Funmilayo Odude, Legal Practitioner, Damod Law Practice
Follow Funmilayo Odude
Subjects of Interest
- Law and Society
The small claims court system is new in Nigeria. But now is the time to strengthen it 20 Jun 2019
According to the International Monetary Fund (IMF), Nigeria’s informal sector accounts for 65 percent of the GDP. The growing youth unemployment has seen many graduates join less educated and uneducated Nigerians in the informal economy.
Businesses in the informal economy are exposed to harsh operating conditions, including high cost of doing business, lack of access to power supply or supply inadequacy, multiplicity of taxes, regulatory dysfunction, lack of access to affordable financing, lengthy legal processes, and inefficient dispute resolution.
Different initiatives have been introduced by the President Muhammadu Buhari administration to address some of the challenges. One of such is the Presidential Enabling Business Environment Council (PEBEC), which operates under the Office of the Vice President, Professor Yemi Osinbajo. PEBEC aims to address systemic business bottlenecks and improve Nigeria’s ranking on the Ease of Doing Business index. As part of its reforms under ‘enforcement of contracts’, the Council introduced the specialised small claims commercial courts. Lagos and Kano states were chosen to pilot the initiative.
In that regard, the Chief Justice of Lagos State, Hon. Justice Opeyemi Oke (now retired), inaugurated the Small Claims Court on the 23rd of April, 2018. The overriding objective of the court is to provide access to an informal, inexpensive and speedy resolution of simple debt recovery disputes not exceeding N5 million. The process of commencing the debt recovery litigations is simple. Filling and filing the requisite forms can be done without engaging the services of a legal practitioner.
The idea behind the small claims court system has been around since the 12th century in England when it first existed as the small county or magistrate courts popularly referred to as the “Court of Pie-powders.” By the 17th century, formal small claims court had been created. In the United States of America, the small claims court system was established in the 1930s, South Africa in 1984, Zimbabwe in 1993, Brazil in 1995, and Kenya in 2016. Lagos is the first state to establish the small claims court system in Nigeria. The Lagos Court of Arbitration (LCA) Small Claims Scheme had been earlier initiated in 2012.
The concept of the small claims court is rooted in access to justice. American legal scholar, Roscoe Pound, is credited with the statement: “… it is a denial of justice in small causes to drive litigants to employ lawyers, and it is a shame to drive them to legal aid societies to get as a charity what the state should give as a right.” Small claims courts are, therefore, set up primarily in order to make civil justice accessible to the poor.
The importance of an efficient and effective dispute resolution mechanism for the informal sector is often underrated. With the operation of the small claims court in Lagos, simple debt recovery cases, which businesses would have had to overlook due to the attendant costs in trying to litigate them under the regular court system or use illegal means to collect – including using the officers of the Nigerian Police Force – can now be litigated in a cheaper, faster and simpler process. From the hairdresser suing her manager for misappropriation of funds during her absence to the microfinance banks suing defaulters of loan facilities, the courts provide easy and fast resolution to small claims in Lagos State.
Justice Opeyemi Oke, while inaugurating the translation of the Court’s Practice Directions Handbook and Policy Guidelines to Yoruba, Igbo, Egun, Hausa and Pidgin English languages on the 14th of May, 2019, disclosed that the Court has delivered 530 judgments out of 850 cases filed by litigants within the last 10 months of its sittings in seven magisterial districts with over 60 percent of the judgments delivered within 60 days. These are impressive statistics considering how slow cases in regular courts can be.
Impressive as these statistics are, there is the danger that the Court may begin to slowly lose its effectiveness, especially in a city like Lagos, if other reforms do not kick in. Already, the statistics given by the CJ show that the small claims registry is being overstretched. The Practice Directions of the court, in a bid to ensure the speed of the process, set quick timelines for action steps. The Assistant Chief Registrar (ACR) is to forward a newly filed case file to the Administrative Magistrate within 24 hours; the Administrative Magistrate is to assign the file to a small claims magistrate within 24 hours; the summons is to be served by a sheriff of the small claims court within seven days and he is to file an affidavit of service within two days of service, etc.
The Practice Directions provide that the entire period of proceedings from filing till judgment should not exceed 60 days, although a judgment of the court would not be invalid by reason of the entire proceedings of the court exceeding the time limit.
It is, however, difficult for the staff of the small claims registry in the different magisterial districts to keep up with these timeframes in view of the volume of cases that are being filed. For instance, there are currently only two sheriffs of the small claims court in the Igbosere magisterial district in Lagos Island with an increasing number of processes to serve on defendants. The dockets of the small claims magistrates who have to combine the small claims cases with the cases on their regular dockets are becoming increasing difficult to manage in accordance with the timelines in the Small Claims Practice Directions. We are in danger of losing the benefits of this wonderful initiative to an ebbing efficiency, if urgent steps are not taken.
Technology is taking over everything and the judiciary should not be left behind. The judiciary needs to harness technological solutions to solve some of the challenges facing our court systems and processes. Many small claims courts in developed countries, including the United Kingdom, allow for small claims to be made online. This is also possible in Nigeria and we ought to have started implementing this.
In a world in which a huge part of communication is done online, magistrate courts in Nigeria are not yet empowered by their rules of procedure to permit service of processes or notices by electronic means. It does not matter if the entire transaction, which brought about the dispute, was carried out online. Manual processes – filing, service, hearing, etc. – are not efficient in handling the volume of disputes being filed in courts every day.
Contrary to the disposition of many that introducing ICT solutions is elitist for a process meant for the informal sector, Nigeria and Nigerians are proof that formal education is not a precondition for understanding, using and implementing technological solutions. Already, the Corporate Affairs Commission has started to register businesses online from the search, payment of registration fees and stamp duties, to the resolution of any queries. Many micro, small and medium-sized enterprises (MSMEs) incorporate various online payment solutions in running their businesses. Technology offers easy-to-use solutions to the infrastructural and staff deficiencies in our systems.
The jurisdictional limit of N5 million the small claims court in Lagos has is higher than the limits set in other African countries. It is only lower than the thresholds in the more developed emerging economies and the advanced nations. Based on Nigeria’s economic stature, the limit seems quite apposite for now.
The small claims court in Nigeria is limited to claims involving liquidated money demand and does not cover tort, tenancy or other commercial disputes. This may give the impression of a debt collection agency and capable of being abused by businesses. Therefore, we must be careful to conduct periodic reviews of its Practice Directions and policies to ensure that it primarily remains a court that makes civil justice accessible to the poor.
Kano State launched its own small claims court on the 24th of January, 2019. With the successes already recorded in Lagos, and hopefully in Kano as well, other states in the Federation might consider incorporating this in their legal processes.
Latest Blogs By Funmilayo Odude
- P&ID and Nigeria’s disregard for sanctity of contracts
- The law, not the judiciary, to blame in PEPT judgment
- Ending sexual violence is beyond social media uproar
- Should Lagos State reintroduce monthly environmental sanitation exercise?
- The small claims court system is new in Nigeria. But now is the time to strengthen it