BUSINESS ESSENTIAL VOL 3 NO 25
Dear Esteemed Member,
As you are probably aware, fifteen (15) member countries of ECOWAS signed the Common External Tariff (CET), which came into force in January 2016. However, the policy like every other has a five-year transition period. We reviewed this policy and identified some gaps that that require attention for the CET to achieve its set objectives.
We continued our series on ‘Global Competitiveness Index Report 2016-17’ with a focus on the 2nd sub-index which covered Pillar 5 – 10. Also for your information and enlightenment is a recent press release from the Secretariat on the suspension of Financial Reporting Council of Nigeria’s Code of Corporate Governance. The regular Labour and Employment Law Review and Upcoming Training Programmes were not left out.
Have a pleasant reading.
Timothy Olawale
Editor
In this Issue:
- Overview of the ECOWAS CET: New Propositions For Nigeria
- Global Economic Review And Nigeria Competitiveness: How We Fared Under Pillar 5 – 10
- Press Release: NECA Hails Government’s Suspension of FRCN’s Code Of Corporate Governance
- LABOUR & EMPLOYMENT LAW: Doctrine of Res Judicata (Muhammed Kawu Modi & 3 Ors vs. Abdullahi Yanko & 5 Ors, 2014) 45 N.L.L.R. Pt 146, P. 708 NIC
- Upcoming Training Programmes
Beat Procrastination by Thinking About the Future Typically, knowing the upside of completing a task isn’t enough to make us put in the effort to actually do it. That’s because the present is concrete and the future is abstract. But you can short-circuit your procrastination tendencies by making the future feel more real. Here’s how:
Adapted from “How to Beat Procrastination,” by Caroline Webb |
OVERVIEW OF THE ECOWAS CET: NEW PROPOSITIONS FOR NIGERIA
The countries of ECOWAS negotiated and agreed on the establishment of the region’s Common External Tariff (CET) with the implementation currently in progress. The primary purpose of this write-up is to do a critical review of the CET and the observable gaps that that require attention for the CET to achieve its set objectives successfully, effectively and efficiently.
The Common External Tariff (CET) is a basic feature of the Customs Union (CU). It represents the common tariff structure that all member countries which make up the CU have agreed to apply to trade with non-member countries instead of their own individual tariffs. The primary effect of a CU is to expand trade among members at the expense of trade with non-member countries with the hope of enhancing trade-related economic gains for member countries. Whether their hope is realized or not depends on the extent to which the CU is either welfare – enhancing or welfare – reducing. In particular, the expected expansion of intra-regional trade can have either trade creation or trade diversion effects.
In order for the CU to be welfare-enhancing, trade creation effect must be larger than the trade diversion effect. But even when the CU is welfare-enhancing in the aggregate, there is no guarantee that every member will derive an equal beneficial effect from it. The impact of a CU on individual member countries will vary depending on the CET. If the CET leads to a higher tariff rate for a given member country, the country will suffer from trade diversion. This typically occurs when a smaller country is obliged to apply a CET which is designed to protect the industries of a larger or more dominant country. The opposite effect occurs when the CET rate is lower than an individual country’s pre-CU tariff rate. In this case, the potential for net trade creation exists and can be realized.
In the actual implementation of the CETs an individual member country of a CU will generally have to increase its tariffs on some products and reduce them on others. The overall impact will, thus, depend on the balance between these two effects. This balance depends, in turn, on the CET level that is selected for the CU. More specifically, the higher the CET, the more trade diversionary will be the CU. This suggests that a well-designed and generally accepted CET is crucial for the equitable distribution of its beneficial effects and, hence, the sustainability of the CU. The establishment and continued sustainability of a CU rest quite heavily on designing the CET in a way that harmonizes the national tariffs while effectively taking into account the conflicting positions of individual member countries as well as the various interests within each country. In the end, an effective CU needs to have a generally accepted CET since the CU must be based on a union-wide trade policy that is common to all the member countries.
Nigeria in ECOWAS CET: Key Elements and Challenges
In accordance with the specifications of its originating treaty, the ECOWAS was expected to gradually intensify and deepen its integration process by starting as a free trade area (FTA) and proceeding to a customs union, built around the Common External Tariff (CET). As a free trade area, the primary instrument used for enhancing intra-ECOWAS trade flows was the ECOWAS Trade Liberalization Scheme (ETLS); in the context of which members granted to one another first reduced preferential and, eventually, completely tariff-free market access. The ETLS was thus meant to gradually integrate all the economies of ECOWAS countries into one regional economy within which qualified goods originating in these countries could enjoy tariff-free movement.
The next stage in the regional integration hierarchy is the CET. The establishment of the CET may or may not involve further liberalization beyond that provided by the ETLS, but it is meant to achieve a policy objective which would be more important. In particular, the CET moves the final authority for tariff policy making from the level of individual member states to that of the ECOWAS regional authority. Ordinarily, the establishment and smooth implementation of a regional CET would be enhanced if the constituent countries share common features which could lead them to believe that a common regional trade policy would be a mutually acceptable and effective instrument for achieving their individual trade and development objectives. When this is not necessarily the case, or not perceived to be the case, difficulties are likely to arise. An analytical description of the process of establishing and implementing the ECOWAS CET suggests that certain differences have shaped the process and may need to be explicitly recognized and fully taken into account if its success is to be ensured.
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The process of creating the ECOWAS CET has involved moving from the tariff structures of individual countries over time through convergence to a common regional tariff structure, with the last step taken in the context of negotiations. A review of the individual tariff structures provides the first clue about the concrete differences.
Finally, Nigeria has given approval for the implementation of the ECOWAs CET during the five –year transition period (2015-2019), with effect from 11 April, 2015. Taken on its face value, one might be tempted to think that this approval implies that convergence has, at last, been achieved across all West African countries regarding the establishment of a common regional tariff structure which is generally liberal. In fact, however, this is quite far from the reality. A comparison of both the structure of the tariffs and the simple average applied MFN tariff rate across West African countries will tend to show convergence, but it would hide the fact that, in Nigeria specifically, such a comparison is essentially meaningless. It very badly under-estimates the protectiveness of Nigeria’s trade regime as it fails to capture the other two and clearly more binding layers of import restrictions represented by the additional import levies and prohibitions.
Gaps in ECOWAS CET Design, Structure and Implementation Mechanism
In comparison with various aspects of CET in practice, the ECOWAS CET is likely to be easier for member countries to implement and adhere to if its design, structure and implementation modalities pay close attention to the obvious asymmetries among the ECOWAS member states in terms of basic economic features and policy stance. This is not to suggest that these asymmetries are permanent and will not change over time. But their recognition and being built into the CET design and structure should help in ensuring that the CET will evolve as the asymmetries gradually decline in significance.
- CET Structure and Rates
The basic UEMOA CET structure has four bands with rates rising from 0% through 5% and 10% to 20%, with each higher level being assigned to a higher level of processing until the highest rate of 20% which is assigned to final consumer goods. This reflects the classic escalating or cascading structure which is deliberately designed to promote local industries by shielding their products to some extent from competition with similar imported goods.
The addition of the fifth band at 35% may, on the face of it, be viewed simply as a continuation of the cascading structure. This view would be correct if the rate is assigned to “super” final goods, since it is clearly above the 20% assigned to final goods in the UEMOA CET. But it is in fact assigned to “specific goods for economic development” and has been applied across the board including to goods that would normally be classified as “raw materials”, “intermediate goods”, and “final goods”. Therefore, the 35% rate is inconsistent with the escalating structure that is preserved by the first four bands of the ECOWAS CET. It has generally been used as a single rate CET; and this raises the issue regarding whether a CET structure can combine both escalating and single rate structures.
The 35% rate was grafted on top of the four rate bands inherited from the UEMOA CET as a means of accommodating Nigeria’s demand for high rates that would more accurately reflect the country’s more protectionist trade policy preference. Unfortunately, this is clearly not the best way to satisfy Nigeria’s demand. Its existence not only distorts the cascading structure of the ECOWAS CET, but it also places a heavier burden of the negative effects of trade diversion on the ECOWAS member states whose low national tariff levels must be increased several folds if they are obliged to accept and fully implement the ECOWAS CET. The appropriate solution is to remove the fifth band of 35% in the ECOWAS CET and then permit member states to have exceptions from the ECOWAS CET with respect to which they may charge whatever rate they consider appropriate bearing in mind the country’s trade policy stance.
In selecting the UEMOA CET’s structure and rates, as the basis for formulating ECOWAS CET, the Heads of State and Governments of ECOWAS focused on “convenience”, rather than theoretical purity and correctness. As shown in section 2 above, the more appropriate basis for the development of the CET of a customs union is to use the weighted average of the tariff rates of the participating countries because this represents a more accurate reflection of the different trade policy preferences of the member states. The fact that the CETs of “hegemonic” customs unions (such as SACU and EACU) are the same as the national tariff structure and rates of the dominate country generally violates this principle. As a result, other member countries of such unions end up bearing the full burden of trade diversion that automatically emerges. This explains why the dominant country is typically obliged to “compensate” the remaining member countries through special arrangements to transfer resources back to these member countries through tariff revenue sharing.
The consequences of selecting the UEMOA CET as the basis for developing the CET of ECOWAS are as follows. The UEMOA countries will not be required to undergo any adjustment, especially once the fifth band of 35% is eliminated. The countries with lower national tariffs, such as Cape Verde, Guinea-Conakry and Liberia will have to carry the adjustment burden of virtually doubling their simple average tariff rates. Other countries such as Gambia, Ghana and Sierra Leone will have to reduce their simple average tariff rates to some extent and therefore, deal with the associated burden of loss of industrial output and rising unemployment, if their existing tariffs offer significant protection to their manufacturing sectors. In the case of Nigeria which has the most protectionist tariff regime in ECOWAS, the required reduction in its simple average tariff is as large as 59%. If such a large reduction were to be implemented over the short transition period of five years, Nigeria would lose much of its manufacturing sector that survives currently only because of the heavy protection from import competition provided by the country’s highly protectionist tariff regime.
The effort by Nigeria to avoid this has manifested in two results. One is the fifth band of 35%; the other is the country’s circular which broadly accepts the ECOWAS CET of five bands but adds three other elements of “additional protection”. Among these three elements; one, in the form of the use of import adjustment tax would be within the ECOWAS CET, if the special conditions for its use are met. The other two include the National List and the Import Prohibition List, both of which are completely outside the ECOWAS CET.
If theoretical rigour had not been sacrificed on the altar of “convenience” at the beginning of the establishment of the ECOWAS CET, perhaps some of the current problems could have been avoided. It is certainly the case that each ECOWAS member country would have had to make some adjustment in terms of its national tariff being reduced or increased to some extent in order to implement the emerging ECOWAS CET. As things stand now, it appears that, at least two steps should be taken in order to resolve the current difficulties. One of these would be to remove the fifth band of 35%. The other is to allow each member country to designate a negotiated list of national exceptions from the ECOWAS CET over which each member country would retain the discretionary power to fix the tariff rate. Hence, rather than have a complete ECOWEAS CET which member countries may find too difficult to implement fully due to unacceptably high adjustment costs, there will be an incomplete CET which is fully implementable combined with exceptions that would, eventually be gradually folded into the CET over time as the asymmetries among member countries lesson and an effective common trade policy stance becomes feasible.
- Implementation Mechanism
The current implementation mechanism designed for the ECOWAS CET has two key component parts. One is the five-year period provided for transition during which each member country would converge its national tariff structure and rates to the agreed ECOWAS CET structure and rates. The other is the monitoring and evaluation system which would use the appropriate indicators to watch over the journey of conversion.
This mechanism has a gaping hole in it. As shown in the review part of section2 above, the experiences of most customs unions that have established their own CETs make it quite clear that the selected transition period should be broken into specific phases that are timed and are associated with meeting specific targets in terms of the proportions of the gap between the national tariff rates and the goal in terms of the CET rates.
There is an important reason for this arrangement. A phased set of targets to be achieved over a similar phased set of time limits lends itself more easily to triggering remedial actions promptly rather than waiting to the end of the transitional period before any such actions are signaled and can be pursued in a timely fashion. Thus, if the transition period of five years is broken up into five phases each of one-year duration and 20% of the established gap between the current national tariff rate and the final CET rate must be filled during each phase, the job of measuring performance along the journey is easier and more transparent; as should be the incremental and cumulative remedial actions that must be taken to ensure successful and timely convergence.
OPINION
- There would remain, of course, the larger issue of whether it is feasible at this stage to have a complete ECOWAS CET in the presence of strong differences between Nigeria and the rest of ECOWAS with respect to the use of tariff policy for industrialization. The fact that ECOWAS CET has an escalating structure implies that, conceptually at least, it would be legitimate to use tariff policy for promoting industrial development. If this would not be allowed, there should have been established a single rate CET, as in the Gulf Cooperation Council.
- In any case, there are enough asymmetries among ECOWAS countries whose appropriate recognition would make a complete CET difficult, if not impossible to operate. The lesson from the experiences of most of the customs unions formed by developing countries is the desirability of incomplete CETs which provide exceptions in the context of which member countries may exercise some discretion in their trade policies. The relevant issue should be the extent of this discretionary policy space and how to discipline its use so that it does not impose unnecessary burden on other member states.
- This is the context in which the ECOWAS CET fifth band of 35% may need to be examined. This rate was put in place as a means of accommodating Nigeria’s more protectionist tariff policy. But it clearly has a damaging effect on countries such as Cape Verde, Guinea Conakry and Liberia which are obliged to raise their relevant tariff rates from 6-7% to 35%. This would lead to a massive trade diversion effect and raise domestic prices on the affected products. Such countries are thus forced to bear an unfair burden of the support that Nigeria has chosen to bestow on its domestic producers.
- The solution to this problem is not necessarily to force Nigeria to eliminate this rate or its import prohibition policy. The more workable solution is to accept an ECOWAS CET which is, for the time being, incomplete by permitting all member countries to designate a limited number of tariff lines as exceptions whose rates can be determined outside the CET and at the discretion of each member country. Virtually all CETs associated with customs unions composed of developing countries provide for such exceptions.
GLOBAL ECONOMIC REVIEW AND NIGERIA COMPETITIVENESS: HOW WE FARED UNDER PILLAR 5 – 10
We continued our review of the Global Competitiveness Report 2016- 2017, having reviewed the 1st sub-index (Basic Requirements) which is key for factor-driven economies. Our focus in this edition is the 2nd sub-index (Efficiency enhancer), which is key for efficiency driven economies. Under this sub-index, we looked at the 5th –10th pillar as follows:
5th pillar: Higher education and training
Quality higher education and training is crucial for economies that want to move up the value chain beyond simple production processes and products. In particular, today’s globalizing economy requires countries to nurture pools of well-educated workers who are able to perform complex tasks and adapt rapidly to their changing environment and the evolving needs of the production system. This pillar measures secondary and tertiary enrolment rates as well as the quality of education as evaluated by business leaders. The extent of staff training is also taken into consideration because of the importance of vocational and continuous on-the-job training—which is neglected in many economies—for ensuring a constant upgrading of workers’ skills.
| Nigeria’s Global Competitiveness Ranking | Rank/138 | Value | |
| 5th pillar: Higher education and Training | 125 | 2.9 | |
| 5.01 | Secondary education enrolment rate (gross %) | 120 | 43.8 |
| 5.02 | Tertiary education enrolment rate (gross %) | 114 | 10.4 |
| 5.03 | Quality of the education system | 118 | 2.8 |
| 5.04 | Quality of maths and science education | 124 | 2.7 |
| 5.05 | Quality of management schools | 94 | 3.8 |
| 5.06 | Internet access in schools | 129 | 3.1 |
| 5.07 | Local availability of specialized training services | 91 | 4.1 |
| 5.08 | Extent of staff training | 68 | 3.9 |
Source: Global Competitiveness Index Report 2016-17/NECA Research
Under the 5th pillar sub-index, Higher education and Training, Nigeria ranked 125th out of 138 economies surveyed. Across the twelve pillars, this pillar ranked among the country’s worst performances, however, we have listed areas of concern for improvement:
- Internet access in schools
- Quality of maths and science education
- Secondary education enrolment,
- Quality of our education system, amongst others
6th pillar: Goods market efficiency
Countries with efficient goods’ markets are well positioned to produce the right mix of products and services given their particular supply-and-demand conditions, as well as to ensure that these goods can be most effectively traded in the economy. Healthy market competition, both domestic and foreign, is important in driving market efficiency, and thus business productivity, by ensuring that the most efficient firms, producing goods demanded by the market, are those that thrive.
Market efficiency also depends on demand conditions such as customer orientation and buyer sophistication. For cultural or historical reasons, customers may be more demanding in some countries than in others. This can create an important competitive advantage, as it forces companies to be more innovative and customer oriented and thus imposes the discipline necessary for efficiency to be achieved in the market.
| Rank/138 | Value | |||
| 6th Pillar: Goods Market Efficiency | 98 | 4.1 | ||
| 6.01 | Intensity of local competition | 75 | 5.0 | |
| 6.02 | Extent of market dominance | 66 | 3.7 | |
| 6.03 | Effectiveness of anti-monopoly policy | 124 | 2.8 | |
| 6.04 | Effect of taxation on incentives to invest | 27 | 4.2 | |
| 6.05 | Total tax rate (% profits) | 55 | 33.3 | |
| 6.06 | Number of procedures to start a business | 107 | 9 | |
| 6.07 | Time to start a business (days) | 119 | 30.8 | |
| 6.08 | Agricultural policy costs | 43 | 4.1 | |
| 6.09 | Prevalence of non-tariff barriers | 30 | 4.8 | |
| 6.10 | Trade tariffs (% duty) | 102 | 9.7 | |
| 6.11 | Prevalence of foreign ownership | 52 | 4.8 | |
| 6.12 | Business impact of rules on FDI | 33 | 5.1 | |
| 6.13 | Burden of customs procedures | 132 | 2.9 | |
| 6.14 | Imports % GDP | 137 | 13.6 | |
| 6.15 | Degree of customer orientation | 123 | 3.9 | |
| 6.16 | Buyer sophistication | 93 | 3.0 | |
Source: Global Competitiveness Index Report 2016-17/NECA Research
Under Good Market Efficiency sub-index, which is the country’s fourth best performance, which ranked 98th among the 138 countries. The country recorded good performance in the following indicators:
- Effect of taxation incentives to invest (27th)
- Prevalence of non-tariff barriers (30th)
- Business impact of rules on FDI (33rd)
- Agricultural policy costs, (43rd)
- Prevalence of foreign ownership (52nd), and
- Total tax rate (% profits) (55th).
7th pillar: Labour market efficiency
The efficiency and flexibility of the labour market are critical for ensuring that workers are allocated to their most effective use in the economy and provided with incentives to give their best effort in their jobs. Labour markets must therefore have the flexibility to shift workers from one economic activity to another rapidly and at low cost, and to allow for wage fluctuations without much social disruption. Efficient labour markets must also ensure clear strong incentives for employees and promote meritocracy at the workplace, and they must provide equity in the business environment between women and men. Taken together these factors have a positive effect on worker performance and the attractiveness of the country for talent, two aspects of the labour market that are growing more important as talent shortages loom on the horizon.
| Rank/138 | Value | ||
| 7th pillar: Labour market efficiency | 37 | 4.5 | |
| 7.01 | Cooperation in Labour-employer relations | 86 | 4.2 |
| 7.02 | Flexibility of wage determination | 40 | 5.4 |
| 7.03 | Hiring and firing practices | 16 | 4.8 |
| 7.04 | Redundancy costs (weeks of salary) | 64 | 15.4 |
| 7.05 | Effect of taxation on incentives to work | 11 | 5.1 |
| 7.06 | Pay and productivity | 71 | 3.9 |
| 7.07 | Reliance on professional management | 33 | 4.8 |
| 7.08 | Country capacity to retain talent | 80 | 3.3 |
| 7.09 | Country capacity to attract talent | 50 | 3.7 |
| 7.10 | Female participation in the labour force (ratio to men) | 83 | 0.76 |
Source: Global Competitiveness Index Report 2016-17/NECA Research
The second best performance for the country is under the Labour Market Efficiency pillar, ranked 37th among 138 countries.
Key performances include:
- Effect of taxation on incentives to work (11th)
- Hiring and firing practices (16th)
- Reliance on professional management (33rd), and
- Flexibility of wage determination ( 40th)
8th pillar: Financial market development
An efficient financial sector allocates the resources saved by a nation’s population, as well as those entering the economy from abroad, to the entrepreneurial or investment projects with the highest expected rates of return rather than to the politically connected. Business investment is critical to productivity. Therefore economies require sophisticated financial markets that can make capital available for private-sector investment from such sources as loans from a sound banking sector, well-regulated securities exchanges, venture capital, and other financial products. In order to fulfil all those functions, the banking sector needs to be trustworthy and transparent, and—as has been made so clear recently—financial markets need appropriate regulation to protect investors and other actors in the economy at large.
| Rank/138 | Value | |||
| 8th Pillar: Financial Market Development | 89 | 3.7 | ||
| 8.01 | Financial services meeting business needs | 101 | 3.7 | |
| 8.02 | Affordability of financial services | 132 | 2.5 | |
| 8.03 | Financing through local equity market | 46 | 4.1 | |
| 8.04 | Ease of access to loans | 129 | 2.6 | |
| 8.05 | Venture capital availability | 130 | 2.0 | |
| 8.06 | Soundness of banks | 83 | 4.5 | |
| 8.07 | Regulation of securities exchanges | 49 | 4.7 | |
| 8.08 | Legal rights index (0-10 best) | 46 | 6 | |
Source: Global Competitiveness Index Report 2016-17/NECA Research
9th pillar: Technological readiness
The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries, with specific emphasis on its capacity to fully leverage information and communication technologies (ICTs) in daily activities and production processes for increased efficiency and enabling innovation for competitiveness. Whether the technology used has or has not been developed within national borders is irrelevant for its ability to enhance productivity. The central point is that the firms operating in the country need to have access to advanced products and blueprints and the ability to absorb and use them. Among the main sources of foreign technology, FDI often plays a key role, especially for countries at a less advanced stage of technological development.
| Rank/138 | Value | ||||
| 9th pillar: Technological readiness | 105 | 3.1 | |||
| Availability of latest technologies | 97 | 4.3 | |||
| Firm-level technology absorption | 83 | 4.3 | |||
| FDI and technology transfer | 73 | 4.3 | |||
| Internet users % pop. | 83 | 47.4 | |||
| Fixed-broadband internet subscriptions/100 pop. | 135 | 0.0 | |||
| Internet bandwidth kb/s/user | 127 | 21.0 | |||
| Mobile-broadband subscriptions/100 pop. | 107 | 21.0 | |||
Source: Global Competitiveness Index Report 2016-17/NECA Research
10th pillar: Market size
The size of the market affects productivity since large markets allow firms to exploit economies of scale.
Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets have become a substitute for domestic markets, especially for small countries. Thus exports can be thought of as a substitute for domestic demand in determining the size of the market for the firms of a country.
| Rank/138 | Value | ||||
| 10th Pillar: Market Size | 26 | 5.0 | |||
| Domestic market size index | 21 | 5.0 | |||
| Foreign market size index | 51 | 4.9 | |||
| GDP (PPP) $ billions | 22 | 1091.7 | |||
| Exports % GDP | 134 | 10.4 | |||
Source: Global Competitiveness Index Report 2016-17/NECA Research
The country’s best performance in the sub-index according to the Global Competitiveness Report 2016- 17 is the Market Size sub-index, this can be attributed to the large population size of the country as reflected in the domestic market size index, ranked 21st among 138 countries. However, highest component of our Export is predominantly Crude Oil & Gas as against manufactured products and services in other emerging economies.
OPINION
- One of the key findings in this report is that more open economies are also more innovative. Therefore, falling openness—in the form of increased non-tariff barriers to trade and investment—represents a real threat to future prosperity.
- Although innovation and technology are gaining importance as drivers of competitiveness for all countries, advanced and emerging, the results shows that all factors of competitiveness are complementary and should be addressed simultaneously. Making sustainable, long-term overall progress requires addressing gaps in all pillars.
- The ability to track progress, identify success stories, and prioritize growth agendas is essential for galvanizing the country around structured public-private dialogue that overcomes the constraints of the political cycle and the short-term and special interests of all parties.
PRESS RELEASE
NECA HAILS GOVERNMENT’S SUSPENSION OF FRCN’S CODE OF CORPORATE GOVERNANCE
The Nigeria Employers’ Consultative Association (NECA) has commended the Federal Government on its decision to suspend the Financial Reporting Council (FRCN)’s recently released Code of Corporate Governance. NECA considered the action appropriate in view of the failure of FRC to secure the buy-in of the Organised Private Sector (OPS) on such an important guideline. (read more)
LABOUR & EMPLOYMENT LAW: Doctrine of Res Judicata (Muhammed Kawu Modi & 3 Ors vs. Abdullahi Yanko & 5 Ors, 2014) 45 N.L.L.R. Pt 146, P. 708 NIC
Facts:
By their Originating Summons, the claimants sought the following reliefs amongst others:
- A declaration that the Academic Staff Union of Secondary Schools, Bauchi State (ASUSS) formerly called Conference of Secondary School Tutors, Bauchi State is not a registered Trade Union under the Trade Union Laws of Nigeria
- A declaration that the Academic Staff Union of Secondary Schools (ASUSS) Bauchi State not being a registered Trade Union is not eligible to enjoy the privileges of recognition by Bauchi State Government and enjoyment of check off dues from its members and other benefits and privileges of registration and recognition.
- An injunction restraining the 1st and 2nd respondents from arrogating to themselves and the members of the Association (ASUSS) the status and privileges of a registered Trade Union and enjoyment of all benefit and privileges of a registered and recognised Trade Union
- An injunction restraining the 3rd to 6th respondents from according the 1st and 2nd respondents or ASUSS Bauchi State any form of recognition or privileges of a registered Trade Union
The respondents filed a motion on notice, seeking the following reliefs:
- An order striking out the suit for being incompetent in that it was caught up by the principle of estoppels per res judicata
- An order striking out the suit for being an abuse of judicial process
Issues
- Whether the claimants/respondents’ suit was caught by the principle of estoppels per res judicata and can be competently determined by the court
- Whether the suit was an abuse of judicial process
The Judgement
On requirements of doctrine of res judicata:-
The rule of res judicata requires that where a final decision is given by a court of competent jurisdiction, the parties cannot be heard to contradict that decision in any subsequent litigation between them in respect of the same subject matter. For the doctrine to be applicable in a suit, it must be shown that the parties, issues and subject matter in the previous suit are the same as those in the suit which the plea of res judicata is raised. See: Aro vs. Aro (2000)3 NWLR pt. 649, p443, AIB Ltd vs. Purification Tech. Ltd (2000) 10 NWLR pt. 676 p. 552
On what court will do to determine whether or not claims are same in two different suits:-
In determining whether or not the claims raised in two suits are the same, it is necessary for the court to refer to the nature of claims made by the parties in their pleadings. A cursory look at the subject matters if Suit No. BA/116/2000 and the instant suit clearly reveals that they are at sharp variance with each other. The issues and subject matter in the two cases are clearly different. Therefore, the principle of res judicata will not apply in this case. See: CBN vs. Ahmed (2001) 11 NWLR pt. 172 p 36
On when abuse of process of court is said to exist:-
An abuse of the process of the court is said to exist when a party improperly uses the uses of the judicial process to the irritation and annoyance of his opponents, such as instituting multiplicity of actions on the same subject matter against the same opponent on the same issue. In the instant case, having held that the issues and subject matter in Suit No. BA/116/2000 and the present suit are not the same, there was no abuse of court process. See: ACB Plc vs. Nwaigwe (2000) 1 NWLR pt. 640 p. 201
Final Judgment:-
The Court dismissed the preliminary objection and held that the suit was competent and it was not an abuse of court process.
OPINION:
It is in the interest of society as a whole, that litigation must come to an end.
1) Theme: Safe Workplace Intervention Project Year 2016 Award Ceremony and Problem Solving Clinic on the ECA 2010
Date: 22nd November, 2016
Venue: NECA Learning Centre
Fee: FREE
Time: 10am
2) Theme: Negotiation: Strategy for Business Transaction and Relationship
Date: 24th – 25th November, 2016
Venue: NECA Learning Centre
Fee: N82,500 (NECA Members) N87,500 (Non-NECA members)
Time: 9:00am – 4:00pm
For further details please contact Adewale (08069720364) adewale@neca.org.ng Visit www.neca.org.ng
| For Advert Placement: kindly contact Timothy Olawale on tim@neca.org.ng, 08033435439 |
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