISPUTE MANAGEMENT

As much as a sound understanding of the contractual responsibilities and effective relationship management should reduce the likelihood of contract disputes, they can still arise. Generally, a disagreement will be considered a dispute where the parties cannot resolve it without recourse to a resolution mechanism.

Most contracts will provide for the exploration of alternative dispute resolution mechanisms in the case of a dispute before resort is made to litigation. There are various dispute resolution mechanisms ant it is important to have a full understanding of the different components and suitability of the different mechanisms before deciding on an appropriate mechanism to employ. Some disputes can be settled by negotiations between the parties, while others may require a facilitative approach (where a third party facilitates the resolution) or even a determinative approach (where a third party decides on the issues in dispute). We shall now briefly examine the different mechanisms.

Negotiation

This is a very common way of resolving disputes. It involves the discussion of issues by parties with a view to arriving at a mutually acceptable outcome without the intervention of third parties. This is particularly suitable where parties wish to maintain an ongoing relationship. It is crucial that participants in the negotiation possess the required authority to reach a conclusion without recourse to a higher authority.

For any negotiation to have a fruitful outcome parties must be willing to be reasonable and open-minded; equally, they must consider the subject-matter as negotiable.

Mediation

This involves an independent and impartial third party who facilitates the resolution of the dispute between the parties. The mediator serves as a mere go-in-between as he does not have any authority to make any determination or reach any decision.

Expert determination

This is usually used where the dispute involves a technical issue under the contract, or where the parties have an agreement in relation to the issue in dispute which requires a precise valuation or technical decision. This usually involves the use of a third party expert, chosen on account of his qualifications and experience. Parties also can decide whether the decision of the expert will be final and binding or whether it would just be and advisory or recommendatory opinion.

Unlike a mediator, an expert is expected to reach a decision on the issue before him. His decision will not be based on the submission of parties; rather, will be a product of his own investigations and inquisitions. Very often, the issue before the expert might just a fraction or part of the entire dispute.

Arbitration

Unlike the foregoing dispute resolution mechanisms, arbitration is adversarial in nature. An arbitrator or panel of arbitrators is chosen by the parties and the conduct the arbitration in line with predetermined rules and procedures. At the end of hearing a determination of the issues raised is made in form of an award.

For more on the procedures; practice and pitfalls of commercial arbitration, see: COMMERCIAL ARBITRATION IN NIGERIA: PRACTICE, PROBLEMS AND PROSPECTS, by Nwoye Ifeanyi Daniel Esq.

Litigation

Litigation is simply the act of seeking redress through the conventional courts. It is usually expensive and time consuming; and is generally resorted to when other means of dispute resolution have failed.it is important that other means of dispute resolution are explored and legal and other professional advice sought prior to commencement of litigation.

RECORD KEEPING

Before the start of and during the life-span of the contract, various documents are created. It is important to keep accurate record and copies of these documents as they form part of the organization process assets and they may become useful in the future. It is advisable to keep contract documents for at least a period of six years after the conclusion of the contract.

The following is a list of documents that may need to be created and kept.

  • Final contract document as signed by parties
  • Risk assessment documents
  • Contract management plan
  • Analysis of contract conditions and expected deliverables
  • All substantive communications between parties
  • Insurances, indemnities, deeds and licenses under the contract
  • Briefings of stakeholders
  • Transition plans
  • Minutes of meetings
  • Schedules of tasks and meetings
  • Records of payments
  • Performance reports and assessments
  • feedback of any non-compliance or under or non-performance
  • Changes to the contract
  • Records of disputes and their resolutions
  • Expert advice received

 

THE PLACE OF THE 21ST CENTURY LAWYER

In complex commercial contracts, the legal practitioner performs varied functions over and above the traditional tripartite roles described earlier. Emerging trends have legal practitioners saddled with the focal task of managing and administering the contract relationship throughout its life-cycle. This demands an ample knowledge of the various facets of commercial contract management.

Even in situations where a technical expert is retained as the contract manager, the role of the legal practitioner is still both vital and immense. While the technical aspects of performance and risk evaluation and management are best handled by the various technical experts involved; the legal, quasi-legal and factual determinations and decisions that need to be made on a continual basis in Dispute, Change and Relationship Management and other areas of commercial contract management like Contract Start-up, Administration and Record Keeping are best left in the able hands of the legal practitioner.

Increasing number of large corporations and multi-nationals seek the services of corporate and commercial lawyers who are grounded in commercial contract management. Some of these companies require membership of a commercial contract management body (like the International Association of Commercial Contract Managers [IACCM]) by the legal practitioners interested in working with them.

 

The Author can be reached at

blazeconsults@gmail.com

Base Erosion and Profit Shifting (BEPS) – Real or Virtual?

Base Erosion and Profit Shifting (BEPS) has been assumed to be a problem to the effect that certain individuals have exploited the loopholes in the structure / legal framework designed to eliminate double taxation in such a way that their “fair share” of taxes are not being paid.

The situation in question is a bit of an oxymoron and is built on the belief that there is a universal way to define “fair share” as it relates to taxation.

In the sciences and engineering, to be able to deal with an issue one resorts to the use of models. A model is a temporary concept that helps deal with abstract phenomenon in such a way that such abstract concept can be analyzed and its effect evaluated under varying conditions. The use of models however does not always produce a perfect picture of what would happen in the real world but to a large extent helps to estimate within reasonable or tolerable limits a magnitude of the benefits and risks associated with a product, service or design without deploying so much resources needed to actually implement the solution in view.

When discussing issues that affect the general populace, using technical jargon whether scientific or legal has a way of masking the real issues at stake and inadvertently excludes a large percentage of the public from the discussion. This results in decisions that affect a wide section of the society being taken by a few people who are believed to be “especially wise” (technocrats). Unfortunately, this has played out in the case of the existence of ‘corporate bodies’ and international taxation laws.

A few questions come to mind as one seeks to investigate the issue of BEPS.

  1. Who is a tax payer?
  2. What is the basis of taxation?
  3. Who makes the rules on business and taxation, defining what should be taxed and what shouldn’t be taxed?

Taxation grew under certain circumstances that are actually very different from the world in which it is currently being debated. If the foundation of taxation is not well clarified, the populace will live in a world where they believe that certain individuals are not paying their “fair share” of taxes when in reality, certain people were never really paying taxes and a new group has decided to join the next available social cadre which pays “less” than the vast majority of others.

Two problems are associated with taxation laws

  1. Disparity in tax rates based on income
  2. Complicated tax codes such that a lot is shrouded in technical language

The existence of these two problems have resulted in certain people looking for ways to ‘legally’ lower their tax bills. The vehicle for such is available in a virtual entity called “the corporation” which was also created by law. The corporation is a new “monarch” in a financial world (empire).

To be able to deal with tax base erosion which is implemented using profit shifting, one would deal with definitions of who really is a tax payer and how to eliminate disparity in tax rates.

A transaction is finite in certain respects; who is involved, what was exchanged and at what cost. Should a transaction be subject to taxation or should the residual benefits be taxed? Who really obtains the residual benefits? These questions are a fall out of the tax reduction strategies. If all that is to be taxed is profit, them profit shifting will take place. If governments use different tax rates for organizations and individuals, then there will be gravitation by individuals towards the scheme that pays less taxes.

Creating artificial entities called “corporations” and keeping a wide disparity between tax rates across nations involved in economic transactions would nearly always give room for ‘legal’ schemes to take advantage of lower tax rates. I think at this point, the real problem is tax base erosion, profit shifting is just a way it is implemented. That takes me back to the first question; who really was expected to pay taxes when taxes were first created? With the answer in mind, one can then be able to manage the complexity created over time in tax administration and discussions on “fair share” of taxes. Profit shifting will only make sense if there is a place to where profits are taxed lower or not taxed at all.

Going back to the era when cross country transactions started it would be obvious that tax reduction only existed when there were geographic administrative boundaries and in the present situation where we now have virtual bodies called “corporations”. I call them virtual since they are not human.

An extreme solution may involve any or all of the following:

  • Eliminate tax rate differences among individuals
  • Tax all transactions irrespective of whether they are intermediate or final
  • Uniform year end across the globe for all corporations irrespective of geographic location.

 

 

 

NCC and MTN Nigeria: The fine and the story

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Going through the stories on the fine imposed on MTN in Nigeria by the Nigerian Communications Commission, a number of points have been highlighted by certain commentators:

  1. The desire by the Nigerian government to raise funds by all means to deal with shortages from oil revenue
  2. Slapping such a large fine on one of the most successful foreign-owned enterprises would likely deter inward investment
  3. The rationale for the fine value ($ 1000 per unregistered line)

Indeed for MTN there were unintended consequences:

  1. share price fall (JSE)
  2. bond yield rise

What then are the options for MTN with respects a response to the situation?

The MTN response

  1. Do nothing
  2. Call the bluff and down tools (Nigeria cannot presently deal with that)
  3. Negotiate a reduction
  4. Pay the fine in smaller installments.

Conclusion:

If MTN refuses to pay, nothing really can be done by the Nigerian government considering that MTN occupies a critical part of the information infrastructure. (A poor risk assessment effect by the regulatory framework). Secondly, MTN cannot easily call the bluff since the company will inevitably face the ripple effects in the JSE. Call it a “Catch 22” scenario.

However, no matter what one takes out of this, one thing is common in Africa and Asia whenever there is FDI and that is:

– foreign owned firms have a way of asking for waivers to rules.

One may ask a number of questions. Is the problem the fine or the fact that companies flout regulations expecting to get away with it?  Should firms be fined when they flout regulations or in this case should the regulators figure out the revenue per unregistered line and then reach a consensus on the fine? What is the real financial cost of flouting regulations?

Even if MTN ends up not paying the fine, one thing is clear and that is the possibility of “the law of unintended consequence” coming to play. A major fallout of the ease with which information flows worldwide.

http://www.bloomberg.com/news/articles/2015-11-02/four-charts-that-show-why-mtn-s-nigerian-fine-matters-so-much

COMMERCIAL ARBITRATION IN NIGERIA: PRACTICE, PROBLEMS AND PROSPECTS

by Nwoye Ifeanyi Daniel Esq.

ABSTRACT

This article will examine the state of commercial arbitration in Nigeria. The different forms or genres of arbitration in Nigeria, (as an alternative dispute resolution method), will be explained with the emphasis on commercial arbitration. The divergent provisions of the law on domestic and international commercial arbitration are highlighted. The article examines the current state of the practice of commercial arbitration (both domestic and international) in Nigeria, highlighting the problems, examining the changes taking place and proffering further modifications and developments on the law and practice of arbitration in Nigeria.

INTRODUCTION

Disputes are regular features of human relation. Commercial transactions also give rise to disputes. However, the quick and fair resolution of commercial disputes is an indispensible requirement for stability and growth in any economy. When parties are faced with a dispute, they can choose to either take it to the courts for adjudication, or to pursue any of the methods of alternative dispute resolution. However, the high cost of litigation and the antagonistic disposition it usually fosters between parties, (possibly because of the adversarial nature of most legal systems), make arbitration and other alternative dispute resolution methods better alternatives.

ALTERNATIVE DISPUTE RESOLUTION

Alternative Dispute Resolution has been referred to as the different processes designed to aid the peaceful settlement of disputes without recourse to traditional courts through litigation. They are not “substitutes” to litigation, but rather, they are viewed as “aids” to litigation. These processes try to achieve an expeditious resolution of the conflict between the parties, while at the same time, preserving the cordial relationship between the parties. The major forms of alternative dispute resolution are:

  • Negotiation: Largely, this is done by the parties involved without any external interference. Here, the parties seek to arrive at an amicable settlement of the dispute through discussions. This method can only be effective where the parties are willing to make concessions and compromise their positions in order to arrive at terms of settlement that would be agreeable to all parties.
  • Mediation: In mediation, a third parties acts as a go-in-between for the parties. The third party does not take sides but tries to open up the channel of communication between the parties in order to resolve the dispute. He does not suggest terms but rather conveys the terms of the parties and he lacks power make any decisive determination of the issues.
  • Conciliation: Conciliation is very similar to mediation. However, the conciliator can offer and proffer solutions and terms to the parties. The parties are at liberty to accept or reject the terms.

Although arbitration is an alternative dispute resolution method, it has some features that clearly distinguish it from other; chief among them being the powers of arbitrators to make binding decisions in form of awards.

NATURE OF ARBITRATION

Arbitration is a form of alternative dispute resolution method in which disputes between parties are heard and settled by person(s) chosen by the parties. The dispute between the parties is settled by a third party or a body of third parties chosen by the parties, after hearing the cases of the parties in a judicial manner. Simply put, it is the voluntary submission of a dispute to persons of the disputing parties’ choice for a binding decision. The decision reached by the arbitrators is called an award and it is enforceable by the courts. Though the arbitration proceedings are said to be conducted in a judicial manner, the rules applicable to its proceedings are less stringent than the rules applicable in the conventional courts.

FORMS OF ARBITRATION

The term “forms of arbitration” is used to refer to the various forms of disputes and situations arbitration is employed to settle. This is also used to refer to the type of arbitration body in use (whether institutional or domestic), and also the nature of dispute and parties involved (whether domestic or international). These forms of arbitration are considered below, though international and domestic arbitration are considered in relation to commercial arbitration.

  1. COMMERCIAL ARBITRATION

As aptly stated by the Authors of “Law and Practice of Arbitration and Conciliation In Nigeria” Honourable Justice J. Olakunle Orojo and Professor M. Ayodele Ajomo on page vi of the book: “The resolution of commercial disputes is obviously a very crucial aspect of the operation of the national economy and of the judicial system.”

Commercial arbitration in Nigeria is governed by the Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria (2004). Arbitration is simply defined in the Act as “commercial arbitration, whether or not administered by a permanent arbitral institution”. On the other hand, “commercial” is defined as “all relationship of a commercial nature including any trade transaction for the supply of goods and services, distribution agreement, commercial representation or agency, factoring, leasing, investment, financing, banking, insurance, exploitation agreement or concession, joint venture and other forms of industrial or business co-operation, carriage of goods or passengers by air, sea, rail or road.”

From the foregoing, we can then say that commercial arbitration is the voluntary submission of disputes arising from any form of business or commercial transaction to a third party other than the courts, for a binding decision. Commercial Arbitration will be discussed in greater details later in this work.

  1. INVESTMENT ARBITRATION

The term “Investment Arbitration” refers to arbitration between government agencies and an investor. This is distinguished from commercial arbitration which essentially involves private parties. Investment arbitration in Nigeria can be said to be derived from the Nigerian Investment Promotion Commission Act, (NIPCA) Cap N 117 Laws of the Federation of Nigeria, 2004 which was first enacted in 1995. While the Arbitration and Conciliation Act deals with arbitration in general, the NIPCA deals extensively with the promotion of investments in Nigeria. The NIPCA contains specific provision for the resolution of disputes arising from investment transactions (transactions between an investor, whether Nigerian or foreign, and any Government of the Federation of Nigeria).

Section 26 of NIPCA provides as follows:-

(1) “Where a dispute arises between an investor and any Government of the Federation in respect of an enterprise, all efforts shall be made through mutual discussion to reach an amicable settlement.

(2) “Any dispute between an investor and any Government of the Federation in respect of an enterprise to which this Act applies is not amicably settled through mutual discussions, may be submitted at the option of the aggrieved party to arbitration as follows:-

(a) in the case of a Nigerian investor, in accordance with the rules of procedure for arbitration as specified in the Arbitration and Conciliation Act or

(b) in the case of a foreign investor, within the framework of any bilateral or multilateral agreement on investment protection to which the Federal Government and the country of which the investor is a national are parties; or

(c) in accordance with any other national or international machinery for the settlement of investment disputes agreed on by the parties.

(3) Where in respect of any dispute, there is disagreement between the investor and the Federal Government as to the method of dispute settlement to be adopted, the International Centre for the Settlement of Investment Dispute shall apply.”

  1. MARITIME ARBITRATION

Maritime refers to anything relating to or involving ships, shipping, navigation or seamen. The practice of Maritime arbitration has not been as common or frequent as the other forms of arbitration because most arbitration clauses in maritime contracts try to exclude the jurisdiction of the Nigerian Courts, whether the subject matter of the claim or any of the parties is within the jurisdiction of the Nigerian courts notwithstanding. However, the enactment of the Admiralty Jurisdiction Act (AJA) has tried to provide a remedy (ineffective in our opinion) to the above-mentioned situation. Equally, the emergence of the Maritime Arbitration Association of Nigeria in 2005 can be said to be bringing new fire and impetus to the promotion of maritime arbitration in Nigeria.

The question that then readily comes to mind is this, “can ouster clauses in arbitration agreement effectively disrobe the Nigerian courts of their jurisdiction in maritime matters?” The answer can be found in the Admiralty Jurisdiction Act (AJA) 1991. Such ouster clauses are clearly prohibited in the Act as the Act unequivocally preserves the jurisdiction of the Federal High Court no matter the nature, wordings or drafting of the ouster clause in any arbitration clause in the contracts.

Section 20 of the AJA states:-

“Any agreement by any person or party to any cause, matter or action which seeks to oust the jurisdiction of the Court shall be null and void, if it relates to any admiralty matter falling under this Act and if –

  1. the place of performance, execution, delivery, act or default is or takes place in Nigeria; or any of the parties resides or has resided in Nigeria; or
  2. – f.
  3. under any convention, for the time being in force to which Nigeria is a party, the national court of a contracting State is either mandated or has a discretion to assume jurisdiction; or
  4. in the opinion of the Court, the cause, matter or action should be adjudicated upon in Nigeria.

This Act has been given judicial backing in many cases. For instance, in M.V. PANORMOS Bay v. Olam (Nig.) Plc (2004) 5 N.W.L.R. Part 865, C.A.1, Clause 7 of a Bill of Lading read as follows:- “Any dispute arising under this bill of lading shall be referred to arbitration in London. The unamended centrum arbitration clause will apply.” It was held by the Court of Appeal that by virtue of Section 20 of the Admiralty Jurisdiction Decree, 1991 any such agreement which seeks to oust the jurisdiction of the court shall be null and void, if it relates to any admiralty matter falling under the Decree.

In our opinion, the tenor of the clause is mandatory, as it sought to make the international arbitration the only means settlement of any dispute. It may be that the dictum of the court would have been different if “may” was used in place of “shall” in the clause. While the Admiralty Jurisdiction Act cannot be said to have any direct provision requiring arbitration in maritime affairs to be domestic, it unarguably, can be said to have blocked any road to compulsory international arbitration provisions.

  1. CUSTOMARY ARBITRATION

Customary arbitration can be said to be a product of the evolution of the practice of voluntary submission of disputes, (usually traditional in nature) to traditional rulers, chiefs and elders for amicable settlement. The range of disputes settled in this manner includes chieftaincy matters, sale of land under the customary system, family matters, etc. The procedure is usually flexible as the goal is not the handing down of strict legal rules and decisions, rather, the amicable settlement of the dispute between the parties. Witness can be called and documents tendered, after which the decision of the customary arbitrators is handed down.

However, the binding effect of such decisions will depend on the acceptance of the parties. Any party that is not satisfied with the decisions reached can reject same without much ado. The matter becomes settled only when the parties accept the decision. Thus, the Supreme Court stated in Agu v. Ikewibe (1991) 3 NWLR pt 180 385 SC, that a customary arbitration award only becomes binding after parties have signified acceptance of the suggested award. Up till this time, either of the parties is entitled to reject the award. The conditions that must be present before a customary arbitration award becomes binding were set down by the Supreme Court in the case of Eke v. Okwaranyia (2001) 12 NWLR Pt 726 181 SC as follows:

  1. That there had been voluntary submission of the matter in dispute to an arbitration of one or more persons;
  2. That it was agreed by the parties either expressly or by implication, that the decision of the arbitration will be accepted as final and binding;
  3. That the said arbitration was in accordance with the custom of the parties or their trade or business;
  4. That the arbitrators reached a decision and published their award;
  5. That the decision or award was accepted at the time it was made.
  1. INDUSTRIAL ARBITRATION

The Trade Disputes Act Cap T8, Laws of the Federation of Nigeria, 2004, enjoins parties to find ways of amicable settlement of disputes apart from the Act. Industrial arbitration is the submission of industrial or trade disputes to the industrial arbitration panel in accordance with the provisions of the Trade Dispute Act.

The Act provides to the effect that if the means of amicable settlement fails or if there is no such agreed means of amicable settlement, the parties or their representatives are to meet within seven (7) days after the dispute arose. The meeting would be presided over by a mediator mutually appointed by the parties.  The meeting would be with a view to finding an amicable settlement of the dispute. However, if after seven days of appointment of the mediator an amicable settlement could not be reached, within three days after the expiration of the seven days, the dispute shall be referred to the minister of labour at the instance of either of the parties. The report to the minister shall be in writing, detailing the points on which the parties disagree and the steps that have been taken towards settlement.

Within fourteen days of the receipt of the report, the minister shall refer the dispute to the Industrial Arbitration Panel in accordance with sections 5-10 of the Arbitration and Conciliation Act. This whole process negates the voluntary nature of arbitration as the dispute is referred to the arbitration panel at the instance of the minister rather than as a voluntary decision of the parties. However, apart from the seemingly involuntary nature of the commencement of industrial arbitration proceedings, all other aspect of the practice of industrial arbitration can be said to conform to the regular form and practice of arbitration.

 

FORMS OF COMMERCIAL ARBITRATION

  1. DOMESTIC COMMERCIAL ARBITRATION

This is a form of commercial arbitration where the parties have their places of business within one country. It is immaterial whether or not the parties are citizens or foreigners. The arbitration will be viewed as domestic so long as the parties have their place of business in the same country and the arbitration is done in that country.

  1. INTERNATIONAL COMMERCIAL ARBITRATION

International commercial arbitration is a form of arbitration where the parties have their places of business in different countries, or the subject matter of the arbitration relates to more than one country, or a substantial part of the obligation of the parties are to be performed outside the countries of their places of business. Without prejudice to the foregoing, parties can, despite the nature of their transactions, agree to the effect that any arbitration arising from the transactions shall be treated as international arbitration.

INSTITUTIONAL/ AD-HOC ARBITRATION

Whether domestic or international, commercial arbitration can further be classified into two; ad-hoc and institutional arbitration.

Ad-hoc arbitration refers to the form of arbitration where the parties appoint the arbitrators themselves. When appointed, the arbitrators conduct and control the proceedings within the limits laid down by law. On the other hand, institutional arbitration is one in which the appointment of the arbitrators, the conduct and control of the proceedings and the issue of the award are done in accordance with the rules and practices of an arbitral organization. The following arbitration institutions are active in Nigeria:

  1. The Chartered Institute of Arbitrators UK (Nigerian Branch)
  2. The Chartered Institute of Arbitrators Nigeria
  3. The Lagos Regional Center for International Commercial Arbitration
  4. The International Chamber of Commerce (Nigerian National Committee)
  5. The Lagos Court of Arbitration

APPLICABLE LAWS

Commercial arbitration in Nigeria is primarily governed by the Arbitration and Conciliation Act. The preamble to the Act reads,

“An Act to provide a unified legal frame work for the fair and efficient settlement of commercial disputes by arbitration and conciliation; and to make applicable the Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention) to any award made in Nigeria or in any contracting State arising out of international commercial arbitration.”

Similarly, “arbitration” is defined in Section 57 of the Act as “a commercial arbitration whether or not administered by a permanent arbitral institution”; and “commercial” is defined in the same section as

“all relationships of a commercial nature including any trade transaction for the supply or exchange of goods or services, distribution agreement, commercial representation or agency, factoring, leasing, construction of works, consulting, engineering, licensing, investment, financing, banking, insurance, exploitation agreement or concession, joint venture and other forms of industrial or business co-operation, carriage of goods or passengers by air, sea, rail or road”

However, the provisions of the Act can be said to have left some lacunae and crevices. These holes are filled by the common law and doctrines of equity, supplemented by Trade usages and agreement of parties.

ARBITRATION AGREEMENT

The Act, section 1, provides that any arbitration agreement must be in writing. The arbitration agreement can be a separate contract between the parties or contained in a clause in the main contract between the parties. However the arbitration contract is written, it is still imperative that the matters to which the arbitration agreement relate, be matters that are arbitrable. The matters that are expressly mentioned in the wide definition of “commercial” in section 57 of the Act are obviously and now statutorily arbitrable. However, the following matters are not arbitrable: criminal matters, matrimonial matters, matters of general interest or a status matter, such as the winding-up of a company or bankruptcy.

Except a contrary intention is shown in the arbitration agreement, the arbitration agreement (even when contained as a clause within another agreement), shall be irrevocable except by the agreement of parties or by leave of court or a judge, – section 2 of the Act. Equally, where a party, in disregard of the arbitration agreement, commences a suit in the court, the proceedings can be stayed on the timeous application of the other party, section 4 and 5 of the Act. See also Bebeji Oil Allied Prod Ltd v. Pancosta Ltd (2007) 31 WRN P172.

Such an action instituted without recourse being first had to arbitration, in contravention of the arbitration agreement, can also be struck out for not fulfilling a condition precedent. This position is supported by the following cases: Oyedele v. New India Assurance Co. Ltd (1969) 3 ALR Comm. 200 HC; Kurubo v. Zack-Motison Nig. Ltd (1992) 5 NWLR (pt 239) 102 CA; Niger Progress Ltd v. North East Line Corporation (1989) 3 NWLR (pt107) 68 SC; African Insurance Dev. Co. Ltd v. Nigeria LNG Ltd (2000) 4 NWLR (pt653) 494 JSC.

APPOINTMENT OF ARBITRATORS

The appointment of arbitrators is governed by section 7 of the Act. The section provides to the effect that parties are at liberty to specify in the arbitration agreement how arbitrators are to be appointed. But where no such specification is made, in a case where there are to be three arbitrators, each party will appoint one arbitrator and the third arbitrator will be jointly appointed by the two arbitrators appointed by the parties.

If a party fails to appoint an arbitrator within 30 days of receipt of request to do same or where there is a disagreement on the appointment of the third arbitrator between the two arbitrators appointed by the parties, or where the parties fail to appoint an arbitrator in the case of single arbitrator, and an application is made to the court, the appointment shall be made by the court. The decision of the court in the matter stated above shall not be subject to any appeal.

The court has, in the case of Ogunwale v. Syrian Arab Republic (2002) 9 NWLR (pt771) 127 at p.146, stated that for the provision prohibiting appeal on the decision of the court to apply, the following conditions must be in place: (a) a binding, valid, compellable arbitration clause; (b) a dispute capable of being referred to arbitration; and (c) a party must have refused or defaulted to make an appointment.

JURISDICTION

By section 12 of the Act, an arbitral tribunal is authorized to rule on questions pertaining to its jurisdiction and on any objections with respect to the existence or validity of an arbitration agreement. The challenge of the jurisdiction of the tribunal must be raised no later than the time of submission of the points of defence, and a party will not lose his right to raise such objection by reason that he has appointed or participated in the appointment of an arbitrator.

Furthermore, where an arbitral tribunal is exceeding the scope of its authority, an objection can be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the proceedings. An arbitral tribunal shall rule on any such pleas challenging its jurisdiction or scope of authority either as a preliminary question or in an award on the merits, and such ruling is final and binding.

CONDUCT OF ARBITRATION

By section 14 of the Act, in any arbitral proceedings, the arbitral tribunal shall ensure that the parties are accorded equal treatment and that each party is given full opportunity of presenting his case. Domestic arbitrations are bound to be conducted in accordance with the procedure contained in the Arbitration Rules set out in the First Schedule to the Act. On the other hand, international arbitrations dance to a different tune. Section 53 of the Act allows parties to an international commercial transaction to agree in writing as to the rule that will be applicable in their arbitration. Parties may adopt the Arbitration Rules set out in the First Schedule to the Act, or the UNCITRAL Arbitration Rules or any other international arbitration rules acceptable to the parties.

The act provides that proceedings may be conducted in any of the following ways:

(a)         by holding oral hearings for the presentation of evidence or oral arguments; or

(b)        on the basis of documents or other materials; or

(c)        by both holding oral hearings and on the basis of documents or other materials.

The proceedings are usually analogous to the conduct of a civil case. The claimant presents his case and calls his witnesses who are cross-examined by the respondent. The respondent, thereafter, presents his case/defence and calls his witnesses who are cross-examined by the claimant. The parties summarize their cases in form of addresses and the award is thereafter made by the tribunal.

ARBITRATION AWARDS

The decision of an arbitral tribunal at the conclusion of the arbitration proceedings is referred to as an award. An award can also be based on terms of settlement by the parties if the parties are able to reach an amicable settlement on their own during the pendency of the proceedings. However, once the tribunal, on application of the parties, adopts the settlement as its award, it will have the same binding power as an award reached and made independently by the tribunal. This is the tenet of section 25 of the Act.

Section 24(1) of the Act provides that in an arbitral tribunal comprising more than one arbitrator, any decision of the tribunal shall, unless otherwise agreed by the parties, be made by a majority of all its members. Also, the award must be in writing and unless otherwise agreed by the parties or it was based on the settlement by the parties, the award must state reasons for the decisions taken.

ENFORCEMENT OF AWARDS

An award by an arbitral tribunal is binding and can be enforced, with the leave of court, in the same manner as a judgment of a court of law, –section 31 of the Act. Once there is nothing intrinsically wrong with the arbitration proceedings or the time for challenging it has expired, the award becomes final. This is because, as Galadima  JCA (as he then was)  stated in Ebokan v. Ekwenibe & sons Trading Co. (2001) 2 NWLR (Pt 696) 32, once parties have chosen to submit to arbitration, they are estopped from backing out of the decision of the arbitrator whether or not it favours them, so long as the award is good on its face. The party seeking the enforcement shall supply the duly authenticated original award or a duly certified copy thereof; and the original arbitration agreement or a duly certified copy thereof. 

JUDICIAL REVIEW OF ARBITRATION AWARDS

By section 32 of the Act, Any of the parties to an arbitration agreement may request the court to refuse recognition or enforcement of the award. Therefore, an aggrieved party can apply to the court to set aside an award. The courts will set aside an award on any of the following grounds;

  • Where the award contains decisions on matters which are beyond the scope of the arbitration
  • Where an arbitrator has misconducted himself
  • Where the arbitral proceedings or award has been improperly procured. (section 29(2) and 30(1) of the Act)

The term “misconduct” as seen in the above provision is a wide one, but one can say that any conduct that can be interpreted as amounting to a miscarriage of justice will be treated as misconduct under the Act. In Comptoir Commercial and Ind. S. P. R. Ltd v. Ogun State Water Corporation and Anor, the Supreme Court held that the admission of inadmissible evidence which goes to the root of the matter may be construed as misconduct.

Some actions that may amount to misconduct were listed by the Supreme Court in A. Savoia Ltd v. Sonubi (2000) 12 NWLR (Pt682) 539 SC and they include;

  1. Failure to comply with express or implied terms of the arbitration agreement;
  2. Where an award ought not to be enforced on the grounds of public policy;
  3. Bribery and corruption of the arbitrators;
  4. Mistake as to the scope of authority conferred by the arbitration agreement;
  5. Failure to decide on all matters referred;
  6. Breach of the rules of natural justice;
  7. Failure to act fairly towards both parties

DIVERGENCE IN INTERNATIONAL COMMERCIAL ARBITRATION PROCEDURE

The Part III of the Act applies to international commercial arbitration. Section 43 of the Act provides thus “the provision of this Part of this Act shall apply solely to cases relating to international commercial arbitration and conciliation in addition to the other provisions of this Act.” However, the procedure and conduct of international commercial arbitration are very similar to that of the domestic commercial arbitration. The divergence on some points of procedure can be seen as being designed to give efficacy to the arbitration in international commercial transactions and in compliance with laws and models on international commercial transactions.

For instance, while in domestic commercial arbitration, where the parties did not specify mode of appointment of arbitrators and there is a dispute as regards such, the arbitrators will be appointed by the court on application of either party; no reference is made to the court by the Act in this matter as regards international commercial arbitration. The Act rather refers to the “appointing authority” in place of the court. See section 44 of the Act. Where a sole arbitrator is to be appointed by the appointing authority as a result of failure of the parties to appoint, the appointing authority shall use the list-procedure unless the parties agree otherwise or the appointing authority, in its discretion, decides that the list-procedure is not appropriate in the circumstance. The list-procedure is as follows;

  • at the request of one of the parties the appointing authority shall communicate to both parties an identical list containing at least three names;
  • within fifteen days after the receipt of the said list, each party may return the list to the appointing authority after having deleted the name or names to which he objects and numbered the remaining names on the list in the order of his preference;
  • after the expiration of the above period of time the appointing authority shall appoint the sole arbitrator from among the names approved on the lists returned to it and in accordance with the order of preference indicated by the parties.

By section 47 of the Act, the arbitral tribunal in an international commercial arbitration shall decide the dispute in accordance with the rules in force in the country whose laws the parties have chosen as applicable to the substance of the dispute. The above mentioned laws refer to the substantive laws of that country, but where the laws of the country to be applied is not determined, the tribunal will apply the laws determined by the conflict of laws rules it deems applicable. For the grounds of setting aside an award from an international commercial arbitration, see section 48 and 52 of the Act.

PROBLEMS OF ARBITRATION

Arbitration, as a medium of alternative dispute resolution, is not without its own flaws and pitfalls, the first of these being the level of ignorance of arbitration procedures. Apart from multinationals and large corporate bodies with robust legal departments, the whole process and advantages of arbitration remain shrouded in mystery to most commercial entities and directors.

Arbitration is unsuitable for complex legal matters and multiparty suits for which action in court would be more useful. Arbitration is more suitable for two party disputes with an extant arbitration agreement between them. A party that is not privy to the arbitration agreement cannot be forced to join in the arbitration unlike a civil suit where different joinder proceedings could be used.

Equally, the powers of the arbitration panel are not as wide as the powers of the court and can be limited by the parties. When eventually an award is made, recourse will be first had to the court before it can be enforced and an aggrieved party can apply to the court to have the award nullified. Thus, it is not as final as it appears to be.

ADVANTAGES OF ARBITRATION

Parties that submit their disputes to arbitration usually do so in a bid to avoid the delays, lengthy procedures and tiring adjournments that characterize the regular court proceedings. Hence, one the most important feature and advantage of arbitration is the speedy and swift determination of disputes. Arbitration allows parties considerable autonomy. Parties can choose their arbitrators, place of arbitration, and in international arbitration, parties can also determine applicable laws. Arbitration equally offers the parties confidentiality and privacy. Arbitration proceedings are not conducted in open court with people that have no interest in the matter present, unlike the regular courts. This helps preserve trade secrets and company’s reputation.

Arbitration is usually more conciliatory than litigation. Our adversarial legal system makes legal fights in the court to be “winner takes it all” arrangement. Arbitration, on the other hand, as an alternative dispute resolution method, has more likelihood of preserving the commercial and business relationship between the parties. Parties to an arbitration proceeding will have the opportunity to have their dispute settled by an expert in the field of the contract or transaction. This is, of course, because parties can choose the arbitrators. For instance, if the dispute involves technical accounting problems, it could be referred to chartered accountants. Equally, unlike other forms of alternative dispute resolution, the arbitration award has some finality and is enforceable by the court.

PROSPECTS OF COMMERCIAL ARBITRATION IN NIGERIA

Commercial arbitration in Nigeria has a lot of prospects for improvement in efficiency and wider usage. A few changes can be made in the arbitration practice in Nigeria to increase efficiency. These will be discussed shortly. There are new developments in the laws governing arbitration and other alternative dispute settlement methods, especially in Lagos.

New Developments in Law

Lagos state can be said to be at the vanguard of regulation of alternative dispute resolution framework by states. The state has passed some legislations in this regard, these include;

  • The Lagos State Arbitration Law No.10 of 2009 (LSAL). This applies to all arbitrations within the state except where the parties have expressly agreed that another law should apply. Other modifications made by the law in comparison to the Federal Act relate to provisions such as appointment of arbitrators, cessation of office, place and time of arbitration, setting aside of awards and costs. New provisions included in the law cover areas such as the form of arbitration agreements to take, cognisance of electronic means of communication and other modern means of communication which are not contained in the Federal Act, provisions on the appointment of umpires in arbitration proceedings, consequences of the termination of an arbitrator’s appointment, immunity of arbitrators, consolidation, concurrent hearings and joinder of parties, interest, notification of awards/arbitrator’s lien on awards, etc.
  • The Lagos Court of Arbitration Law No.8 of 2009 (LCAL) which establishes a court of arbitration in Lagos State.
  • Lagos State Multi-Door Court House Law 2007 which makes settlement and awards duly signed by an ADR judge enforceable as a judgment of the High Court.

The Lagos State point of view is anchored on the fact that arbitration, conciliation and other ADR processes are not found in the exclusive nor concurrent list of the 1999 Constitution of Nigeria; hence, they are residual and fall within the legislative competence of the states. However, certain matters in respect of trade and commerce are contained within the exclusive list, thus, conferring jurisdictional competence on the federal government to legislate on arbitration and conciliation. We think that a judicial pronouncement in this regard by the Supreme Court will put the matter to rest.

  • There is a bill presently before the National Assembly seeking to establish a National Alternative Dispute Resolution Regulatory Commission (the Bill). The functions of the commission, according to the Bill is to:

“regulate, through the process of accreditation, all Alternative Dispute bodies and institutions engaged in practice training, education or skills acquisition in alternative dispute resolution mechanism; advise the federal and state governments on the use of alternative dispute resolution mechanisms; develop an alternative dispute resolution policy for Nigeria; maintain a register of Alternative Dispute Resolution bodies and Institutions in Nigeria; set and maintain standards in the training curriculum of the Alternative Dispute Resolution bodies in Nigeria; undertake public enlightenment programmes on the benefits of Alternative Dispute Resolution as effective means of settlement of disputes; develop and maintain relations with international Alternative Dispute Resolution bodies and organisations with a view to attaining best international standards and practices in the field of Alternative Dispute Resolution; organize local and international seminars, workshops and conferences for users and practitioners; develop and constantly review, rules and regulations for the practice of Alternative Dispute Resolution in Nigeria; carry out such other activities as the Commission may consider necessary to raise awareness and maintain standards in the use of Alternative Dispute Resolution in Nigeria.”

The bill has received criticisms on the grounds that ADR, by its nature, does not require regulation. The attempt to regulate the practice of ADR will definitely impinge on the right of parties to choose who and how to submit their dispute for settlement through ADR. Equally, the Bill is seen as being against international best practices as arbitration is not regulated anywhere else.

SUGGESTED IMPROVEMENTS

Arbitration, though governed by law, is still largely crafted and piloted by the desires and agreement of the parties. To maximize the efficiency of the process, the following suggestions are offered:

Formation of the tribunal: Parties should verify the arbitrators’ availability and obtain a commitment for the issue of the award within reasonable time. Sole arbitrators should be used for smaller or simpler disputes.

Procedure: Parties are encouraged to ask the arbitral tribunal to convene an early procedural conference. Where practicable, fast track schedule with fixed deadlines should be considered. In some cases, a determination of preliminary issues may lead to a quicker and more efficient resolution.

Evidence: Limit and focus requests for the production of documents. Especially in international commercial arbitrations, the standards set in the IBA Rules of Evidence should be considered. Allow electronic filings and encourage paperless arbitrations. There should be no need to have multiple witnesses testify about the same facts.

Hearing: Videoconferencing can be used for testimony of witnesses who are located far from the hearing venue. Consider fixed time limits for hearings.

Settlement: Other routes of settlement, like mediation, can still be employed at the inception of and during the pendency of arbitration. Arbitrators can provide preliminary views that could facilitate settlement.

REFERENCES

  • Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria (2004)
  • Orojo and Ajomo, Law and Practice of Arbitration and Conciliation In Nigeria
  • Nigerian Investment Promotion Commission Act, (NIPCA) Cap N 117 Laws of the Federation of Nigeria, 2004
  • Admiralty Jurisdiction Act (AJA) 1991
  • Trade Disputes Act Cap T8, Laws of the Federation of Nigeria, 2004
  • The Lagos State Arbitration Law No.10 of 2009
  • The Lagos Court of Arbitration Law No.8 of 2009
  • Lagos State Multi-Door Court House Law 2007
  • http://www.vanguardngr.com/2013/05/stakeholders‐oppose‐regulation‐of‐alternativedispute‐resolutions/
  • nassnig.org/nass2/legislation.php?id=1402
  • Akin Akinbote, Arbitration in Africa – The State of Arbitration in Nigeria. A Paper Presented at the 2008 Colloquium of the Association for the Promotion of Arbitration in Africa Held at Djeuga Palace Hotel, Yaounde Yaounde From 14th – 15th January, 2008.
  • ADEDOYIN RHODES – Vivour, Recent Arbitration Related Developments in Nigeria, (CIARB) Arbitration: Reprinted From (2010) 76 Arbitration 130-135:
  • George Etomi, Efeomo Olotu and Ivie Omorhirhi, Internationa Journal of Commercial and Treaty Arbitration.
  • Otuturu, Some Aspects of the Law and Practice of Commercial Arbitration in Nigeria, Journal of Law and Conflict Resolution, August, 2014.
  • Buruma, International Commercial Arbitration, an Introduction, 2013 edition

Subscriber Identity and Subscription Management In Nigerian Mobile Telephone Service

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The telecommunications landscape in Nigeria had the existence of a telecommunications firm (P&T / NITEL) that was wholly owned and operated by the government. Sometime later, NITEL decided to engage the activities of private companies in the discharge of its obligations. Some of these were responsible for retailing International calling minutes. There was an advancement to the licensing of fixed wireless carriers that provided telephone services in a wireless local loop that still interconnected with the existing infrastructure of NITEL.

As the clamor for deregulation grew, the Nigerian Communications Commission (NCC) was created under Decree number 75 by the Federal Military Government of Nigeria on 24 November 1992. In 2001, full digital mobile licenses were sold and the regulatory body, Nigerian Communications Commission (NCC) was now able to supervise a new Nigerian telecommunications landscape that had private sector players as participants. In less than a decade the number of subscribers served by the private telecommunications providers became much more than those served by the government owned NITEL. As at the time of writing this article, NITEL appears to exist under new terms and company structure within a private sector owned administration.

NITEL in its days provided subscriber telephone services using wires that could be traced to the locations of the subscribers. The issue of ascertaining the user of the service was simple to handle. All that needed to be done was to trace the cable. In the case of full mobile telephony, it is quite difficult to tell precisely where a telephone subscriber is. To make matters worse, an individual could initiate a call from a location full of people like a busy car park or amusement center. At best one may be able to identify the area where the individual is located but may not ascertain who the real caller is considering that 40% of the people in the location could be making phone calls from mobile phones.

In dealing with security concerns, what really counts? Is it the ownership of the telephone line or the use of that line? There are chances that a mobile phone could be stolen and used in a criminal activity. If the phone line in question is a land-line, it is easy to trace the line to the location of use, however, if it is a mobile telephone line, it is a bit more complicated. To deal with the attendant issues, the Nigerian Communication Commission (NCC) decided to establish guidelines for Subscriber Identity Module (SIM) card registration. An excerpt from the draft regulations on SIM card registration is given below

5)  For the avoidance of doubt, there shall be no proxy registration of SIM cards and any persons registered pursuant to the foregoing paragraph (3) shall be liable for activities carried out on the SIM Card.

The statement makes it clear that all responsibility for use of a SIM card lies with the individual who the SIM card is registered to. That means everyone who has a SIM card registration entry needs to be sure of which SIM cards are registered against the identity. The big challenge here is that the guidelines for SIM card registration are silent on how to handle this issue.

The Case for Subscriber Data and Subscriber data verification

A comprehensive record of the nation’s telecommunications subscribers is necessary for planning purposes. To make work easy for policy makers there is need to also have demographics associated with the data. But there is need not only to keep a tab on subscriber data but on the subscriptions. In Nigeria, over 95% of telephone subscriptions are mobile phone subscriptions.

The data capture process is given below

  • Obtain a form
  • List all the mobile numbers you have with a particular mobile telephone network operator on that form
  • Provide the SIM serial numbers of the telephone lines
  • Provide a means of identification
  • Provide bio metric data
  • Depart from the Registration kiosk

The flaw lies in two areas. The first is that the identity of the individual needs to be verified using a third party system. The best of this is the National Identity Management Commission (NIMC) issued National Identification Number (NIN). Not many Nigerians using mobile phones and in possession of SIM cards have enrolled and obtained a NIN. The second flaw is that the individual / subscriber has no access to a central database that maps his or her identity to the different SIM cards registered to him or her.

There is need to resolve the issue of subscriber personal identification before moving on to subscription registration. The bank verification number (BVN) system was able to tackle this by assigning unique IDs to individuals and then asking that the relationships (bank Accounts) be mapped to this unique ID.  If access to the national identification database is a big hassle, then the telecommunications regulator (NCC) should use the same option utilized by the banks by establishing a unique subscriber ID per telecommunications service user and then requesting that the individual provides this unique ID at point of purchase of any SIM card or service subscription to the new mobile phone service operator. The operator should simply have access to map the new telephone line purchased to the existing customer / subscriber ID.

Considering that telephone lines assigned to any subscriber are the responsibility of the subscriber, there should be access to the registration database so that the subscriber can routinely check and confirm or otherwise flag the existence of telephone lines on his or her profile. At this moment, that platform does not exist. What it implies is that all individuals with SIM card registrations are at the mercy of the data entry staff involved in SIM card registration and a lot of these data entry staff are ad-hoc staff.

Without complaining about the sensitivity of the information that people (who are not staff of any government agency) handle and have access to, it is scary that the lawful owners of this data have no access to it.

From a cursory observation, it is obvious that there is no deterrent to misallocation of telephone lines to subscriber profiles. There is no simultaneous identification of telephone lines and subscriber bio-data capture. It is clear that, the entire SIM card registration and update process is fraught with errors that cannot be easily identified by the people best equipped to do so which are the subscribers. The subscriber simply walks away from a registration point assuming that the data assigned belongs to him / her. What happens in the case of errors and what if the error is deliberate?

In the meantime, it would not be a difficult measure to establish a short code messaging process of obtaining registration information about any telephone line using the telephone line in question. The mobile telephone companies can set up a system where a subscriber can send an agreed message to a short code and will obtain the registration information attached to a line. If that information is inconsistent with his or her identity, then that is a good basis for further investigation. This mechanism however cannot provide to the subscriber the information of how many telephone lines are registered to him or her. Alternatively, one can resort to court affidavits and / or paid newspaper advertisement to protect oneself against such errors.

Subscriber Profiles and Subscriptions

When in 2001, the companies that won the auction of digital mobile telephone licenses commenced services, they sold SIM cards without caring to obtain subscriber data. As long as the conditions of usage were met, the lines were kept active. The conditions involved certain financial obligations. They were generally two kinds of subscription categorization; prepaid and postpaid. The postpaid customers had a certain degree of access to their transactions since their bills were generated at the end of the billing cycle agreed between them and the telephone companies.The vast majority of telephone subscribers in Nigeria are prepaid customers.

Most of of the telephone subscribers do not have access to their subscriber profiles and cannot tell exactly what additional services they are signed onto. It is common to have a notification requiring one to type a single character (in a lot of cases one would hear ‘Press 1”) in response to a prompt and if one goes ahead to carry out the instruction either willingly or accidentally, a new subscription is attached to one’s subscriber line. A number of times, there is a financial implication to that action.  With the advent of touch screen phones, it is not uncommon to have one’s ear depress the screen and respond to requests by mobile telephone service providers. The telephone service providers are the beneficiaries of all such mistakes and have no business benefit in reducing subscriber subscriptions even when the subscriptions are done un-intentionally. The subscribers to a large extent are not even aware of what subscriptions they have.

I believe it is should be a regulatory requirement that all telephone subscribers have a profile created that stores all subscriptions and transactions for at least the duration of the upper limit on data retention in the country. Each subscriber should have access to this profile using a username and password. The regulation should also make it illegal for any additional subscription to be valid without a PIN code response from the subscriber. Simply asking one to type a single character to validate a subscription which is unintended and unrequired in a lot of cases is quite unethical.There is nothing wrong in advertising subscriptions, but gaining these sign ons using means fraught with user unintended errors is unethical.

Conclusion

Data is essential for planning and development. Subscriber data capture is essential nonetheless but there is need to sanitize the system to ensure that the basics are rectified before building on a shaky foundation.

Individual identification should be ascertained, then subscriber profiles should be created and control mechanisms be established to guide subscriptions. If these are not done, the subscriber is facing some many risks that even the threat of litigation would not effectively resolve.

Education for All

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I have a business proposal that would yield a lot of dividend. The business involves sustained investment of particular sums over a defined period of time. After this investment period, there comes the time when the dividends start pouring in. The dividends are consistent in timing and last for over a life time. If you were offered this investment opportunity, would you accept?

Scenario two; you own a firm and you invested money in training your staff. This training afforded your staff the opportunity to acquire new techniques to aid your firm’s business and resulted in your firm developing some extremely useful products which gave your firm an edge in the market. Sales improved and your firm posted great profit. The question is, was the investment in training worth it?

I believe the answer to the above questions is yes. Forgive me for not stating that in both cases, the duration between investment and yield was probably not the same, and of course in both cases you are taking risks. But wait a minute, what is life all about? ‘an empty stable stays clean, but there is no income from an empty stable’.

Life is fun, and one part of it is nurturing ideas. We are all part of a system that operates on growth and development, giving and receiving, Investing and obtaining yields, sowing and reaping. We all love to see our plans succeed and we enjoy this process. At least after things have worked out as we had planned our joy knows no bounds.

The first generation runs the affairs and trains the next generation in the process. After which it hands over to the next generation and delights in watching this new generation take over and surpass its own accomplishments. That era is over, or is it? One generation can only hand over to the next when the first has been able to train the next to take over. If the first generation has not equipped the coming generation with the necessary skills needed to assume the responsibility of leadership, we end up with chaos and not development or progress.

There is so much talk about eradicating poverty but little about empowering people. The empowerment that people need is tied to enlightenment resulting from education. Therefore, if education is not available to the people, then what they’d have is poverty. Maybe, I can make a statement that poverty is the result of the unavailability of education.

Education here refers to a process that results in

  • Self understanding
  • An understanding of one’s environment (physical and otherwise)
  • An awareness of resources available to the individual,
  • An efficient utilization of these resources and which results in
  • Wealth generation and ultimately ends up with
  • The continuation of this process.

An educated person understands himself/herself – he/she knows what strengths, gifts, abilities he/she possesses and how to use same. He/she is aware of the resources in his/her habitat and how these resources can be efficiently and effectively utilized to create wealth. Wealth here refers to all that is needed to preserve the individual in question and also keep the system functioning. Finally, the educated person ultimately proves his/her education in making sure that the cycle continues. This final statement captures the true test of education. One is not educated, until one can spread the effect.

On the average, every one accepts there should be education for all. Secondly, we accept that there is a cost to be borne. Also staring us in the face is the reality that investment in education would be consistent and sustained over a period of time. But like our story shows, it’d pay off. It definitely will. If it doesn’t pay off, then whatever was done was not education, maybe it was simply schooling. And it is obvious to us that schooling is also expensive. I guess that settles the issue of whether education should be available to all and I believe it also settles the question of who should fund education.

One big threat to this entire system of education for all is the dilemma – ‘Getting education out of the schooling system’. When people complain about how expensive education is and when they state that education is capital intensive, they inevitably claim that poverty is cheaper. The obvious reason is that certain people who claim to be enlightened live at the expense of other people’s ignorance. They believe that their luxury is at the expense of other people’s poverty. Maybe that is why there is so much competition instead of variety. Variety brings up abundance and co habitation, competition brings out monopoly and genocide.  And all of this is buried under the cloak of the debate ‘Capitalism and Socialism/Communism which is better’. Good enough we now have robots around. That goes a long way in showing that ‘dominate the earth- didn’t mean dominate yourselves’ and this shows that slavery has never been humane.

The real expensive issue is unprofitable schooling curricula and system, not education.  The Nigerian musician Fela puts it thus ‘teacher no teach me nonsense’. If we don’t get productivity from the system then it needs review. Every community must be self sustaining. Education is the only tool that can produce this. For I believe that there is enough for everyone existing and that there’d be enough even for those yet unborn.

At some time in the history of humanity, Africa sold bodies of youths, today their minds and intellects are mortgaged at the altar of non functioning schooling systems that train them to be every other thing but productive.  What next shall we sell? I do not believe in Marxism or the Matrix but I know that things are out of order and the disorder has a certain degree of order (chaos theory). Again I ask, if education is capital intensive, what of poverty? Maybe, the end justifies the means.

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