Can
a foreign professional institution, which is not incorporated as a Nigerian
company, successfully maintain an action for passing off of its name and grades
in Nigeria?
This
is the principal question that the Federal High Court was asked in the case of The
Chartered Institute of Arbitrators v. The Chartered Institute of Arbitrators
(Nig.) Gte/Ltd and the Corporate Affairs Commission FHC/L/CS/341/09 decided recently
on 22nd October 2018. The Chartered Institute of Arbitrators (CIArb
UK) is an arbitration institution incorporated as a charity in the UK. The
Chartered Institute of Arbitrators (Nig.) Gte/Ltd (NCIArb) is an arbitration institution
registered as a company limited by guarantee in Nigeria.
Background
The
CIArb UK instituted an action at the Federal High Court against the NCIArb for
passing off. CIArb UK claimed that by using the name “Chartered Institute of
Arbitrators (Nigeria)”, NCIArb was passing itself off as the Nigerian branch of
CIArb UK. It also claimed that by using the logo and membership grades of CIArb
UK such as “Associate”, “Member”, “Fellow” and “Chartered Arbitrator”, NCIArb
is passing off the logo and membership grades as those of CIArb UK. Prior to
trial in the suit, the name of the Corporate Affairs Commission
(CAC) was struck out as a party to the suit, whereupon NCIArb filed a preliminary
objection challenging inter alia, the locus standi of CIArb UK to institute the
suit.
In
its judgment, the Court dismissed the preliminary objection and held that CIArb
UK had the requisite locus to institute the action. The Court also granted CIArb
UK the declarative reliefs sought as to passing off and granted an order of
perpetual injunction restraining NCIArb from using its current name or using
the logo and membership grades. NCIArb was also directed to deliver up all
books, letterheads, certificates etc. bearing “Chartered Institute of
Arbitrators (Nigeria)” to the Deputy Sheriff of the Federal High Court for
destruction. See page 22 of the
Judgment.
Issues raised for determination
In
his judgment, Justice C.M.A Olatoregun adopted the issues raised by the
Defendant. Page 12 of the judgment. The key issues were:
Whether or not CIArb UK’s act is void
ab initio by virtue of section 54 of the Companies and Allied Matters Act.
In resolving this issue, the Federal
High Court considered section 54 of the Companies and Allied
Matters Act (CAMA), which stipulates that a foreign company which intends
to carry on business in Nigeria must be registered as a Nigerian Company
otherwise its actions as such company operating in Nigeria, are void. The Court
held that as the reliefs sought related to passing off, section 54 was not
relevant to the case of CIArb UK and there was no contravention of section 54
of the CAMA. See page 15 of the
Judgment. In the Court’s view, if CIArb UK were to be registered as a
Nigerian company, such registration would have been undertaken pursuant to Part
C of the CAMA, which deals with incorporated trustees. [NB. Charities may also
register as a company limited by guarantee].
Whether or not the Defendant is liable
for passing off
The Court identified three components
of the common law tort of passing off as follows: (1) that the name, mark or
sign in contention has become distinctive of the plaintiff’s goods and is
regarded by relevant members of the public as coming from a particular source;
(2) that there has been a misrepresentation by the defendant that has caused or
could cause the public to think that the goods of the defendant emanate from
the plaintiff; and (3) that the plaintiff has suffered or is likely to suffer
loss by reason of the defendant’s misrepresentation. See pages 15 and 16 of the Judgment.
The Court held that the CIArb UK
established the first component to succeed in its action for passing off as it
was an arbitration institution founded in 1915 with branches all over the world
and is globally known to offer training and education to arbitrators. See page 16 of the Judgment. On the second
component involving misrepresentation, the Court found that NCIArb advertised
itself in several Nigerian newspapers using the CIArb’s logo. It invited the
public to a seminar on ADR processes and members of the public were misled into
attending the event. See pages 17 to 19
of the Judgment. The Court also found that NCIArb had membership grades
similar to that of CIArb UK. See pages
19 and 20 of the Judgment.
On the issue of damages or loss from
the misrepresentation, the court held that actual damage or deception need not
be proved and that it was sufficient that the misrepresentation had the
potential to deceive. See page 21 of the
Judgment.
Comments
The
Federal High Court correctly identified the elements that must be proved in an
action for passing off. However, the Court did not (sufficiently) explain why
an action in passing off involving a foreign company (a charitable
organisation) operating through a Nigerian branch, had nothing to do with
section 54 of the CAMA.
Section
54 provides thus:
(1) “…every foreign company which before or after the
commencement of this Act was incorporated outside Nigeria, and having the
intention of carrying on business in Nigeria shall take all necessary steps to obtain incorporation as a separate entity in Nigeria for that
purpose. But until so incorporated, the foreign company shall not carry on
business in Nigeria or exercise any of the powers of a registered company and
shall not have a place of business or an address for service of documents or
processes in Nigeria for any purpose other than the receipt of notice and other
documents as matters preliminary to incorporation under this Act.
(2) Any act of
the company in contravention of subsection (1) of this section shall be void.
Accordingly,
whenever a foreign company is instituting an action in Nigeria, it is opined
that section 54 of the CAMA is relevant as it goes to the question of locus
standi – the capacity to validly maintain an action. As a tort, passing off
envisages that the owner of the name, logo or getup being passed off must have
acquired the reputation around its name, logo or getup in the course of trade
or in a business capacity. In other words, an action in passing off may only be
maintained by a person (natural or artificial) who is carrying on business with
the name, logo or getup being passed off. If an entity is doing business in
Nigeria, section 54 of CAMA then becomes crucial to its locus standi to maintain an action.
A
crucial part of CIArb UK’s claim was that NCIArb’s use of the name “Chartered
Institute of Arbitrators (Nigeria) Ltd/Gte” amounted to the latter passing its
institution off as the Nigerian branch of
CIArb UK. See page 1 of the Judgment.
Expressly stated in the Statement of Claim albeit without reference to the
reliefs sought is the fact that CIArb UK had a Nigerian branch operating in Nigeria
with its permission and support. In these circumstances, it is opined that the
business of the Nigerian branch authorized by CIArb UK and the relationship
between these two bodies (the authorized Nigerian branch and CIArb UK) makes section
54 of the CAMA relevant to the suit. By extension, it cannot be said that there
was no contravention with section 54 of the CAMA. Nor can the irrelevance of
section 54 to passing off actions be stated without some rigorous explanation.
It
is also known that common law precepts such as “passing off cannot override
clear terms of statute where there is conflict. Hence, It would have been helpful
if the learned trial Judge laid down in clear terms why an ordinarily relevant
law (i.e. the CAMA) would be inapplicable. For instance, would it be because of
Nigeria’s international obligations to recognise well-known brands under
certain treaties and agreements such as the TRIPS Agreement as urged in the
case of The Procter and Gamble Company v Global Soap and
Detergent Industries Ltd and the Registrar of Trade Marks (2013) 2 NWLR (Pt.
1336) 409 CA? Are the treaties domesticated as
demanded by Nigerian law to enable their application? If not, on what legal basis
may a court, whose duty is to interpret the law rather than make it, sidestep the
clear words of a statute? It would have been helpful if the court raised and
addressed these questions.
Afroleopa
opines that the appropriate question should have been: whether a foreign
company, which does business in Nigeria without the requisite incorporation,
can validly maintain an action in passing off in Nigeria? Put differently, is
non-compliance with section 54 of CAMA a bar to an action in passing off by a
foreign company or entity?
In the
case of CIArb UK, the authorized branch comprising of its members in Nigeria
was granted Branch status since 1999. See page
9 of the Judgment. It was only after NCIArb (which was incorporated in
1988) had changed its name to the Chartered Institute of Arbitrators (Nigeria)
Ltd/Gte that the Nigerian branch of CIArb UK applied to the CAC to be
incorporated as a company. Juxtaposed with the history of ICSA and ICSAN
summarized above, it appears that CIArb UK may have been negligent in securing
the position of its Nigerian branch when it granted it Branch status.
By
holding that section 54 was irrelevant to the suit, it appears that unless its
decision is overturned on appeal, the court has provided a (temporary) leeway
for the CIArb UK to address its seeming inadvertence. However, this leeway may
not be sufficient as the
present orders merely restrain the NCIArb from using its registered name. The
orders do not affect the certificate of incorporation issued by the CAC to
NCIArb. In the present circumstances, there may yet be need for the parties to explore
other arrangements that addresses the needs and interests of the each party. In
AfroLeopa’s experience as a Chartered Mediator, Alternative Dispute Resolution
(ADR) mechanisms such as mediation may better serve those needs.
For advantages of ADR mechanisms, see
WIPO’s take, here.
