One of the greatest achievements of the Nigerian financial system in the last quarter of the 20th century was the enactment of the Investments and Securities Act, 1999 (ISA). Determined to make the Nigerian capital market (NCM) globally competitive, the ISA established the SEC, sought to protect investors, maintain a fair, efficient and transparent market and reduce systemic risks.
The Investments and Securities Tribunal (IST) was one of the novel features to drive the attainment of the objectives of the Act reenacted in 2007. Created as a fast track civil court of coordinate jurisdiction with the Federal High Court (FHC) it is to determine investment disputes before it within 3 months.
The Tribunal has jurisdiction to the exclusion of any other court in Nigeria to determine disputes between investors and capital market operators, capital market operators interse, capital market operators and regulators. The Tribunal is manned by legal practitioners and persons with cognate experience in capital market matters.
Dispute settlement at the IST is fairly robust and very few cases escalate from the Tribunal to the Court of Appeal and Supreme Court. In its years of existence, it resolved complex capital market disputes, inspired confidence, gave directions to the NCM and won several global recognitions.
Dispute settlement at the IST is fairly robust and very few cases escalate from the Tribunal to the Court of Appeal and Supreme Court
The status and exclusive jurisdiction of the Tribunal has, however, been subject to controversy by scholars and judges. It has been argued that since it is not listed in the Constitution of the Federal Republic of Nigeria 1999 as amended (CFRN) as a superior court of record, it is not one and could not limit the jurisdiction of the FHC whose jurisdiction on corporate matters is prescribed by the CFRN. In SEC v Prof Kasunmu SAN, the FHC and the Court of Appeal held that IST did not have exclusive jurisdiction on the question whether a legal practitioner must register with the SEC to practise in the capital market.
In Nospecto v Olorunnibe the exclusive jurisdiction of the IST was successfully challenged at the FHC and upheld by the Court of Appeal in a matter touching on collective investments scheme. In Mufutau Ajayi v SEC, the FHC and Court of Appeal held that in a matter arising from concealment in a corporate account, the IST had exclusive jurisdiction to determine the matter and not the FHC. In Wealth Zone v SEC, the attempt by the Court of Appeal to reconcile the conflicting judgments on the jurisdiction of the IST did not go far. It was therefore clear that a pronouncement by the Supreme Court was needed to provide clarity on the matter.
The opportunity finally came on 13/1/2023 when the Supreme Court considered the appeal against the judgment of the Court of Appeal in the case of Mufutau Ajayi v SEC. The apex court affirmed the judgment of the Court of Appeal delivered in 2007 which upheld the decision of the FHC delivered in 2005 that the IST had exclusive jurisdiction in the matter of concealment in the corporate account of African Petroleum PLC in 2000.
This Supreme Court decision has some implications for administration of justice in the Nigerian financial system. Specifically, it ended the season of conflicting judgments on the subject of jurisdiction over capital market matters, lightens the crowded dockets of the FHC to focus on other matters before it, buoys investors’ confidence that grievances in the capital market can now, without doubt, be resolved at the appropriate forum within three months of commencement of hearing the case; and for the IST, this decision overthrows a yoke it has had to grapple with since its creation in 1999.
While this Supreme Court judgment is celebrated, the period it took (23 years after the matter arose) for final resolution is a sad commentary on our justice administration system. The matter was in the Supreme Court for 16 years. For capital market transactions that are time sensitive, this is regrettable and underscores the essence of the IST where investment disputes are resolved within three months. On the long haul however, the need to amend the CFRN and include the IST as a superior court of record provides a more enduring solution to the challenge of timeous investment dispute resolution in the Nigerian capital market.
As it now stands, any of these common grounds of disputes in the capital market will find resolution at the IST without much ado about jurisdiction: non-receipt of share certificates or dividends by shareholders, breach of an underwriting agreement, failure to return surplus monies, failure or delay by stockbroker to execute client’s mandate or unauthorized sale of clients’ securities by stock brokers, misappropriation of clients’ funds or securities by a capital market intermediary, misrepresentation of the true position of the client’s account in the register of a public company, failure by an issuing house to remit the process of a public offer to the issuer, failure of a receiving agent to submit investors application forms within time in respect of an offer, misappropriation of proceeds of an offer, late or non-submission of allotment proposal to the regulator for approval, non-payment of fees to parties to an offer.
It is hoped that this clarity will boost investors’ confidence to attract domestic and foreign investments into the NCM.
