CAPITAL MARKET DISPUTES: FEDERAL HIGH COURT IS “REMOVED FROM THE PICTURE”

In a recent precedential decision delivered on 13th January, 2023, the Supreme Court of Nigeria had cause to determine the question of whether the Federal High Court has jurisdiction to entertain capital market disputes arising under the Investments and Securities Act. In APPEAL NO. SC/314/2007: MUFUTAU AJAYI V SECURITIES AND EXCHANGE COMMISSION, the Appellant was a former Finance and Accounts Manager with the defunct African Petroleum Plc (“AP”). It was alleged that the Appellant had authorized the issuance of a prospectus by AP that contained an untrue statement that the total indebtedness of the company as at 30th June, 1999 was N10.2 billion, whereas the figure was more than N22 billion.?

On account of the allegations against him, the Appellant was penalized by the Administrative Proceedings Committee (“APC”) of the Securities and Exchange Commission (“SEC”). The Appellant filed an action for an order of certiorari at the Federal High Court seeking to quash the decision of the APC sanctioning him and for injunction against the SEC. The first ground of the Appellant’s claim was that the APC’s decision was made in violation of his constitutional right to fair hearing because it was made without first affording him the opportunity to be heard, as required by section 36(1) of the Constitution. The second ground was that the SEC and its APC had acted in excess of their powers under the Investments and Securities Act.?

The Federal High Court held that since the APC exists within the SEC, the decision of the APC was a decision of the SEC and the right forum for challenging a decision of the SEC or APC is the Investments and Securities Tribunal and not the Federal High Court. On appeal to the Court of Appeal, the Court affirmed the decision of the Federal High Court.?

In the Appellant’s further appeal to the Supreme Court, he argued that it is the Plaintiff’s claim that determines the court’s jurisdiction and his application for judicial review by way of an order of certiorari in respect of his right to fair hearing necessarily means that the Federal High Court has jurisdiction to entertain the claim. He also argued that the power to make orders of certiorari and injunction are statutory powers given exclusively to courts and nothing in the Investments and Securities Act (1999 and 2007) gives the Investments and Securities Tribunal any power to make such orders, by reason of which the Tribunal could not entertain his claim seeking the orders.?

In its judgment, the Supreme Court agreed with the Appellant on the point that there is nothing whatsoever in the Investments and Securities Act (1999 and 2007) that gives the Investments and Securities Tribunal judicial power to make orders of certiorari or injunction. Therefore, if the Appellant had taken his claims for certiorari and injunction to that tribunal, the tribunal would have had no power to make the orders the Appellant was seeking, even if the tribunal had found merit in his claim.?

However, the court held that where a special procedure is prescribed for the enforcement of a particular right or remedy, departure from the procedure is fatal to an action for such enforcement. The court also held that, based on the provisions of section 236(1) of the Investments and Securities Act 1999 (now section 289 of the Investments and Securities Act 2007) any person with “any grievance, whether on denial of fair hearing by the APC…rule of law, equity, facts or law, etc.” must bring a claim in the Investments and Securities Tribunal, to the exclusion of the Federal High Court. According to the Supreme Court, the Federal High Court is completely “removed from the picture”, where an action concerns a challenge to a decision of the APC. Essentially, the jurisdiction of the Investments and Securities Tribunal is exclusive in that regard.?

This new decision of the Supreme Court has finally laid to rest the controversy and the jurisdictional tension between the Investments and Securities Tribunal in relation to actions challenging decisions or actions of the SEC or its APC, which led to decisions such as those in the cases of WEALTHZONE LIMITED V SECURITIES AND EXCHANGE COMMISSION (2016) LPELR-41808, SECURITIES AND EXCHANGE COMMISSION V OSINDERO ONI V LASEBIKAN (2009) 5 NWLR (PT1134) 377 and other similar cases. Also, the Supreme Court has now established for the first time the point that unlike the High Courts that have statutory powers to order certiorari and injunction, the Investment and Securities Tribunal has no power to make those orders.