Under Order 4 Rule 6 of the repealed Court of Appeal Rules 2016, the Court of Appeal (the Court) had the power to grant preservative reliefs such as an order of injunction, or order of appointment of a receiver or manager for the protection of property or person, pending the determination of an appeal.
However, the provision did not provide any guidance on the conditions for exercising such powers by the Court. Notwithstanding this gap, the Court over time in decided cases came up with conditions for its grant of preservatory orders.
Order 4 Rule 6 of the new Court of Appeal Rules 2021 (CAR 2021) has addressed the highlighted lacuna as it provides the conditions that must be met by an applicant before the Court can exercise its discretion in granting preservative orders.
These conditions include, inter alia: (a) the applicant making an undertaking to diligently prosecute the appeal; and (b) in appeals relating to monetary judgment, the applicant depositing a bond, guarantee or other like instruments from an eligible institution, in such sum not exceeding the judgment sum as security for the judgment sum; or in the alternative, depositing such sum of money, as the Court may determine, into an interest-yielding account in the name of the Chief Registrar or Deputy Chief Registrar of the Court.
“Eligible Institution” is defined in Order 1 Rule 5 of the CAR 2021 to include insurance companies, suretyship companies, banks and other financial institutions. Critically, the use of the words “includes” and “other financial institutions” in Order 1 Rule 5 of the CAR 2021 widens the scope of the provision to cover all licensed financial institutions that can issue “security” instruments/products in the Nigerian financial market.
Undoubtedly, the inclusion of the conditions in Order 4 rule 6 of the CAR 2021 will ensure certainty of the law on the grant of preservatory orders by the Court and will also discourage the filing of frivolous appeals and applications for preservative orders for the purpose of slowing down or frustrating the wheels of justice. The requirement for provision of security from an eligible institution with respect to an application for preservatory orders in an appeal against a monetary judgment is akin to the practice in admiralty law where the owner of a vessel is required to provide acceptable security as to the value of a vessel under arrest, in the form of a bank guarantee, insurance bond or a Protection and Indemnity Club letter, to secure the release of the vessel from arrest.
It is axiomatic that Nigerians are very litigious and that the docket of the Court is annually inundated with new appeals. According to the President of the Court, the Court disposed of 5,669 appeals and 10,798 motions in 2021. It is noteworthy that most of the appeals at the Court are against monetary judgments and parties to such appeals usually file motions for stay of execution of such monetary judgments or applications for other preservatory orders.
Taking cognisance of the significant number of appeals against monetary judgments and motions for stay of execution of such judgments filed at the Court annually, the provision of Order 4 Rule 6 of the CAR 2021 will undoubtedly have economic impact on the Nigerian financial market. This impact seems to be inevitable as the provision of security by an appellant/applicant for stay of execution of a monetary judgment is mandatory under Order 4 Rule 6 of the CAR 2021.
Therefore, every applicant that wants to forestall the levying of execution of a monetary judgment on its assets must provide a security instrument in applying for a stay of execution of the judgment and it is beyond cavil that forestalling such execution is what underpins the filing of appeals against monetary judgments in the first place.
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In terms of economic advantages, the issuance of bonds and other similar security instruments will help deepen the market of commercial surety with insurance companies issuing bonds for a fee. The banking sector will also witness a boost as there is a likelihood of increase in the demand for bank guarantees with respect to appeals against monetary judgments, which will be issued by banks for a fee payable on such guarantees, with attendant positive impact on the Nigerian economy.
It is likely that as bank guarantees are mostly preferred by arrestors of vessels as security for the release of arrested vessels, respondents to an application for stay of monetary judgments and the Court may be more inclined to accepting bank guarantees as security for the grant of stay of execution of monetary judgments.
The more the appeals against monetary judgments and applications for stay of execution of such judgments, the more the demand for these security instruments from eligible institutions.
Consequently, players in the Nigerian financial market need to develop customer-friendly products for appellants/applicants that desire to obtain a stay of execution of monetary judgments and one of the ways of making such products customer-friendly would be to ensure that the fees payable on such products is less than that usually charged with respect to similar products.
Considering the number of appeals against monetary judgments in Nigeria annually and the fact that the conditions in Order 4 rule 6 CAR 2021 with respect to appeals against monetary judgments may continue to be in the Court of Appeal Rules in the foreseeable future, the provision of Order 4 rule 6 of the CAR 2021 will continue to have a positive impact on the Nigerian financial market and eligible institutions with the most customer-friendly products will benefit more in the long run.
Ukattah, a partner at the Dispute Resolution practice of the law firm, Olaniwun Ajayi LP
