Strengthening the Legal Regime for Product Liability and Consumer Protection in Trans-border Transactions in Nigeria

Strengthening the Legal Regime for Product Liability and Consumer Protection in Trans-border Transactions in Nigeria

CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background to the Study

This study addresses the important issue of consumer protection in trans-border transactions under Nigeria’s product liability regime.

Despite national political boundaries, the world is fast becoming a “global village”. With advancements in science and technology, particularly in Information and Communications Technology (ICT), information relating to goods produced in one part of the globe is now easily accessible to inhabitants of other parts of the world. Residents of countries separated by thousands of miles can engage in business transactions involving the supply of goods and provision of services without crossing their nations’ borders. People of one country can, through the Internet, order and pay for goods to be supplied from another country. Similarly, advancements in transport technology have also made travel and transportation of goods a lot faster, safer and less cumbersome than before, with the result that goods produced in one part of the globe can easily be supplied to inhabitants of distant lands. These days, the supplier of goods and the consumer need not be domiciled in one country and subject to the same legal jurisdiction. Globalisation promotes increasing interactions and interrelationships among countries of the world and their inhabitants. Such interactions are made possible by the liberalisation of trade and commerce and are sustained and supported by law, both at national and international levels.

Nigeria, like many other developing countries, depends heavily on imports to meet domestic demands for manufactured consumer goods. Thus, the balance of trade between the developed and developing countries for consumer goods usually tilts heavily in favour of the developed countries.

Owing to the low level of technological development and lack of expertise, raw materials extracted in their natural state in developing countries are often exported to the developed countries, where they are processed and exported back to the developing countries in the form of finished products. For example, Nigeria exports primary agricultural products such as cocoa, cotton and palm oil, and in return massively imports manufactured products such as beverages, clothes and cooking oil, produced from the primary agricultural products. At times, owing to stringent national regulations on standards, goods produced in the developed countries for their domestic markets are of higher standards than those produced for export, especially to developing countries with less stringent regulations and enforcement of standards. Invariably, this results in consumer dissatisfaction, loss of expectations and even injuries or damage to the consumer.

Within the national boundaries of a country, the nature and scope of protection, which the law provides for the consumer, ranging from the regulation of product quality, backed by administrative and penal sanctions, to the provision of civil remedies by regulatory agencies and the courts. Claims for injury, loss or damage arising from a defective product are handled under the country’s national legislation and applicable rules of contract or tort. The applicable legislation and rules of law of any country, which impose liability on persons who manufacture or supply products to the consumer, collectively constitute the country’s product liability regime. Where the transaction leading up to the acquisition of a product, which causes injury or loss to a consumer, involves substantial external (foreign) elements, the presence of such externalities can pose serious challenges for national consumer protection legislation and regulations. Such challenges will hinge, essentially, on the applicability and enforcement of national legislation, regulations and rules of law in a trans-border setting.

1.2 Statement of the Research Problem

With globalisation, the concept of “consumer” has assumed an international dimension. Trade liberalisation, bordering essentially on laissez-faire, seems to be the order of the day. Unscrupulous producers can, and often do, take undue advantage of free trade to produce fake, adulterated and substandard goods, which can easily be exported to other countries to the detriment of consumers. In this regard, the position of developing countries, including Nigeria, that depend largely on the importation of consumer goods is quite precarious. Commerce has become increasingly international and the problems of hazardous, fake and defective products have assumed notable prominence. For example, as of October 2014, the rate of substandard goods in Nigeria was put at forty per cent, of which imported products accounted for ninety-five per cent. Given the massive import of consumer goods, made possible by economic globalisation, what protection has the law provided for the Nigerian consumer in trans-border transactions? It is in the domain of consumer protection law to ensure that goods imported into the country are safe and of good quality, and that where a Nigerian consumer suffers loss or injury as a result of consumption of fake goods he can obtain redress. What then is the extent of protection enjoyed by Nigerian consumers in trans-border transactions and other situations with substantial foreign elements in their relationship with the producer? In today’s global village, where more and more transactions are conducted by multi-national corporations, which are growing in number and importance daily, does Nigeria’s product liability regime provide adequate protection for its consumers?

It is in the light of the above challenges that this study seeks to examine the legal regime for product liability and consumer protection in trans-border transactions in Nigeria. In particular, it examines Nigeria’s domestic product liability regime and rules of Private International Law that should in appropriate cases actuate the domestic law in trans-border transactions. The study seeks to recommend measures to strengthen the relevant statutes and rules of law, to improve the country’s legal regime for product liability and consumer protection in trans-border transactions.

1.3 Research Questions

The study addresses the following pertinent issues:

(1) How is the Nigerian consumer protected against defective products?

(2) What protection, if any, is there under Nigerian law for the consumer in trans-border transactions involving the acquisition of goods?

(3) How best can the Nigerian consumer be protected against defective products in trans-border transactions in the global market created by economic globalisation?

1.4 Objectives of the Study

The principal objective of this study is to examine Nigeria’s product liability regime to ascertain what protection there is for consumers in trans-border transactions involving the acquisition of goods. Its specific objectives are to:

(i) critically examine Nigeria’s product liability law, to ascertain the adequacy or otherwise of the applicable statutes and legal rules in protecting consumers of goods in both domestic and cross-border transactions;

(ii) determine how a greater level of protection can be achieved for consumers through product liability law, in both domestic and trans-border transactions; and

(iii) recommend improvements to strengthen the relevant areas of law in Nigeria.

The basic assumption is that, although the Nigerian consumer enjoys considerable protection against defective products under the country’s domestic law, the same level of protection is not available to the consumer in trans-border transactions as the relevant legislation and legal rules lack extra-territorial application.

1.5 Methodology

This study is essentially descriptive, analytical and comparative. A careful analysis of the relevant Nigerian statutes, case law and applicable international legal standards, is undertaken to show the current position of the law on the subject matter. In particular, the study examines the legal framework for product liability in Nigeria. It also analyses Nigeria’s rules of Private International Law (Conflict of laws) which, in appropriate situations, ought to actuate the application of relevant domestic law in trans-border transactions and compares them with those of other jurisdictions, such as the United Kingdom (UK), the European Union (EU) generally and the United States of America (USA). Primarily, data for the research were gathered from Nigerian and foreign statutes, relevant international legal instruments and relevant decisions of courts in Nigeria and other countries. Other sources of data for the work include opinions of authors as expressed in textbooks, journals, newspapers and other periodicals, both local and foreign. The researcher also had extensive recourse to the Internet, as well as other electronic and print media while gathering information in the course of the work.

1.6 Scope/Delimitation of the Study

In terms of the subject matter, the study focuses on product liability. It does not cover liability for services, which is also an important aspect of consumer protection. In geographical or territorial scope, the study is restricted to Nigerian law, which in the context of the study, includes international legal instruments and rules of Private International Law applicable in Nigeria. Where necessary, the laws of other jurisdictions are highlighted to show the position of the law in those jurisdictions. Finally, relative to time, the discussions and analyses in the work are based on the law as of July 2015. This, however, does not preclude references to earlier statutes, regulations and international standards that have been abrogated, as well as court decisions that have been overruled, where such hindsight is considered necessary to gain insight into the present position.

1.7 Significance of the Study

This study highlights broad issues of consumer protection in cross-border relations, including electronic commerce (e-commerce). It appraises the present position of the law to determine the adequacy or otherwise of the level of consumer protection in domestic and international transactions under Nigeria’s product liability law. It recommends measures that will enable the country to enjoy the benefits of globalisation and, at the same time, ensure adequate protection of its citizens as consumers in the emerging global marketplace. The study is considered useful to those who have the responsibility of formulating legal rules and policies in the area of consumer protection, not only in Nigeria but also in other developing countries, particularly in Africa. The study is also useful to individual consumers and organisations engaged in consumer protection activities because it will enable them to appreciate current consumer protection issues relating to product liability in Nigeria, in particular, and in the global market.

1.8 Organisation of the Research

This thesis is divided into seven chapters. Chapter One deals with introductory matters, such as the background to the study, problems necessitating the research, the objectives of the study, the research questions, methodology, the significance of the study and its scope. Also, it embodies a review of the relevant literature on the subject of the study, analyses and clarifies key concepts in the study, such as consumer, consumer protection law, product liability and places them in proper perspectives for the study.

Chapter Two discusses the legal framework for product liability in Nigeria. As the liability of a producer or supplier of a product can arise in contract, tort or under regulatory statutes, each of these heads of liability is treated separately. An increasing volume of trade in goods is being conducted through electronic commerce (e-commerce), which is rapidly re-shaping the way trade is conducted internally and across the globe. Owing to the growing importance, popularity and peculiarities of this new method of buying and selling of goods, Chapter Three is devoted exclusively to the discussion of consumer protection issues in e-commerce.

Chapter Four discusses the applicable law in product liability in trans-border transactions in Nigerian. The focus here is on the extra-territorial applicability of the relevant statutes and rules of law. There are several defences available to a person sued or prosecuted for product defect. Some of the defences are peculiar to different heads of liability while others apply to more than one head of liability. Thus, to avoid the repetition that would be occasioned by discussing the defences under the various heads of liability, Chapter Five discusses the possible defences available to a defendant in a product liability action. Chapter Six discusses the broader question of enforcement of consumer rights in trans-border transactions. It discusses the relevant rules of conflict of laws relating to the jurisdiction of courts, and the recognition and enforcement of foreign judgments, and compares the Nigerian position with those of other jurisdictions, to show the extent of protection enjoyed by Nigerian consumers in trans-border transactions.

The concluding chapter, Chapter Seven, contains a summary of the findings of the study, as well as recommendations, which if implemented will enhance the protection of Nigerian consumers against defective products in both domestic and trans-border transactions.

References

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