Recovering Bank Debts: Is AMCON a Meddlesome Interloper? By Abubakar D. Sani, Esq

I believe that the certain provisions of the Asset Management Corporation Act, 2010 as well as other provisions relating to banking and insolvency law and practice in Nigeria are inconsistent with relevant provisions of the 1999 Constitution and the African Charter on Human and Peoples Rights, to wit:

1. The Banks & other Financial Institutions Act, 1991;
2. The Nigeria Deposit Insurance Corporation Act, 1988; and
3. The CBN directive to banks on ‘Delinquent Debtors’

They are reviewed seriatim below.

1. The Asset Management Corporation Act, 2010
   • Sections 33 – 35, inter alia, of this Act, in my view, constitute a radical revision of the hallowed doctrine of privity of contract and the presumption against retrospectivity of legislation vis-à-vis vested rights, both of which are well-entrenched in our jurisprudence. This      is because they purport to supplant one of the parties in a      banker/customer relationship, with the Assets Management      Corporation, which of course, was not a party ab initio, to the It is trite law that the relationship between a bank and its customer is contractual and that it is that of debtor and creditor:       BANK OF THE NORTH vs. YAU (2001) 10 NWLR pt. 721 pg. 408   @ 438.

• Under the doctrine of privity of contract, as a general rule, a contract only affects the parties thereto and it cannot be enforced by or against a person who is not a party to it. Only parties to a contract can sue or be sued on the contract, and a stranger to a contract can neither sue nor be sued on the contract even if the contract is made for his benefit, and purports to give him the right to sue or make him liable upon it. See BASINCO MOTORS vs. WOERMANN LINE (2009) All FWLR pt 485 pg.1634 @1656C.
• As stated earlier, Sections 33, 34(1) & (2) and 35(1), (2) & (3) of the Asset Management Corporation of Nigeria Act purported to depart from the established principle of privity of contract by empowering AMCON to step into the shoes of banks by assuming their rights vis-à-vis their customers. The question is: are those provision of the Act valid? I submit that no legislature is competent to alter vested rights in the way these provisions, inter alia, of the AMCON Act has done to the contractual relationship between banks and their debtor customers, at least such rights as were vested prior to the commencement of the Act on the 19^th day of July, 2010.
• This is because a statute is not to be given retrospective effect so as to impair existing or vested rights. See OJOKOLOBO vs. ALAMU (1987)18 NSCC pt. II pg. 991 @ 1003, where the Apex Court adopted, with approval, the following passage in Craies on Statute Law at page 386, viz: “A statute is retrospective which takes away or impairs any vested right acquired under existed laws or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already past’(emphasis supplied). See also AFOLABI vs. GOVERNOR OF OYO STATE (1985)2 NSCC pt. II pt. 1151, where the Supreme Court held that “a statute does not retrospectively abrogate vested rights or take away proprietary rights without making provision for compensation”.
• When, therefore, is a right said to have vested?

That is the question. For the answer, see AGBETOBA vs. LAGOS STATE EXECUTIVE COUNCIL (1991)2 NSCC pt. II pg. 14 @ 29 where the Supreme Court held that:

“For a right to be described as having vested, it must be more than mere expectation based on anticipation of continuance. It must have actually settled on the person enjoying the right, but for the formality of conferment. It should not be contingent on the happening of an event”.

• To the extent that the AMCON Act does not provide compensation for abrogating/taking away the vested/proprietary rights of bank customers, I submit that it is ultra vires the National Assembly, at least in respect of rights which were vested in the so-called eligible back assets prior to the commencement of the Act, on the 19^th day of July, 2010. In other words, in my view, the Act only applies to transactions made between banks and their debtor-customer after the said commencement date of the Act. As was aptly captured by the apex Court in ATT-GEN. OF FED. A.I.C. LTD. (2000) FWLR pt. 26. 1744 @ 1762: “A right to inquire into a contract is a right in personam – a stranger cannot enquire into a contract”.

2. 2. The Banks & Other Financial Institutions Act, 1991

I believe that the following provisions of the law are anomalous for the reasons indicated:-

• Section 11 titled ‘Restriction of legal proceedings in respect of shares held in the name of another”.

As its title suggests, this provision precludes any suit against a bank shareholder on the ground that the share(s) is or are vested in another person. I believe that it is inconsistent with the right of action under Section 4(8) of the 1999 Constitution as well as Article 7(1) of the African Charter on Human & Peoples Rights.

• Section 41 of the Act provides that no suit shall be instituted against a bank which has been taken over by the Nigerian Deposit Insurance Corporation, and that if any such proceedings is instituted, it shall abate, without further assurance than the Act. As with Section 11 of the Act, discussed supra, I believe that this provision is inconsistent with the right of action under Article 7(1) of the African Charter and Section 4(8) of the Constitution. See EYESAN vs. SANUSI (1984)15 NSCC pg. 271.
• Section 43 of the Act provides that: “every bank shall use as part of its description or title the word “bank” or any one or more of its derivatives, either in English or some other language”. The Nigerian Mortgage Refinance Company (“NMRC”) was granted a banking license by the Central Bank of Nigeria sometime in February 2015. I believe that the breach of this provision of BOFI by the NMRC is evident from the omission of the word “bank” or any of its derivatives from its name: I submit that neither “mortgage” nor “refinance” are derivatives of “bank”. For the meaning of “derivatives”, see the Oxford Advance Learner’s Dictionary, 6^th edition, page 314.
• Section 45 of the Act empowers the President to proscribe any trade union, whose members are employed in a bank, once he “is satisfied that the union has been engage in acts calculated to disrupt the economy”; the proscription takes effect upon mere publication of the order in the Gazette, and the trade union shall,“as from the date of the order, cease to exist”. I submit that the provision violates the fundamental right to fair hearing under Section 36(1) & (2) of the 1999 Constitution: see BAKARE vs. L.S.C.S.C. (1992) 8 NWLR pt. 262 pg. 641 @ 689 and ADIGUN vs. ATT-GEN OF OYO STATE (1987) 18 NSCC pt. 1 pg. 346 @ 401.

3. The Nigerian Deposit Insurance Corporation Act, 1988 Section 10(1) of this Act provides as follows:

“The Corporation shall establish a general reserve fund to which shall be transferred the Corporation’s net operational surplus before tax if the reserve fund is less than ten times the paid-up capital”.

The Nigerian Deposit Insurance Corporation is one of 31-odd Government-owned statutory Corporations to which the provisions of the Fiscal Responsibility Act, 2007 are applicable. I believe that Section 10(1) of the NDIC Act is inconsistent with Section 22 of the Fiscal Responsibility Act, which provides, inter alia, that only one-fifths of the operating surplus of the corporation for the year should be retained with the balance paid into the Consolidated Revenue Fund of the Federation.

3. The CBN Directive to banks on “Delinquent” Debtors.

• The ongoing publication by banks of debtors alleged to be indebted to them in the sum of N50 million or more are ostensibly in obedience to a directive issued by the Central Bank of Nigerian (CBN). I believe that this “name and shame” policy is inconsistent with the duty of confidentiality owned by the banks to such account holders under Section 37 of the Constitution.
• While this right is not absolute, (it can be derogated from under Section 45 of the Constitution, in the interest of “public safety, public morality, defense or for the purpose of protecting the right and freedom of other persons” ). However, I believe that the circumstances for such derogation are not present in the mere fact that a person owes a bank the sum of N50 million.
• This is all the more so because the details of a customer’s account with a bank are privileged and, unless the customer waives that privilege, the bank would be liable for any unauthorized disclosure of those details: TOURNIER vs. NATIONAL PROVINCIAL UNION BANK OF ENGLAND (1924) K.B 461.

Abubakar D. Sani,Esq 11^th June, 2019