What is Commercial Litigation
Introduction
Commercial litigation is an essential aspect of the legal world, especially in a fast-paced business environment like Nigeria’s. As companies grow, enter into contracts, engage in joint ventures, or handle disputes over money, goods, or services, disagreements are bound to arise. When these disputes escalate to the courtroom or arbitration panel, they fall under what is called commercial litigation.
But what exactly is commercial litigation? Why is it important to businesses? How is it handled in Nigeria, and what legal frameworks apply?
This article presents a detailed explanation of commercial litigation, the types of disputes it covers, the processes involved, the courts with jurisdiction, and practical tips for businesses involved in commercial disputes.
Definition of Commercial Litigation
Commercial litigation refers to the process of resolving business-related disputes through legal proceedings, either in court or through alternative dispute resolution (ADR) mechanisms such as arbitration, mediation, or conciliation.
It encompasses a broad range of legal disputes involving companies, partnerships, investors, entrepreneurs, or any entities engaged in commerce, trade, or business.
Key Features:
It is civil (not criminal) in nature
It often involves contractual or financial claims
It can be local or international
It may be settled in court or out of court
Legal Framework for Commercial Litigation in Nigeria
Commercial litigation in Nigeria is governed by various laws, rules of court, and sector-specific regulations. Some of the most relevant include:
The Constitution of the Federal Republic of Nigeria, 1999 (as amended)
Companies and Allied Matters Act (CAMA) 2020
Federal High Court Act
High Court Rules of various States
Evidence Act 2011
Arbitration and Mediation Act 2023
Investment and Securities Act 2007
Trade Disputes Act
Central Bank of Nigeria (CBN) Guidelines for financial institutions
Contract Law principles (common law and equity)
Types of Disputes Handled in Commercial Litigation
Commercial litigation covers a wide range of disputes that arise in the course of business. Below are common types:
1. Breach of Contract
When one party fails to perform its obligations under a contract, it can result in a lawsuit for damages or specific performance.
Examples:
Failure to deliver goods as agreed
Breach of service level agreements
Non-payment for services rendered
2. Debt Recovery
Businesses often resort to litigation to recover unpaid debts from customers, clients, or partners. Debt recovery litigation is common in banking, real estate, and trade.
3. Shareholder Disputes
Conflicts among shareholders can lead to litigation over:
Voting rights
Dividend distribution
Share dilution
Oppression of minority shareholders
4. Employment and Labour Disputes
These arise between employers and employees, especially in breach of employment contracts, wrongful dismissal, or enforcement of restrictive covenants.
5. Partnership Disputes
Disagreements between business partners over profit sharing, management, or dissolution of the partnership.
6. Real Estate and Property Disputes
Commercial real estate issues such as:
Disputes over leases
Property sale agreements
Title issues
Recovery of possession
7. Banking and Finance Litigation
Includes:
Disputes over loan agreements
Default on repayment
Enforcement of guarantees or security
Letters of credit disputes
8. Construction and Infrastructure Disputes
Issues with contractors, subcontractors, or developers over delays, defects, non-payment, or performance guarantees.
9. Intellectual Property (IP) Disputes
Businesses litigate over infringement of trademarks, copyrights, patents, or trade secrets.
10. Tax and Regulatory Disputes
Litigation against government agencies such as FIRS or state tax authorities over tax assessments, penalties, or compliance.
Jurisdiction: Where Are Commercial Cases Heard in Nigeria?
Jurisdiction depends on the nature of the claim, the parties involved, and the location of the transaction or property. Courts that handle commercial disputes include:
1. State High Courts
Handle general commercial disputes such as contract breaches, real estate, partnership issues
Each state has its High Court, including the FCT High Court
2. Federal High Court
Exclusive jurisdiction over matters relating to:
Companies under CAMA
Admiralty and shipping
Intellectual property
Aviation
Federal government agencies
Banking and financial institutions
3. National Industrial Court
Handles employment and labour-related commercial issues
4. Investment and Securities Tribunal
Handles disputes involving securities, capital markets, and investor protection
5. Arbitration Tribunals and ADR Panels
Many contracts have arbitration clauses that require disputes to be resolved by private arbitrators under institutions like:
Lagos Court of Arbitration (LCA)
Nigerian Institute of Chartered Arbitrators (NICArb)
ICC, LCIA (for international disputes)
Stages in Commercial Litigation Process
1. Pre-Action Stage
Legal advice and case review
Letter of demand or pre-action notice
Negotiations or mediation
2. Filing of Court Processes
Statement of claim, originating summons, or writ of summons
Service on the defendant
Filing of defense by the other party
3. Preliminary Hearings and Applications
Motions on jurisdiction
Requests for interlocutory injunctions or interim orders
4. Trial Stage
Examination and cross-examination of witnesses
Presentation of documents and evidence
Oral arguments
5. Judgment
Final decision of the court
Remedies granted (damages, specific performance, injunctions)
6. Enforcement of Judgment
Garnishee proceedings
Writ of execution
Receiver/manager appointment
Winding up of companies
7. Appeal (if necessary)
To the Court of Appeal or Supreme Court
Remedies Available in Commercial Litigation
Damages – Monetary compensation for loss suffered
Injunctions – Court orders to stop or compel an action
Specific Performance – Enforcing the exact terms of the contract
Declaratory Reliefs – Court declarations on the rights or obligations of parties
Rescission – Cancelling a contract
Account of Profits – For fiduciary breaches
Reinstatement – Especially in employment cases
Restitution – Return of unjustly held property or money
Alternative Dispute Resolution (ADR) in Commercial Litigation
Due to delays in court processes, ADR is becoming the preferred method of resolving commercial disputes. Nigerian courts actively promote ADR through:
Lagos Multi-Door Courthouse (LMDC)
Lagos Court of Arbitration (LCA)
Private mediation centers
Mandatory pre-trial conferences
ADR benefits:
Confidential
Faster resolution
Less adversarial
Preserves business relationships
Challenges in Commercial Litigation in Nigeria
| Challenge | Description |
|---|---|
| Delay in court proceedings | Prolonged cases due to adjournments and court congestion |
| High cost of litigation | Legal fees, filing costs, and enforcement costs |
| Enforcement of judgments | Difficulty recovering money from a losing party |
| Corruption and judicial inefficiency | Allegations of bias or unethical practices |
| Complexity of laws and regulations | Businesses must navigate overlapping regulations |
Recent Developments and Reforms
Judicial autonomy laws – Strengthening court independence
Technology in courts – E-filing, virtual hearings
Arbitration and Mediation Act 2023 – Unified framework for ADR
Specialized commercial courts – Like the Commercial Division of Lagos High Court
Court of Appeal Rules 2021 – Faster appellate process
Why Businesses Need a Commercial Litigation Lawyer
Having a commercial litigation lawyer is critical for business survival and success. Their roles include:
Reviewing contracts to avoid future disputes
Advising on legal risks in business deals
Representing you in court or arbitration
Negotiating settlements
Enforcing or defending legal rights
At Chaman Law Firm, we specialize in helping Nigerian and international businesses navigate complex commercial disputes with strategy, integrity, and speed.
Tips for Nigerian Businesses in Managing Commercial Disputes
Document everything – contracts, communications, payments
Include clear dispute resolution clauses in all agreements
Act early – don’t delay legal consultation
Consider ADR – cost-effective and faster
Use qualified commercial lawyers for legal advice
Ensure regulatory compliance to avoid sanctions or legal action
Conclusion
Commercial litigation plays a vital role in maintaining trust, enforcing contracts, and protecting business interests. As businesses in Nigeria continue to expand and transact locally and globally, the potential for disputes grows. Understanding the processes, rights, and remedies available under commercial litigation helps companies protect themselves and make informed legal decisions.
Whether you’re a startup or an established business, engaging professional legal support is not just a choice—it’s a necessity.
Contact Us
Are you facing a business disagreement, breach of contract, or commercial dispute? Understanding what commercial litigation entails is the first step to protecting your company’s interests.
At Chaman Law Firm, we offer expert legal representation in all forms of commercial litigation—from contractual breaches to shareholder disputes and debt recovery. Our experienced legal team is committed to resolving disputes efficiently and protecting your bottom line.
📞Phone: 08065553671, 08096888818
✉ Email: chamanlawfirm@gmail.com
📍 Address: 115, Obafemi Awolowo Way, Allen Junction, Ikeja, Lagos, Nigeria
🌍Click here to learn more about Chaman Law Firm
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