AN APPRAISAL OF THE LEGAL FRAMEWORK FOR DISPUTE RESOLUTION IN THE NIGERIAN CAPITAL MARKET

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ABSTRACT

The capital market is the long arm of the financial market through which resources in the form  of savings are pooled and channeled to the production of goods and services. Disputes often arise in capital market transactions, which must be resolved speedily, fairly and efficiently in the interest of stability of the market. Notwithstanding the various processes for dispute resolution in the Nigerian capital market, the jurisdiction to adjudicate over capital market disputes has been a source of contention among stakeholders. In the event of disagreement, the forum to ventilate grouses is not now firmly and squarely settled.The Investments and Securities Tribunal, which was created by the ISA as a solution, to this near intractable dispute resolution crisis, has been mired in constitutional and jurisdictional controversies. The Appellate Courts have not been unanimous on its jurisdiction. Furthermore, the exclusive jurisdiction of the Federal High Court on matters arising from the Companies and Allied Matters Act, 2004 has also been called to question. As things stand presently, the following research questions seek urgent answers; is the legal framework for dispute resolution in the Nigerian Capital Market adequate to resolve the current controversies in the system; does the framework for dispute resolution in the Nigerian capital market in conformity with international best practices and standards;and finally, are there special needs or peculiarities in the operationsand emerging disputes in the Nigerian capital market, requiring aspecialised dispute resolution system.The aim of this research is the attainment of a robust dispute resolution system in the Nigerian Capital Market,that will meet the aspirations of stakeholders. To this end, the objectives of this research are; to critically evaluate the extant legal framework for dispute resolution in the Nigerian Capital Market and advance recommendations, that will resolve the current challenges in the system; to examine in detail the statutory and administrative procedures for the resolution of disputes in the Nigerian Capital Market, such as the SEC Administrative Proceedings Committee and other internal enforcement processes and the disciplinary/dispute resolution of the SROs. This is with a view to making suggestions for reform, that will make same accord with global standards and international best practices.Investors’ confidence can be buoyed by an assurance of a fair and efficient dispute resolution system that is not hamstrung with teething challenges of competence. The controversies surrounding the constitutional place and jurisdiction of the Investments and Securities Tribunal has led to conflicting decisions by superior courts in Nigeria. These do not portend encouraging signs for domestic and foreign investors.Stripping the Investments and Securities Tribunal the jurisdiction in criminal matters has weakened its role as a fast-track dispute resolution mechanism in Nigeria. The facts giving rise to disputes in the market are often intertwined such that separating the fact that give rise to civil disputes from those that give rise to criminal liabilities can be quite challenging. Therefore, since capital market disputes are time sensitive, the problems arising therefrom become even more worrisome. This uncertainty is certainly not a good sign for domestic and foreign investors in the Nigerian economy. The ISA permits the SEC to constitute committees and under this power the SEC has over the years constituted the Administrative Proceedings Committee, a quasi-judicial body, to resolve disputes in the capital market. With the complement of primary and secondary data (statute,case law and existing jurisprudence) on this subject, this study finds that the absence of a formal structure for the APC or retaining it as an ad hoc committee convened at the pleasure of SEC has introduce so much uncertainty into its existence To properly situate the Investments and Securities Tribunal and address the controversies surrounding its status and jurisdiction, it is recommended that section 6 (5) of the Constitution of the Federal Republic of Nigeria, 1999 be

 

amended to include the IST as a superior court of record. This will streamline the approach of the Nigerian courts and assure investors that their grievances would receive fair, firm and timeous hearing. Section 284 and 294 of the Investments and Securities Act require amendment to confer civil and criminal jurisdiction on the Investments and Securities Tribunal. Section 310 of the ISA should also be amended to clearly establish the Administrative Proceedings Committee.

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