4. Rational Dispute Resolution
4.1 Rule of Law
4.2 Enforcement of Contracts
4.3 Commercial Dispute Resolution
In-Country Assessment

4. Rational Dispute Resolution – Weak

Goal – An efficient institutional framework that balances the rights of the public, owners, lenders and borrowers in the event of a dispute or loan default


4.1 Rule of Law

Core Question: Do all market participants abide by the rule of law and have confidence in the courts and the ability of police to control crime? No – Very Weak, while there have been some recent improvements, rule of force still predominates in much of the country.



4.1.1   What is the confidence level of the strength and impartiality of the police, courts and contract enforcement? Very Weak – Percentile Ranking – 9.9Trend

Source: 2011 Governance Matters, World Bank,


4.1.2   Can members of the judiciary be held accountable for their actions? Yes– Score 74 out of 100 – Moderate

 Source: 2010 Global Integrity Report –


Costs of Crime

4.1.3   What are the business costs of crime and violence? High costs – Ranking 128th out of 144 – Score 3.3 out of 7, Very Weak

Source: The Global Competitiveness Report 2012-2013, World Economic Forum
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4.2 Enforcement of Contracts

Core Question:         Are systems in place for timely and efficient enforcement of contracts?
Commercial – No – Weak
Residential –   Yes – Strong


4.2.1 – Judicial Enforcement

Commercial – Weak – Ranking 98th out of 185 Trend          What is the number of procedures involved in resolving a commercial dispute? 40          What is the time between the filing of a lawsuit and resolution in judicial enforcements? 457 days          What is the cost of judicial enforcements as a percentage of claim value? 32%

Source: Doing Business 2013


Survey Questions

SQ 10  What is the time between notice of intent to foreclose and loan collection in judicial enforcements? See below for power-of-sale

SQ 11  What is the cost of judicial enforcements as a percentage of property value? See below for power-of-sale


4.2.2 – Summary Proceedings

SQ 12  Summary proceedings are alternative dispute resolution processes where creditors can apply for a direct court order in property disputes. What is the time between notice of intent to foreclose and loan collection in summary proceedings if available to lenders?  See below for power-of-sale

SQ 13  What is the cost of summary proceeding if available to lenders as a percentage of property value? See below for power-of-sale


4.2.3 – Power-of-Sale

SQ 14  What is the time between notice of intent to sell and loan collection for power-of-sale agreements if available to lenders? 112 days – Very Strong

SQ 15  What is the cost of power-of-sale agreements if available to lenders as a percentage of property value? 6.19% – Strong

Source – Financing Homes 2008, World Bank and International Housing Finance Corporation

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4.3 Commercial Dispute Resolution

Core Question:         Can commercial disputes be resolved efficiently and fairly without exorbitant expense and delay? Yes – Strong, there is growing consensus that foreign investment is essential to realizing Nigeria’s vast potential.


Survey Questions

4.3.1 Commercial Courts

SQ 16  Do specialized commercial courts exist for the handling of property disputes and foreclosures? Yes – Weak, Commercial Division of the High Court of Lagos began in 2002; reforms are underway in court procedures and handling of cases.

Source: High Court of the State of Lagos


4.3.2 Alternative Dispute Resolution

SQ 17  Are alternative dispute resolution mechanisms in place including commercial arbitration, private mediation and community based processes? Yes – Strong – a member of the New York Convention, National ADR Law passed in 2007, Lagos law passed in 2009 and there is growing support

Source: The Lagos Multidoor Courthouse,


4.3.3 Commercial Treaties

SQ 18  What bilateral, regional and international commercial treaties exist concerning business between countries? Strong – a member of WTO, OPEC, the Economic Community of West African States (ECOWAS) with a Trade Investment Framework with the U.S. and the U.K., Bilateral Economic Cooperation with China

Source: U.S. State Department Background Notes:

Federal Republic of Nigeria:



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In-Country Assessment

FQ 8.              To what extent do practitioners report the use of formal contracts and trust institutions to support contract enforcement?

Two major factors account for the state of affairs in Commercial Dispute Resolution in Nigeria today namely:

1. Obsolete laws (particularly with regard to the rules of procedure) and

2. Judicial attitude (particularly with the lack of specialization of judicial personnel).


The civil resolution of Commercial Disputes is one of the many functions of the High Courts in the various states of Nigeria. The Lagos High Court for instance is constituted to deal with all manner of cases ranging from the trade Union/Labor Relations matters to commercial, environmental, Professional Practice and Arbitration awards etc. It is commendable that a commercial division of the court has been established to deal exclusively with resolution of commercial disputes. It has long been realized that in commercial matters time is of the essence as time is money, more so in the context of a fast growing economic environment such as Nigeria’s.


Only a speedy and effective system of resolution of business disputes will ensure that redress is not sought in unlawful extra-judicial means, as sometimes is the case or that business executives do not choose the other option of licking their wounds in the event of botched transactions to the detriment of the common good. The current practice in the Lagos high Courts follows the English practice.


Hand in hand with the clarion call for commercial courts in all judicial divisions in Nigeria, will be the need for specialist Judges in all spheres of commerce, Banking and Credit, Companies and Allied Matters, Patents and Intellectual Property etc. These Judges by their background and training will be adequately equipped to appreciate the needs and aspirations of the business community in their adjudication. The ideal justice delivery system such as that envisaged by the establishment of commercial courts will be that where process and personnel are positioned to take full advantage of the developments in technology by employing the appropriate scientific devices to save judicial time and remove the physical stress placed on Judges in court who at the present time still take notes in long hand, a job that can be more efficiently and conveniently handled by trained stenographers.


In summary, public interest and the interest of all persons in commerce demand the establishment of commercial divisions within our various courts to take the nation into the new information technology era in partnership with other advanced countries of the world who have given priority to the role of Judicial and legal reforms as a necessary element of development within the comprehensive development framework of the more advanced and prosperous nations of the world.


Source: The Courts and Commercial Dispute Resolution in Nigeria: The Need for Specialization, 2005, Babalakin and Co, Commercial Law Firm.