It is not in doubt that parties are bound by the contract entered into by them and signed by them. However, clauses that states that parties must submit to the jurisdiction of a foreign country may not be enforced on some grounds. Parties to a written contract are bound by the terms of a contract this is subject to the fact that they freely entered into same and the contract is not illegal or contrary to public policy.
Nigerian courts recognize parties’ choice of foreign (non-Nigerian) law and jurisdiction. The Nigerian courts will, as a general rule, give effect to the parties’ choice of a foreign governing law and will, accordingly, apply such law in the determination of any claims that come within their jurisdiction. For instance, where parties have English law as the governing law of the contract, Nigerian courts, will, generally give effect to the choice of English law as the governing law of the contract if any claim in relation to the contract were to come under their jurisdiction.
Nigerian courts will, however, only interfere with parties contract in circumstances where the terms of the contract are contrary to Nigerian public policy, inconsistent with Nigerian law or where there are vitiating elements in the terms and conditions of the contract. The Supreme Court of Nigeria has ruled in SONNAR & ANOR. V. PARTNENREEDRI M.S NORDWIND & ANOR (1988) N.S.C.C. PPS. 28-49 that the parties’ choice of law is not conclusive and that to be effective, the choice of law must be “real, genuine, bona fide, and reasonable”. The Nigerian Supreme Court has also held that the foreign law chosen by parties as the proper law of their contract” must have some relationship to and must also be connected with the realities of the contract considered as a whole”.
As with the case of the parties’ choice of law, the Nigerian courts have demonstrated that in certain limited circumstances they will be prepared to assume jurisdiction notwithstanding the express choice of some other jurisdiction by the parties. Oputa, JSC in the Sonnar Case above stated that:
“Our courts should not be too eager to divest themselves of jurisdiction conferred on them by the constitution and by other laws simply because parties in their private contract chose a foreign forum and a foreign law”.
The factors which the courts will consider in determining whether to assume jurisdiction were also set out in the Sonnar Case and include:
A. The countries with which the parties are connected;
B. The location of the evidence, the convenience in terms of accessibility and expenses between the domestic and foreign courts;
C. Whether the party seeking to stay the proceedings is only seeking procedural advantages; and
D. Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: Be deprived of security for that claim; Be unable to enforce any judgment obtained; Be faced with a time-bar not applicable to the domestic court or; For political, racial, religious or other reasons be unlikely to get a fair trial.
Thus, before parties go into any form of contract whatsoever and decide to submit to a foreign jurisdiction, they should understand that they are bound by it. Any attempt to choose another jurisdiction to entertain any dispute that may arise from the contract after submission to a foreign jurisdiction must be upon satisfying the above conditions.
By Lucky Obahor
