ABSTRACT
The increasing globalisation of commerce has significantly expanded the scope and complexity of contractual relationships that transcend national borders, thereby elevating the importance of conflict of laws in contractual transactions. In jurisdictions such as Nigeria, where cross-border trade and foreign investment continue to grow, determining the applicable law and competent forum has become a critical legal concern. Conflict of laws, as a branch of private international law, provides the legal framework for resolving issues relating to jurisdiction, choice of law, and the recognition and enforcement of foreign judgments. This article situates Nigeria within the broader international legal landscape, examining how its legal system interacts with those of other jurisdictions in addressing disputes arising from transnational contracts.
1.0 INTRODUCTION
Conflict of laws, often referred to as private international law, is a branch of law that addresses legal disputes involving a foreign element by determining which jurisdiction’s legal system is applicable and which court has the authority to adjudicate the matter. It arises in situations where a contractual transaction is connected to more than one country, such as where the parties are domiciled in different jurisdictions, the contract is formed in one country but performed in another, or where the subject matter of the agreement spans multiple legal systems.
In simple terms, it is that aspect of private law that deals with cases containing a foreign element1. Rather than prescribing substantive rights and obligations, conflict of laws provides a framework of rules designed to resolve questions of jurisdiction, choice of law, and the recognition and enforcement of foreign judgments.
2.0 NATURE OF CONFLICT OF LAWS
The nature of conflict of laws is inherently functional and facilitative, as it seeks to promote order and fairness in transnational legal relationships. It operates as a coordinating mechanism between different legal systems, ensuring that cross-border disputes are resolved in a manner that respects both the legitimate expectations of the parties and the sovereignty of the states involved.
In contractual matters, this involves identifying the legal system with which the contract has its closest and most real connection, while also giving effect, where possible, to the intentions of the contracting parties. The discipline therefore balances competing considerations such as legal certainty, predictability, justice, and international comity.
3.0 CHARACTERISTICS OF CONFLICT OF LAWS
Conflict of laws is distinct from both domestic law and public international law. Unlike domestic law, which governs purely internal legal relationships within a single jurisdiction, conflict of laws is concerned with cases involving a foreign element. It also differs from public international law, which regulates relations between sovereign states and international organisations. Instead, private international law governs relationships between private individuals or entities across borders, although it is applied by national courts and derived primarily from domestic legal systems.
This dual character national in source but international in application, makes conflict of laws a unique and complex field of legal study. In common law jurisdictions such as Nigeria, conflict of laws rules has largely developed through judicial decisions, resulting in a flexible and case-driven approach. By contrast, civil law jurisdictions often rely on codified statutes, which provide more structured and predictable rules. Despite these differences, there is an increasing trend towards harmonisation, driven by international trade and the need for uniform legal standards.
4.0 CONNECTING FACTORS IN CONFLICT OF LAWS
In resolving conflict of laws disputes, courts rely on certain connecting factors commonly expressed in Latin maxims to determine the applicable law (lex causae). These include:
- Lex domicilii: the law of a person’s domicile.
- Lex situs: the law of the place where property is situated.
- Lex loci actus: the law of the place where a legal act occurs.
- Lex fori: the law of the forum.
- Lex patriae: the law of nationality.
- Lex loci contractus: the law of the place where the contract is made.
- Lex loci solutionis: the law of performance.
- Lex loci celebrationis: the law of marriage celebration.
- Lex loci delicti: the law of the place of a tort.
- Lex monetae: the law of the currency involved.
These principles guide courts in identifying the most appropriate legal system applicable to a dispute2.
5.0 KEY ELEMENTS IN CONTRACTUAL CONFLICT OF LAWS
The resolution of conflict of laws issues in contractual transactions revolves around jurisdiction, choice of law (governing law), and the recognition and enforcement of foreign judgments. These elements collectively determine where a dispute may be heard, which legal system governs the contractual relationship, and whether a decision rendered in one jurisdiction will be recognised and enforced in another.
6.0 DETERMINE THE GOVERNING LAW OR CHOICE OF LAW.
The first question to be determined in the context of international commercial agreements concerns with system of law governs the validity, scope, interpretation, or performance of the contract. Governing law or choice of law clauses are of critical importance in cross-border contracts3.
The circumstances under which the courts are called upon to determine the governing law of a cross-border contract include: (i) where the parties expressly choose a governing law, (ii) where the parties failed to expressly choose but their choice may be inferred from a holistic reading of their contract, or (iii) where the parties failed to choose, and their choice cannot be inferred from the contract.
In some instances, the parties may not have realised the need to select a governing law and in other cases, the parties may have simply failed to arrive at a common ground in terms of the governing law. This calls to mind an illuminating passage drawn from the English High Court case where Mann J. stated that: “The evidence before me showed that each of the parties was overtly adamant that it did not wish to accept the other’s jurisdiction or governing law and could reach no agreement on any other jurisdiction or governing law.
As a result, (the relevant agreement) contains no governing law clause and no jurisdiction clause. In addition, neither party wanted to give the other an advantage in terms of where the agreement was finalised. If their intention in doing so was to create obscurity and difficulty for lawyers to debate in future years, they have succeeded handsomely4’’
Party autonomy is a foundational principle in the conflict of laws as it relates to contractual transactions, referring to the freedom of contracting parties to determine the terms governing their agreement, including the choice of applicable law and, in many cases, the forum for dispute resolution. This principle is widely recognized in both Nigerian law and other legal systems, particularly within common law jurisdictions, as it promotes certainty, predictability, and commercial convenience in cross-border transactions.
By allowing parties to select the legal framework that will regulate their contractual relationship, party autonomy reduces ambiguity and minimizes the risk of disputes over applicable law.
The starting point of the analysis is to look at the instances where the parties have expressly selected a governing law. In Enka v. Chubb5, the UK Supreme Court stated that where an English court has to decide which system of national laws governs a contract, the court will apply the rules developed by the common law for determining the law governing contractual obligations.
Those rules are that a contract (or relevant part of it) is governed by: (i) the law expressly or impliedly chosen by the parties; or (ii) in the absence of such choice, the law with which the contract is most closely connected6.
Although the Nigerian rules of conflict of laws are still largely undeveloped, by reason of the provisions of section 45(1) of the Interpretation Act pursuant to which the Common Law of England, the Doctrine of Equity together with the Statutes of General Application that were in force in England on the 1st day of January 1900, were received into Nigeria, the situation is the same where a court in Nigeria has to answer the same question.
Thus, under Nigerian law7, the general rule is that contracting parties are free to choose the law that will govern their contractual rights and obligations, and their transaction. Consequently, an express choice of law clause in a contract should be honoured as long as the choice is bona fide and not against public policy8.
There are however exceptions to this general rule, and Nigerian courts will not enforce the choice of foreign law as the governing law of a transaction under certain circumstances, such as: (i) where the chosen law is against Nigeria’s public policy or (ii) where mandatory rules of Nigerian law forbid the choice of a law other than Nigerian law to govern a transaction, in whole or in part.
In Sonnar (Nig) Ltd v Partenreederi MS Nordwind9, the Nigerian Supreme Court held that a choice of law is only effective where the choice is “real, genuine, bona fide, legal and reasonable.” The Court departed from the general rule and rejected the express choice of German law as the governing law of a transaction between a Nigerian shipper and a Liberian shipowner on the basis that the choice was “capricious and unreasonable” because the chosen law had little or no connection with the parties or their transaction.
As with the case of the parties’ choice of law, the Nigerian courts have demonstrated that in certain limited circumstances they will be prepared to assume jurisdiction notwithstanding the express choice of some other jurisdiction by the parties. Oputa, JSC in the Sonnar Case above stated that:
“our courts should not be too eager to divest themselves of jurisdiction conferred on them by the constitution and by other laws simply because parties in their private contract chose a foreign forum and a foreign law”.
The factors which the courts will consider in determining whether to assume jurisdiction were also set out in the Sonnar Case and include:
- the countries with which the parties are connected;
- the location of the evidence, the convenience in terms of accessibility and expenses between the domestic and foreign courts;
- whether the party seeking to stay the proceedings is only seeking procedural advantages; and
- whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: i. be deprived of security for that claim: ii. be unable to enforce any judgment obtained: iii. be faced with a time-bar not applicable to the domestic court or iv. for political, racial, religious or other reasons be unlikely to get a fair trial.
7.0. CONCLUSION
Conflict of laws plays a vital role in the regulation of cross-border contractual transactions. While Nigeria recognises fundamental principles such as party autonomy and enforcement of foreign judgments, challenges remain in their consistent application.
There is a pressing need for legal reform aimed at modernising Nigeria’s conflict of laws framework and aligning it with international best practices. Strengthening both judicial mechanisms and alternative dispute resolution frameworks will promote legal certainty, attract foreign investment, and enhance Nigeria’s position in the global commercial landscape.
However, without effective judicial consistency and legislation clarity, these reforms may not fully achieve their intended impact.
1.I.O Agbede, Conflict of Laws in Nigeria, (Lagos, Shaneson C.I. Ltd, 2001).
3. Henry Indriyati et al, ‘The Development of the Principles of Agreement in Cross Border Amid COVID-19 Outbreak’ in M. K. bin Abdullah et al. (eds.), Proceedings of the International Seminar on Border Region (INTSOB 2023), Advances in Social Science, Education and Humanities Research 823.
4. Apple Corps Ltd v Apple Computer Inc. [2004] EWHC 768 (Ch)
5. Enka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb [2020] UKSC 38. Similar rules apply under the Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) applicable in the European Union.
6. See Dicey, Morris & Collins on The Conflict of Laws, 15th edn. (2012) rule 64(1). See also See also the dictum of Lord Simmons in Bonython v. Australia [1951] AC 201, 219-220.
7. See generally Chukwuma Okoli and Richard Oppong, Private International Law in Nigeria Hart Publishing: Oxford, (2020).
8. 11 See Vita Foods Products Inc v. Unus Shipping Co Ltd [1939] AC 277 (PC); JFS Investment Ltd v. Brawal Line Ltd (2010) 18 NWLR (Pt. 1225) 495 at page
9. Sonnar (Nig) Ltd v Partenreederi MS Nordwind (1987) 4 NWLR (Pt. 66) 520 (‘The Nordwind’)
