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Co-ordination of Insolvency Procedures between Nigeria and Foreign Jurisdictions- A Case Study of Alan Dick
1. CO-ORDINATION OF INSOLVENCY PROCEDURESCO-ORDINATION OF INSOLVENCY PROCEDURES
BETWEEN NIGERIA AND FOREIGN JURISDICITIONS-BETWEEN NIGERIA AND FOREIGN JURISDICITIONS-
WHAT WORKS & WHAT DOES NOTWHAT WORKS & WHAT DOES NOT
CASE STUDY:CASE STUDY:
Alan Dick and Company West Africa Limited (in liquidation)Alan Dick and Company West Africa Limited (in liquidation)
(“ADWA”)(“ADWA”)
Presented byPresented by
Seyi AkinwunmiSeyi Akinwunmi
PartnerPartner
Akinwunmi & Busari, LPAkinwunmi & Busari, LP
seyi@akinwunmibusari.comseyi@akinwunmibusari.com
2. BACKGROUND INFORMATIONBACKGROUND INFORMATION
ADWA was incorporated in Nigeria in 22nd February 2001ADWA was incorporated in Nigeria in 22nd February 2001
as a wholly owned subsidiary of Alan Dick & Companyas a wholly owned subsidiary of Alan Dick & Company
Limited UK, (“ADC”).Limited UK, (“ADC”).
Sometime in June 2008, ADWA's Directors surreptitiouslySometime in June 2008, ADWA's Directors surreptitiously
initiated a members’ voluntary winding-up process oninitiated a members’ voluntary winding-up process on
behalf of ADWA.behalf of ADWA.
On 17th December 2008, the members’ voluntary windingOn 17th December 2008, the members’ voluntary winding
up was substituted with a court ordered liquidation on theup was substituted with a court ordered liquidation on the
application of Diamond Bank Plc.application of Diamond Bank Plc.
During the course of the liquidation we discovered thatDuring the course of the liquidation we discovered that
ADWA’s directors had carried out a considerable numberADWA’s directors had carried out a considerable number
of fraudulent transfers of funds from ADWA outsideof fraudulent transfers of funds from ADWA outside
Nigeria (particularly to the UK).Nigeria (particularly to the UK).
3. BACKGROUND INFORMATIONBACKGROUND INFORMATION
As liquidators we have an obligation to ensure that theAs liquidators we have an obligation to ensure that the
Directors of ADWA are held accountable for anyDirectors of ADWA are held accountable for any
fraudulent activities and ensure that they contribute tofraudulent activities and ensure that they contribute to
offsetting the liabilities of ADWA.offsetting the liabilities of ADWA.
We have therefore engaged the services of the following;We have therefore engaged the services of the following;
UK based Solicitors and Queen’s Counsel.UK based Solicitors and Queen’s Counsel.
International Forensic Accountants.International Forensic Accountants.
UK InvestigatorsUK Investigators
This treatise focuses on co-ordination of insolvencyThis treatise focuses on co-ordination of insolvency
procedures between Nigeria and United Kingdom usingprocedures between Nigeria and United Kingdom using
ADWA as a case studyADWA as a case study..
5. THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACTTHE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT
(“THE ACT”)(“THE ACT”)
The Act is based on reciprocity of treatment of similarThe Act is based on reciprocity of treatment of similar
judgments in the originating country.judgments in the originating country.
It provides for the enforcement in Nigeria of final andIt provides for the enforcement in Nigeria of final and
conclusive judgments and orders delivered by superiorconclusive judgments and orders delivered by superior
courts of foreign countriescourts of foreign countries ..
The judgments of the courts of foreign countries can beThe judgments of the courts of foreign countries can be
enforced in Nigeria by the order of the Minister of Justiceenforced in Nigeria by the order of the Minister of Justice
whose discretion to confer reciprocal status to a foreignwhose discretion to confer reciprocal status to a foreign
country is based on his being satisfied that, substantialcountry is based on his being satisfied that, substantial
reciprocity of treatment will be assured as regards thereciprocity of treatment will be assured as regards the
enforcement in that foreign country of judgments given inenforcement in that foreign country of judgments given in
superior courts in Nigeria.superior courts in Nigeria.
6. THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACTTHE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT
(“THE ACT”)(“THE ACT”)
A creditor in respect of a foreign judgment may apply to aA creditor in respect of a foreign judgment may apply to a
superior court in Nigeria anytime within 6 (Six) years aftersuperior court in Nigeria anytime within 6 (Six) years after
the date of the judgment.the date of the judgment.
Where there is an appeal during the proceedings, theWhere there is an appeal during the proceedings, the
creditor may apply after the date of the last judgmentcreditor may apply after the date of the last judgment
given on the appeal.given on the appeal.
The application for registration is by Originating SummonsThe application for registration is by Originating Summons
on notice to the judgment creditor, accompanied with theon notice to the judgment creditor, accompanied with the
certified copy of the foreign judgment itself.certified copy of the foreign judgment itself.
Upon its being registered, the judgment, for the purposesUpon its being registered, the judgment, for the purposes
of execution, is of the same force and effect, andof execution, is of the same force and effect, and
proceedings may be taken on it.proceedings may be taken on it.
7. THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACTTHE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT
(“THE ACT”)(“THE ACT”)
It is pertinent to note that by virtue ofIt is pertinent to note that by virtue of
Section 8 of the Act, “no proceedings forSection 8 of the Act, “no proceedings for
the recovery of a sum payable under athe recovery of a sum payable under a
foreign judgment, being a judgment toforeign judgment, being a judgment to
which Part 1 of the Act applies, other thanwhich Part 1 of the Act applies, other than
proceedings by way of registration of theproceedings by way of registration of the
judgment, shall be entertained by any courtjudgment, shall be entertained by any court
in Nigeria”in Nigeria”..
8. THE UNCITRAL MODEL LAW ONTHE UNCITRAL MODEL LAW ON
CROSS-BORDER INSOLVENCYCROSS-BORDER INSOLVENCY
(“THE MODEL LAW”)(“THE MODEL LAW”)
9. THE UNCITRAL MODEL LAW ON CROSS-BORDERTHE UNCITRAL MODEL LAW ON CROSS-BORDER
INSOLVENCY (“THE MODEL LAW”)INSOLVENCY (“THE MODEL LAW”)
Adopted by UNCITRAL on 30th May 1997, the Model LawAdopted by UNCITRAL on 30th May 1997, the Model Law
is designed to assist States to equip their insolvency lawsis designed to assist States to equip their insolvency laws
with a modern, harmonized and fair framework to addresswith a modern, harmonized and fair framework to address
more effectively instances of cross-border insolvency.more effectively instances of cross-border insolvency.
The Model Law is unilateral and does not requireThe Model Law is unilateral and does not require
reciprocity from other states so local recognition isreciprocity from other states so local recognition is
available for insolvency proceedings anywhere in theavailable for insolvency proceedings anywhere in the
world.world.
But some states like South Africa and Mexico requireBut some states like South Africa and Mexico require
reciprocity while states like the United States, Japan andreciprocity while states like the United States, Japan and
the United Kingdom do not require reciprocity for thethe United Kingdom do not require reciprocity for the
applicability of the Law.applicability of the Law.
10. The United Kingdom Model LawThe United Kingdom Model Law
on Cross-Border Insolvencyon Cross-Border Insolvency
Regulations 2006Regulations 2006
11. The United Kingdom Model Law version as enacted inThe United Kingdom Model Law version as enacted in
2006 by the Cross-Border Insolvency Regulations2006 by the Cross-Border Insolvency Regulations
2006 will be our focal point in this discourse.2006 will be our focal point in this discourse.
The law is applicable whereThe law is applicable where;;
assistance is sought in Great Britain by aassistance is sought in Great Britain by a
foreign court or a foreign representative inforeign court or a foreign representative in
connection with a foreign proceeding; orconnection with a foreign proceeding; or
assistance is sought in a foreign state inassistance is sought in a foreign state in
connection with a proceeding under Britishconnection with a proceeding under British
Insolvency law; orInsolvency law; or
12. The law is applicable whereThe law is applicable where;;
a foreign proceeding and a proceedinga foreign proceeding and a proceeding
under British Insolvency law in respect of theunder British Insolvency law in respect of the
same debtor are taking place concurrently;same debtor are taking place concurrently;
oror
creditors or other interested persons in acreditors or other interested persons in a
foreign state have an interest in requestingforeign state have an interest in requesting
the commencement of, or participating in, athe commencement of, or participating in, a
proceeding under British insolvency law.proceeding under British insolvency law.
13. The law divides foreign proceedings into;The law divides foreign proceedings into;
MAIN PROCEEDINGSMAIN PROCEEDINGS
ANDAND
NON-MAIN PROCEEDINGSNON-MAIN PROCEEDINGS
14. ARTICLEARTICLE 1515
By virtue of Article 15 of the Model Law, aBy virtue of Article 15 of the Model Law, a
foreign representative may apply to theforeign representative may apply to the
court for recognition of the foreigncourt for recognition of the foreign
proceedings in which he has beenproceedings in which he has been
appointed.appointed.
15. THETHE GRANTGRANT OF ASSETOF ASSET
FREEZINGFREEZING
ORDERSORDERS/INJUNCTIONS/INJUNCTIONS
16. The English courts have the powers toThe English courts have the powers to
assist victims of fraud through the grant ofassist victims of fraud through the grant of
asset freezing injunctions and searchasset freezing injunctions and search
orders.orders.
Section 25 of the Civil Jurisdiction andSection 25 of the Civil Jurisdiction and
Judgments Act 1982 empowers the HighJudgments Act 1982 empowers the High
Court in England to grant interim relief inCourt in England to grant interim relief in
aid of legal proceedings in other countries.aid of legal proceedings in other countries.
17. Credit Suisse Fides Trust SA v CuoghiCredit Suisse Fides Trust SA v Cuoghi
(1997) 3 All ER 724(1997) 3 All ER 724
Lord Justice Millet recognised that anLord Justice Millet recognised that an
ancillary jurisdiction ought to be exercisedancillary jurisdiction ought to be exercised
with caution, and care should be taken notwith caution, and care should be taken not
to make orders which conflict with those ofto make orders which conflict with those of
the court seized of the substantivethe court seized of the substantive
proceedings.proceedings.
18. Credit Corporation v Uzan and ANORCredit Corporation v Uzan and ANOR
(2003) EWCA Civ 752(2003) EWCA Civ 752
Lord Justice Potter stated the considerationsLord Justice Potter stated the considerations
which the court will bear in mind as follows;which the court will bear in mind as follows;
““Whether the making of the order will interfereWhether the making of the order will interfere
with the management of the case in the primarywith the management of the case in the primary
court;court;
Whether it is the policy in the primary jurisdictionWhether it is the policy in the primary jurisdiction
not itself to make worldwide freezing/disclosurenot itself to make worldwide freezing/disclosure
orders;orders;
19. Credit Corporation v Uzan and ANORCredit Corporation v Uzan and ANOR
(2003) EWCA Civ 752(2003) EWCA Civ 752
Whether there is a danger that the orders made will giveWhether there is a danger that the orders made will give
rise to disharmony or confusion and/or risk of conflicting,rise to disharmony or confusion and/or risk of conflicting,
inconsistent or overlapping orders in other jurisdictions,inconsistent or overlapping orders in other jurisdictions,
in particular the courts of the state where the personin particular the courts of the state where the person
enjoined resides or where the assets affected areenjoined resides or where the assets affected are
located.located.
Whether at the time the order is sought there is likely toWhether at the time the order is sought there is likely to
be a potential conflict as to jurisdiction rendering itbe a potential conflict as to jurisdiction rendering it
inappropriate and inexpedient to make a worldwideinappropriate and inexpedient to make a worldwide
order.order.
Whether, in a case where jurisdiction is resisted andWhether, in a case where jurisdiction is resisted and
disobedience to be expected the court will be making andisobedience to be expected the court will be making an
order which it can not enforceorder which it can not enforce
21. FRAUD!!!FRAUD!!!
Financial department of ADWA wasFinancial department of ADWA was
substantially run from the UK andsubstantially run from the UK and
documents were consciously destroyed.documents were consciously destroyed.
Coincidence in the timing of theCoincidence in the timing of the
movement of funds from Nigeria tomovement of funds from Nigeria to
England and the period in which theEngland and the period in which the
English company was in financialEnglish company was in financial
difficultiesdifficulties..
22. FRAUD!!!FRAUD!!!
dividend of NGN 1.296 billion for the financialdividend of NGN 1.296 billion for the financial
year ended 31 March 2005, was paid at a timeyear ended 31 March 2005, was paid at a time
when ADWA was operating at a loss and hadwhen ADWA was operating at a loss and had
negative shareholders’ funds.negative shareholders’ funds.
Loan of over N8 billion from the banks despiteLoan of over N8 billion from the banks despite
the fact that ADWA was paid in advance forthe fact that ADWA was paid in advance for
majority of its contracts so that there was nomajority of its contracts so that there was no
need for the facilities which ADWA obtainedneed for the facilities which ADWA obtained
from the Banks.from the Banks.
Tax Evasion.Tax Evasion.
24. CONCLUSIONCONCLUSION
Clearly, the intricacies and complexitiesClearly, the intricacies and complexities
involved in this cross-border insolvencyinvolved in this cross-border insolvency
proceeding is quite challenging. We areproceeding is quite challenging. We are
however assured that considering itshowever assured that considering its
success thus far, the liquidationsuccess thus far, the liquidation
proceedings will expand the boundaries ofproceedings will expand the boundaries of
insolvency proceedings in Nigeria.insolvency proceedings in Nigeria.
