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Jurisdiction Over Contracts For Service: Another Look at the Jurisdiction of the NICN (Labour Law)

Contracts For Service, Jurisdiction, Law, Labour Law, NICN, National Industrial Court.

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Oyemaja; Jurisdiction Over Contracts For Service: Another Look at the Jurisdiction of the NICN (Labour Law)

The scope of the jurisdiction of the National Industrial Court of Nigeria (‘NICN’ or the ‘Court’) has been subject of controversy since the Third Alteration to the Nigerian Constitution. This, by itself, is not a bad thing. On the contrary, one could argue that the controversy generated is as a result of the development of jurisprudence in labour and employment matters and the notable activism of the Court since its elevation to a court of record by the said constitutional alteration.

The President of the NICN, Hon. Justice B. B. Kanyip, PhD, OFR, in a judgment delivered on the 26th of July 2023 in the case of Alphacyn Nigeria Limited v. Registered Trustees of Prince and Princess Estate Residents Association & Anor[1] seems to have again expanded the jurisdiction of the NICN when he assumed jurisdiction over a contract for service between two corporate entities.

The Claimant in the suit, Alphacyn, sued the Residents Association of the Estate it erstwhile provided facility management services to (the first Defendant) and the company which had replaced it (the second Defendant) alleging a wrongful termination of the facility management agreement it executed with the Estate (the first defendant), following the refusal of the Estate to renew the said agreement and the appointment of the second defendant to replace it.

The Claimant sued in the NICN and both Defendants filed objections on different grounds. The most crucial ground of objection and upon which this piece is based is the ground challenging the jurisdiction of the NICN to determine the suit. The two different positions argued by the claimant and the first defendant arise from the application of two different rules of interpretation on the provisions of Section 254C of the 1999 Constitution (as amended). The court adopted the claimant’s position in this regard, however the judgment itself, while trying to set ‘new’ precedent created some level of uncertainty as in the final analysis, the court found that there was a ‘disguised’ employment relationship between the parties.

It has become important to establish some level of certainty in the scope of the jurisdiction of the NICN.

Why is this important?

Jurisdiction is the most fundamental issue in our jurisprudence. The learned jurist, Hon. Justice Niki Tobi, J.S.C described it as “the nerve centre of adjudication; … the blood that gives life to the survival of an action in a court of law, in the same way blood gives life to the human beings and the animal race.”[2]

Jurisdictional issues and challenges are one of the most poignant sources of injustice in our practice and procedure in court matters. The injustice manifests in two ways: first, our appellate system is bogged down by interlocutory appeals on preliminary matters. Appeals on jurisdiction of the courts form a substantial number of the appeals that pass our appellate courts. The resultant effect is two-pronged: delay in hearing substantive matters which has in turn over the years led to a lack of depth in our jurisprudence on substantive issues of law. Those issues are tied down at the courts of first instance while awaiting decisions of the appellate courts on interlocutory issues, such as ‘jurisdiction.’ The second manifestation is just as dreary and includes situations where substantive cases are heard and determined by the courts, only to have judgments set aside on appeal, not on the substantive issues in those cases but from a challenge to the jurisdiction of the court that heard the matter. Hon. Justice Ejiwumi, justice of the Supreme Court puts it succinctly: “There is no justice in exercising jurisdiction where there is none. It is injustice to the law, to the court and to the parties to do so.”[3]

Jurisdiction must thus be an area of law that is certain and not subject to private interpretation. According to Tobi J.S.C., “Jurisdiction is an exact law that has to be applied exactly to any given case.”[4] Hence, the need to very quickly resolve any lingering doubt on the scope, borders and boundaries, if any, on the jurisdiction of the NICN.

Jurisdiction over Labour and Employment

The provisions of Section 254C (1) (a) of the Constitution state as follows:

“(1) Notwithstanding the provisions of sections 251, 257, 272 and anything contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the National Industrial Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters -

(a) relating to or connected with any labour, employment, trade unions, industrial relations and matters arising from workplace, the conditions of service, including health, safety, welfare of labour, employee, worker and matters incidental thereto or connected therewith;

There are two important things about the jurisdiction of the NICN as it pertains to the current discourse. It is exclusive, an issue which this author will touch on much later. It is also specialized. The Court of Appeal touched on these two features when it considered the jurisdiction of the NICN vis-à-vis the Federal High Court and said[5]: “By virtue of the use of the word notwithstanding in section 251(1) and 254(c) of the 1999 Constitution, the jurisdictions of the Federal High Court and the National Industrial Court are mutually exclusive. They do not share any jurisdiction, the subject matter being specifically circumscribed by the Constitution. It is obvious that the National Industrial Court is strictly a labour and employment related matters, (sic) it is a specialized Court, it is not a court of general jurisdiction. Subject matter is the most important factor in determining whether the National Industrial Court will have jurisdiction in a matter and regardless of the parties.”

The definition of the subject matter of ‘labour and employment’ is however not as simplistic as it sounds, especially as it relates to the jurisdiction of the NICN. No doubt, the attitude of the courts has been to uphold the jurisdiction of the NICN to all matters relating to labour and employment. The Court of Appeal’s position is that[6]the jurisdiction of the NIC extends to all matters related to, incidental thereto or connected with any labour or employment dispute. In effect, therefore, its exclusive jurisdiction extends to matters having a nexus, inextricably linked or reasonably connected to subject matters over which jurisdiction is conferred in section 254C. Put in another way, the jurisdiction of the National Industrial Court relates to the ramifications of labour and labour relations in its length and breadth and does not make any distinctions between employer-employer relations, employer-employee relations and as in the instant case employee-employee relations as far as it concerns labour.”

Thus, once the subject matter relates to labour and employment, the NICN would have exclusive jurisdiction no matter who the parties are – whether a Federal Government Agency[7] (which would have vested jurisdiction in the Federal High Court prior to the Third Alteration), or crewmen of vessels/vessels[8] (which would have fallen under the admiralty jurisdiction of the Federal High Court pre-Third Alteration).

However, the boundaries of the subject matter of labour and/or employment seemed to have been restricted to matters where the underlying relationship between the parties connoted employment, formal or disguised. Hon. Justice Kanyip admitted this much in the judgment when he said: “And I must state that in the main, the generally held view by this Court was that this Court’s jurisdiction was only over contracts of service, not over contracts for service. See, for instance, Mr. Abdul Fatai Yahaya v. Huilanje Mineral Resources Nigeria Limited & anor unreported Suit No. NICN/LA/12/2013, the ruling of which was delivered on 4 June 2014 and Mr Henry Adoh v. EMC Communications Infrastructure Limited [2015] 55 NLLR (Pt. 189) 546 NIC. … Hon. Justice Anuwe, J, then of the Owerri Division of this Court, had to make a case stated on the issue to the Court of Appeal in Engr. Jude Ononiwu (Trading under the name of Judeson Chemical and Engineering Co. Ltd) v. National Directorate of Employment & anor unreported Appeal No. CA/OW/32/2015, the ruling of which was delivered on 22 May 2015. The question referred to the Court of Appeal was whether it was this Court or the Federal High Court that had jurisdiction over the dispute in issue. The Court of Appeal held that the suit arose from a simple contract between the claimant and the 1st defendant wherein the claimant rendered training services to the 1st defendant by training 2,204 trainees for the 1st defendant between 1996 and 2000. Accordingly, that “the relationship between the parties is contractual. It is a contract for service as opposed to contract of service which is employment issue … The Court of Appeal proceeded to reproduce the constitutional provisions that donate jurisdiction to this Court, the Federal High and States High Court; and then held thus: A careful perusal of Section 254(C) 1 (a - m) and 251 (a - s) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) set out above would reveal that the claim of the Claimant is not related to the sections of the Constitution set out above because the disputes grounded on simple contracts are not among the jurisdiction conferred on both the National Industrial Court of Nigeria and the Federal High Court. Hon Justice Bada, JCA, who read the leading judgment, then ruled thus, on the basis of section 272 of the 1999 Constitution: Consequent upon the foregoing I am of the firm, view that it is the State High Court that has jurisdiction over the claims of the claimant as set out earlier in this Ruling. His Lordship relied on Onuorah v. Kaduna Refining and Petrochemical Co. Ltd [2005] LPELR-2707(SC) and Integrated Timber & Plywood Products Ltd v. Union Bank of Nigeria Plc [2006] 5 SCNJ 289, where the Supreme Court held that it is the High Court of a State that has jurisdiction to hear the matter of simple contractual relationship between the parties. His Lordship concluded by holding that neither this Court nor the Federal High Court had jurisdiction over the matter. That “the court with jurisdiction, considering the facts of the case, is the State High Court”. The case was then returned to this Court for appropriate action.”[9]

His Lordship however proceeded to state how the Court of Appeal in the case of Engr. Jude Ononiwu (Trading under the name of Judeson Chemical and Engineering Co. Ltd) v. National Directorate of Employment & anor wrongly applied Supreme Court cases what were pre-third alteration. His Lordship, referring to another decision of the appellate court where it was reiterated that the jurisdiction of the NICN was limited to situations where there was an employment relationship stated: “I am not unmindful of Denca Services Ltd v. Mr Nnamdi Azunna [2018] LPELR-46043 (CA); [2019] 16 ACELR 137 at 149 - 150, which decision appears to lay down that the NICN has jurisdiction over matters in section 254C(1) of the 1999 Constitution only when there is an employment relationship existing between the disputing parties. In the words of the Court of Appeal: I iterate that unless there is an employment relationship between the parties as the linchpin on which the action is founded, the cause of action will not be cognizable under the exclusive jurisdiction conferred on the lower court under Section 254C(1) of the 1999 Constitution as amended.”

It can be agreed that generally prior to this decision of the NICN, the position of judicial precedents was that contracts for service, that is, contracts with independent contractors that did not establish any employment relationship did not fall within the jurisdiction of the NICN.

Interpretation of Labour and Employment

The parties in this case held two different views on the definition of ‘labour’ as used in Section 254C (1)(a) of the Constitution with two different resultant effects. The claimant’s position is that the regular, dictionary meaning of ‘labour’ included any work done for money and thus this would include any type of work, without any qualification of the underlying relationship between the parties. The 1st defendant, on the other hand, posited that the underlying relationship between the parties would determine whether the NICN could exercise jurisdiction over the suit. Its position was that contracts for service involving an independent contractor, not being an employment relationship, did not fall within the contemplation of Section 254C(1)(a) of the Constitution.

Hon. Justice Kanyip in his interpretation of the subsection (a) held that the term ““any labour” has the effect of encompassing both contracts of service and contracts for service.” It is his position that the failure by previous decisions to consider the specific import of the phrase “any labour” which in his view is “broad enough to cover contracts for service” renders previous decisions holding that the NICN does not have jurisdiction over contracts for service distinguishable.

It is this writer’s view that the definition and reliance on a phrase without the entire context in which it is used in a view to expand its meaning goes outside the import of even the literal interpretation of statute. A sentence and or paragraph should be read holistically to derive the meaning of the words and or phrases used therein as well as the general import of the entire sentence or paragraph. The duty of the courts in interpretation of statute, especially the Constitution is to give them the meaning intended by the legislature. The Supreme Court’s instruction on this is: “It is the duty of the court to interpret the words of the law maker as used. Those words may be ambiguous, but even if they are, the power and duty of the court to travel outside them on a voyage of discovery are strictly limited.”[10]Hon. Justice Karibi-Whyte J.S.C. says it this way in the same case: “The solemn and sacred duty of the Court is to interpret the words used in the section by the legislature and give to them their intended meaning and effect.”

It is this writer’s opinion that in the full reading of the entire subsection (a), the phrase “any labour” refers to and is rendered subject to and further qualified by the other matters listed in that subsection - employment, trade unions, industrial relations and matters arising from workplace, the conditions of service, including health, safety, welfare of labour, employee, worker and matters incidental thereto or connected therewith. As the phrase “any labour” was not rendered as a subsection on its own as other matters in subsections (b) to (m) were, it is safe to ascribe to the law-maker the intention to qualify the class of the “any labour” as “any labour” within the context of the paragraph in which it was put.

One case to consider with respect to this reasoning is the case of Nwobike v. FRN[11] where the Supreme Court had cause to interpret the phrase “corrupt malpractises” within the context of Section 46 of the EFCC (Establishment) Act. Hon. Justice Abubakar J.S.C., reading the lead judgment held: “It suffices therefore to say that the words “corrupt malpractices” entail conduct that might or affect the honest and impartial exercise of a duty; encompassing a vicious and fraudulent intention to evade the prohibitions of the law; something against or forbidden by law; moral turpitude or exactly opposite of honesty involving intentional disregard of law from purely improper motives. To this extent therefore, I have given a careful consideration to the natural, ordinary, and plain interpretation of the expression “corrupt malpractices”, which is not defined under the EFCC (Establishment) Act, and with all due respect, find it difficult to accept that the literal interpretation is effective in discovering the intention of the legislature with respect to ascertaining the scope of the expression “any form of corrupt malpractices” used in section 46 of the EFCC (Establishment) Act. If the literal meaning is adopted, it means that the powers of the EFCC will be at large and open ended, because by that interpretation, every criminal and illicit activity committed will fall within the scope of “corrupt malpractices” and consequently be regarded as an economic and financial crime, which the EFCC will be empowered to investigate, so doing will make a pigmy of other legislations and render them barren and sterile.”

The learned jurist continued: “Again, if the definition of “corrupt practices” is not properly defined and demarcated, the Economic and Financial Crimes Commission will assume some supernatural strength as to render it all in all, thereby dwarfing other similar agencies vested with powers to investigate and prosecute criminal offences, and bring the EFCC assume the corresponding powers of the Chief Law Officer of the Country. Such open ended powers if not defined will escalate the status of the agency to that of ruthless ungovernable monster, I am sure this is not the intention of the legislature necessitating the establishment of the EFCC and enacting the Act.”

It is generally agreed that part of the intention of the Third Alteration to the 1999 Constitution is to create a specialized court dealing with labour and employment matters. The interpretation of ‘labour’ if made too wide or general would cloak the NICN with almost the same unlimited and general jurisdiction as State High courts for the NICN would be called to determine contracts for supply of all services – from the mundane nature such as auto repair, electronics servicing, and mechanic/car wash or repair to the more complex types of construction/building, technology support, consultancy agreements, professional services retainers, and so on. The intention of the legislature was to create a specialized court.

Her Lordship, Hon. Justice Ogunwumiju J.S.C. in Nwobike’s case listed three factors that are to be considered in the application of the purposive rule or approach to statutory interpretation. They are:

“(1) The language of the provision

(2) The context in which the language is used and

(3) The purpose of the legislation or statutory scheme in which the language is found.

All other subsections of Section 254C indicates an intention to have a court deal with employment related issues and organized labour no matter the party – public or private. There is nothing else that indicates that the legislature intended relationships with independent contractors, otherwise known as simple contracts, to be included within the scope of the jurisdiction of the NICN. We must be mindful that as Hon. Justice Tobi J.S.C. stated, “whatever rule of interpretation, the intention of the lawmaker is paramount and central.”[12]

The point must be made that this issue is different from the issue of identifying ‘disguised’ and ‘ambiguous’ employment relationships under which outsourcing and triangular relationships fall. This is considered next.

Despite Hon. Justice Kanyip’s holding that “all labour” as used in Section 254C(1)(a) of the 1999 Constitution (as amended) includes contracts for service, he proceeded to find that the relationship between the claimant and the 1st defendant in the case under consideration was one of disguised employment being an outsourcing relationship. The learned judge stated: “In the instant case, this Court has been called upon to interpret the Facility Management Agreement between the 1st defendant and the claimant (Exhibit A2 attached to the affidavit in support of the originating summons). The agreement appointed the claimant as Facility Manager, which in clause 2.0 of the agreement, the 1st defendant appointed the claimant as its “lawful agent with full authority to do any and all lawful things necessary for the fulfillment of this Agreement, including the following”: management of environmental sanitation, management of electrical facilities, Helpdesk/Information Centre, management of water installations, employment and management of labour, communication, securities services, enforcement of estate rules and maintenance of public utilities. For this, the claimant was by clause 3.0 to be paid management fee pegged at 15% of the monthly approved expenditure. This monthly approved expenditure was put at N2,895,550.00. How this sum was to be expended was then indicated in the form of a table in same clause 3.0. The monthly management fee accordingly came to N377,550.00.

What the 1st defendant effectively did as per the agreement was to outsource to the claimant the work enumerated in clause 2.0. Outsourcing is what the ILO calls disguised or objectively ambiguous employment relationship. And this Court, given the broad definition of the phrase, “any labour”, and its power and jurisdiction over labour conventions, treaties, etc ratified by Nigeria, international labour standards and the jurisprudence that follow them, has jurisdiction over outsourcing of work.”[13] It was on this basis that the court held that it had jurisdiction to entertain the suit.

This, then raises the question as to whether all contracts for service are ‘disguised or objectively ambiguous employment relationships’? If the answer is in the negative, as it surely must, would the NICN still exercise jurisdiction over contracts for service that are not so disguised or objectively ambiguous? While an auto repair shop can have full mechanics as employees, specialists in certain areas of the automobile as consultants and some trainees as contract staff all depicting different types of labour and employment related relationships – substantive and/or disguised; would every car owner that takes their vehicles to the auto repair shop for repairs be said to be in an employment relationship with such auto repair shop? Would the same ‘labour’ principles applicable to the first set of relationships (between the auto repair shop and all who work for and with it) be applicable as well to the relationship between the auto repair shop and its customers/clientele. This writer thinks not.

Most of the cases that are heard by the NICN have the employee as the claimant but the court necessarily has jurisdiction over both sides of the relationship. If this is the case, extending the jurisdiction of the NICN to all contracts for service would necessarily mean that the NICN would begin to exercise jurisdiction over performance-related disputes and by extension consumer protection. This is clearly outside the scope intended by the legislature.

The need to protect workers of all classes and categories is quite appreciated. For a strong entrepreneurial and informal economy like Nigeria’s, a healthy balance must be created to understand and nurture the classes of independent contractors that exist. Not all contracts for service connote employment relationships or unequal bargaining positions.

Perhaps it is time for the legislature to take another look at the provisions of Section 254C of the Constitution, not for the purpose of whittling down any of the powers extended to the NICN but for the purpose of providing clarity and reducing the amount of ‘injustice’ that could be occasioned before arriving at judicial precedents on the issue. A consideration for the legislature is the exclusivity given in respect of all matters. For there to be an interpretation that expands the jurisdiction of the NICN, there ought to be some level of non-exclusivity. As was suggested by some learned authorities over the controversy that followed the decision in MT Sam Purpose’s case dealing with jurisdiction over crewmen, in order to avoid injustice, the jurisdiction of the NICN in some matters could be shared. It portends danger to subject jurisdiction over a dispute on a simple contract to a first test as to whether it ‘disguises’ an employment relationship. One solution is for the NICN and the State High Courts to share jurisdiction over such contracts for service.


End Notes

[1] Unreported SUIT NO. NICN/ABJ/57/2023

[2] Inakoju v. Adeleke (2007) 4 NWLR (Part 1025) 423

[3] Olutola v University of Ilorin (2004) LPELR – 2632 (SC)

[4] Onwudiwe v. F.R.N. (2006) 10 NWLR (Part 988) 382

[5] C.B.N v. Oodo [2021] 18 NWLR (Part 1809) 461

[6] Omang v. Nsa [2021] 10 NWLR (Part 1783) 55

[7] C.B.N v. Oodo (Supra)

[8] MT Sam Purpose v. Amarjeet Singh Bains [2021] LPELR – 56460 (CA)

[9] Page 16 to 17 of the judgment

[10] A.G. Ondo State v. A.G. Ekiti State (2001) LPELR – 622 (SC).

[11] [2022] 6 NWLR (Part 1826) 293

[12] Abubakar v. YarAdua [2008] 19 NWLR (Part 1120) 1 at 136 Paras D-E.

[13] Page 25 and 26 of the judgment

Originally published by Oluwafunmilayo Odude on Linkedin

Oyemaja Law.

Oyemaja Executives.


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