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Lagos State Small Claims Court: A Milestone In Dispute Resolution

On Monday, April 23, 2018, the Lagos State Judiciary took a significant step towards further enhancement of the process for settlement of commercial disputes, involving small claims not exceeding Five Million Naira (N5,000,000 Naira) in the State. This was done by the establishment of the Small Claims Court with the objective of providing easy access to an informal, inexpensive and speedy resolution of simple debt recovery disputes in the Magistrates’ Courts. A Small Claims Court is a specialized court or local tribunal created by statute with specific duties and powers. Generally, the court is designed to provide judicial determination of disputes involving small amounts of money quickly and cheaply, with or without legal representation. Following the creation of the court, the Magistrates’ Court Law (Practice Directions on Small Claims) 2018 (“Practice Directions”) were issued by the Hon. Justice Opeyemi Oke, Chief Judge of Lagos State, as the regulatory framework for the take-off and smooth operation of the new regime.

As Nigeria’s financial nerve center and economic capital, the myriad of disputes arising from business transactions, investments and all sorts of contractual relationships on a daily basis in Lagos State is generally expected. Parties to these disputes also expectedly seek settlement daily either by instituting legal actions in the court of law or by submitting to an arbitration panel, in accordance with the terms of their agreements. Notably, in many instances, not only are the amounts of claim not in contest (liquidated demands), they are also relatively small to have warranted the kind of rigour, technicality and expenses in terms of finance and time; usually associated with proceedings in the regular courts. In essence, the importance of the role of the Small Claims Court in decongesting the regular Magistrates’ Courts in Lagos State of cases which could easily be resolved without much technicality, cannot be overemphasized.

This piece evaluates the impact of the establishment and operation of the Small Claims Court on the resolution of commercial disputes in Lagos State. A background is also provided on the global evolution of the Small Claims Court with comparative insight into the practice and procedures applicable in different jurisdictions.


The evolution of the Small Claims Court can be traced to the small county or magistrate’ courts in medieval England, which were popularly referred to as the “Court of Pie-powders”. These small courts were established to judicially resolve disputes among small merchants, artisans, itinerant traders and the like, who moved from place to place, usually on foot. Historically, pie-powder referred to the dusty feet of travelers and vagabonds, and was only later applied to the tribunal who might have dealings with such people. In addition, since the members of the tribunal were not sitting on a bench but walking around in fairs, they would often get their feet dusty. The term pie-powder therefore applied to the tribunal because the court was frequented by merchants with dusty feet, who wandered from mart to mart. In 12th Century England and Scotland, a decision had to be made within a day and a half (before the third tide) of any accusation. If the court ruled against the defendant and the defendant could not pay the decided amount, his property could be seized, appraised, and sold to cover the costs.

When the time came for the trial, both parties (plaintiff and defendant) would be summoned. Typically, the defendant would be summoned an hour earlier. The burden of proof was on the plaintiff with documents and witnesses often being provided as evidence. After the plaintiff had made his case, the defendant then had the right to respond to the accusation and counter with evidence of his own. Trials at courts of pie-powders were short, quick and informal. For speed, judgments were oral, written affidavits and cross-examinations were not used.

By the 17th Century, when the standard district courts had well been established, most of the powers of the Courts of Pie-powders had effectively been transferred to the regular court system, for practical reasons rather than as a result of legislation. The last "active" Court of Pie-powders, at the Stag and Hounds Public House in Bristol, was reportedly abolished by the English Courts Act 1971. Consequently, the pie-powder courts and other similar agencies became transformed into Small Claims Courts and spread into other parts of the world as a distinct segment of the system of civil courts. In the United States of America, the Small Claims Court system was reportedly established in the 1930s in response to the growing need for a ‘People’s Court’ to settle small disputes of individuals, sole proprietorships, partnerships, associations and corporations. The system was created in South Africa in 1984. In Zimbabwe, 1993. In Brazil, 1995 and in Kenya, 2016. In Nigeria, the small claims initiatives started with the Lagos Court of Arbitration (“LCA”) Small Claims Scheme in 2012 and now, in 2018, the properly designated Small Claims Courts.


In Lagos State, the Small Claims Court/Track was created out of the existing Magistrates’ Courts, as a division of the Court. The applicable law is the Magistrates’ Court Law of Lagos State 2009, which gives the Lagos State Judicial Service Commission the mandate to establish Magistrates’ Court Houses, as it considers appropriate, necessary and expedient to accommodate the needs of the State. The law also empowers the Chief Judge of the State to, in addition to the Magistrates’ Court (Civil Procedure) Rules, make rules regulating the practice and procedure of the Magistrate Court so established. This sets the legal framework under which some Magistrates’ Courts were in April 2018, designated as Small Claims Courts and the Practice Directions issued.

Instituting a Case

Accordingly, an action for the determination of a dispute between litigants could henceforth be commenced in a designated Small Claims Court in Lagos State where:

  • The Claimant or one of the Claimants resides or carries on business in the State;

  • The Defendant or one of the Defendants resides or carries on business in the State;

  • The cause of action arose wholly or in part in the State;

  • The claim is for a liquidated monetary demand in a sum not exceeding N5,000,000 (Five Million Naira), excluding interest and costs; and

  • The claimant has served on the Defendant, a Letter of Demand, in the prescribed form.

Given the objective of the Small Claims Court and the target-class of claims and litigants, the procedure has essentially been simplified by reducing same into standard forms, which the Claimant or Defendant/Counter-claimant, as the case may be, can simply fill out and file at the Registry of a Magistrate Court having jurisdiction to hear small claims suits. These include Form SCA 1 for Letter of Demand; Form SCA 2 for Complaint Form; Form SCA 3 for Summons; Form SCA 5 for Defence/Counterclaim; Form SCA 7 for Order of Substituted Service; and Form SCA 8 for Appeal Form, among others.

Where a case satisfies the stipulated criteria for Commencement of Action (stated under Article 2) as enumerated above, the Claim thereof shall be marked “Qualified for Small Claims” by the person in charge of the Small Claims Registry and the Applicant shall thereafter be directed to pay appropriate filing fees. The case files in respect of a duly marked Claim is required to be forwarded, within 24 hours, from the Registry to the Administrative Magistrate, who in turn shall also within 24 hours of the receipt of the forwarded case files, assign the case to a Magistrate of the Small Claims Court. Such case assignments are required, by the Practice Directions, to be undertaken on a random basis. More so, the Registry is mandated to effect the service of the Summons on the named Defendant(s) through the Sheriff of the Small Claims Court, within seven (7) days of filing. Where personal service of the Summons is proven to be impracticable, the Claimant shall apply for an Order of substituted service.

Defence/Counterclaim, Representation and Hearing of Cases

A Defendant duly served with a Summons from a Small Claims Court Registry is required to file his Defence/Admission or Counterclaim, in the prescribed form, within seven (7) days. Where a Defendant fails to file an Answer to the Claim, he may be held to have admitted the Claim. A Claimant who wishes to respond to a Defendant’s Counter-claim has within five (5) days to file a Reply to same. The filing of the Claimant’s Reply marks the close of pleadings.

At the proceedings before the Small Claims Court, parties are at liberty to represent themselves. Partnerships and Registered Companies can be represented by either a Partner, the Company Secretary or any other Principal Officer of the Partnership or Company. While parties may testify on their own behalf and tender all necessary documents, they may also call other witnesses to give evidence at the hearing.

The Magistrate is obliged to promote, encourage and facilitate amicable settlement of a dispute among the parties by providing settlement options to the parties as he deems fit, at the first appearance of the parties before the Court. This process of facilitating amicable settlement shall not exceed seven (7) days. Where parties are able to resolve their dispute, the terms of settlement shall be entered as consent judgment by the Court accordingly. However, in a situation where parties are unable to amicably settle their dispute, the Magistrate shall hold a preliminary hearing for the purpose of giving directions for hearing of the Claim or Counter-claim within the timelines stipulated in the Practice Directions.

It should be noted that the Magistrate’s role in facilitating amicable settlement between parties is limited to “c”. In order words, the Magistrate is neither a Mediator nor an Arbitrator. He should therefore not see himself as someone conducting either mediation or arbitration or Early Neutral Evaluation (ENE) or any other form of Alternative Dispute Resolution (“ADR”). While Facilitated Negotiation takes place only between the parties and is only guided by the Magistrate, ADR mechanisms involve the inputs of third parties who are experts in the technicality and formality of legal and/or arbitral rules.