Administration

COLLECTING ART: A HANDBOOK

Foreword

I often wonder what motivates an individual to start collecting art. But perhaps more intriguing is, what sustains the collector’s interest in this endeavour? It is fascinating that some people do not stop after purchasing maybe ten or twenty works but continue accumulating until they have several hundred artworks. I wish I could conduct in-depth research into this aspect of human behaviour. Today, a “Handbook on Collecting Art” can be seen as a modern day “Do it yourself” manual. Personally, I have never been guided by such a book; neither did I come across any handbook on collecting art. So when I was asked to write this Foreword, I was excited although a little uncertain, as I put my thoughts together.

“I love this work,” “This is a remarkable piece,” “Lovely,” “Oh that painting speaks to me”- these are some of the common expressions one often hears from collectors as they go through exhibition halls or at various artists’ studios. These comments are from the heart, triggered by the eyes, processed in the context of our brain and tamed by the depth of our pockets. These are feelings which cannot be expressed in a “Handbook on Collecting Art.” What then are the psychological factors which affect the decision making process of an Art Collector? How do you analyse or measure the consistency or the intensity which drive one to actually purchase and continuously acquire art? How does one understand or evaluate the buying pattern of a collector?

Many studies have shown how much our childhood activities, hobbies and upbringing, impact our adult lives. Could this be applicable to our behaviour as art collectors? For example, many people began collecting various items as children – stamps, marbles, dolls, cards featuring footballers, and country flags. I vividly recall the keen competition between my childhood friends on the type and colour of marbles in our collections. The same applied to friends who collected stamps, dolls and cards. It did not matter the socio economic background of the children. Those who could not afford stamps or marbles collected “ikoto” (tops made from metal strips) which they played with in the sand. Could those childhood behaviours have created the foundation for collecting later in life? Could there be a correlation between these two phases of life? Could our early childhood competitiveness for the best marbles, stamps, dolls or card collections, have shaped our perception about art or other collectibles? Did out childhood visits to museums and galleries with our parents or on school excursion, have an impact in developing our appreciation of collectibles?

Until a formal study is done, your guesses are as good as mine!

1970’s AND 80’S

I would like to make a few observations about this era which probably may not apply to more recent or younger collectors, but may resonate with older ones. In trying to understand how it all began for me personally, I think there are four main milestones:

The Lagos art scene of 30 to 40 years ago was a very fascinating one. It was mostly characterised by the same group of people who you bumped into, several times a week at shows or exhibitions. These shows and exhibitions were mainly staged then, at the Italian French, or Russian cultural centres, and at the British Council, and Goethe Institute, then. In those days there were “saloons,” where an art lover would host a small exhibition for an artist in their house or garden. Corporate bodies, in line with their Corporate Social Responsibility (CSR) efforts, hosted exhibitions curated by art enthusiast. Saloons have now completely disappeared from the scene, replaced by art galleries. Over the years, the numbers of people who plough the art scene have multiplied in number and in complexity. As a result, there is now an increased desire to acquire, and the Lagos Art scene is now a major social event.

I believe that most of today’s major collectors were part of this scene of the 70’s and 80’s and many started collecting at that time.

Secondly, I do believe that there is a “raison d’etre” for collecting. Somewhere in the psyche of the collector, is that individual eye for art – a sombre and genuine appreciation of the creative mind of the artist. Both of these elements are situated within the context of one’s environment. Personally, there has been no method to my collecting or any investment angle. If I liked the artworks, I bought as many as I could afford.
I started off by buying watercolours – they were vibrant, bright, colourful, and the texture was light. Landscapes also spoke to me – nature, cities, rural areas, roof tops, monuments. At a later stage, I started looking at oils, etchings and multimedia. Subsequently, I eased into sculptures. In reality, there was no well thought plan on how I bought art.

In those days, we would often ask ourselves. “Do you have an Olaku; a Barber, or Ovrati or Akande, or Dale or an Oshinowo, or a Bruce, or an Ewonwu?” These were some of the artists that were talked about among my circle of art friends. These kinds of questions also shaped one’s acquisition pattern.

Finally, another factor which shaped one’s early collection was the influence of art from Anglophone West African especially from Ghana, on the Lagos art scene; the likes of Glover, Delaquis, Kotei, Bartimeus and Butler.

POST 2000

A lot has changed in the art scene and the collecting of art, since the turn of the century. The advent of local and international auctions conducted by various auction houses including Arthouse, Bonhams and more recently, Sotheby’s, has had a major impact on the art sector in Nigeria. The following significant changes have been resulted:

Internalization of African Art. Especially Nigerian art. Nigerian art has now been taken to the world by more Nigerian artists who live and work in the diaspora. Also, Nigerian Art is being showcased at many international art fairs. Shows, biennales and exhibitions at international museums. These factors have given rise to an independent system of assessing the quality and value of African artworks. A new value proposition is now being attached to the collection of art from Africa. Collectors, who hitherto, have made acquisition decisions purely on aesthetic value can now ascribe monetary value to each of their work.
This monetization of African art, though still at its infancy, has brought with it a vibrant interest in Nigerian art, with scores of new collectors, Art Funds and happy artist- both old and young. Driven by enormous monetary value of their collections, a very active art market has evolved with big ticket transactions taking place.

Today, collectors are now trying to maximize the value of their collections, by buying contemporary works, thereby, hedging their bets for the future. They are focusing on works that command big ticket value at auctions. They are, in essence, refreshing their collections in order to strike a balance and enhance the overall value of their collections.

It is only a question of time- sooner rather than later before the Nigerian art scene becomes a multi-million-dollar market like the European, Indian, and Chinese art markets.

In the past, the issue of provenance was moot. Art was purchased mainly at exhibitions or directly from artists. Although there were a few art dealers, the works they sold also has solid provenance. Collectors exchanged or sold works angst themselves and provenance was never an issue. Today, this is now an important issue. The lack of documentation or reference database has highlighted the “soft underbelly” of our art market. The increase in the monetary value of our art market. The increase in the monetary value of our art has now made the source and origin of the work an imperative. This has given rise to a noticeable increase in fakes and forgeries. Sadly, the “N” facto has appeared on the art scene in Nigeria. But it is reassuring that collectors are now documenting the works in their collections. For instance, the Foundation for Contemporary and Modern Visual Art (FCMVA) has established a database for contemporary Nigerian artworks. In future, these initiative will probably ensure a solid reference database for provenance and the documentation of artworks.

(iv)These changing times have thrown up a new breed of collectors:

The upwardly mobile professionals “investing” in art.
The ‘keeping up with the Jones’ type’ who see art as a way of validating their position and success in life and attending auctions because they want, and have to be seen.
“The new money” type, as changing political and economic scene in Nigeria has thrown up different individuals, who spend their windfall profits on art collecting.

To conclude, it is an absolute privilege for me to write this foreword and to be a part of this new endeavor of a friend and fellow collector, Jess and his co-author, Fabian. I believe that this book will further stimulate discussion within the art scene in Nigeria and abroad.

Olayinka Fisher

LAW & SOCIETY

Foreword

It gives me tremendous pleasure to accept the invitation of my learned friend of the Silk – Dr Fabian Ajogwu SAN to write the foreword to his scholarly book on: ‘’Law and society’’. The book articulates extremely important and fundamental issues which affect the society at large.

The scope of the book is huge as it analyzes the relationship of the law with many societal topics encompassing ‘’Inter alia’’ the history of the Nigerian society, sources of law, evolution of the Nigerian legal system, the Nigeria Constitution, Ethics in the legal profession and many more topics besides. Indeed, the learned Senior Advocate of Nigeria splendidly demonstrates an impressive holistic approach to the title and essence of the book: ‘’Law and Society’’. As we say in the law ‘’ he covers the field’’.

Although professional ethics in the legal, medical, engineering or any other profession is a topic many scholars and authors are not comfortable to discuss, yet, the author deftly and boldly articulates ethics in all its ramifications by his own originality and wise application of the Rules of Professional Conduct in the legal profession. The discussion on professionalism and ethics of in-house and public services counsel is a superb explosion of an important part of the ethics of the learned profession. The author should be loudly applauded for his discourse on this important aspect of the legal profession.

The author eloquently enunciates the lawyer’s noble and professional role to uphold and facilitate the development of the society. It is trite to state that every aspect of human society revolves around law and the lawyer. The lawyer is involved in drafting and constructing documents, and findings solutions to many of the societal problems, particularly legal problems. In his book: “In the Eyes of the Law’’, the Honourables Justices Chukwudifu Oputa said at pages 213 declared:- ‘’The ordinary citizen may not and perhaps cannot protect himself against those concentrations of power which by their weight or their natures conduces to the oppression of the individual namely, the power of prosecution, the power of parliament, the power of the executive, the power of wealth and status, the power of monopoly and restrictive association, and the biggest problems of all, the power of numbers. it is the duty of the advocates, a duty he owes to the community to ensure that the individual is properly protected from power to see that there is a fair, equitable and just balance between those who have power and those who are subjected to such power’’.

Undoubtedly, lawyers will encounter many obstacles and challenges which may impede the effective discharge of the duty imposed on them as lawyers. Such obstacles include unethical conduct of some colleagues, unjust laws, disobedience of court orders, particularly by government officials and delay in the adjudicatory system. Dr. Ajogwu SAN Presents the book as a clarion call to lawyers to observe the highest ethical principles of their learned profession in order to discharges the enormous responsibility placed on them by the law.

In the author’s elucidation of the famous (or is it infamous?) chapter II of the Constitution on Fundamental Objectives and Directive Principles of State policy, the author vehemently address the mischief in S. (6) of the Constitution which renders all the sanctimonious pronouncement on the good life in Chapter II worthless. The negation of justiciability in Section 6(6) leaves the Chapter in a prostrate state. My learned friend is insightful in his treatment of customary law which he has placed on its proper pedestal thus:-
“Customary law has got to be recognized as an important vehicle regulating the conduct and lives of the vast majority of Nigeria’’.

The Hon. Justice Nnaemeka-Agu JSC in Ugo v Obiekwe declared thus:-
‘’Our customary law is still bogged down this annoying vestige of colonialism…. The result is that our customary law is still treated like foreign law in our own country (more than three decades) after our independences from colonial rule. This is far from satisfactory… it is to be regretted however, that whereas the authorities concerned are taking the commendable step of riding our statue and received English law of anachronism, nothing appears to be happening in the area of customary law which forms the essential backbone of our ‘’corpus juris Nigerianae’’.

I believe that the Nigerian Institute of Advanced Legal Studies das a programmed on research on customary law. The country and the legal system should benefit substantially from such an academic exercise.
As a former student of classics, I make bold to congratulate Dr. Ajogwu SAN for the dexterous employment of Latin ‘’, (with their English translation), to upgrade the scholarly reach of the book and enhance its prose.

Dr. Ajogwu’s admirable professional high standard is vividly manifested in this brilliant book. His laudable and ethical approach to the practice of law and his commitment to high quality professionalism should encourage every lawyer who reads the book to go and do likewise. The book is outstanding for many reasons including: the author’s lucidity of though, clarity of language, profundity of research and compelling intellectual discourse. The splendid characteristics of this book are a testament to the learned mind of a learned Senior Advocate of Nigeria.

I congratulate the author for his valuable contribution to legal scholarship. My learned friend has written a provocative book which is germane to the current state of our country as we struggle to find ways through which the law can be the true agent towards solving the myriads of problems confronting us as nation and in fulfilling our roles as lawyers.

I hereby recommend the book, without any reservation whatsoever, to judicial officers, legal practitioners, academicians, law-students, civil society, the media, all who enjoy reading and all persons who are interested in making the Nigerian society better for all of us by upholding the Rule of Law. This Book is a masterpiece which will adorn any library, particularly a law library.
Dated this 30th day of October 2013

Chief ‘Folake Solanke, SAN, CON Legal Practitioner, Alabukun Law-Chambers ANCE Building (2nd Floor)’ Magazine Road, Jericho, Ibadan.

TRADE & INVESTMENTS IN NIGERIA: LEGAL & REGULATORY ASPECTS

Foreword

I am pleased to be invited to write a foreword to this insightful piece written by the law firm of Kenna Partners. Having been at helm of the Ministry of Industry, Trade and Investment (MITI) for the past four years, I understand the challenges of many foreign and local investors who have either invested in Nigeria or are intending to invest in Nigeria.

Over the years, Nigeria has put in place several incentives for local and foreign investors. We realize that there is a need to always clarify the legal requirements to enjoy these incentives, so as to further encourage investments. Nigeria is among the top ten fastest growing economies in the world and the underpinning objective that runs through the pages of this work, I believe, is the consolidation of Nigeria’s position as a nation and indeed the surpassing our previous achievements.

This is more so in view of the fact that the world has become a global community. One of the challenges of this obvious reality is that there is a paradigm shift from the traditional approach to commerce as we used to know. Global commerce, as amplified by information technology leaves no one in doubt of the need for a rich guide-book of this nature in Nigeria. The need to position Africa as a business-friendly continent so as to maximize the benefits of Foreign Direct Investments (FDI) is a collective responsibility. This book, Trade & Investments In Nigeria: Legal & Regulatory Aspects, provides an insight into many legal and regulatory issues in business such as legislative requirements for doing business in Nigeria, tax management and efficiency, immigration, labour relations, banking and financial services, corporate governance, oil and gas, maritime and incentives for doing business in Nigeria. The reader is provided with an insight into the regulatory issues which a prospective investor must take into cognizance before embarking upon a commercial venture.

This work which covers many areas of the technical aspect of business law has been written in a logical manner, using simple language, thus making it easily understandable even for non-legal minds. It has outlined solutions to the many challenges associated with legal and regulatory frameworks in the field of commerce and investing in the Nigerian economy.

It is in the light of the above that the importance of this piece written by Kenna Partners cannot be overstated. Kenna Partners, as one of the long standing and top-ranking commercial law firms in Nigeria, has brought its wide experience to bear on this book. The Book speaks eloquently of the sheer breadth of the informed understanding of Nigeria’s business terrain by the authors. It is filled with proactive and reliable legal reference materials in the field of commerce. I salute the industry and ingenuity of Kenna Partners in giving us this master piece.
I sincerely recommend this book to captains of industry, business executives, intending foreign and local investors, members of the Bar and Bench, all persons in the corporate world and indeed, the general public. It is a “must read”.

MERGERS & ACQUISITIONS IN NIGERIA: LAW & PRACTICE

Preface

As a crucial tool for expanding the operations of a company with a view to achieving long term growth, and increased revenue or profitability, the subject of mergers and acquisitions is no doubt an important one. The concept of mergers and acquisitions (M&A) only had minimal actual significance in Nigeria starting from the year 1982. This situation changed significantly after the Securities and Exchange Commission (SEC) began its operations in 1982, marking the beginning of regulated business combinations in Nigeria. Between 1982 and 1988, the SEC supervised thirteen mergers, including the mergers of Lever Brothers Nigeria and Lipton Nigeria, and John Holt and John Holt Investment. The prospects of mergers and acquisitions in Nigeria have continued to evolve since then.

M&A is an area that is as dynamic as the market itself, and and allows for deal and process innovations that spur new regulations. In dreaming up the shareholders rights plan, or the poison pill, in 1982 to give boards of a target company a chance to “level the playing field” and have time to weigh offers, renowned M&A lawyer, Martin Lipton explained that they “…had reached a whole new plateau of hostile takeovers, and there was really very little in the way of defense to them”. Lipton’s innovation did not come into popular use until after the Delaware Supreme Court cleared the path with a 1985 decision.

Different legislation have been passed to regulate business combinations, including the companies and allied Matters Act of 1990 and the investment and Securities Act of 2007, as well as some sector-specific Acts, such as the Banking and other Financial Institutions Act of 1991, the Insurance Act of 2003 and the Electric Power Sector Reform Act of 2005. In 2002, there was a merger of two important petroleum companies; Agip Nigeria Plc and Unipetrol Plc to form Oando Plc. However the most striking activities in M&A in Nigeria were undoubtedly the 2005 mergers that took place in the banking sector. These mergers were driven by the Central Bank of Nigeria’s 2004 directives to all Nigeria banks to increase their shareholders’ fund to a minimum of NGN25 Billion (US$208 million), from NGN2 Billion.

In eighteen chapters, I have tried to look at the meaning of mergers and acquisitions, the commercial background of M&A, issues of due diligence, principal legal documentation, as well as tax considerations against the background of Nigerian laws. Issues of valuation, intellectual property rights, and employee relations are critically examined from a Nigerian law and practice perspective. Takeovers, and takeover bids, private equity arrangements and collective investment schemes are given in-depth considerations as would governance, corporate control & pursuit of profits, and protection of shareholders, and ends with useful Nigerian case studies, court forms and templates, which are intended to serve as a guide-thread to the extensive literature on the transactional aspect of M&A. Recent trends in M&A as well as the implications of the International Financial Reporting Standards (IFRS) on mergers and acquisitions have been discussed in this edition.

In writing Mergers and Acquisition in Nigeria: Law & Practice, it was not my intention to provide a comparative survey of all elements of the subject. Rather my aim was to provide a practical guide on the law and practice of M&A starting from preliminary considerations through to the deal. There appeared to be a need for a source-book and practice-book, as opposed to a text book, so as to deal with the substansive law as well as give insights into the practice of M&A in Nigeria, deriving mainly from the investment and securities Act, 2007. All of this have brought dept and meaning to this book on M&A in Nigeria. This book lays no claim to perfection, and I therefore take full responsibility for any errors of omission or commission that may be found herein.

Fabian Ajogwu, SAN, Phd (Law) (Aberdeen)
Lagos, June, 2014

MERGERS & ACQUISITIONS IN NIGERIA: LAW & PRACTICE

Foreword

It is a pleasure to be asked to write the foreword to this important practice book on mergers and acquisitions. The book’s importance and usefulness lie in the way in which Mr. Fabian Ajogwu, SAN has selected a combination of practical texts and cases to present a comprehensive piece on the law and practice of mergers and acquisitions in Nigeria.

Mergers and acquisitions (M&As) have no doubt become a veritable engine of economic growth. They are attractive because they create commercial synergies and economies of scale by expanding operations and markets and contribute to eliminating inefficiencies and increase productivity and profitability of companies. The author captures the usefulness of mergers as “vital tools used by companies for the purpose of expanding their business operations with objectives ranging from increasing their size, long term profitability or relevance within a particular market’’.

The introduction lays out the meaning of mergers and acquisitions and presents the history of mergers and acquisitions in Nigeria from AG Leventis and Leventis stores merger in 1983, to very recent ones, with the most striking m&a activities being in the banking and financial services sector consolidations that occurred from 2005. These mergers were largely driven by the central bank of Nigeria’s 2004 directives to increase the shareholders’ funds of banks to a minimum of N25 billion.

The author presents the law and practice of M&A in Nigeria, followed by crucial issues such as legal and commercial setting of m&a, due diligence, preliminary documentation, the valuation question, tax aspects of M&A, implications on labour relations, and good references to successful mergers and acquisitions in Nigeria.
There is an attempt to critically evaluate some of the successful cases of mergers from the reasons and benefits of the merger, to the content of the scheme of merger, court ordered meetings of merging entities, and the court sanction of the mergers. At whatever level the law and practice of mergers and acquisitions in nigeria is studied and reviewed, there can be no doubt regarding the value of Mr. Ajogwu’s book in clarifying the mechanics, strategies and processes of mergers, the essence of due diligence, the impact of private equity, the strong question of valuation and other implications of M&A both from stakeholders and regulatory perspectives.
For students of the subject it is a one-stop-shop, which sets M&A in its practical context. For practitioners, investment bankers, lawyers, executives, board members and policy-makers it should be good reference and compulsory reading.

Mr Ajogwu’s book constitutes a bold initiative at stating the law and practice of M&A in Nigeria is the form of a practitioner’s book for the benefit of all who are interested in the subject. I must
commend the learned senior advocate for this pioneering step in writing this book, and therefore regard ‘mergers and acquisitions in Nigeria: law and practice’ as an authoritative text on the subject. I recommend the book to all practitioners and persons interested in Mergers and Acquisitions in Nigeria.

Mr Atedo N A Peterside, OON
Chairman, Stanbic IBTC Bank Plc

PETROLEUM LAW & SUSTAINABLE DEVELOPMENT

Preface

It is the view that petroleum, a natural resource of value accruing to a people should be a blessing to them, but that presupposes that among other things it does not end up impairing the ability of future generations to live minimum standards of life that recognise the importance of the nexus between people, economy, environment and enterprise (described as the Es). It is a disconnect between Petroleum exploration, production and management on the one hand, and the sustainability of the three Es that has led to the coined expression – “the oil curse”. Therefore the concept of sustainable development emerged as the link between petroleum development activities on one hand and ensuring the ability of present and future generations to meet their socio economic and environmental needs on the other hand.

In the last two dacades, the concept of sustainable development has emerged strongly in national policies and international law in recognition of the fact that human development activities are the major concern of sustainability. Almost every policy document in the developed economies of the world contains sustainable development agenda. Various corporate organisations have also developed some kind of sustainable development strategy. Whether it is a government agenda on sustainable development or corporate strategy on sustainable development, common features are that human development activities are at the centre of sustainability concerns and that actions needs to be taken to ensure development that is sustainable. The Rio Declaration on Environmental and Development rightly noted that in order to achieve sustainable development and a higher quality of life for all people, states should reduce and eliminate unsustainable patterns of production and consumption.

Upstream oil and gas exploration and production are human development activities that raise major sustainability concerns particularly in the oil producing areas of Nigeria. This book examines the concept of sustainable development in relation to the Nigeria oil and gas industry as it poses considerable sustainability issues. The concept of sustainable development has been defined variously but the often most cited definition is that preferred by the Report of the Brundtland Commission that is: “development that meets the need of the present without compromising the ability of future generation is given restricted interpretation as referring to environmental protection alone. This book shows that sustainable development can be understood properly in the real sense of the words – ‘sustainable’ and ‘development’ and that it is much more than environmental protection.

This book therefore examines sustainable development as an umbrella concept that embodies various principles that could be operationalized in the Nigerian petroleum industry. The book highlights the relevance of the various principles to the petroleum industry and shows greater understanding that sustainable development is based on a set of principles that would profoundly
affect national and international governance. The book presents a balanced understanding of sustainable development which is intended to protect and restore the environment without compromising the benefits of traditional development which is centered on economic and social development. In essence, upstream oil and gas development activities in Nigeria can be carried out in a sustainable manner whereby ecological carrying capacity of the environment can be maintained, economic development and social progress are promoted.

The book has eleven chapters, three apprendices and a comprehensive bibliography. It is divided into four interrelated parts. Part 1 examines generally the Nigerian oil and gas starting from the discovery of oil and gas, ownership of oil and gas in Nigeria, participants in the Nigeria oil and gas ownership. Part II analysis the concept and principles of sustainable development with special emphasis on the oil and gas industry. Part III examines the legal framework for sustainable development in the Nigeria oil and gas industry. The major factor in the assessment of the international oil and regime and the domestic oil and gas legal framework is to ascertain the extent to which they embody the various principles of sustainable development as regulatory tools and strategies. It is important to note that international oil and gas regime is not designed to deal with economic, social and environmental issues that arise from upstreams oil and gas development activities in the oil producing areas of Nigeria. Therefore Nigeria through its domestic legal framework has the responsibility of ensuring sustainable oil and gas exploration and production.

Part IV makes assessment of progress towards sustainable development in the Nigerian oil and gas industry and offers recommendations that will promote sustainable development in the industry. The recommendations are based on the following: better regulatory or legal regime that is backed by effective and efficient enforcement mechanisms, cooperation of the oil companies through the use of corporate social responsibility, clean development mechanisms and commitment to sustainable development. The book recommends that the local communities should be law abiding and play participatory roles in this journey towards sustainable oil and gas exploration and production. The input of civil society group is not left out in the recommendation.

The need for the application of the concept of sustainable development in the Nigerian upstream oil and gas industry is therefore predicated on the fact that the concept is all encompassing and seeks to promote better environmental protection, encourage economic development and promote social wellbeing. Positive impact of sustainable oil and gas exploration and production in the Nigerian oil and gas industry will have a positive multiplier effect on the larger national society: be it economic development, social progress or environmental protection.

All of these have brought depth and meaning to this book on petroleum Law and Sustainable Development. The book lays no claim to perfection, and we therefore take full responsibility for errors of omission and commission that may be found herein.

Dr Fabian Ajogwu, SAN
Dr Oscar Nliam
Victoria Island, Lagos
June 1, 2014

PETROLEUM LAW & SUSTAINABLE DEVELOPMENT

Foreword

The importance of the environmental issues has for the last three decades at least, been central to the development of the global oil and gas industry ,as we continue to witness the clash of perspectives between protagonists for and against the further development of the world’s still vast hydrocarbon resources. The global community is certainly heavily dependent on oil and gas supplies and will remain so for the foreseeable future. Indeed modern civilization remains significantly beholden to this resource and its countless derivatives.
The exploitations of hydrocarbons unfortunately also inevitably comes with an environmental toll: Oil spills, well blowouts, fires and consequent ecological damage to land, vegetation and to aquatic life from direct pollution through oil on land, in water or from flared associated gas. This is all apart from social dislocation within host communities and the social upheavels that have been caused by the industry. The challenge therefore has been with what the anti oil and gas development lobby, vocally highlights as the untold adverse ecological, economic and social impact of oil and gas exploration and production.

This book sets out a most balanced account of this challenge from the authors perspective and conviction of a need and alternate way to integrate the development of oil and gas with best environmental practices to ensure the sustainability of both. The authors have eloquently argued the case that an appropriate focus on sustainable development is the necessary and effective measure, to address the negative issues associated with oil and gas exploration and production. This is especially so, having regard to the serious environmental problems that made the Niger Delta a hotbed of resistance to oil and gas production, drawing also on the experiences and practices of other oil and gas provinces around the world.

“Petroleum Law and Sustainable Development” thus seeks to dissect this conflict from the point of view of sustainability – from fifty years ago when oil was first discovered in Nigeria with scant attention to any environmental impact assessment, through the increasing awareness of its deterious effect on host communities lives and livelihoods especially, to the authors advocated balanced recipe of embedding best environmental management practices within the activities involved in the exploration, production and evacuation of oil and gas to prevent or minimize any and all such adverse impacts.

The concept of sustainable development has been comprehensively dealt with by the authors Dr Fabian Ajogwu SAN and Dr Oscar Nliam who have carefully and clearly distilled the principles, theories, law and practice in the Nigerian oil and gas industry. They have also linked the relevance of each concept or principle to the industry and to international law and convention, while highlighting the other important sustainable development pillars. The authors state emphatically that these are economic development and social cohesion and progress in addition to the more familiar environmental protection issues.

Finally the authors conclude with the trend typified by international conventions and treaties on the subject of oil and gas particularly, which now seem to point toward the notion of sustainability, just as domestic courts and local; dispute settlement mechanisms provide a corollary legal framework for the settlement of oil and gas exploration and production disputes in the Nigeria.

Dr. Ajogwu and Dr Nliam must also be applauded for their insightful analysis of the Nigerian Oil and Gas Industry Content Development Act of 2010 that examined the social and economic aspects of sustainability in the Nigerian oil and gas industry. “Petroleum Law and Sustainable Development” is especially commendable for its insightful recommendation for a paradigm shift to sustainable oil and gas exploration and production in Nigeria. There is no doubt that amongst the many obstacles that constitute, in the words of William C. Clark, “a powerful impediment to moving toward more sustainable development”, is “our ignorance about how to do so”.

This book has convincingly dealt with this powerful impediment by recommending measures through which the goal of sustainable oil and gas exploration and production could be realised in Nigeria. The discussion on the need for a paradigm shift for a sustainable oil and gas exploration and production is undoubtedly an outstanding contribution to the Nigerian oil and gas industry and entire country which has often struggled with negative economic, social and environmental impacts of the petroleum industry. With more than thirty combined years of experience of legal practice and research between the authors, it is not surprising to see that this book combines theory and practice in a seamless practical way as it offers solutions that will engender sustainability.

The learned authors, Dr Fabian Ajogwu SAN and Dr Oscar Nliam have produced a marvellous reference book for the oil and gas industry, government and regulators, judicial officers, legal practioners, academics, students, civil society groups, the media and all who wish to see the Nigerian oil and gas industry move in a more sustainable direction. I must commend the authors of an excellent book and for this critical addition to the body of literature in such an area of national importance.

H. Odein Ajumogobia San, Ofr, Llm (Harvard)

LAW & SOCIETY

Preface

Law is defined as the regime that orders human activities and relations through systematic application of the force of politically organised society, or through social pressure, backed by force, in such a society. It is also defined as the aggregate of legislation, judicial precedents and accepted legal principles. It is the legal system; the set of rules that prescribe acceptable behaviour in a society. In some cases, the laws prescribe punishments that will be imposed on persons who are guilty of infraction of the law. There is a third sense in which law is used in which law is used. In that sense, law defines as the set of rules dealing with a specific area of the legal system. An example of this is criminal law, which is the set of laws that define crimes and prescribe punishment for breach thereof.

In Nigeria, the major laws on crimes and offences are the criminal procedure Code, which regulates offences in the South and the Penal Code, which regulates offences in the North. In addition to these, there are many other legislation and regulations that relate to crimes. Society is a community of people with common history, religion, culture or traditions. Such community of persons may be a nation, state, locality, town or village. The peoples that constitute the society must however possess one or more element(s) common to them. It has been established that there is a relationship between law and society. Nigerian authors of legal literature have rarely addressed the relationship between law and society. With respect to criminal law, there are sociological questions of what the basis for punishment is. It is reorientation and transformation? Is it merely a means to torture and shame? Or is it a means of putting criminals away from decent living for a very long time? This work will agree with pats-Acholonu, JCA that: It must be stated here that the purpose of law in any society claiming to be civilized is to bring order, stability and interdependent consciousness in a given society. To that end, the Courts through the well oriented reasoned and seasoned legal activism and society engineering will by their liberal interpretative powers focus on the egalitarian aspects of the life of the society and make the society responsive to the norms and demands of some philosophical tenets which guarantee the well-being and orderliness of the community.

Candidates for political offices in Nigeria in the quest for electoral votes often promise a social contract with the people. This book sets out to ascertain the meaning of social contract and to what extent it exists in Nigeria. It further suggests how its benefits, if any, can be realised. A major challenge to Nigeria’s democracy and the government is the fact of the non-involvement of the people in making the most important law – the Constitution – that will govern them. This has the effect of making them feel left-out and to see the laws as impositions by the government. It is ironical that the 1999 Constitution, which was enacted without any involvement of the people by the military, opens with the words ‘’ we the people of the Federal Republic of Nigeria….. Do hereby make, enact and give to ourselves the following Constitution”:’’ No wonder then that since 1999, there has been a clamour for a sovereign national conference and constitutional; amendment. All these underscore the need for the law to be made for the people and, directly or indirectly, by the people. This raises the challenge of how that can be achieved.

Since 1999 Nigeria’s attempt to amend the Constitution has been made difficult by the lack of consensus on several of the issues and the submission of numerous difference demands by too many interest groups and members of the society. Part A of this book deals with the interconnection between law and society
The few texts on ethics in the legal profession were written by lecturers at the Nigeria Law School essentially for students of that vocational institution. Chief Olanipekun SAN takes the view that a lawyer who was trained at the Nigerian Law School ought to be familiar with the ethics of the profession. It is one thing to be familiar with a concept and quite another to be guided by it. It is important to take a detailed look at the lawyer’s two attributes of professionalism and ethics from the practitioner’s perspective. It is this void that part 2 of this Book seeks to fill.
The incidents of professional misconducts among lawyers call into question the extent to which lawyers are aware of, or have on a personal level imbibed the core values of the profession. The reasons for this include the early stage formation of the individual in terms of character building, greed, a growing culture of impunity
on the part of offenders, declining enforcement of the rules guiding the profession, the state of the economy and corruption in the wider society. Of equal concern are the widespread allegation of corruption and bias against judges and the question of whether a segment of lawyers in the private and public sectors of the economy understand their professional duties, the profession and the society.

Having chosen the noble profession of the law however, the lawyers and the judge must aim to lives of integrity and dignity, accompanies by a competent and professional approach to the delivery of legal services and discharge of the judicial function. The legal practitioner must aim for excellence and to hold his own among his peers anywhere in the world. Today’s lawyer and judge must, to paraphrase Achebe, dance the dance that is prevalent in his time. This time, it must not be the dance of corruption, but of high ethical conduct, not of regressive, unorthodox approach to the practice of law, but of progressive, technology driven style of legal practice dictated by the finest traditions of the profession and by ‘the good that happens elsewhere’.

The principles of ethics and professionalism are contained in some written documents such as the Legal practitioners Act and the Rules of professional conduct. Unsurprisingly, these are not exhaustive in their contents. This book brings new perspectives to issues of ethics and professionalism for lawyers and examines compliances with the principles in a fast changing world, bearing in mind that lawyers are the custodians of the law, with its immense relevancies to the society.

The book lays no claim to perfection, and I therefore take full responsibility of any error of omission or commission that may be found herein.

CORPORATE GOVERNANCE & GROUP DYNAMICS

Preface

The notion of corporate governance can simply be put to effective governance of the corporation in the real sense of the words – ‘corporate’ and ‘governance’. It has been argued that shareholders have an incentive to invest resources in curbing both managerial and owner opportunism, however the recent experiences in the banking and financial services sector in Nigeria show that the significant shareholders that are most capable of curbing board and management excesses (for example the institutional shareholders and majority shareholders) have showed an apparent unwillingness to oppose the management and the boards of the companies.

This situation is more prevalent in companies operating within group structures (companies having parent – subsidiary relationships). With the five banks that emerged as having corporate governance challenges in July 2009 all operating group structures. The banking and financial services crisis in Nigeria has raised serious questions about the adequacy of corporate governance arrangements especially for companies operating within the group structure.

In the group structure, the duty on the part of the board to be accountable to the shareholders, creditors, and other stakeholders become even more pronounced. Consideration of recent concrete examples in Nigeria reveals that not only must existing corporate governance arrangements be questioned in terms of their ability to cope with managerial problems raised by the complexities of the group structures. This issue, which is the theme of this book, has hardly ever been addressed.

This book examines the existing models of corporate governance in Nigeria to see if they are indeed adequate to cope with the complexities of group structures especially in the banking and financial service sector: it concludes with the finding that corporate governance within group is better observed when the respective boards of the parents as well as the subsidiaries are accountable to their respective shareholders and stakeholders, and take responsibility for the direction of the specific enterprise that they are by law responsible for. The book further recommends that it is this specific responsibility of each board that could ensure proper disclosures, integrity in financial reporting and a duty of accountability of management to the shareholders. It is a twelve-chapter book that deals with issues ranging from theories and standard Models of Corporate Governance to the Roles of Professionals in Corporate Governance, International Financial Reporting Standard and the Relationship between Risk Management and Corporate Governance.

All of these have brought depth and meaning to this book on corporate governance and group dynamics. The book lays no claim to perfection, and I therefore take full responsibility for any errors of omission and commission that may be found herein.

Dr Fabian Ajogwu, SAN Balgowan
June 23, 2013

COLLECTING ART: A HANDBOOK

Preface

The practice of art collecting has a long history and the ways of collecting art are as varied as the backgrounds, social environments and personal histories of the collectors. There is no single “right” way of collecting art, but there are many practices that will not help creating an art collection of quality.

There are many ways of collecting art and there are many reasons for doing it. For some, it is simply a hobby; for others, it becomes a passion to which they devote considerable time, effort and resources. For a few, it is just a way of diversifying their investments. Whatever their reasons for acquiring artworks, whether enjoyment, vanity, investment or a mixture of all, for many collectors, art is among the most valuable assets they own. Learning how to appreciate them, to manage and care for them is of capital importance.

There are thousands of books devoted to art. This one focuses on the collectors and their practice. This book does not aim at providing a history of art collecting or a sociological study of the motives for doing. We do not offer specific advice on what or where to collect. We do not enter on whether art is a genuine, profitable asset class for investment or not. Though we refer to these issues, they are outside the scope of the book; its goal is less ambitious. Art Collecting: A Handbook aims at offering the novice and experienced collector a better understanding and some practical advice on some of the main issues involved in this practice. Besides collectors, this book will be of use to many other players in the art world: dealers, critics, scholars, journalists, art enthusiasts. Sometimes, professionals advising collectors on issues of taxation, insurance, wealth investment, estate planning, legal matters, etc. are not well acquainted with even the basic features of the practice of art collecting. We hope this book will also be of use to them in the eight chapters it is divided into.

Chapter One is devoted to the collectors; to their motivations and approaches to collecting. We look at the main characteristics of an “educated, serious collector”. For some decades, the practice of collecting has been considered from the point of view of its value as an investment. We consider this trend in this first chapter. Though collecting is intensely personal, it can become so absorbing as to have an effect on the family of the collector. In this first chapter we also look at this aspect of collecting.

Chapter Two looks at the development of an art collection. Serious art collections do not happen by chance. Whether properly articulated or not, sound planning and strategy differentiate ordinary accumulations of artworks from great collections. We also look at the role of art advisors and the process of commissioning art.

Chapter Three looks at the process of buying art. Whether the collector acquires works from the primary or secondary markets, knowing about different channels work is a necessity. Due diligence is at the core of good practices in art collecting. We also consider it in the chapter.

Chapter Four looks at the legal framework within which art collection operates. These issues might not be the most attractive to the collector, but a good understanding of the rights and duties of collectors, artists and dealers is necessary for any serious collector. Unfortunately, collectors are not always well informed about copyright, moral rights and artist resale rights; we look at them in this chapter. Finally, a long section is devoted to Art Fraud, a threat always present in art collecting.

Chapter Five provides tips and suggestions on the transfer of an art collection and particularly, to estate planning. Planning for the future of the collection once the collector is gone is frequently postponed by collectors. This section offers suggestions on possible options open to the collector.

Chapter Six offers advice on documentation and management of the collection. Keeping proper inventories is an indispensable task for the development of a collection and for its transmission to future generations. Insurance and taxation are not the most glamourous and appealing aspects of art collecting, but the educated collector will always take them into consideration.

Chapter Seven is devoted to the care required by an art collection. Art collections are always at risk of being damaged by environmental, physical, chemical or biological agents. Knowing how to prevent or counteract these causes of damage is an essential skill for any serious collector.

Finally, Chapter Eight offers a glossary of terms collectors come across frequently.

In the process of writing this book, we have learned not only about the technicalities associated with putting together, managing and transferring an art collection, but above all, we have learnt about collectors: people, who passionately devote some of their best energies and resources, to collecting art. There are wonderful stories of big and small, affluent and ordinary collectors who, sometimes obsessively, follow this interest in life.

To own works of art is not the same as collecting art. Although owning art is a necessary condition for collecting art, accumulating and collecting are different practices. From the first to the second, there is a substantial difference in the intentionality of possessing these artworks. A gallery owner with a large number of works in his stores can also be a collector, but generally, is not. An investor with a good portfolio of art is not necessarily a collector. Neither is a corporation that owns a large number of pieces in their buildings. Great collections are always linked to great collectors. Collections are always unequal because collectors are always different. As Baudrillard famously said: “It is inevitably oneself that one collects”^. We hope this book will help them continue doing it in a more systematic, knowledgeable and organised way.

CORPORATE GOVERNANCE & GROUP DYNAMICS

Foreword

I am pleased to be asked to write the foreword to Dr. Fabian Ajogwu’s book, Corporate Governance & Group Dynamics. It is generally agreed that the leadership provided by the board will always be a significant factor in the successful running of the enterprise. For many years, the discussion has focused mainly on the need for the corporate to be governed by an efficient Board, and the emphasis has been on adhering to the principles of corporate governance especially in relation to globally accepted best practice.

However, it is becoming increasingly clear that some attention should be given to the more complex relationships that exist between companies operating within a group structure, for the simple reason that the actions of the parents often affect the subsidiary and vice versa. This book, turning the searchlight on this complex area of company administration, is indeed a welcome addition to the literature on corporate governance and enterprise development, especially because it raises questions about the suitability of existing models of corporate governance in Nigeria for dealing with the complexities of group structures, particularly in the banking and financial services sector.

The Author makes the point clearly that ‘corporate governance within groups is better observed when the respective boards of the parents as well as the subsidiaries are accountable to their respective shareholders and stakeholders, and take responsibility for the direction of the specific enterprise that they are by law responsible for’. He believes that it is precisely the lack of this accountability and responsibility that led to the corporate maladministration and failures of recent times. The Author goes further to recommend that ‘it is specific responsibility of each board that could ensure proper disclosures, integrity in financial reporting and a duty of accountability of management to the shareholders’. I cannot agree more.

Dr. Fabian Ajogwu, SAN has been a great advocate of good corporate governance practice in Nigeria since it became a discipline of interest to practitioners in the country. He has taught it, preached it and written on it consistently, bringing his understanding and expertise on the subject to bear on his interactions with his audiences over the years. For me, this book offers additional confirmation of his scholarly commitment, which is evident in the scope and depth of discussions, the propositions as well as the analysis of the principles of corporate governance as they apply to groups. I must commend the Learned Senior Advocate for making this significant contribution to the jurisprudence of corporate governance.

I therefore have no hesitation in recommending this book as an authoritative text on the subject for the benefit of companies, boards, shareholders, regulators, directors, managers, stakeholders and indeed all who are interested in seeing that our corporations become increasingly well governed.

Dr Christopher Kolade, CON Pro-Chancellor, Pan-Atlantic University Formerly, Nigerian High Commissioner to the United Kingdom Formerly, President, Society for Corporate Governance Nigeria Lagos.
June 2013

COMMERCIAL ARBITRATION IN NIGERIA: LAW & PRACTICE

Preface

The concept of a free-market economy presents opportunities for disputes in the pursuit of economic gains. In seeking the determination of their rights and liabilities, or the amicable settlement of their disputes, parties can have recourse to the court system or to alternative dispute resolution (ADR) methods. Although ADR includes other methods and mechanisms such as meditation, conciliation, and negotiated settlement, arbitration has however become the main alternative to resolving or determining commercial disputes. Generally speaking, ADR has gained widespread acceptance in trade and commercial disputes, to the extent that in some jurisdictions, the Court Civil Procedure Rules now require some parties to resort to some type of ADR, usually in the form of meditation, before permitting the parties’ cases to be tried.

In this book I have tried to lay out the framework for arbitration and conciliation, the agreement to arbitration and the practice and procedure of commercial arbitration. In so doing I have tried to bring to the fore the practical situations and issues that parties, counsel, arbitrators and all that are involved in this system of dispute resolution face. It is therefore intended to be practice handbook. The jurisprudence and recent case law discussed in the book provided the basis of academic research, and form a practical in the field of commercial arbitration in Nigeria. The principles underlying the law and practice of arbitration are applicable not only to Nigerian, but to a number of common law countries, including signatories to the New York convention. I have tried to present the law and practice as they exist today.

In fourteen chapters, I have attempted to look at the general principles and legal framework of arbitration, including the law and procedure applicable to arbitration. The nature of the arbitration agreement is examined, with emphasis on the essential elements of an arbitration clause, common defects in arbitration clauses, jurisdictional and enforcement issues. Forum of arbitration, capacity to arbitrate, place and language of arbitration are also discussed.

The practical aspects of commencement of arbitration, as well as difficulties with commencement are discussed in chapter four. The constant challenge of forum of dispute resolution (litigation or arbitration) is treated in chapter six dealing with ‘stay of proceedings’. The discussions cover recourse to court for preservative orders, as well as case law on when a party is deemed to have taken a step in the proceedings. The later chapters deals with arbitration proceedings and preliminary issues such as admissibility of evidence, adherence to rules of evidence, methods of presenting evidence, and the standard as well as the burden of proof in arbitration. Arbitration proceedings and Award are treated in chapters eight and nine respectively.

I have attempted to deal with the pressing issues of enforcement of awards, and challenge of arbitral awards. A chapter is dedicated to mediation and conciliation and another, to the techniques for settling of disputes. With the benefit of practice experience, and feedback from teaching at the professional training programmes for arbitrators. I have included templates and precedents that should be of practical value to the practitioner, and a case study to form the basis for moot proceedings.

All of these have brought depth and meaning into this book on the law and practice of commercial arbitration in Nigeria. This book lays no claims to perfection, and I therefore take full responsibility for any errors of omission or commission that may be found herein.

Fabian Ajogwu FCIArb.
Lagos.
March 2, 2009

COMMERCIAL ARBITRATION IN NIGERIA: LAW & PRACTICE

Foreword

Alternative dispute resolution of matters, especially, commercial cases, has become a permanent feature of the Nigerian legal system. However, this is one area in which there is a dearth of literature, notwithstanding the statutes and avalanche of case-law that pervade the scene.

The ice had been broken by Orojo and Ajomo in their book, Law and Practice of Arbitration and Conciliation in Nigeria followed by Akpata in his work on arbitration. Now it seems, by the production of this well written work on Commercial Arbitration in Nigeria: Law and Practice, no excuse could any longer be proffered for seeking foreign authors in the field of arbitration in Nigeria.

Mr. Fabian Ajogwu has done a thorough job that would be of delight to practitioners in Arbitration, both as Tribunal or counsel. He has left no stone untouched in achieving the aim of ADR, which he has rightly said, provides “The Mechanism for Dispute Resolution processes and techniques that fall outside of the judicial process, which is provided by the government.” The author is right. He is also right, when he pronounced on the rising popularity of ADR:

“The rising popularity of ADR can be explained by the increasing number of cases being handled by the traditional courts and the attendant delays, the perception that ADR implies lower costs than litigation, a preference for confidentiality and the desire of some parties to have greater control over the selection of the individual or individuals who will settle their dispute on the basis of competence, experience and absence of bias.”

If only for these reasons and the fact of commercial convenience to corporations, thereby ADR would not disrupt the original contact inter se or with others outside their domain, corporations, lawyers and ADR practitioners should have easy access to definitive literature that would enhance the progress before Tribunals. The case law is heavy and not easily accessible without help. And when comes a book of this depth, which could be relied upon in respect of search and research with the ultimate aim of achieving not only speed but unadulterated justice, justice is assured.

For in ADR, as the parties agree to be bound by the decisions of the Tribunal, they should have confidence that the Tribunal is always posited to do justice. And for the Tribunal, the practitioners and the parties, there is necessity for the type of work that has been done by this author in his book.

One interesting innovation is the chapter fourteen of this book which deals with Moot Proceedings. The author has shown that the book has no limitations. Teachers and students of arbitral procedures are supplied with a weapon of pursuit of excellence. And thus, everyone, be he a student, party, counsel and tribunal, has a deep fountain to draw from.

I feel highly honoured to have been called upon to write a foreword to this book. It is a book for the shelf of everyone of whatever discipline, who believes in actualizing speed, in the determination of cases, especially commercial cases.

I congratulate the author.

HON JUSTICE KAYODE ESO, CON, LTD, LITT.D
Formerly Justice Supreme Court of Nigeria.
Formerly President Chartered Institution of Arbitrators (Nigeria),
Chancellor Ladoke Akintola University of Technology, Ogbomoso.

FAIR HEARING

Preface

Fabian Ajogwu FCIArb.
Lagos.
March 2, 2009

FAIR HEARING

Foreword

It is a pleasure to be asked to write the Foreword to this important book. Its importance and usefulness lie in the way in which the learned Senior Advocate, Mr. Fabian Ajogwu has approached the subject of fair hearing with emphasis on the Constitution of the Federal Republic of Nigeria 1999. He has carefully selected his materials and cases in a way that presents the practical issues that come in consideration of fair hearing and fair trial.

Fair hearing is an integral part of justice administration, and derives from the principles of natural justices and fairness. The principles belie the whole jurisprudence of law and justice. They are not only applicable to the courts, but also to any person or persons acting in a judicial capacity. The Author is therefore right in holding the view that the rules of natural justice are ‘the minimum standards of fair decision-making imposed on persons or bodies acting in a judicial capacity’.

He goes further to pronounce that- … Where the relevant person or body is required to determine questions of law or fact in circumstances where its decisions will have a direct impact on the rights, liabilities or legitimate expectations of the parties involved, an implied obligation to observe the principles of natural justice arises.

The learned author takes a careful look at the meaning of fair hearing and fair trial, before analyzing the right to a fair hearing under the Constitution of the Federal Republic of Nigeria 1999, making references to decided case under the Constitution as well as under the equivalent provisions of the 1979 Constitution.

The twin principles of audi alteram partem (let the other side be heard) and nemo judex in causa sua (that no one should be a judge in his own case) are discussed comprehensively n the context of constitutionally guaranteed fundamental rights. The author provides a practices guide to the remedies that are available under the Fundamental Rights (Enforcement Procedures) Rules of 2009.

I must commend the learned author for making the bold step to write this book, sharing his wealth first, of experiences, and then of researched in the field. I have no hesitation in recommending the book, Fair Hearing to all students and teachers of law, judicial offices, arbitrators, and all persons interested in fairness and justice in the determination of rights and liabilities of others.

I congratulate the Author.

Hon. Justice Salihu Modibbo Alfa Belgore GCON
Formerly, Chief Justice of Nigeria

CORPORATE GOVERNANCE IN NIGERIA: LAW & PRACTICE

Foreword

It is a pleasure to be asked to contribute a preface to this magisterial work. Its importance and usefulness lie in the way in which Fabian Ajogwu has selected his material and conducted his research, to present a comprehensive piece on the Law and Practice of corporate governance in Nigeria. He has done this by laying out the fundamentals of corporate governance, carrying out a well reasoned comparative analysis and study of corporate governance practices in Nigeria. More than anything, his excellent Introduction explains the origins of corporate governance and different governance models. There was no attempt on the part of the author to compare apples and oranges. This book compares Nigeria with other emerging markets of relatively similar size and stages of economic development. It looks at best practices in those jurisdictions and proffers guidance on best practices, and code implementation from the perspectives of the stakeholders of an enterprise.

The Introduction lays out the principles of corporate governance, and illustrates the difficulty of arriving at any general concept of corporate governance across jurisdictions, given the inherent complexity of the subject, arising from the combination of economic and social roles by companies. The author presents the best practices in Nigeria, followed by an annotation of the Nigeria Code of Corporate Governance issued by the Securities and Exchange Commission. There is an attempt to critically evaluate the legal and ethical perspectives of the prescriptions of the code alongside issues of implementation and enforcement. In the Nigerian market, Governance structures are very important, in the sense that they have to be clear and understood to be effective, but their precise forms are less so understood. What really matters is the way in which companies, directors, officers and auditors put these structures to work, so that the enterprise is governed in a proper way.

The socio-economic and political environment of business, legal framework of business, and access to long-term finance, all together shape the forms of corporate governance within a jurisdiction. This book is a study of systems and processes in a continuous state of dynamism, and the practice of corporate governance has developed dramatically in the last decade, with rapid need for it in Nigeria heightened in the wake of mergers and acquisitions, and intense capital market activities that characterized the years 2004 – 2007.

The rules have been laid down by the Securities and Exchange Commission by the introduction in 2002 of a Code of Corporate Governance, and more recently by the Central Bank of Nigeria in its own code for the banking and other financial institutions sector. These codes were written following consultations with industry stakeholders and practitioners. The author participated actively in drafting the first Code of Corporate Governance in Nigeria, and brings the in-depth knowledge of the key issues, the debates, the feed back from stakeholders and the regulatory authorities’ perspectives in his work on the law and practice of corporate governance in Nigeria.

There is no shortage of codes across jurisdictions, and we certainly do not need a separate code for each sector of the economy. It is hoped that the principles of corporate governance will catch up with practical experience and illuminate it. This may be a high expectation, but this book provides information on the relevant works on corporate governance, against which to compare, analyse, and assess the foundations on which so much has been built so rapidly. In addition to changes in structure and process, the balance of power between the lead players in the corporate field has shifted in the last half-century. Sir Adrian Cadbury puts it succinctly when he said –

“At the start, boards of directors were generally weak, executive management was in charge and shareholders were dispersed. Gathering investor pressure on the directors of under-performing companies, however led to a strengthening of boards at the expense of management. This in turn developed into the present position whereby the concentration of shares in the hands of institutional investors has increased their power in relation to boards and management and, at the same time, drawn attention to their responsibilities in matters of governance”

These changes occurred in jurisdictions where the capital market served as the primary source of raising capital. In jurisdictions where the banks are the primary sources of raising capital, the balance of power is also shifting there. The focus in Nigeria is now on the governance of banks themselves and in turn on their responsibilities for the governance of the companies, which they lend to. The forces driving these changes have been mainly regulatory as well as market-based, a point which is relevant to the issue of convergence internationally.

Following the completion of the consolidation exercise in the banking sector, the Central Bank of Nigeria handed down to bankers, a code of corporate governance that was strengthened to meet the specific challenges facing the industry at the time. This leads on, however, to another question of balance, this time the balance between market forces and forces of regulation. Sarbanes Oxley Act is a clear illustration of a regulatory reaction to serious problem – the Enron collapse. Regulatory reactions often depend on the severity and scale of the need.

Codes of Corporate Governance are intended to regulate the conduct of directors, accountability to shareholders, recognition of the interest of other stakeholders and the need to encourage investment to flow where it could be most productive by raising in this case, the Nigeria corporate governance standards to the best international practices in comparable jurisdictions. This would appear to be the reason and purpose of corporate governance.

At whatever level the law and practice of corporate governance in Nigeria is studied and reviewed, there can be no doubt about the value of Mr Ajogwu’s book in clarifying the principals of corporate governance, the codes of corporate governance, and the supporting law and practice in Nigeria. For students of the subject, it is a one-stop shop, which sets corporate governance squarely in its practical context. For practitioners, executives, board members and policy-makers it should be compulsory reading.

With the benefit of being at the forefront of commercial law practice in Nigeria in a full services firm, the author brings to bear on the subject, originality of thought and clarity of language, in a manner that makes for easy reading by boards, shareholders, institutional investors, managers, investment bankers, and lawyers old and young.

Emmanuel Ibe Kachikwu
LL.M (Harvard) Ph.D (Harvard), FCIArb,
Executive Director and General Counsel
ExxonMobile Nigeria
Lagos, September 1, 2007

LEGAL & REGULATORY ASPECTS OF COMMERCE

Preface

This work is a collection of papers and articles written by kenna & associates lawyers, both incumbents and alumni (although actual authorship had been undertaken during incumbency). Although many of the papers have been delivered at conferences on the cognate subject, a great many of the articles had been written specially for contribution to the legal research notes, which for upwards of five years had been the pre-occupation of the research unit of the firm.

Many of the articles and papers have been given rise by actual experience by counsel advising clients on diverse disciplines of commercial law, as well as litigating and arbitrating disputes arising from commercial transactions. Accordingly as to be expected, many of the articles have been culled from actual considered opinions of counsel on the subjects. The initial idea for the writing of this book had been mooted at our breakfast sessions at which industry leaders have had the opportunity of sharing experiences, challenges, frustrations, opportunities, and friendship on a business-to-business level.

Within the last eight years, commerce in Nigeria, (within the context of the legal and regulatory environment), has been characterized by a continuous policy of activism, leading to major milestones. From the mobile telecommunications licence auctions of the early 2000’s to the pension reforms of 2004, to the bank recapitalization exercise of 2005, to the nascent insurer recapitalization exercise, to the ‘unbundling’ of the defunct National Electric Power Authority (leading to its acquired new name, Power Holding Company Nigeria). This also extended to the merger of the joint Maritime Labour & Industrial Council with the National Maritime Authority (culminating in all-new Nigerian Maritime Administration and safety Agency), and to the adoption of the landlord port model by the Nigerian Ports Authority in the port reforms of 2005. The economy has been awash with activity. It was in this same period that the Cabotage Act was enacted. The same period saw the birth of the Economic and Financial Crimes Commission and the Independent Corrupt Practices Commission; it was during the same epochal times that the Supreme Court of Nigeria handed down its decision in what had become known as the Resource Control Suit.

This particular decision had promised, and did engender, serious consequences for the operators of the respective production sharing contracts and joint operating agreements in the oil and gas sector. In the course of the same period Nigeria exited the Paris and London Clubs of international creditors and strengthened the framework for the sustainable management of domestic debt. During the same period, the Corporate Affairs commission (CAC) introduced the “same-day” incorporation procedure and the Securities and Exchange Commission launched the code of Corporate Governance for Quoted Companies. The “same-day” incorporation procedure had been recommended to the CAC by the firm in a World Bank funded study of legal and regulatory impediments to small business formalization.

On the private sector of the economy, activity levels peaked during the period and the indicators and readings were quite encouraging. Many more enterprises got quoted on the Nigerian Stock Exchange as market capitalization grew in geometric proportions, whilst investor confidence continued to rise with the influx of significant foreign direct and portfolio investments. A couple of Nigerian stocks were listed on overseas bourses as well. Corporate bonds had never been so well promoted and professionally practiced as they have been during the period as the federal government, and several state governments have been frequent callers at the bonds market, for different purposes.

In all of this, we have constantly found our clients in need of legal solutions to novel issues presented to the world of modern commerce by an evolving legal milieu. And the finding of efficient, ethical, and justifiable solutions to these legal and regulatory issues has dominated the Firm’s practice during the period in reference. It is therefore the object of this work to document its responses to the active issues in doing business in Nigeria and to provide supporting information for the benefit of all who are interested in the subject: doing business in Nigeria. This work, it must be admitted, is not one of those be-all-know-all kinds of books. It is a manual on commerce, as it were, with an emphasis on the legal and regulatory aspects. Accordingly, copious references to case law and statute have been carefully avoided, these being provided only where necessary to explain an issue in hand, which may not be otherwise so fully explained. Ofcourse, some of the articles and papers have surrendered their original titles and headings to editorial ‘intrusion’. Perfection continues to pertain to the divine, and therefore remains only a noble aspiration for the world terrestrial.

This work would not lay any claim to perfection but one thing is doubtless: the contributors have brought a wealth of research and experiential knowledge to bear on the work, and therefore deserve commendation. We do hope that the material contained herein will be of benefit to their intended audience: commercial and investment lawyers, investment and corporate bankers, lawyers generally, entrepreneurs and investors, business managers and everyone involved in the decision-making process and in the legal risk evaluation and management process.

Nzeakor Atulomah
1 September, 2007

LEGAL & REGULATORY ASPECTS OF COMMERCE

Foreword

I have pleasure in being requested to write a foreword to this book by the law firm of Kenna & Associates for two reasons. First, the question of Africa’s integration into global trade and commerce continues to generate much interest both at governmental and non-governmental levels. The place of Africa and the African in world trade remains marginal and several reasons have been assigned for this phenomenon, including the uncertainty and tedium of the legal and regulatory environment.

Second, I have taken a keen interest in the development of the African business climate, and have accordingly been involved with several inter-governmental and non-governmental initiatives aimed at achieving the development of free market economies within Africa. For me, working with the common wealth business council, the blair commission for Africa, the G8 Business Action for Africa, G8 Business Action in Africa Against Corruption and the new partnership for African development (NEPAD) has provided deep insights into the many challenges with which business in Africa (small and large) are faced from day to day.

Issues of taxation, intellectual property protection, business immigration, labor relations, corporate governance, political stability and institutional framework have remained daunting for the continent of Africa. Every effort therefore to clarify the legal and regulatory environment for the purpose of aiding investor understanding of the markets is more than welcome.

It is in the above light that this work by the law of Kenna & Associates stands out tall. The material has been presented in simple language. The authors have been forthcoming in their approach to the issues discussed and very willing to handhold newcomers to the jurisdiction on key matters affecting doing business in Nigeria. It cannot be gainsaid that Nigeria is right on its way to becoming Africa’s top choice investment destination and therefore requires, for its timely attainment of this noble goal, the expertise and scholarship of a crop of professionals who would be on hand to advise and assist investors and the business community with diverse legal and regulatory issues by which commerce is invariably characterised.

Coming from a full services law firm that has been at the forefront advising international and local clients on all aspects of trade investment, this book provides the needed resource and promises a good read for everyone interested in trade and commerce in Nigeria whether large scale or small scale.

Koosun kalian (Ms.)
Chairman, G8 Action In Africa Against Corruption.

SHIP ACQUISITION AND FINANCE: LAW & PRACTICE

Preface

There is a correlation between increased global trade and the demand for ships to carry goods, support oil and gas exploration, enhance tourism and leisure among other things. The list is endless. Shipping as capital intensive venture, requires financing from a pool of resources in the form of equity, debt or a hybrid of both. The funding needs do not change in principle whether it is for new ships or used ships. In this book, the expression -ships‟ and „–vessels‟ are used interchangeably for ease of discussion of a range of vessels that operate and provide support to -various sectors of the economy.

Despite the age and growth of the maritime sector, shipping companies continue to face challenges of access to financing of ship acquisitions. Prospective owners can hardly provide the fixed-asset-type securities (used in traditional lending transactions) required by local banks and financial institutions. The limitations imposed by insisting on a fixedasset-type traditional securities like land and building is that where they exist, they can hardly cover the costs of acquisition or a sizeable fraction thereof of sophisticated modern vessels. Bankability and comfort for providers of capital should instead come from, and leverage, the expected or projected streams of cash flows derivable from the projects or contracts that the ship would be procured for.

The existing legal framework requires improvement to provide for the evolving trends in project financing, unique contracts in oil and gas exploration, transportation, leisure and support services across other sectors. This book draws from practice experience at Kenna Partners, having advised on the bank financed acquisition of a number of vessels including Nigeria’s first ever locally wholly-owned deep offshore vessel. This book is intended to guide investors and ship merchants on the process of acquiring and strategically registering ships. The statute enabled drive towards local participation in inland coastal trade is a desirable thing as long as there is access to finance to realise the objectives. The reality is that users of ships understandably look at other considerations of equal (if not more) importance to them, such as safety, security, and suitability of the vessel. The opportunities provided by the Coastal and Inland Shipping Act No. 5 of 2003 (Cabotage Act) can only be tapped into where there are ships, and the means to acquire them. It takes careful planning and deal structuring to convert the opportunities into a bankable project, which if properly financed enables seamless acquisition of vessels that are commercially self-sustaining.

In twelve chapters, I have tried to lay out the ship registration procedure, ship financing options, pre-deal negotiation, ship mortgages, liens and other securities, which include maritime liens. I have also tried to discuss the procedure for shipping mortgage, discharge of ship mortgage including power of sale, and financing as well as registration risks. Dispute resolution is discussed extensively in chapter nine of the book. The future of ship registration and financing, as well as prospects for growth and development, and accounting and financial standards are also discussed.

More specifically, chapter eleven covers the documentation required in ship acquisition. It discusses Declaration of Pledge, Deed of Appointment of Trustees, Deed of Covenants Accompanying a Deed of Legal Mortgage of the Ship, Ship Mortgage Deed, Loan Agreement, Power of Attorney and Deed of Legal Mortgage among others. The appendices to the book include actual documentation that include the Memorandum of Agreement, some useful transaction templates, sample Declaration of Pledge, Deed of Appointment of Trustees, Deed of Mortgage, Deed of Covenants Accompanying Deed of Legal Mortgage, Loan Agreement, Power of Attorney and the Coastal and Inland Shipping Act 2003. It is prudent to mention that no two transactions are exactly the same, and it would be advisable for readers to adapt the agreements they use to the specific circumstances that they are faced with, while relying on the advice of their professional advisers.

In writing this book, it was not my intention to provide a comparative survey of all elements of the subject. Rather, my aim was to provide a practical guide on the law and practice of ship acquisition starting from pre-deal negotiations through to the deal, and to registration. I have taken an approach that is driven by the need for a practice-text, as opposed to a textbook, so as to deal with the law and practice on the subject. All of these have brought depth and meaning to the book. This book lays no claim to perfection as nothing done by a mortal is perfect, and I therefore take full responsibility for any errors of omission or commission that may be found herein.

Professor Fabian Ajogwu, SAN, FCIArb
LL.B (Hons), B.L, LL.M, MBA, Ph.D (Aberdeen)
Lagos Business School
June 1, 2017