By O. G. Ogbom, Esq., Ph.D.,
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An Examination of the CBN Act, Foreign Exchange Laws, Legal Practitioners Act, Legal Practitioners Remuneration Order, Rules of Professional Conduct and the EFCC’s Recent Position
Introduction
The recent warning attributed to the Economic and Financial Crimes Commission (“EFCC”) that lawyers who charge or receive professional fees in foreign currency may face prosecution has generated an important legal question: does a Nigerian lawyer commit a criminal offence merely by agreeing with a client that professional fees will be denominated or paid in United States dollars, pounds sterling, euros or another foreign currency? The question requires careful distinction between three separate concepts: criminal liability, regulatory/professional misconduct and contractual freedom.
The fact that the Naira is Nigeria’s currency and legal tender does not, without more, necessarily mean that every contractual obligation expressed in a foreign currency is criminal. Equally, the absence of an automatic criminal offence does not mean that every foreign-currency fee arrangement is professionally or regulatorily permissible. The issue has assumed particular significance following the EFCC’s reported position.
Any analysis of whether charging legal fees in dollars is a crime must begin with section 36(12) of the Constitution of the Federal Republic of Nigeria 1999. The constitutional principle is straightforward: a person cannot be convicted of a criminal offence unless the offence is defined and its penalty prescribed in a written law as was held in Aoko v. Fagbemi & Anor (1961) 1 All NLR 400. This is fundamental to criminal jurisprudence. It means that the question cannot simply be answered by saying that dollar-denominated legal fees are “illegal”, “unethical” or contrary to a regulatory expectation. For criminal liability to arise, there must be:
- a written law creating the offence;
- conduct falling within the wording of that offence;
- the necessary elements of the offence established; and
- proof beyond reasonable doubt.
Consequently, if the EFCC seeks to prosecute a lawyer merely because the lawyer’s professional fee was expressed in US dollars, the critical question is:
What specific written law creates the offence, and which provision of that law has been contravened?
This distinction between illegality, professional misconduct and criminality is central to the entire controversy.
The principal statutory provision relied upon in arguments concerning foreign-currency transactions, is the Central Bank of Nigeria Act 2007. Section 15 provides:
“The unit of currency in Nigeria shall be the naira…”
Section 20 deals with currency notes issued by the Central Bank. Most importantly, section 20(5) provides that a person who refuses to accept the Naira as a means of payment commits an offence, subject to the proviso that:
“the Bank shall have powers to prescribe the circumstances and conditions under which other currencies may be used as medium of exchange in Nigeria.”
The statutory language is significant. The Act establishes the Naira as Nigeria’s currency and protects its status as legal tender. However, there is an important legal distinction between the currency of legal tender, the currency in which a contractual obligation is denominated, and the currency in which payment is ultimately made. The CBN Act does not, in the provisions considered by the courts, expressly state that every contract or professional fee agreement denominated in a foreign currency is void or criminal.
The Nigerian courts have recognised, in appropriate circumstances, contractual obligations expressed in foreign currency. In Teju Investment & Property Co. Ltd v Alhaja Moji Subair, CA/L/149/2015 [2016] NGCA 134. The Court of Appeal considered the validity and effect of a transaction expressed in foreign currency. The Court referred to the Supreme Court authorities including Koya v UBA PLC, (1997) 1 NWLR (Pt.481) 251 and Broadline Enterprises Ltd v Monterey Maritime Corporation,(1995) 9 NWLR (Pt.477) 1, and recognised that Nigerian courts may, depending on the facts, enter judgment in a foreign currency where the contractual obligation is established in that currency..
In Koya v United Bank for Africa Plc (1997) 1 NWLR (Pt. 481) 251, the Supreme Court recognised the jurisdiction of Nigerian courts, in appropriate circumstances, to give judgment in a foreign currency. Similarly, in Broadline Enterprises Ltd v Monterey Maritime Corporation (1995) 9 NWLR (Pt. 477) 1, the Supreme Court recognised the ability of Nigerian courts to award judgment in foreign currency where the circumstances justify it. This was also the case in Adedoyin v Igbobi Development Co. Ltd (2014) LPELR-22994(CA).
The collective significance of these authorities is that foreign currency is not, as a matter of Nigerian law, an inherently unlawful subject of contractual obligation. That does not resolve the professional-regulation question, but it substantially weakens any proposition that the mere use of foreign currency automatically constitutes a criminal offence.
The point must be noted that the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, Cap. F34, LFN 2004, establishes a regulated foreign-exchange market and recognises transactions in convertible foreign currencies. More significantly, its provisions identify professional fees among recognised sources of foreign currency. Section 4(c) principally deals with professional fees.
Section 4 provides:
“For the avoidance of doubt, foreign currency from the following sources may be sold in the Market…”Section 4(c) identifies: “agency commissions, professional fees and other forms of invisible earnings.”
Please note that professional fees are expressly recognised as a source of foreign currency that may be sold in the foreign exchange market. This supports the argument that foreign currency received as professional income is not inherently unlawful. However, Section 4(c) does not expressly authorise every method of charging or collecting legal fees in foreign currency. It must be read alongside the other provisions of the Act and applicable regulations.
If Nigerian law contemplated that professional fees could never legitimately constitute a source of foreign currency, it would be difficult to reconcile that position with legislation expressly recognising professional fees in the foreign-exchange regulatory framework. The existence of foreign-exchange regulation, however, means that receiving foreign currency does not necessarily operate outside the law. The transaction must comply with applicable foreign-exchange requirements, banking rules, documentation requirements and any restrictions applicable to the particular transaction.
Lawyers do not operate solely under general commercial law. The profession is governed by the Legal Practitioners Act, the Legal Practitioners Remuneration (For Business, Legal Services and Representation) Order 2023, and the Rules of Professional Conduct for Legal Practitioners 2023.
Pursuant to that statutory authority, the Legal Practitioners Remuneration (For Business, Legal Services and Representation) Order 2023 was made. The Order commenced on 16 May 2023 and establishes fee scales covering, among other things, consultation and legal opinions, company incorporation, litigation and property transactions. Therefore, the professional-fee question cannot be answered exclusively by reference to the CBN Act.
The Remuneration Order provides minimum or prescribed scales for different categories of legal services. It also provides mechanisms for determining remuneration in matters not specifically covered by the prescribed scales. The Order requires legal practitioners to issue written terms of engagement and establishes rules governing professional remuneration. This raises an important question:
Does the Remuneration Order prohibit a lawyer from agreeing with a client that the fee will be denominated in dollars?
The Order does not expressly make it a professional misconduct simply because a professional fee is denominated in US dollars. That is materially different from saying that a lawyer may disregard the Order. A lawyer must still comply with the applicable fee scales, minimum charges, engagement requirements and other professional obligations. Accordingly, a fee arrangement could potentially raise a professional/regulatory issue without necessarily constituting a criminal offence.
It is important to mention that the Rules of Professional Conduct for Legal Practitioners 2023 provide another layer of regulation.
Rule 52 addresses professional fees and requires that fees charged by a lawyer be reasonable and commensurate with the service rendered. It also identifies relevant considerations in determining the appropriate fee, including; time and labour, novelty and difficulty, skill required, customary charges of the Bar, amount involved, benefit accruing to the client, contingency or certainty of compensation and nature of the engagement.
Again, the focus is principally on reasonableness and professional regulation, rather than creating an offence specifically called “charging legal fees in foreign currency.” Therefore, if a lawyer quotes: “Professional fee in dollars, the mere fact that the figure is in dollars does not, by itself, answer the question of criminality.
One of the most important distinctions is between denomination and payment. Suppose a lawyer’s engagement letter states: “Professional fees shall be US$10,000.” That is a statement about the currency of obligation. A different question is whether the client actually pays the lawyer US$10,000 in cash, transfers dollars into a domiciliary account, pays the Naira equivalent, or transfers funds from outside Nigeria.
This distinction was expressly considered by the National Industrial Court in Adedipe v Oracle Software Nigeria Ltd, (Supra) where the Court noted that section 20 of the CBN Act deals with payment and does not, in its wording, prohibit every instance of foreign-currency denomination. Consequently, a blanket proposition that: “A lawyer who writes USD on a fee note has committed an economic crime,” would require considerably more statutory justification.
The EFCC is a statutory agency. Its powers are derived principally from the Economic and Financial Crimes Commission (Establishment) Act 2004 and other relevant legislation. The EFCC has jurisdiction over economic and financial crimes defined by law. Therefore, where a lawyer is threatened with prosecution for charging professional fees in foreign currency, the legally important question is not simply whether the EFCC considers the practice undesirable. The question is: Which economic or financial crime has been committed, and what statutory provision creates that offence? The Commission must establish the elements of the alleged offence. The mere assertion that an arrangement is “illegal and unethical” cannot substitute for identifying the statutory offence where criminal prosecution is contemplated.
A lawyer may breach a professional rule without committing a criminal offence. Conversely, a lawyer may commit a criminal offence which also constitutes professional misconduct. For example, suppose a lawyer charges a fee arrangement that violates an applicable provision of the Remuneration Order. The possible consequence may be; fee assessment, disciplinary proceedings, recovery proceedings, professional sanctions or other regulatory consequences.
It does not automatically follow that the lawyer has committed an offence punishable by imprisonment. This distinction is particularly important because the Legal Practitioners Act gives the professional regulatory framework a specific role in regulating lawyers’ remuneration. The Remuneration Committee was expressly empowered by section 15 of the Act to regulate legal practitioners’ charges, including agreements between lawyers and clients.
Section 20(5) of the CBN Act expressly criminalises refusal to accept Naira as a means of payment, subject to the statutory proviso permitting the CBN to prescribe circumstances and conditions under which other currencies may be used. Consequently, a lawyer who simply says:
“I will not accept Naira. You must bring dollars,” may present a different legal issue from a lawyer who agrees that the professional fee is calculated or denominated by reference to US dollars but complies with applicable payment and foreign-exchange requirements.
The controversy should therefore not be reduced to the simplistic proposition that:
“Charging legal fees in dollars is illegal.” Nor should it be reduced to the opposite proposition that: “Lawyers have an unrestricted right to charge whatever fee they want in whatever currency they choose.” Neither proposition accurately captures the legal complexity. The better position emerging from the statutory framework and authorities is as follows:
- the Naira is Nigeria’s currency and legal tender under the CBN Act.
- the CBN Act does not, on the provisions considered in Adedipe v Oracle Software Nigeria Ltd, expressly criminalise every contractual obligation merely because it is denominated in foreign currency.
- Nigerian appellate authorities recognise that, in appropriate circumstances, parties may enter into contractual obligations expressed in foreign currency and Nigerian courts may enforce or award such obligations. Koya v UBA, Broadline Enterprises v Monterey Maritime Corporation, Saeby Jernstoberi MFA/S v Olaogun Enterprises Ltd, and Teju Investment v Subair are particularly relevant.
- Foreign-currency transactions remain subject to Nigeria’s foreign-exchange regulatory framework. The Foreign Exchange Act expressly recognises professional fees among sources of foreign currency.
- Legal practitioners are subject to a specialised professional remuneration regime under section 15 of the Legal Practitioners Act and the 2023 Remuneration Order.
- The Rules of Professional Conduct require legal fees to be reasonable and commensurate with the service rendered and subject to the Remuneration Order.
- A breach of professional regulation does not automatically become a criminal offence.
- Where criminal prosecution is proposed, the prosecuting authority must identify the specific written law creating the offence and establish its ingredients in accordance with the Constitution.
Conclusion
The question whether a Nigerian lawyer commits a crime by charging legal fees in foreign currency cannot properly be answered with an unqualified yes. The law makes the Naira Nigeria’s currency and legal tender, and foreign-exchange transactions are regulated. Lawyers are also subject to a specialised statutory and professional regime governing remuneration. However, the mere denomination of a lawyer’s professional fee in US dollars or another foreign currency is not, on the authorities considered, by itself sufficient to establish a criminal offence. The distinction between denomination, payment, foreign-exchange regulation, professional regulation and criminal liability is decisive.
The court has examined the CBN Act and found no provision expressly making the denomination of contractual entitlements in foreign currency illegal. The Supreme Court authorities cited herein, demonstrate that Nigerian law does not recognise an absolute prohibition against contractual obligations expressed in foreign currency.
Where the EFCC proposes criminal prosecution, the burden remains to identify the precise statutory offence and establish all its ingredients. A general assertion that dollar-denominated professional fees are “illegal” cannot, without a corresponding statutory prohibition, replace the constitutional requirement that criminal offences be defined by written law.
Accordingly, the most defensible position on the present authorities is that charging or agreeing legal fees in foreign currency is not, merely by that fact alone, an automatically established criminal offence in Nigeria. Nevertheless, lawyers must structure such arrangements in compliance with the Legal Practitioners Act, the 2023 Remuneration Order, the Rules of Professional Conduct, applicable CBN/foreign-exchange regulations, tax laws and any legislation dealing with money laundering or proceeds of crime.
O. G. Ogbom, Esq., Ph.D., is a Port Harcourt-based Legal Practitioner. He may be reached via ogbomgoodluck@gmail.com or ogbom@lawfreightattorneys.com.ng.
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