The right of foreign companies to sue in any Nigerian court is entrenched in Section 78, and 84 of the newly enacted Companies and Allied Matters Act (CAMA) 2020. The provisions of the sections are highlighted as follows.
Section 78 in relation to foreign companies having the intention to do business in Nigeria provides that “every foreign company which before or after the commencement of this Act was incorporated outside Nigeria, ad having the intention of carrying on business in Nigeria, shall take all steps necessary to obtain incorporation as a separate entity in Nigeria for that purpose, but until so incorporated, the foreign company shall not carry on business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents, as matters preliminary to the incorporation of this Act”. By the provision of this section, foreign companies with the intention to transact in Nigeria must take stapes to be registered with the CAC as a separate entity with legal status, unless that company is registered, it shall not have a place of business or address of service in Nigeria, and failure to do this is a contravention of Section 79 of the Act.
While Section 84 empowers a foreign company not registered in Nigeria to institute legal action in its own name, it states that (a)- nothing shall be construed as authorizing the disregard by any exempted foreign company of any enactment or rule of law and (b) nothing in this chapter shall be construed as affecting the rights or liability of a foreign company to sue or be sued in its name or in the name of its agent”.
These sections protect the right of access of foreign companies to the Nigerian court for the enforcement of their rights. A foreign company in Nigeria is required by law to register with the Corporate Affairs Commission (CAC) before commencing its business operations, however, the issue of whether a foreign company has the capacity to carry on business and institute an action before the Nigerian courts to enforce its rights has been the decision of several courts for determination.
Furthermore, the registration of a foreign company with the CAC is different from the power of the company to sue. A foreign company not incorporated in Nigeria can institute an action in Nigeria once the law of the country where the company is registered is recognized in Nigeria. In the decided case of BANK OF BARODA V. IYALABAM CO.LTD (2009) 3 NWLR (Pt.785)551, the right of a foreign company to sue was determined where the Ogundare, J.S.C held that “Nigerian court recognizes as juristic persons, corporations established by foreign law by virtue or the fact of their creation and continuance under and by virtue of that law. Such recognition is encouraged by the comity of nations and such foreign company is permitted under the proper instruments of the foreign country”.
It also held that “it is a principle of common law, and this is accepted in this country, that a corporation incorporated in a foreign country may sue and be sued in our court”.
Also in the decided case of RITZ & CO. KG V. TECHNO LTD (1999) 4 NWLR (PT 598) 298, the court went further to hold that a foreign company does not necessarily need to sue in the name of its agents in Nigeria, where it stated that “a foreign company not registered in Nigeria can sue in its name without necessarily suing in the name of its agents in Nigeria. It can never be a just and fair approach to say that a foreign company cannot sue to claim its legitimate right in Nigeria because it has not yet been registered. Suing or being sued in Nigeria does not mean carrying on business in Nigeria”.
Inthe case of SAEBY JERNSTOBERI MFAS V OLAOGUN ENTERPRISES LTD (1999(14 NWLR (PT.637) 128, the Supreme Court explained the rationale of a foreign company exercising its rights to sue and be sued in Nigeria. It held that “the principle of law that a foreign corporation, duly created by laws of a foreign state recognized by Nigeria may sue or be sued in its corporate name in our courts is part of the common law. The suggestion that a foreign company duly incorporate outside Nigeria should first be registered in Nigeria under the provisions of the Companies and Allied Matters Act dealing with registration of foreign country as defined by the Act is too preposterous and patently inimical to international trade to merit any prolonged or serious consideration”.
The decision of the court in the question of whether a foreign company can sue in Nigeria has put to rest the consideration that the foreign company must be registered in Nigeria before it can institute an action to enforce its rights. In the same vein, a Nigerian who wishes to sue a foreign company in Nigeria does not need to bother whether the company is registered in Nigeria.
Finally, the current provision of the law is that foreign companies are required to be registered to carry on any business in Nigeria as stated in Section 78 of the Act; however, non-registration of the foreign company with the CAC does not serve as a limitation for the company to sue and be sued in Nigeria.
In conclusion, foreign companies have the right to institute an action for claims and enforcement of its rights in Nigeria. Section 78 of the CAMA focuses on encouraging foreign companies looking to carry on business in Nigeria to be duly registered with the CAC; however, non-registration of the foreign company does not preclude it from instituting a legal action against a Nigerian or a Nigerian company to enforce its rights. The interpretation of Section 84 of CAMA is that foreign companies not registered in Nigeria has the right to sue and be sued in Nigeria.