Can a foreign professional institution successfully maintain an action for passing off of its name and grades in Nigeria?

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 22^nd 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

Chartered Institute of Arbitrators UK

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?

The status of CIArb UK and its authorised Nigerian branch shares some similarities with the position of the Institute of Chartered Secretaries and Administrators (ICSA), originally founded in England in 1891. For several years, ICSA’s members in Nigeria operated in associate capacity. The Nigerian Chapter was granted autonomy in 1988 and incorporated under the Companies Act 1968 as the Institute of Chartered Secretaries and Administrators Nigeria (ICSAN). It became chartered in Nigeria by virtue of Decree 19 of 1991 (now Institute of Chartered Secretaries and Administrators of Nigeria Act, Cap I13 Laws of the Federation of Nigeria 2004). In 2014, ICSA and ICSAN signed a Memorandum of Understanding (MoU) to inter alia, clarify the treatment of their respective members and students.

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.