‘What has been signed away is commercial immunity, not Nigeria’s sovereignty’
Recently, the National Assembly discovered a clause in Chinese contracts with Nigeria proposing a forfeiture of sovereignty in the event of not being able to repay or service the loan. Does this have any implications?
One of the clauses in question, which have been making rounds, is Article 8(1) of the commercial loan agreement signed between the Federal Ministry of Finance on behalf of Nigeria and the Export-Import Bank of China. In a review of the above clause, it is worthy to note that sovereign States have and enjoy immunity; this may mean a party to a contract can on the basis of immunity refuse to implement its part of the deal, escape implementation of the arbitrary judgment, or tribunal. So, it may be best practice to require a waiver to ensure the effectiveness of the dispute resolution mechanism if and when required. On the other hand, most of China’s loans are tied to infrastructural development and is seen by several observers as a new form of economic colonialism. Owing to this, many have raised concerns that this clause allegedly concedes sovereignty of Nigeria to China.
It is clear that what has been signed away is commercial sovereignty and immunity and not Nigeria’s sovereignty. This invariably means China has a right to seize the assets, which its funds have been invested in, till they recoup their investment in the event of a default. Furthermore, this leaves a lot of questions unanswered since we aren’t privy to the whole clauses in the agreement. Peradventure Nigeria defaults, how long is China meant to take over these assets? In what state or condition should the assets be returned? What if China claims the assets isn’t profitable enough to recoup their funds, what next? Terms must be clearly stated. Noting Nigeria’s trend in lack of accountability, transparency, and responsibility, it may be to our disadvantage to having such clauses in agreements with China, especially considering that Nigeria presently owes specifically to the present government a total of $1,728,140,000 to China in debt
What options are available for an unwilling party to extricate from a valid contract?
Such a party can take the options provided under the termination clause of such a contract. Also, there are cases where contracts are discharged under frustration. What this means is that a contract may be discharged by frustration. A contract may be frustrated where there exists a change in circumstances, after the contract was made, which is not the fault of either of the parties. And it renders the contract either impossible to perform or deprives the contract of its commercial purpose. But I will desist from giving a professional opinion on a contract that I have not seen a copy of. I will not be in a good position to argue for or against unseen contractual terms.
Nigerians are groaning over the recent hike in the pump price of petrol and an increase in electricity tariff. What is your take on this?
This does not come as a surprise as the standard of living in Nigeria has been on a decline in recent times with multiple national economic meltdowns since 2015. We acknowledge that a combination of factors hassled to the increase in the pump price of Petroleum Motor Spirit (PMS) and the hike in electricity tariffs. We, however, are of the opinion that the increase could not have been implemented at a worse time. The cost of living has risen astronomically, while wages have largely remained the same or increased at a far slower rate than the cost of living. In addition, the COVID-19 pandemic is ravaging the economy, making an already bad situation worse. Popular opinion seems to be that the Nigerian government needs to be more sensitive to the average Nigerians’ plight and also do more to ensure that financial palliatives are adequate and reach the intended recipients. We believe this will help to cushion the effects of these increases on the lives of the average Nigerians.
With the ravaging COVID-19 pandemic, how has this affected your business dealings and representations?
We have not only seen COVID-19 as a threat but are also seeing the opportunities it is creating. We have tried to leverage the opportunities, while also neutralizing the threats. We are leveraging the use of technology for our operations and law business practice. COVID-19 has also reduced operational cost and placed more pressure on us to look at the need to diversify. Some of the threats it has posed are that it has reduced international trade as borders are closed and commercial activities have reduced as well as a reduction in income.
The opening of Kusamotu Chambers in faraway Beijing is an ambitious move. What informed this expansion?
This foray into the Chinese legal service market is for us a natural progression for expansion of our present operations, which has had a long-standing involvement with providing cross border legal services out of our offices in Nigeria. For over a decade now we have provided services for Chinese Companies and institutions based in China but doing business in Nigeria, mainly in trade and investment, such as China Export and Credit Insurance Corporation (Sinosure), Chinese Government owned entity, and several other Chinese companies doing business in Nigeria.
China has emerged as a global partner in trade and infrastructure, rendering loans and services to many nations, especially in Africa. Is your expansion a strategy in keying into this international trade by way of legal practice?
Absolutely yes! Our expansion is certainly a strategy in keying into the Chinese international trade by way of legal practice focusing especially on China. Our practice is deeply entrenched in international commercial law practice and as such, as mentioned in your question, we already provide legal services to our Chinese clients investing in Nigeria and Africa as a whole, in trade, infrastructure, loans, etc. As a matter of fact, we have done those over a long span of time, developing our relationship with our Chinese clientele. We have had to expand our reach to 20 African countries where we have strategic partner law firms that run with the same vision, representing our firm on the continent by providing legal services on our behalf whenever and wherever our clients have their transactions executed on the African continent. As a result, this affords us the luxury of capacity, capability, and efficiency to meet up with the demands of our Chinese clients who are notorious for their aggressive business model.
How did this relationship start?
This relationship emanated from us over a decade long relationship with one of China’s biggest insurance companies, china export, and credit insurance corporation (Sinosure). It is a Chinese government-owned institution. They support Chinese manufacturers and companies bringing billions of dollars’ worth of investment transactions into Nigeria and Africa as a whole, therefore single-handedly contributing to a large portion of foreign investments into Nigeria. We provide legal services for their transactions and have been awarded the most valuable partner of the year (MVP) for seven years in a row and in 2013, awarded the best foreign investment practice by word finance magazine. This further boosts the confidence of the Chinese community in legitimising our competence and expertise. As the Chinese are a very close and closed community, we leveraged our capabilities. We were therefore introduced through this medium to the Chinese community and as we are a multi-faceted firm, which had garnered its credibility, reputation, and pedigree in Nigeria from its 55 years in existence providing legal services in the corporate and commercial law field, infrastructure, power, solar/renewable energy, oil and gas, mining, and agriculture industry. We were more than ready to meet the demands of all aspects and types of Chinese companies and investors doing business in Nigeria.
Integrity poses a challenge to international trade. How have you been able to set standards in this regard?
As a law firm with a difference and focus on excellence and precision, integrity is a key aspect of our law practice. It binds our business relationship with clients. This is so fundamental to our practice and has afforded us the foundation with which we stand with about 70 per cent of our Asia/China practice returning clientele for over a decade now. Also in fostering business relationships with clients, we have been able to overcome the challenges and set the standard by relying on our code of ethics and conduct, and as such, help clients de-risk their transactions.
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