Between 2023 and 2027, President Bola Tinubu’s government is expected to spend around N341.23 billion on judgment debt settlement. The judgment debts were classified as promissory notes in the Debt Management Office’s ‘Schedule of Promissory Notes Issued by Category as of September 30, 2022’ document.
A promissory note is a debt instrument that contains a written commitment by one party (the note’s issuer or maker) to pay another party (the note’s payee) a defined quantity of money, either on demand or at a predetermined future date, according to Investopedia.com.
According to Section 4 of the Government Promissory Notes Act, government promissory notes are paid from the federation’s general revenue and assets.
It read in part, “The principal sums and interest represented or secured by any government promissory notes are hereby charged upon and shall be payable out of the general revenue and assets of the federation.”
Out of the 21 promissory notes related to judgment creditors, 12 would be settled during the four-year tenure of the current administration. While two are dominated in naira, the rest will be settled in dollars.
The two naira-dominated judgment debts would cost about N39.07bn while the rest in dollar would cost $393.89m (about N302.61bn, using the exchange rate of the Central Bank of Nigeria of N768.27/$).
The government said the mediation proceedings were under the alternative dispute resolution framework of the International Chamber of Commerce led by Phillip Howell-Richardson.
Olu Daramola (SAN) from Afe Babalola’s Chambers, who spoke with The PUNCH recently, said the government was not in the habit of defending cases.
He stated, “Most cases against the government are due to negligence and poor handling, leading to judgment against the government even where there could have been no judgment because it has been poorly defended. But unfortunately, the tragedy is that when you file a case against the government, they may not bother until you get a judgment.
“When you already have a judgment, negotiations become difficult because if you win your case in court and the person is now negotiating with you to take a smaller sum than the one that was awarded in court, definitely you won’t be willing.”
The SAN added that the careless signing of contracts was creating problems for the government.
On his part, Prof Sam Erugo (SAN) said it should be disturbing to citizens that the Federal Government continuously faces threats and imminent penalties or liabilities for alleged breaches of construction contracts.
A senior legal practitioner, Matthew Burkaa, said, “Nobody will be happy to see that funds that are supposed to be used for other things are being used for settlement of litigation expenses.”
