The debate over the extents and limits of the jurisdiction of the Federal High Court and the State High Court in Nigeria is age long.

While much of that debate has gone away due to pronouncements of the Apex Court in a series of cases, it would however appear that questions of law arising therefrom continue to linger in a few cases. One such case where a bit of controversy and debate continues amongst practitioners is that of the Court vested with jurisdiction to adjudicate on insurance claim disputes.

The issue of the Court vested with jurisdiction over insurance claims has however been dealt with by the Courts in two recent cases, these are SUN INSURANCE NIGERIA PLC v. UMEZ ENGINEERING CONSTRUCTION COMPANY LTD (2015) LPELR-24737(SC) and YDRO-TECH NIGERIA LTD & ANOR v. LEADWAY ASSURANCE CO. LTD & ORS (2016) LPELR-40146(CA). The former was a decision of the Supreme Court whilst the latter was decided by the Court of Appeal. Both will now be briefly examined below.

Summary of facts of both cases:

In Sun Insurance’s case, on the question as to whether or not the Federal High Court has jurisdiction to entertain and determine all simple contracts of insurance claims between parties to such contracts, the Supreme Court held that Insurance Policies are simple contracts. The Court restated the exclusivity of the Federal High Court’s jurisdiction as it pertains to matters listed in Section 251 of the 1999 Constitution. The Court however noted that since nothing in the Insurance Act of 1997 confers jurisdiction in respect of disputes arising from simple Contracts on the Federal High Court, then jurisdiction in respect of such claims vests in the State High Court. The Supreme Court specifically stated as follows:

“The Respondent having shown that neither Section 251(1)(a)-(r) of the Constitution of the Federal Republic of Nigeria, nor the provisions of the Insurance Act No. 2 of 1997 by virtue of Section 251(1)(s) conferred exclusive or additional jurisdiction to entertain simple claims on Insurance contracts on the Federal High Court, the subject matter of such claims remains under the jurisdiction of the state High Courts under Section 272(1) of the 1999 Constitution.”  (Pp. 17-20, paras. F-G)”

However, in Ydro’s case, the dispute arose out of a “bonds credit guarantee and suretyship” Insurance Policy. The question before the Court in this case was whether the State High Court could adjudicate on a dispute between the Insurer and the insured regarding terms of the Insurance Policy.

In answering this question, the Court observed that Section 2 of the Insurance Act of 2003 (“The Act”), contains a list of insurance businesses in Nigeria and that “bonds credit guarantee and suretyship business” was so listed. The Court then stated that since this item was listed under Section 2 of the Insurance Act of 2003 then it is one of the risks required to be insured by the Act. Having stated this, the Court further noted that Section 69 of the Act makes provision for “Court” settlement of claims of risks required to be insured by the Act. Flowing from this, the Court stated that since “Court” was defined as “Federal High Court” by the Interpretation Section of the Act (Section 102), then the Court with jurisdiction to adjudication to hear the matter is the Federal High Court.

It is important to state here that the Nigerian Court of Appeal is bound to follow the decision of the Supreme Court in previously decided cases with similar facts and/or similar issues of law, except it had substantial reasons for not doing so e.g. where the facts of the case previously decided by the Supreme Court are not similar to the one before it or where the question of law is different. Thus, since Sun Insurance’s case was similar to Ydro’s case (both as to facts and questions of law), the Court of Appeal in Ydro’s case had to show why it refused to follow the decision of the Supreme Court in the earlier decided Sun Insurance’s case.

So how did the Court of Appeal justify its refusal to follow the Supreme Court’s decision in Sun Insurance’s case? To put it succinctly, the Court of Appeal was simply of the opinion, that Sunrise Insurance’s case was different from Ydro’s case case on grounds that Sun Insurance’s case was decided on the basis of the 1997 Insurance Act while Ydro’s case was decided based on the provisions of the Insurance Act of 2003.


With due respect to the learned justices of the Court of Appeal, it appears that the Ydro’s case was decided on the basis of an erroneous interpretation of the law. It also appears that the Court of Appeal erred by refusing to follow the Supreme Court decision in Sun Insurance’s case. The grounds for this opinion are now explained below.

Firstly, the Court of Appeal wrongly interpreted the provisions of Section 2 of the Act, when it stated that risks listed under that section are risks which must be mandatorily required under the Act. A combined reading of Section 69 and 102 of the Act shows that certain risks must be insured in Nigeria and that any dispute in respect of such risks are to be decided by the Federal High Court. However, the risks contemplated in this regard are those listed in Section 64 to 68 of the Act and not those in Section 2 of the Act.

To reinforce the point being canvased here, it will be helpful to quote the introductory paragraphs of Section 2 and Section 64 to 68 of the Act. The introductory paragraph of Section 2 of the Act reads as follows:

“There shall be for the purpose of this Act two main classes of insurance that is-…”

Thereafter, the Act continues to specifically classify insurance businesses in Nigeria.

On the other hand, the introductory paragraph of Section 64 of the Act reads “No person shall cause to be constructed any building of more than two floors without insuring with a registered insure” That of Section 65 provides “Every public building shall be insured with a registered insurer” Section 67 provides “an insurance in respect of goods to be in imported into Nigeria shall be made with an insurer registered under this Act.” Section 68 of the Act provides:

“No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer registered under this Act.”

A consideration of the above quoted provisions of the Act shows clearly that the Act was merely classifying insurable business in Nigeria in Section 2 and not making them risks which must be mandatorily insured as is the case for the risks listed in Section 64 to 68 of the Act. What is more? Section 2 of the Act is sub-headed; “Classification of Insurance business”. It therefore would be wrong to state that the risks covered by the businesses listed in Section 2 of the Act are those required to be insured by law. To follow this line of reasoning is to state that the law imposes a duty on Nigerians to take out an Insurance Policy in respect of all risks covered by the Insurance businesses listed in Section 2 of the Act (such as life insurance). It is a well-known fact that the law does not place a duty on citizens to mandatorily take out a life insurance policy.


From the above, the conclusion is that the Federal High Court has exclusive jurisdiction in respect of insurance disputes where it concerns the risks contained in Section 64 to 68 of the Act. However, where the dispute is in respect of any other risk outside those contemplated by Section 64 to 68 of the Act, the State High Court has jurisdiction.

To state otherwise is to attempt to divest the State High Court of its jurisdictional territory as guaranteed by the Constitution[1].

Yinka Adegboye is a Lagos based practitioner and Academic. He can be reached on [email protected]

[1] Section 272 (1) of the Constitution of the Federal Republic of Nigeria (1999)

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