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Choice of law in international contracts for the transfer of technology: a critique of the Nigerian approach

Published online by Cambridge University Press:  28 July 2009

George Nnona
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Abstract

The practice of the National Office for Technology Acquisition and Promotion has been to insist that in contracts for the transfer of technology involving Nigerian parties on the one hand and foreigners on the other, Nigerian lawmust be chosen as the law governing the obligation of the parties under the contract. This article critically examines the legality and relevance of this approach and considers in particular the relevant legislation, the doctrinal bases of choice of law and the practical implications of the choice of Nigerian law in the context of its legal development. The article concludes that the current position needs to be reviewed in that the current approach may ultimately prove harmful to foreign investment and technology in the country.

Type
Research Article
Information
Journal of African Law , Volume 44 , Issue 1 , Spring 2000 , pp. 78 - 85
Copyright
Copyright © School of Oriental and African Studies 2000

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References

1 A body established to monitor, on a continuing basis, the transfer of foreign technology to Nigeria. Formerly named National Office of Industrial Property, its name was changed to National Office for Technology Acquisition and Promotion with effect from 19 June, 1991, by s. 1 of Decree No. 82 of 1992, the National Office of Industrial Property (Change of Name, etc.) Decree 1992

2 The word “legislation” appears in the Guidelines instead of the word “agreement”.This is ostensibly an error, as the word “legislation” in the context of the Guidelines generally, and clause 13 in particular, does not lend itself to a reasonable construction.

3 It may be argued that NOTAP may still insist on the specified rates of payment after considering specific contracts individually, notwithstanding representations from the parties and evidence to the contrary. It is however submitted that, in this event, the position of NOTAP would be liable to judicial review. There is a requirement that public bodies vested with statutory powers, especially discretionary powers, must exercise the same reasonably. See Hood Phillips, O. and Jackson, P.; O. Hood Phillips– Constitutional and Administrative Law, 7th edn., London, 1987, 669–670Google Scholar

4 The rule is “gennalia specialibus non derogat”, meaning that specific provisions prevail over general provisions. See British Bata Shoe Company limited v. Melikan [1956] 1 FSC 100, at 105 per JIBOWU, AG F.C.J.Google Scholar

5 S.6(2) para.(r).

6 Though this has been criticized by many authors as not being a credible basis for conflict of laws rules, it has nevertheless continued to receive judicial attention as such. See for instance Settebello Ltd v. Banco Totta and Acores [1985] 1 WLR 1050.Google Scholar North quoting De Nova describes “comity” as “a phrase which is grating to the ear when it proceeds from a court of justice“. North, P.M. and Fawcett, J.J., Cheshire and North–s Private International Law. 12th edn., London, 1992, 4.Google Scholar

7 See Zajtay, I., “The application of foreign law” in Kurt, Lipstein (ed.) International Encyclopaedia of Comparative Law, Vol. III Private International Law, Ch. 14, New York, at 3.Google Scholar Also, Collins, L. (ed.), Dicey and Morris on The Conflict of Laws, 12th edn., vol. 1, London. 1993, 5 6Google Scholar

8 North and Faweett above, 476.

9 The idea of a bargain is fundamental to English contract law. “An English man is liable, not because he has made a promise, but because he has made a bargain.” See Furmston, M. P., Cheshire, Fifoot and Funnstons Law of Contract, 13th edn., London, 1996, 29.Google Scholar See also Sandrock, O., “The Standard Terms Act 1976 of West Germany”, (1978) 26 American Journal of Comparative Law 551.CrossRefGoogle Scholar

10 Sec Harvey, B. and Parry, D., The Law of Consumer Protection and Fair Trading, 3rd edn., London, 1987, 37.Google Scholar

11 These statutes were received into Nigerian law by virtue of section 32(1) of the Interpretation Act Cap. 192, Laws of the Federation of Nigeria, 1990, and the various High Court laws of the different states. They however, no longer apply in the states comprising the old western Region of Nigeria

12 Sec, Law Commission Reports 21–30 No. 24: Exemption Clauses in Contracts Final Report: Amendments to the Sale of Goods Act, 1893, at 46 para. 120; Hall, C.; “International Sales and the Supply of Goods (Implied Terms) Act 1973”, (1973) 22 I.C.L.Q. 740–742CrossRefGoogle Scholar

13 The Act, together with the old rules, controls the use of unfair terms in consumer contracts, as well as contracts between “merchants” or business enterprises interse. The purpose of the Act is, “to set limits to the factual capacity of a party to replace the common law or statutory legislation by its own self-created quasi-lcgislation”. Sandrock, op cit. 552.

14 Suit No. FHC/I,/28/91;’unreported ruling dated 31 March, 1993.

15 See Sandrock, op cit. 562–563

16 It is noteworthy that counsel for the plaintiff/respondent had drawn the attention of the court to the provisions of the Standard Terms Act of West Germany, 1976, a copy of which was annexed as an exhibit to the plaintiff/respondent's affidavit. The court appeared however to have wrongly and incompletely articulated the submission of counsel in that regard.

17 The term “armslength arrangements” is used to distinguish arrangements involving multinational corporations and their Nigerian subsidiaries, in which the Nigerian subsidiaries enter into agreements or contracts with the foreign parent companies, for the transfer of relevant technology to the subsidiaries. Such arrangements do not give rise to any problem, as the interests of the subsidiaries are often the same as the parent companies.

18 See Agbede, I., Themes on Conflict of Laws, Ibadan, 1989, 2Google Scholar

19 See North and Fawcett, op cit. 56 and 458

20 Protection for Nigerian parties to such transactions may, for instance, be better achieved by vesting Nigerian courts with exclusive jurisdiction for contracts entered into in Nigeria, and keeping the choice of law open. Though this opens the possibility of the parties being frustrated by the delays and inefficiencies of the Nigerian judicial system, the parties still have the option of ensuring that their contracts are not concluded in such a manner that they qualify as contracts entered intoin Nigeria.