The Small Claims Court is designed to fast track the recovery of debts of less than N5m (five million Naira Only) through the combined use of mediation and conventional court processes.
Have you ever been a victim of an unpaid debt? Close your eyes and imagine for a moment the anxiety and failed expectations that comes along with it. An individual or an organization procures a loan from you or demands that you render a professional service for a delayed pay. At the point of negotiation you are assured that you will get paid on a definite date or period. After you let go of your money or service, you live in the hope that at the agreed time you will be financially buoyant. That’s where it all ends.
Weeks upon weeks after due date, you call; you visit, to remind your debtor of his promise to repay his debt. At the initial stages he pleads for a little more time. Soon he feigns s that you have become a pain on his neck; and shortly after, disappears entirely from your radar. You are stuck.
The foregoing captures the stories of small businesses, banks and individual creditors. These scenarios have in some measure impacted unemployment in our society. You will recall that soon after the dizzying spend of the oil boom era and the return to civilian administration, harsh economic realities had stared our nation in the face. One of these was that the rush for white collar jobs was no longer the way to go.
It is however a known fact that establishing a small business in Nigeria is no tea party. Alluring as the concept of self-employment may appear, the contradictions of our socio economic realities make the prospects unattractive. Those who dare to deep their toe soon get confronted by the lack of infrastructural facilities, access to funding and the scourge of debts owed by customers Otigba Ocheche (not real names) a graduate of banking and finance is at the moment engaged in a battle for life over threats of collapse of a family business which he manages. He had taken over the running of the moderate sized battery sales outlet after four years of fruitless search for a white collar job. As I write this, crippling debts owed by customers is making the chances of survival of the business largely unpredictable. Perhaps of greater concern is the fact that the thought of going to court to recover the debts appears a no go area for Otigba’s father. According to him he neither possesses the financial muscle to engage the services of a lawyer nor the capacity to stand the rigours of a lawsuit.
It is against the backdrop of the foregoing that Nigerians must appreciate the ease of debt recovery now provided for in the newly established Small Claims Court. The Small Claims Court is designed to fast track the recovery of debts of less than N5m (five million Naira Only) through the combined use of mediation and conventional court processes. The Small Claims Court is a component of the federal government’s ease of doing business project and has Lagos and Kano as pilot States for the scheme.
In Lagos State where the project has since taken off, a small claims action can be filed in the Court’s Registry located in every Magisterial District. According to the Court’s practice direction ‘’Hearing shall be conducted by the court from day to day as far as is practicable and may only be adjourned as a last resort and for the shortest possible time. Adjournment can only be granted during proceedings in unforeseen and exceptional circumstances and a party may not be granted more than one adjournment during the entire proceedings…’’ Though the entire hearing period, inclusive of seven (7) days for amicable settlement has been restricted to thirty days, Court Judgment in the matter shall however be delivered within 60days of the commencement of trial . Appeals against the judgment of the small claims court shall be heard at the High Courts of Lagos State. ‘’The Appeal shall be by oral hearing of the parties and on the records of the appeal. The whole Appellate Process from the assignment of the Appeal to Judgment shall not exceed thirty (30) days.’’
The flexibility and speed of debt recovery through the Small Claims Court comes as a major relief for the sustainability of small and medium enterprises. It is a simplified process which parties can undertake pro se. Its outcomes will however drive some discipline into the consumer appetite of chronic debtors who uncharitably live off small business manufacturers and suppliers to feather their own processes. The large community of small businesses such as freight forwarders, stevedoring contractors and several others which provide massive employments at the nation’s maritime industry should find this helpful.
Combined use of mediation and legal processes in a conventional courtroom is an innovation that should stir some interest in lovers of the 21st Century dispute resolution platforms of ADR. Though variants of these have been applied in the High Courts under classifications such as Case Management Conference or Pretrial Conferences, it would appear that this will be the first time mediation will be specifically mentioned as a component of a litigation trial. This may well be signs of the courts of the future, don’t you think?