The Chairman, Senate Committee on Industries, Sen. Tokunbo Abiru, has led a debate on the bill he sponsored which seeks to regulate award of Pre-judgment interest in commercial transactions.
The bill titled, ‘Federal High Court Act (Amendment) Bill, 2021 co-sponsored by Senator Opeyemi Bamidele (Ekiti Central) scaled second reading.
The Bill was read the first time on Wednesday 9th June, 2021.
The bill seeks to amend the Federal High Court Act to cure the shortcomings inherent in the Principal Act to make provisions for the regulation of the award of pre-judgment interest to ensure the attainment of substantial justice, particularly in relation to claims bothering on commercial transactions.
In his lead debate, Abiru argued that it was time the law regulating pre-judgment interest be amended.
In highlighted the shortcomings of the existing law, he said: “No doubt, real economic value would have been lost on those judgment sums by the time of judgment, given the high inflationary trend that permeates our economy.
“Take for instance the 2019 decision of the Supreme Court in Julius Berger (Nig.) Plc vs. T.R.C.B. Ltd (2019) 5 NWLR (Pt. 1665) p. 291 where though the claim on the principal sum succeeded, the Supreme Court held that the claimant was not entitled to pre-judgment interest because the claimant had failed to show any custom, agreement or statute under which it founded its claim of interest.”
Abiru, a former bank chief, continued: “Mr. President, distinguished colleagues, in commercial claims, particularly the ones for recovery of debts, the claimant should ordinarily be entitled to pre-judgment interest on the principal debt sum should he succeed in his claim.
“However, entitlement to such a pre-judgment interest is not as easy as it seems, at least as far as the numerous decisions of our appellate courts are concerned.
“Presently in Nigeria, there is no statutory law which regulates the award of pre-judgment interest. Nigerian courts up till date still have recourse to the English common law practice as a guide in their award of pre-judgment interest.
“The common law practice is to the effect that such interest can only be claimed as of right where it is contemplated by the agreement of the parties, or under a mercantile custom or under a principle of equity. This is no doubt, a very herculean task for the claimants to overcome, as a great number of decided cases in Nigeria have shown’’.
Co-sponsor of the bill, Senator Bamidele while supporting the bill said: “The very essence of this bill is to fill an obvious lacuna in our laws. Our courts, including the Federal High Courts have continued to hold that there is no legal basis for them to take decisions that will help preserve the real economic value of judgement debts because there is no legal position that empowers them to avoid prejudgment interests.
“Nigeria is not a strange peculiarity, that had been the case in several common law countries around the world including the United Kingdom. But by virtue of 1934 legislation, the United Kingdom took care of this situation by conceding to judges the discretion of being able to avoid pre-judgment interest. That is what the law is seeking to do for Nigeria.
“So that we are not left behind in the developed and developing common law countries and provide impetus to our judges to be able to exercise unfettered discretion based on very clear legal decisions. I want to strengthen the hands of judges and our courts to avoid and preserve pre-judgment interest which is what will speak to the real economic value.”
Senator Ibrahim Hadejia (Jigawa North East) also supported the bill.