NIGERIA Law and Practice Contributed by: Tamuno Atekebo, Chinasa Unaegbunam, Naomi Kabowei and Favour Osayuwamen, Streamsowers & Köhn
2.1.6 Licensing/Qualification of Lessors Foreign lessors need not be licensed or qualified in Nigeria to do business with domestic lessees. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law Most lease contracts in Nigeria with foreign governing law clauses include typical clauses that are contained in lease contracts for aircraft and aircraft parts. Nige - rian law does not stipulate that certain lease terms be excluded in a lease agreement, as parties are free to stipulate the terms that will govern the lease agree - ment. 2.2.2 Tax and Withholding Gross-Up Provisions Gross-up provisions are common and have been enforced by superior courts of record in Nigeria. How - ever, sums representing taxes or penalties borne by companies on behalf of another person or company are disallowed as a deductible expense. 2.2.3 Parts Installed or Replaced After a Lease’s Execution Parties are free to amend the terms of their lease to cover engines and other parts installed or replaced on an aircraft after the execution of the lease. 2.2.4 Risk of Title Annexation If the interest in an engine installed in an airframe is held by a person other than the person who holds interest in the airframe, the risk of title annexation does exist. The realisation of the interest in the aircraft engines is, however, subject to the registration of such an interest with the NCAA at the time it is created. 2.2.5 Recognition of the Concepts of Trust/Trustee The concept of a trust and the role of an owner trus - tee under a lease is recognised in Nigeria. The legal framework for trusts in Nigeria is the received com - mon law of England. There is currently no specific statute governing private trusts in Nigeria. 2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register The interests of an owner (legal or beneficial) or a les - sor of an aircraft, including aircraft engine and pro -
the relative convenience and expense of a trial as between the courts of each jurisdiction; • whether the law of the foreign court applies and, if so, whether it differs from Nigerian law in any material respects; and • to what country and how closely either party is connected, and whether the defendants genuinely desire trial in the foreign country or are only seek - ing procedural advantages – examples of such instances include: (a) where the defendant is resident within the juris - diction of the court; (b) if the subject matter of the suit is located within the jurisdiction; or (c) if the contract was entered into in Nigeria. 2.1.3 Restrictions Concerning Payments in US Dollars No material restrictions are imposed on domestic les - sees making rent payments to foreign lessors in US dollars, as long as the domestic lessees fully comply with – among other things – foreign exchange rules, as well as tax and AML regulations. 2.1.4 Exchange Controls Nigerian laws permit the repatriation of the proceeds of valid transactions in any convertible currency, pro - vided that the necessary documentation is duly com - pleted and submitted to an authorised dealer. Author - ised dealers are banks licensed by the Central Bank of Nigeria to operate in the foreign exchange market. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease Stamp duties arising from the execution of a lease are applicable to both physical and electronic docu - ments and would arise once performance is within the jurisdiction. Lease payments are subject to withholding taxes at a rate of 10%. For non-resident companies, the taxes withheld are treated as their final tax. Importantly, tax - able persons in countries with whom Nigeria has a double tax agreement (DTA) will be taxed based on the provisions of the DTA.
432 CHAMBERS.COM
Powered by FlippingBook