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When administrative discretion raises questions



Discretion is a huge part of administrative law in most national systems across the world. The constitution and other legislation cannot possibly contemplate or provide a remedy for every single situation, so the government’s powers are delegated to agencies to administer laws in a more tailored fashion. These agencies are typically created by statute and authorised by the same statute to make regulations over the subject matter that they govern.

Where the principal statute does not create an explicit offence, the agency is usually given a scope of penalties to consider, so that the penalty applied is, more or less, commensurate to the severity of the offence. Similarly, an enabling statute might also give the agency or authority the leeway to waive or suspend penalties for certain offences.

In addition to the dispensation of justice, administrative discretion functions as a tool for implementing government policy. Thus, if there is a certain activity that the federal or state government would like to promote, it can signal its disposition by the way that the governing sub-authority issues or withholds permits – within the ambit of the scope laid down by the enabling law, of course – or exercises any other discretionary power. An independent agency can, through the way it chooses to exercise the discretion it has been granted, set its own agenda for achieving the aims for which it (the agency) was established.


The tricky thing about the exercise of discretion however, is that it can be quite difficult to say with certainty that it is right or wrong. If the law conferring the discretionary power has been substantially complied with, there is little that can be done to review the agency’s action. Some believe in fact that discretion once conferred is maximum discretion and cannot be fettered; that it is entirely subjective and the judgement of the person authorised to act or refrain from acting must prevail.

However, our system of law permits the challenge of administrative discretion where there are grounds to do so. One of the hallmarks of the late Senior Advocate, Chief Gani Fawehinmi’s public advocacy was his frequent challenges, either to compel an administrative authority to do something they had chosen in their discretion not to do, or to review the exercise of their discretion. This is because, administrative discretion must conform broadly to certain principles. The agency or regulator has (i) a duty to act in good faith; (ii) a duty not to be influenced by irrelevant considerations; (iii) a duty to act reasonably; and (iv) a duty not to exceed the statutory bounds of the discretion.

The challenge notwithstanding this however, is that administrative discretion creates law but its inherent arbitrariness goes contrary somewhat to some of the key characteristics of “good” law – that judicial (and quasi-judicial) outcomes are reasonably predictable, and that similar circumstances will lead to similar outcomes.


This background has been as much a revision, for me, of knowledge imparted several moons ago before the turn of the millennium, as setting out the underpinnings to our regulatory framework as a Common Law jurisdiction. The context is very much the recent decisions of the Governor of the Central Bank to levy fines and immediately debit the accounts of the banks in question, and to order the immediate refund of a cumulative sum of over $8bn transferred outside Nigeria over a 10-year period. The Attorney-General has also got in on the act, declaring that the same company owes over $2bn in back taxes.

On the one hand, it is extremely unclear what law gives the AG the power to review taxes and what the competence of his team of lawyers is analyse payments. This is however the same AG that declared that Force Majeure made a contract void from its beginning, so one cannot be too surprised at his latest antics.

The central bank’s intervention however raises a few pertinent questions. Obviously, the CBN is duty-bound to enforce foreign exchange regulations but is the most extreme sanction the appropriate course of action here? The profits were legitimately earned and these transfers did not take place surreptitiously. Though the language of the CBN’s letter is that “flagrant violations” took place, the CBN gave an approval-in-principle to the unconsummated transaction which seems to be the basis of the allegations and it is still the official policy of the Federal Government of Nigeria that foreign investors have the guaranteed and unconditional right to take out their profits.I have previously admitted that my bias is pro-business but objectively speaking, there is significant dissonance here.

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