JURISDICTIONAL OVERREACH IN BANKING AND FINANCIAL MATTERS BY MAGISTRATE COURTS
INTRODUCTION/BACKGROUND
The Nigerian judicial system, structured with distinct jurisdictional boundaries, aims to ensure fairness and legal precision.The jurisdiction of magistrate courts in Nigeria is clearly defined by law, yet there has been an increasing trend where these lower courts overstep their boundaries, particularly in matters involving banks and financial institutions. A disturbing practice has emerged where magistrate courts issue orders restricting bank accounts despite lacking the legal authority to do so;this practice, devoid of legal foundation, not only undermines the integrity of the judicial process but also poses significant risks to individuals and businesses.
JURISDICTIONAL BOUNDARIES OF MAGISTRATE COURTS
Magistrate courts(called District Courts when presiding over civil matters in the North) are inferior courts of record and is deemed one most important inferior courts within the Nigerian legal system. They are courts of summary jurisdiction created by the law of the House of Assembly of a State and have limited jurisdictions which vary from state to state. They exercise jurisdiction over both civil and criminal matters, and is constituted by a single magistrate. It is a court of summary jurisdiction because the matters are determined without pleadings or briefs filed by the parties.Magistrate Courts generally exercise civil jurisdiction over personal actions arising from the existence of a contract, torts, landlord-tenants issues so long as the damages claimed or the annual rental value does not exceed a certain sum (as determined by the Magistrates’ Court laws of various states). They are also empowered to make orders and grant injunctions concerning a property which is the subject matter of an action before it. Magistrate Courts also derive authority from the Administration of Criminal Justice Act 2015 and the Magistrates’ Court Rules; however none of these laws empower the Magistrate Court to preside over issues involving financial institutions or to issue orders restricting bank accounts.
The power to preside over issues involving financial institutions falls within the jurisdiction of the Federal High Court as well as the High Courts. The Banks and Other Financial Institutions Act (BOFIA) 2020 exclusively vests jurisdiction over banking-related matters in the Federal High Court. Section 251(1)(d) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) explicitly states that:
"The Federal High Court shall have exclusive jurisdiction in civil causes and matters relating to the operation of companies under the Companies and Allied Matters Act or any other enactment regulating the operation of companies in Nigeria."This provision extends to banking institutions, financial transactions, and regulatory enforcement matters. The power to issue orders affecting bank accounts is generally vested in the Federal High Court and the High Courts or in specific law enforcement agencies empowered by statutes like the Economic and Financial Crimes Commission (EFCC) Act or the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Act. These agencies, when investigating financial crimes, can obtain orders from the Court to freeze accounts, following stringent due process requirements.Thus, magistrate courts have no legal standing to make decisions affecting financial institutions or to issue orders freezing or restricting bank accounts.
JUDICIAL OVERREACH: INSTANCES OF UNLAWFUL ORDERS BY MAGISTRATE COURTS
Despite the clear legal framework, several magistrate courts have continued to overreach their jurisdiction by issuing orders that interfere with banking operations. In FIDELITY BANK PLC V. MONYE (2012) the Court of Appeal reaffirmed that only the Federal High Court has jurisdiction over matters involving banks and other financial institutions. Any order issued by a magistrate court affecting a banks operations is ultra vires and null and void.
Another instance in the case of MRS EUNICE ODDIRI (NEE ESISO) v. ZENITH BANK AND ORS FHC/ABJ/CS/1635/2019 where Justice Ekwo stated in his judgement that a Magistrate Court lacks the power to make bankers orders or order the freezing/restriction of an account, pursuant to a law that is non-existent(BANKERS ORDER ACT 1877). Another instance is the case of BLAID CONSTRUCTION LIMITED & ANOR v. ACCESS BANK PLC.
A worrying pattern seems to be emerging where banks, rather than law enforcement agencies, approach magistrate courts to obtain orders restricting customer accounts. Such orders are often obtained ex parte (without notifying the affected party), violating due process and the fundamental right to fair hearing enshrined in Section 36 of the 1999 Constitution; Such orders are not only unlawful but also potentially detrimental.They can disrupt businesses, freeze essential funds, and cause irreparable damage to individuals' financial standing. The lack of proper scrutiny and due process in Magistrate Courts makes these orders particularly susceptible to abuse.
A RECENT CHALLENGE: SETTING THE RECORD STRAIGHT
Recently, our firm encountered a glaring example of this jurisdictional overreach. A bank, instead of approaching the appropriate law enforcement agency or a superior court, obtained an order from a Magistrate Court to restrict our client's bank account. This order, obtained without any legal basis, caused significant disruption to our client's business operations.
We challenged this order, arguing vehemently that the Magistrate Court lacked the jurisdiction to issue such a directive. Our submissions highlighted the clear jurisdictional limitations of the Magistrate Court and the absence of any legal provision empowering it to restrict bank accounts. We further emphasized that the correct procedure would have been for the bank to approach a law enforcement agency with the information and allow them carry out their investigations before approaching the appropriate court for an order; as provided by law.
The Magistrate Court, after considering our submissions, acknowledged its lack of jurisdiction and rightfully set aside the order. This decision reaffirms the importance of adhering to jurisdictional boundaries and underscores the illegality of Magistrate Courts issuing orders restricting bank accounts.
THE ROLE OF LAWYERS AND MAGISTRATES IN PREVENTING JUDICIAL OVERREACH
This case highlights the urgent need for magistrates to adhere strictly to their legal boundaries. However, beyond the judiciary, legal practitioners also have a role to play in upholding the rule of law. It is unethical for lawyers to knowingly approach magistrate courts for orders they are fully aware are unlawful. As ministers of justice, lawyers should not exploit legal loopholes or mislead courts into issuing orders that contravene the constitution and statutory provisions, such actions not only undermine the integrity of the legal profession but also contribute to the erosion of public trust in the judiciary.The Rules of Professional Conduct for Legal Practitioners (RPC) 2007 emphasizes the duty of lawyers to act with integrity and avoid conduct that undermines the administration of justice. Legal practitioners must stop enabling judicial overreach by filing applications in courts without jurisdiction, as doing so amounts to professional misconduct.
CONCLUSION
Magistrate courts in Nigeria must confine themselves to their legally defined jurisdiction and refrain from issuing orders they lack the power to make. Banks and financial institutions should be mindful of the proper legal channels when seeking account restrictions, ensuring that they comply with the provisions of BOFIA and the 1999 Constitution. Lawyers, as officers of the court, must uphold justice by discouraging unlawful applications and ensuring that court processes are not abused.
The Nigerian judiciary operates within a structured legal framework, and any deviation from its defined boundaries weakens public confidence in the rule of law. If magistrate courts continue to exceed their jurisdiction, it is incumbent upon the legal community to challenge such instances and reinforce judicial accountability. Upholding the law requires collective responsibility, and it is through adherence to due process that the integrity of Nigeria’s legal system can be preserved.
REFERENCES
1. 1999 Constitution of the Federal Republic of Nigeria (as amended), Section 251(1)(d).
2. Fidelity Bank Plc v. Monye (2012) LPELR-14720(CA).
3. 1999 Constitution of the Federal Republic of Nigeria (as amended), Section 36.
4. Banks and Other Financial Institutions Act (BOFIA) 2020, Section 60.
5. Rules of Professional Conduct for Legal Practitioners (RPC) 2007.
