Whether there Is Locus Standi to Institute an Action by an Adversely Affected Third Party on Behalf of a Company

CASE TITLE:               ABACHA & ANOR v. A.G. OF THE FEDERATION & ORS (2023) LPELR-59545(SC)

JUDGMENT DATE:      13TH JANUARY, 2023

JUSTICES:                      MUSA DATTIJO MUHAMMAD, JSC

CHIMA CENTUS NWEZE, JSC

UWANI MUSA ABBA AJI, JSC

MOHAMMED LAWAL GARBA, JSC

HELEN MORONKEJI OGUNWUMIJU, JSC

PRACTICE AREA:           ACTION

FACTS:

Upon the receipt of the report of fraudulent corrupt practices against some companies in February 2008, a special investigation panel was set up by the Federal Government of Nigeria under the office of the National Security Adviser to investigate these companies. In respect of the investigation, some witnesses were invited to appear before the panel. It was against this backdrop that the Appellants as children of late General Sani Abacha, instituted an action against the Defendants/Respondents by an originating summons.

The Appellants sought among others for a declaration that the 4th Defendant (a national of Liechtenstein and judicial officer) is not permitted within the contemplation of the 1999 Constitution of the Federal Republic of Nigeria to conduct Liechtenstein criminal proceedings against the family of late General Sani Abacha, that it is against the principle of international Law for the 4th Defendant to come to Nigeria and act as a Judicial Officer to exercise Judicial functions in respect of Criminal Proceedings in Liechtenstein against the family of late General Sani Abacha, an order restraining the Defendants from conducting criminal proceedings in respect of the forfeiture proceedings against the family of late General Sani Abacha, perpetual injunction, restraining the Defendants from taking evidence from witnesses and an order restraining the 5th Defendant, his agents, privies or servants from exercising judicial functions in the Federal Republic of Nigeria particularly in respect of criminal proceedings against the Abacha family.

The Respondents, on the other hand, filed a notice of preliminary objection challenging the jurisdiction of the Federal High Court to entertain the suit. The Court delivered its judgment declining jurisdiction to entertain the suit and consequently struck out the suit for lack of locus standi by the Appellants. Dissatisfied by the decision of the trial Court, the Appellants appealed to the Court of Appeal which unanimously dismissed the appeal on the 25th day of July 2013 for lacking in merit.

Being dissatisfied, the appellants further appealed to the Supreme Court.

ISSUES FOR DETERMINATION:

The Court determined the appeal based on the following issues for determination:

1. Whether the lower Court was right when it affirmed the decision of the trial Court that the Appellants lacked the locus standi to institute the action on the ground that the Appellants’ affidavit evidence had not disclosed sufficient interest in the suit to maintain same.

2. Whether the lower Court was right when it held that the affidavit evidence of the Appellants was properly evaluated, having regard to the circumstances of this case.

COUNSEL SUBMISSION:

It is the submission of learned counsel for the Appellants, Dr. R.O. Atabo Esq., that the trial Court erred in law when it held that the Appellants lacked the locus standi to institute the action and their suit was consequently incompetent. Counsel cited OJUKWU v. GOVERNOR OF LAGOS STATE (1985) 2 NWLR Pt. 10 Pg. 806; A.G LAGOS STATE v. EKO HOTELS LTD (2006) 18 NWLR Pt.1011 Pg.378. Therein the law on locus standi was settled to mean the legal capacity or standing of a party to institute or commence an action in a competent Court of law. For a person to be held to have locus standi in a suit, such a person must show that he has sufficient or legal interest which is to be adversely affected by the act of the Respondent and upon which he is calling on the Court to intervene. Counsel cited ALBION CONSTRUCTION LTD. v. RAO INVESTMENT & PROPERTIES LTD. (1992) 1 NWLR Pt. 219 Pg. 583. Counsel further submitted that to determine whether the Appellants have locus standi, the Court is to refer to their Statement of Claim or Originating Summons. Counsel cited QUO VADIS HOTELS RESTAURANT LTD. v. COMMISSIONER OF LANDS (MID-WEST) (1973) 6 SC Pg. 71.

Learned Appellants’ counsel argued that the legal interest of the Appellants is disclosed from the issues submitted for determination before the trial Court as well as the reliefs sought arising from the issues for determination. Exhibit “C” discloses that the Appellants’ neither sued for or on behalf of the nine (9) companies as the companies are legal entities capable of suing and being sued.

Counsel further submitted that the Appellants’ suit was in respect of the criminal allegations of financial misappropriation made against the family of late General Sani Abacha. Section 6 (6)(b) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) vests the family of late General Sani Abacha with the right to sue against any infringement or threat of infringement to their legal right. They equally have the locus standi to seek protection from the Court against an imminent threat to those legal rights. Counsel cited A.G. LAGOS STATE v. EKO HOTELS LTD (2006) ALL FWLR Pt. 342 Pg. 1398. Counsel argued that the Appellants are the beneficial owners of the accounts maintained by the companies under investigation and they have the right to sue. The Appellants cited A.G. LAGOS v. EKO HOTELS (2006) ALL FWLR Pt. 342 Pg. 1398, OJUKWU v. OJUKWU (2008) NWLR Pt. 1119 Pg. 439 at 457 and PAM v. MOHAMMED (2008) 16 NWLR Pt. 1112 Pg.1 in aid of the principle that a party in imminent danger from an adverse party has locus standi to seek redress by way of commencing an action in Court.

In response, learned counsel for the Respondents in their various briefs submitted that the Court of Appeal was right to hold that the trial Court rightly held that the Appellant had no locus standi to institute the suit. This is premised on the fact that the companies listed for investigation were different legal entities with individual legal personality. The companies listed might have been owned by the family of late General Sani Abacha, but are in law, different individuals from the subscribers to its Memorandum of Association.

Learned Counsel for the Respondents argued that the principle of law in the realm of corporate law as enunciated in the case of FOSS v. HARBOTTLE (1843) 2 Hare 461, in relation to locus standi is that, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or an association of persons is the company or the association of persons itself and not a shareholder or member of the association. Such a shareholder or member of the association would only be fighting the suit for which he has no locus standi. Counsel cited RUFUS IWUAJOKU ONUEKWUSI & 8 ORS v. THE REGISTERED TRUSTEES OF THE CHRIST METHODIST ZION CHURCH (2011) 6 NWLR Pt. 1243.

DECISION/HELD:

In the final analysis, the Supreme Court dismissed the appeal.

RATIO:

ACTION – LOCUS STANDI: Who has the locus standi to commence an action on matters affecting/relating to a company

“The suit was initiated in reaction to Exhibit “A” (a letter of invitation) from the 3rd Respondent. The said Exhibit “A” was addressed to the nine listed companies. The Appellants failed to show their nexus with the companies listed in the said Exhibit. The Appellants did not exhibit the particulars of directors of the companies or the Memorandum and Articles of Association of the companies. It is pertinent to state that Exh. “A” held out in support of the originating summons identified nine (9) companies under investigation to wit: (1) Glotar Est., (2) Peltora Est; (3) Kurita Est; (4) KRH Capital Est; (5) Septo Escro Account 24500 with LLB of Lic.iur. Walter Matt; (6) ACT Anaconda Invest Est; (7) Nalim Anstalt; (8) Giha Est; and (9) Raw Materila Development and Trading S.A.

Even though it is stated in Exhibit A that criminal investigation is pending in Princely Court of Justice at Liechtenstein against the companies owned by the Abacha family and the Court had invited one Mr. Bashir Mohammad Dalhatu to testify, none of the companies is a party to the instant suit and neither is Mr. Bashir Mohammad Dalhatu the person who was summoned to testify is a party to this suit. The Appellants cannot in the place of the 9 companies listed in Exhibit A seek to enforce a wrong allegedly done to the companies. The companies are in law each different persons altogether from the Appellants. Even the subscribers and shareholders cannot institute an action on behalf of the companies. See REV. RUFUS IWUAJOKU ONUEKWUSI & 8 ORS. v. THE REGISTERED TRUSTEES OF THE CHRIST METHODIST ZION CHURCH (supra).

The Appellants in this suit have not been invited to testify before the panel in Exhibit A. The persons invited to testify in respect of the companies being investigated have not taken any legal step to challenge their invitation, neither has any of the company being investigated challenged the action of the Respondents in the Nigerian Courts. The corporate veil exists for the benefits of shareholders because of the origin of the doctrine of “lifting the corporate veil” is the case of SALOMON v. SALOMON & CO. LTD (1897) AC 22 where Salmon used the corporate veil to shield himself from corporate liability. It would be inequitable to allow someone who can hide under the veil to evade liability to turn around to lift the veil to take benefit that would ordinarily accrue to the Company. Where harm is done to a company, according to the rule in FOSS v. HARBOTTLE, it is only the company that can sue to remedy it. The exceptions where an intervening event can occur are listed in CAMA.

Assuming the Appellants are shareholders even though they have not adduced evidence in that regard, the shareholder’s rights in the company are attached to his shares. The shares are choses in action as opposed to choses in possession. Choses in action include voting rights, rights to partake of dividends when declared, right to attend meetings etc. The implication of incorporation is that the property of the Company is in perpetual succession different from its shareholders. It is therefore impossible for the Appellants to institute an action in their own name to protect the interest of the companies. It is trite law that these companies can sue and be sued in their own names and not in the name of third parties. See UMAR v. W.G.G (NIG) (LTD) (2007) 7 NWLR Pt. 1032, LAGOS STATE v. EKO HOTELS LTD (2006) ALL FWLR Pt. 342 Pg. 1470.

It is therefore impossible for the Appellants to institute an action in their own name to protect the interest of the companies. It is trite law that these companies can sue and be sued in their own names and not in the name of third parties. See UMAR v. W.G.G. (NIG) (LTD) (2007) 7 NWLR Pt. 1032 Pg. LAGOS STATE v. EKO HOTELS LTD (2006) ALL FWLR Pt. 342 Pg. 1470. It would have been a different matter if the Companies even though of foreign origin sued to protect themselves from forfeiture proceedings in a foreign country- Nigeria

Section 299 of the Companies and Allied Matters Act CAP. C20 LFN 2004; states that:

Where an irregularity has been committed in the course of a company’s affairs or any wrong has been done to the company, only the company can sue to remedy that wrong and only the company can ratify the irregular conduct.” Per OGUNWUMIJU, J.S.C.