Legal Implication Of A Waiver Of Sovereign Immunity!

By Ikenga Chronicles July 31, 2020

— Kenneth Ikonne (SAN)

In many legal systems of the world, there still exists a legal doctrine that says that the King can do no wrong – thus, such kings and the countries they rule cannot be sued in municipal courts or arbitration tribunals, even when they’ve done wrong, or are in breach of commercial agreements. That, in a nutshell, is the doctrine of sovereign immunity.

Gradually,in the interest of international commerce and the effectuation of contract terms, legal systems began to scale back the armbits of the doctrine, and the position today is that in jurisdictions where the doctrine still applies, sovereign immunity can be waived voluntarily by the nation to which it attaches, rendering the nation which has waived it amenable to civil processes in commercial litigation. Therefore, a waiver of sovereign immunity has become a standard clause in most international commercial contracts involving a sovereign entity inorder to render their terms enforceable at law. If a waiver of sovereign immunity is not incorporated, the money lent to a borrower – country may be lost forever in case of a breach, as no court or arbitration tribunal will agree to assume jurisdiction and enforce the terms of the loan contract.

What a waiver of sovereign immunity therefore implies is that the defence of sovereign immunity cannot be raised by the debtor – nation in arbitral or judicial proceedings, wherever held, to forestall the enforcement by the creditor – nation of the facility’s terms and conditions, especially where the facility is collateralized. No serious nation grants a loan without these terms.

The presence of these terms in those agreements with China does not in the least imply a cession of sovereignty to China. But what it does underscore is the need to borrow sparingly but strategically, and to spread the projects out equitably, since the successful enforcement of the contract’s terms might necessitate a seizure of a strategic national asset, and thus affect every part of Nigeria without discrimination.

It would be immoral (for instance) to tie up assets in the Niger Delta (I do not suggest that this was done), to obtain funds for the construction of a railway line to Maradi in Niger Republic, when the people of Niger Republic will in no way be affected when a waiver of the sovereign immunity clause underguarding the loan is invoked by China!

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