Restructuring by litigation in Nigeria

I am delighted to congratulate and felicitate with my very good friend, Mr. Obafemi Adewale on the occasion of his 60th birthday anniversary. As an ardent believer in the rule of law Mr. Adewale has used his fecund legal knowledge to promote the devolution of powers from the central government to the state and local governments. I am proud to confirm that he was one of the state attorneys-general who successfully challenged the over concentration of powers hitherto exercised by the federal government. Since I was given the liberty to pick a topic of our discourse I decided to review the major constitutional cases in which the struggle for restructuring has been waged and won in the law courts in Nigeria.

In my presentation I am going to prove that there is no state government in Nigeria that has not benefited from the restructuring of the country through litigation. Notwithstanding the obvious limitation of restructuring through the law courts I shall conclude by urging the other states in the country to follow the example of Lagos state by operating in the areas that have been reserved for state governments in our distorted federal arrangement. To appreciate the point that the progress that has been recorded in the legal front I am going to review the major constitutional cases that have altered the status quo.

Legal battle for restructuring waged by state governments

The Vice-President of Nigeria, Professor Yemi Osinbajo had recalled that “on the eve of civil rule in 1999 the Federal government had encroached into many crucial areas exclusively within the competence of states. These include: planning and development control, creation of offences, revenue collection and distribution.”[1]  While the courts have upheld the tenets of federalism within the limited ambit of the 1999 Constitution as amended the national assembly has continued to consolidate the status quo to the detriment of federalism while the Presidency has regularly encroached on the powers of state governments. On their own part, state governors have virtually turned local governments to extension of state governments, thereby compounding the crisis of distorted federalism. However, all the federating units have waged legal battles in court with a view to restructuring the country in a manner that federalism is restored.

At the commencement of the current political dispensation many interest groups found that the federal government had encroached into many areas that were exclusively reserved for state and local governments. Apart from changing military decrees to Acts of Parliament the national assembly has not shown any readiness to review the Constitution with a view to restoring the federal status of the republic. Hence, the demand for a sovereign national conference to rectify the legislative and political anomalies carried out by the defunct military regimes has fallen on deaf ears. To challenge the several laws and policies of the federal government which violate the principles of federalism the 36 state governments have had to resort to litigation. The federal government has fought back by defending such cases vigorously and adopting extra-constitutional measures to stop state governments from altering the status quo.

In addition to litigation the Lagos state government has dared the federal government by enacting laws in areas not covered by the exclusive legislative list in the Constitution. Even though the federal government fought back through legislative and political measures it has failed to stop state and local governments from restoring federalism in Nigeria. As a result of the success recorded by state governments in the law courts the internally generated revenue of every state has increased rather phenomenally. For instance, through aggressive tax drive, issuance of certificates of occupancy on all landed properties, control of inland waterways, collection of levies from hotels, vehicle licences, approval of building plans etc the IGR of Lagos state which was N600 million per month in 1999 has increased to N23 billion in 2017. Regardless of political differences, every state government has had to understudy the revenue generation initiative of Lagos state.

Therefore, I wish to submit that without embarking on the struggle for restructuring through litigation and adoption of political measures, majority of the state governments would have collapsed under the weight of wage bills. To that extent, such legal and political struggle has altered the national economy to the advantage of all state governments. In other words,  there is no state government that has not benefited maximally from the struggle for restructuring which has been led by the Lagos state government since 1999. At this juncture, it is pertinent to review the decisions of the courts in some major constitutional cases which have impacted positively on internally generated revenue base of state governments.

Control of town planning and physical planning

Under the erstwhile military regime, physical planning all over the country was regulated by the Urban and Regional Planning Act enacted in 1992. In Attorney-General of Lagos State V Attorney-General of the Federation & Ors [2] the plaintiff challenged the validity of the Act. In granting the reliefs sought by the Plaintiff the Supreme Court held that urban and regional planning as well as physical development were residual matters within the exclusive legislative and executive competence of the state and that grant of approvals, permits and licenses for building and physical development in Lagos state including under bridges, loops and highways setbacks are residual responsibility of the State government.

Ratification of federal government lands in Lagos state

Following the relocation of the federal capital from Lagos to Abuja there has been a running battle over the regularization of the landed properties of the federal government in Lagos State. In Attorney-General of the Federation v Attorney-General of Lagos[3]  the dispute between the federal and Lagos state governments was about “general control and management of federal land within Lagos state particularly the re-issuance of certificates of occupancy, granting consent or exercising rights of ownership.” The Supreme Court struck out the suit after upholding the preliminary objection filed by the Lagos government to challenge the competence of the suit. Justice Dattijo Muhammed who read the ruling said the court lacked power to exercise its “original jurisdiction” in the suit because the federal government had “transferred its title in the land to others.”

Seizure of local government funds by federal government

Sequel to the creation of local government by some state governments in 2002 President Obasanjo reacted by ordering the seizure of the Lagos state local governments until they dissolve the new local governments  and revert to the status quo. In Attorney-General of Lagos State v Attorney-General of the Federation [4] the Ahmed Tinubu regime challenged the action of the federal government. In upholding creation of the additional 37 new local government councils the Supreme Court said  they were inchoate since they had not been registered by the national assembly.         However, the court held that the seizure of the local governments was illegal and unconstitutional.

Vehicle Registration in Nigeria

Pursuant to section 5 of the Federal Road Safety Corps Act the commission established under the law is in charge of designing and production of driver’s licence and vehicle number plates as well as the registration, licensing, road worthiness of vehicles, driver’s licence. Despite the enormous powers of the Commission the Lagos state government has established the Lagos State Motor Vehicle Administration Agency (MVAA) with responsibility of developing a sustainable policy on motor vehicle documentation and other related matters.

The State government through MVAA started the issuance and registration of Number Plates in 2007. As of today, aside the federal government as represented by the FRSC, Lagos is the only state that produces number plates in the country. The Lagos state generates substantial revenue from the issuance and registration of number Plates. It now issues averagely 20,000 number plates monthly, and controls more than 60% of the number plates issued in the country.

Powers of state governments to collect levies from hotels

In 2914, the Lagos State house of assembly rolled out 4 laws to regulate hotel occupancy and licensing and restaurant operation within Lagos State. In Attorney-General of Federation v. Attorney-General of Lagos State [5] the federal government had sought to invalidate the laws but the Supreme Court dismissed the suit on the grounds that the federal government’s power to enact laws on Tourists Traffic under Item 60 of the Exclusive List would not oust Lagos State’s power to regulate intra-state hotel businesses.

Claim of littoral states to 13% derivation from offshore

Based on the claim of the littoral states to derivation in respect of resources in the continental shelf the federal government sued all the 36 states of the federation in Attorney-General of the Federation v Abia State & Ors [6] . In granting the reliefs sought by the plaintiff the Supreme Court held that the littoral states were not entitled to 13% derivation from revenue in the continental shelf. However, with respect to the defendants’ counter-claims the court declared that the funding of Joint Venture Contracts and the NNPC priority projects from the federation account were illegal and that allocation of 1% of the federation account to the Federal Capital Territory was inconsistent with section 162 (3) of the Constitution. The decision further stated that all revenues accruing to the government must be paid into the federation account apart from the exceptions listed in section 162 (1) of the Constitution, inclusive of the excess crude funds. It was also held the Federal Government to lacks the power to deduct from States’ share of the Federation Account and give same to local governments.

Abolition of onshore/offshore dichotomy

Even though the littoral states lost the resource control case the federal government was forced to enact the Offshore/Onshore Dichotomy Abolish Act, 2004. In Attorney-General of Adamawa State v. Attorney-General of the Federation[7] the plaintiffs challenged the validity of the Act which granted 13% derivation to all littoral state in the offshore national resources located within 200 metres of water depth isobaths. The suit was dismissed as the plaintiff could not prove that the Act was not constitutionally valid.

Legal validity of Sales Tax Law

The power of state governments to collect sales taxes cannot be questioned as it falls within the residual legislative jurisdiction of State Houses of Assembly because it is not in the Exclusive and Concurrent Legislative Lists. In Attorney General, Ogun State v. Alhaja Ayinke Aberuagba & 7 ors. [1985] 1 NWLR, 395 it was contended that the Ogun State Sales Tax Law was unconstitutional on the grounds that it could be equated with Excise Duty which belongs to the exclusive domain of the federal government. It was the view of the Supreme Court that it cannot be so equated as sales tax is a tax on consumption which is not due until the goods have arrived at the point of consumption as opposed to excise duty which is levied at the point of manufacture. However, it was held that the portions of the law which discriminate against goods brought into Ogun state, in favour of goods in that state, are illegal and unconstitutional as they would inhibit  the  free flow of interstate commerce.

Power of state government to legislate on lottery operations

Pursuant to the National Sports Lottery Act an exclusive lottery license was granted to the National Sports Lottery Plc to carry on lottery operations in any part of Nigeria. Since lottery, pools betting and casino betting are within the residual legislative ambit of states the Lagos state government has enacted a law to regulate lottery operations in the state. In Edet v. Chagoon ( 2008) 2 NWLR (Pt. 1070) 85 where it held by the Court of Appeal that Pools Betting and Casino Gaming (Prohibition) Act is not within the legislative competence of the National Assembly. The Court equally confirmed that pools betting and casino are matters not listed on the Exclusive and Concurrent Lists and therefore fall within the residual competence of States.

Power over inland waterways

Notwithstanding that inland waterway is not included in the Exclusive Legislative List the federal government has been granting licences for dredging and other related purposes in Lagos state. In Lagos State Waterways Authority & Ors. v. The Incorporated Trustees of Association of Tourist Boat Operators & Water Transportation in Nigeria, the Court of Appeal held that that the Inland waterways within Lagos State are not and cannot by any stretch of interpretation be covered by any item in the exclusive legislative list under Part 1 to the Second Schedule of the Constitution. .  (See unreported Suit No: CA/L/886/2014),

Collection of tenement rates by local governments

By virtue of the provisions of Section 7(5) of the Constitution and paragraph 1(b) and (j) of the Fourth Schedule to the Constitution only Local Government Councils have the exclusive power to assess and impose rates on privately owned property. In Knight Frank Rutley Nigeria v Attorney General of Kano State⁵ (1998) 4 SC 251  the Supreme Court declared null and void a contract entered into between the Kano State government and Knight Frank Rutley to prepare a valuation list of all ratable hereditaments for the purpose of collection of property rates in some areas of Kano State for being outside the powers of the Kano State government and an usurpation of the powers conferred on local government councils by the Constitution. See also Attorney-General of Cross River State v. Ojua [8].

Monitoring of local government funds by  federal government

The Supreme Court has held that neither the legislative nor executive arm of the Federal Government has powers to “monitor” funds allocated to Local government councils and that the duty of setting up the State Joint Local Government Allocation Committee lies solely with the State Government by virtue of Section 162 (6) of the constitution. Hence, the provisions of the Monitoring of Revenue Allocation to Local Government Act 2005 which purported to establish a committee in each state of the Federation to be known as the State Joint Local Government Allocation Committee were declared illegal and unconstitutional in Attorney-General of Abia State v. Attorney-General of the, Federation [9].

London/Paris club loan refund to state and local governments

In 2006, President Olusegun Obasanjo directed that the sum of $12.4 billion be removed from the federation account and paid to the London/Paris Club following the so called debt relief. Dissatisfied with the over deductions made by the federal government from the statutory allocations of the 774 local government councils in the federation account for the debt relief some local governments sued the federal government for a refund of the sum of $3.2 billion at the Federal High Court, Abuja. In a judgement delivered on December 3, 2013, Justice Adeniyi Ademola granted the relief sought by the plaintiffs and ordered the Federal Government to pay them the sum of $3.2 billion. (See Suit No FHC/ABJ/129/2013 between Linas International Limited and 236 Ors v the Attorney-General of the Federation & 3 Ors).

Encouraged by the judgment the 36 state governments demanded for payment of all over-deductions from their statutory allocations for external debt service arising between 1995 and 2002. Following the amicable resolution of the long standing dispute the federal government has already refunded N522 billion to the states. But contrary to the agreement reached between the federal government and the state government the refund has not been channeled to settle the areas of workers’ salaries. However, the state governments have demanded the payment of the outstanding 50 percent of the refund.

The political struggle for restructuring through litigation

From 1966-1999 and 1984-1999 successive military regime imposed centralism and federal dominance on the country. Even though the government made fortune from the sale of crude oil the development of the nation has been retarded due to unprecedented rate of corruption and lack of commitment to build a united and prosperous nation on the part of military rulers and their civilian collaborators. Owing to serious political and social tension occasioned by poverty, unemployment and insecurity there has been strident calls for the breakup of the country. Instead of promoting inclusive policies and popular programmes the federal government has continued to threaten to crush the forces of disunity and destabilization.

However, since 1999 the civilian administration has “sought to run the federation in a muddling-through fashion, including serious political and social tensions, modest economic performance, and deepening poverty. Currently, therefore, the Nigerian federation is at a crossroads and has two options: devolution or death.” Having opted for the devolution of power the federal and state governments have resorted to litigation to resolve complex political crises. By and large, the state governments have won a number of the constitutional cases but the exclusive control of the federal government in the affairs of state governments has been judicially recognized in line with the 1999 Constitution. Some of the cases are examined below:

Power of state governors to secure public safety

As chief security officers in the states, governors have the power to declare curfew and adopt measures to ensure the maintenance of law and order. In Attorney-General of Anambra State V Attorney-General of the  Federation [10] the Supreme Court held that, “The Constitution in section 215 subsection (1) clearly gives the Governor of Anambra State the power to issue lawful direction to the Commissioner of Police, Anambra State, in connection with securing public safety and order in the State.”

In Inspector-General of Police v ANPP [11] it was held by the federal high court that police permit for rallies was  illegal and unconstitutional and that the governor is the appropriate authority who may delegate powers under the Public Order Act to a Commissioner of Police and that the Inspector-General of Police cannot exercise any power under the Act. The decision was upheld by the Court of in All Nigeria Peoples Party & Ors. v. Inspector General of Police (2008) 12 WRN 65.

Autonomy of local governments

Pursuant to section 7(1) of the Constitution which provides that the system of local government shall be by democratically elected councils the Supreme Court has had cause to set aside the purported extension of the tenure of elected chairmen and councilors by the federal government. See Attorney-General of Abia State  & 35 Ors S v. Attorney-General of the Federation^[12]. In Prince Sanmi Olubunmo (Chairman of Ido Osi LG and Chairman of Association of Local Governments of Nigeria, ALGON, Ekiti Chapter v. Ekiti State Attorney-General, the Supreme Court has also annulled the dissolution of the Councils and removal of elected council officials by state governors before the end of their tenure.³ See also Eze v Governor of Abia State. ⁴ (2014) NWLR (PT 1426) 192

Impeachment of governors

The impeachment of the governors of Oyo, Anambra, Plateau and Adamawa states which were instigated and sponsored by the federal government were set aside by the Supreme Court on the ground that the various houses of assembly violated section 188 of the Constitution. Consequently, the immediate reinstatement of the governors who had been illegally sacked was ordered by the apex court.

On duty of all governments to fight corruption

Section 15(5) of the Constitution has imposed a duty on the State to fight corrupt practices and abuse of office. (ICPC) was passed by the national assembly pursuant to section 15(5) of the Constitution which has imposed a duty. In Attorney-General of Ondo State v. Attorney-General of the Federation [13] the plaintiff challenged the constitutional competence of the Independent Corrupt Practices and Other Offences Act. In dismissing the case the Supreme Court held that the National Assembly had power to enact the law as it is aimed at abolishing corruption and abuse of office and that both the federal and state governments share the power to legislate in order to abolish corruption and abuse of office.

On limit of power of the President to set up Tribunal of Inquiry

As tribunal of enquiry is not provided for in either the exclusive or concurrent list it is a residuary matter. In Chief Gani Fawehinmi v. Ibrahim Babangida[14] the Supreme Court held that the power to set a Tribunal of Inquiry is vested in state governors and that the power of the President to institute a commission of enquiry under the Tribunal of Enquiry Act is limited to the Federal Capital Territory.

Implications of the failure of Supreme Court to determine some constitutional cases

In spite of the progressive role played by the Courts in promoting federalism through litigation it ought to be pointed out that the Supreme Court has curiously refrained from pronouncing on certain crucial matters of constitutional significance. It is on record that the Supreme Court failed to intervene in the suspension of the governors of Plateau and Ekiti States following the declaration of emergency rule in both states by President Olusegun Obasanjo. The cases challenging the illegal dissolution of the democratic structures were struck out on technical grounds. See Attorney-General of Plateau State v. Attorney-General of the Federation[15].

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Similarly, the case challenging the constitutional validity of the Economic and Financial Crimes Commission Act was struck out. See Attorney-General of Benue State v. Attorney-General of the Federation [16].  In the same vein, the Hisbaw Law of Kano State for the establishment of state police was struck out for want of jurisdiction on the untenable ground that there was no dispute between the parties. See Attorney-General of Kano State v. Attorney-General of the Federation [17].

The refusal of the apex count to entertain such issues of constitutional importance raised in the plaintiffs’ claims means that the legal validity of the issues in dispute have not been determined.  The implication is that the determination of the issues will have to wait for another opportunity in the Supreme Court.

Conclusion

In the light of the foregoing it is submitted that some of the aforementioned cases have altered the fiscal arrangement between the federal government and the state and local governments. In particular, illegal deduction of funds by the federal government to fund the federal capital territory and so called special projects, seizure of local government funds  which allowed the federal government to dip hands into the federation account to fund its obligations have been stopped. The collection of levies from hotels, inland waterways, building plan approvals, registration of vehicles etc by the federal government has also been stopped. Through restructuring by litigation the internally generated revenues of the every state government has increased.

However, while the federal government has been restrained from seizing or monitoring the funds local governments the monthly statutory allocations accruing to them are alleged to have been cornered by many state governments. Furthermore, in spite of the annulment of the dissolution of local government councils and the removal of elected chairmen and councilors from office state governors have continued to appoint caretaker committees or sole administrators to man them. In spite of the fact that the victory recorded in the aforementioned cases has led to increased revenue for state governments it has not translated to improvement in the quality of the life of an average citizen in the country. Such lack of accountability has confirmed my position that power devolution without democratization will concentrate powers in the hands of regional overlords to the detriment of the people.

Being the text of the public lecture delivered by Femi Falana SAN at the 60th birthday anniversary of Obafemi Adewale Esq held by Young Lawyers Forum at the Are Afe Babalola Bar Centre Ado, Ekiti State on Friday, October 20, 2017.