Legalpedia Citation: (2023-07) Legalpedia 52907 (SC)

In the Supreme Court of Nigeria

Fri Jul 7, 2023

Suit Number: SC.CV/405/2013

CORAM

John Inyang Okoro JSC

Uwani Musa Abba Aji JSC

Helen Moronkeji Ogunwumiju SCN

Adamu Jauro SCN

Emmanuel Akomaye Agim JSC

PARTIES

UNITED BANK FOR AFRICA PLC

APPELLANTS

. TRIEDENT CONSULTING LIMITED

RESPONDENTS

AREA(S) OF LAW

APPEAL, ARBITRATION, CONSTITUTIONAL LAW, CONTRACT, EVIDENCE, PRACTICE AND PROCEDURE

SUMMARY OF FACTS

The Respondent commenced an action on 4th February, 2009 against the Appellant for recovery of unpaid value of invoices amounting to the sum of 489,168.45 USD allegedly owed by the Appellant for work done in the line of contract between them. The Respondent also claimed 25% interest on the judgment sum, N250 million as special and general damages for libel and N32 million as solicitor’s fee. Upon receipt of the originating Court process, the Appellant filed a motion on notice pursuant to Order 4(1) and (2) of the Arbitration and Conciliation Act, 2004 seeking an order of stay of proceedings pending arbitration. It did not attach thereto a notice of arbitration neither did it demonstrate any willingness to commence arbitral proceedings.

The two lower Courts concurrently dismissed its application mainly for failure to demonstrate the willingness to commence arbitral proceedings, hence this appeal.

HELD

Appeal dismissed

Cross appeal dismissed

 

ISSUES

1. Whether the Court below was right to hold that before a stay can be granted pending arbitration, the party applying (the Appellant in this case) must demonstrate unequivocally by documentary evidence its willingness to submit the dispute to arbitration?

RATIONES DECIDENDI

JURISDICTION – THE IMPORTANCE OF JURISDICTION

It is trite law that jurisdiction is the life wire of any case. The jurisdiction of a Court is the authority which the Court has to decide matters that are litigated before it. See RAHMAN BROTHERS LTD v. NPA (2019) LPELR – 46415 (SC), NWANZE v. NRC (2022) LPELR – 59631 (SC), BANK OF INDUSTRY LTD. v. OBEYA (2021) LPELR – 56881 (SC).

The jurisdiction of the Court in Nigeria is inherent and is bestowed upon it by Section 6 of the 1999 Constitution of the Federal Republic of Nigeria (as altered) (hereinafter referred to as 1999 CFRN). Under Section 6(6) of the 1999 CFRN, the judicial powers of the Court extends to all matters between government or authority and to any persons in Nigeria, and to all actions and proceedings relating thereto, for the determination of any question as to the civil rights and obligations of that person. – Per H. M. Ogunwumiju, JSC

ARBITRATION – MEANING OF ARBITRATION AND ARBITRATION AGREEMENT

Arbitration is a procedure for the settlement of disputes, under which the parties agree to be bound by the decision of an arbitrator whose decision is, in general, final and legally binding on both parties. The process derives its force principally from the agreement of the parties and, in addition, from the State as a supervisor and enforcer of the legal process. So where two or more persons agree that a dispute or potential dispute between them shall be decided in a legally binding way by one or more impartial persons of their choice, in a judicial manner, the agreement is called an arbitration agreement. – Per H. M. Ogunwumiju, JSC

ARBITRATION – SOURCES OF ARBITRATION LAW

Common law, lex non scripta and statute are the two sources of arbitration law in Nigeria. The statutory source did not codify arbitration law to the exclusion of common law. See B. J. EXPORT & CHEMICAL CO. LTD v. KADUNA PETRO-CHEMICAL CO. LTD. (2003) FWLR Pt. 165 Pg. 445 at 469 C.A. – Per H. M. Ogunwumiju, JSC

ARBITRATION – THE KIND OF ISSUES THAT CAN BE SUBJECTED TO ARBITRATION

Disputes which are subject of an arbitration agreement must be arbitrable. Matters like criminal matters or where fraud is alleged and raised as a matter of public policy are not to be settled privately by arbitration. See B. J. EXPORT & CHEMICAL CO. LTD v. KADUNA PETRO-CHEMICAL CO. LTD. (Supra). – Per H. M. Ogunwumiju, JSC

ARBITRATION – WHETHER AN ARBITRATION AGREEMENT CAN OUST THE JURISDICTION OF A COURT – INSTANCES WHERE THE SUITABILITY OF LITIGATION PREPONDERATES OVER ARBITRATION –

By the provisions of the Arbitration and Conciliation Act, parties to a contract can include an arbitration clause which allows for disputes to be settled by arbitration instead of litigation. At the end of the arbitration process, the agreement reached (i.e the award) will be enforced by the Courts after registration in Court. Where parties opt to arbitrate over disputes, it does not automatically oust the jurisdiction bestowed on the Court by the 1999 CRFN.

Section 2(2) of the Arbitration Act states as follows:

“Unless a contrary intention is expressed therein, an arbitration agreement shall be irrevocable except by agreement of parties or by leave of the Court or judge.” (emphasis mine)

Although it is preferable in many cases to go to arbitration rather than go to Court, it should be noted that arbitration and litigation are not mutually exclusive. Indeed the Court often complements and supplements the functions and powers of the arbitrator. For example, by stay of Court proceedings in appropriate cases; by the issue of subpoena; by making appointments where the parties cannot agree or where a party defaults; for the enforcement of awards and for setting aside awards where necessary. In these cases, the Court intervenes to ensure the proper functioning of arbitration.

No doubt, there are some instances where even though parties have submitted to arbitration, suitability of litigation preponderates over arbitration. These are instances among others:

1. Where the issue for resolution is essentially a legal one.

2. Where the issue turns largely on the credibility of the evidence.

3. Where immediate enforcement of a right is required.

4. Where one of the parties is intransigent.

5. Where there are multiparty disputes arising from a transaction e.t.c.

Thus an arbitration agreement cannot and does not completely oust the jurisdiction of the Court. – Per H. M. Ogunwumiju, JSC

 

TERMINATE – MEANING OF ‘TERMINATE’

According to the Black’s Law Dictionary 8th Edition, to terminate means “to put an end to”,” to bring to an end”, “to end”, “to conclude”. – Per H. M. Ogunwumiju, JSC

ARBITRATION – THE AUTONOMY AND INDEPENDENCE OF THE ARBITRATION CLAUSE

The Courts have always upheld the autonomy and independence of the arbitration clause in the contract. The arbitration agreement may be drawn up separately or may form part of the transaction between the parties. Where the arbitration clause is part of the contract, it is nevertheless regarded in law as a separate contract. In HEYMAN v. DARWIN LTD (1942) A.C 356 at pp. 373-4, the Court in the United Kingdom in considering the legal status of such a clause in a contract, observed:

“… an arbitration clause in a contract is quite distinct from the other clauses. The other clauses set out the obligations which the parties undertake towards each other, but the arbitration clause does not impose on one of the parties an obligation in favour of the other. It embodies the agreement of both parties that, if any dispute arises with regard to the obligations which the one party has undertaken to the other such dispute shall be settled by a Tribunal of their own Constitution.”

Accordingly, where there is a repudiation or total breach of a contract, the arbitral clause survives, as has been further pointed out in HEYMAN v. DARWIN LTD (Supra) that:

“…although further performance of the obligations undertaken by each party in favour of the other may cease, the contract survives for the purpose of measuring the claims arising out of the breach and the arbitration clause survives for determining the mode of their settlement. The purposes of the contract have failed, but the arbitration clause is not one of the purposes of the contract.”

The principle of the separability and autonomy of the arbitration clause is now enacted in Section 12(2) of the Arbitration and Conciliation Act which provides as follows:

“For the purpose of Subsection (1) of this Section, an arbitration clause which forms part of contract shall be treated as an arrangement independent of the other terms of the contract and a decision by the arbitral Tribunal that the contract is null and void shall not entail ipso jure the validity of the arbitration clause.” – Per H. M. Ogunwumiju, JSC

ARBITRATION CLAUSE – THE NORMAL REQUIREMENT AN ARBITRATION AGREEMENT MUST MEET

My Lords, every Arbitration Agreement must satisfy the normal requirement of a contract such as consensus, capacity and legal relationship. Like any other contract, the terms must be clear and certain. The Court would, however, lean towards a construction that will give effect to the intentions of the parties. Thus, where a contract contained an arbitration clause which merely reads “Arbitration if any, by the I.C.C. Rules of London”, the Court held that the words “if any” which were the basis of the opposition were either surplusage or abbreviation for “if any dispute arises” and therefore sufficient. See MANGISTAURAUNAIGAZ OIL PRODUCTION ASSOCIATION v. UNITED WORLD TRADE INC. (1995) LLYOD’S REP. 617. There must also be a valid underlying substantive contract in existence and an arbitration agreement the terms of which are certain and enforceable.

The essence of the arbitration agreement is to refer disputes arising between parties to arbitration. The words by which the reference is made must therefore be clear and express, as an inference will not be implied. So also, what is referred must be clearly and sufficiently stated to ensure that jurisdiction is conferred on the arbitrator.

There is no doubt that where the arbitration clause covers all the disputes arising from the contract or transaction without any limit, the arbitrator ought to have power to deal with such a dispute in order to avoid multiplicity of actions. – Per H. M. Ogunwumiju, JSC

LIBEL – WHETHER A CLAIM FOR DEFAMATION ARISING OUT OF LIBEL CAN BE DETERMINED THROUGH ARBITRATION

My Lords, a claim for defamation arising out of libel is a claim at common law. It remains a question of law. A claim for defamation can only be effectively determined by a Court of law. An arbitrator or an arbitral panel is not imbued with the powers to answer legal questions. Thus before a dispute can be referred to arbitration, same must first and foremost be seen to be arbitrable. An arbitrator cannot grant a relief for damages arising from the determination of the legal question as to:

“whether the letter dated 19th August, 2008 is injurious to the reputation of the Respondent.”

What “arises” from the Arbitration agreement can only be predicated upon matters that take their root from the arbitral agreement. If the issue of costs had been the costs of the arbitration, that would be a different consideration. The issue of costs here is the issue of costs incurred in the prosecution of the civil claim for unpaid invoices and interest thereon in the regular Court. The phrase “arising from this agreement” in the arbitration clause in my view has circumscribed the limit to which the clause applies.

No doubt, it would be to the public good if all the issues in contention are determined by a single judicial or quasi-judicial body, and multiplicity of actions are avoided. – Per H. M. Ogunwumiju, JSC

ARBITRATION – WHETHER CLAIMS THAT WERE NOT SUBJECT OF THE ORIGINAL CONTRACT CAN BE INCORPORATED INTO THE ARBITRATION AGREEMENT

Thus the claim sought to be incorporated into the arbitration must be the subject of the original contract from which the arbitration clause emanated. See AFRICAN INSURANCE DEVELOPMENT CORPORATION v. NIGERIAN LNG LTD (2000) 2SC 57 at Pg. 60; (2000) FWLR Pt. 3 Pg. 431.

In BAKER MARINE (NIG) v. CHEVRON NIG. LTD (2006) 6 SC 21 at Pg. 31 &37; (2006) FWLR Pt. 326 Pg. 235 at 250, the issue in this Court was whether damages for the tort of conspiracy as opposed to that of breach of contract can be at large and that aggravated damages could be claimed and sustained by the arbitral award. This Court held that any award would be outside the arbitration agreement and the arbitrators are not allowed to re-write the arbitration agreement to include extraneous issues or parties outside the substantive contract between the parties. – Per H. M. Ogunwumiju, JSC

COURTS – CONDUCT OF COURTS WHERE THE ARBITRATION CLAUSE IS MANDATORY

Generally, I agree with the Court of Appeal Coram Ogunbiyi JCA (as she then was), Galumje JCA (as he then was) and Mshelia JCA in BEBEJI OIL ALLIED PRODUCTS LTD & ANOR v. PANCOSTA LTD IN CA/L/364/02 delivered on 15/11/2006 that a Court should stay a suit before it where the arbitration clause is mandatory and not merely permissive. The phrase “exclusively settled by arbitration” in an arbitration agreement raises an implied term that no action shall be brought until an arbitration had been conducted and the disputes finally and exclusively settled by arbitration, rules out any other means of settling such a dispute. See A.I.D. CO. LTD v. NIGERIAN LNG LTD (Supra). The general position at common law is that where there is an arbitration clause, a Court can refer a case before it to arbitration and compel the parties to submit thereto. See ROYAL EXCHANGE ASSURANCE CO. LTD v. BENWORTH FINANCE (NIG) LTD (1976) NSCC vol. 10 Pg. 648. – Per H. M. Ogunwumiju, JSC

 

ARBITRATION – CONDUCTS OF COURTS IN INTERPRETING THE SCOPE OF AN ARBITRATION CLAUSE

My Lords, the scope of arbitration clauses would always be considered in their natural meaning within the context and circumstances of each case. The arbitration laws in relation to domestic disputes and domestic arbitration even where it requires the arbitrator to assume jurisdiction, does not alter the legal rights of the parties and the Court still has the last word. – Per H. M. Ogunwumiju, JSC

ARBITRATION – THE IMPLICATION OF S.4 & S.5 OF THE ARBITRATION AND CONCILIATION ACT – CONDUCT OF COURTS IN INTERPRETING STATUTES

Section 4 and Section 5 of the Arbitration and Conciliation Act Cap. A18 LFN 2004. The two provisions are set out below:

“4(1) A Court before which an action, which is the subject of an arbitration agreement is brought shall, if any party so requests not later than when submitting his first statement on the substance of the dispute, order a stay of proceedings and refer the parties to arbitration.

(2) Where an action referred to in Subsection (1) of this Section has been brought before a Court, arbitral proceedings may nevertheless be commenced or continued, and an award may be made by the arbitral Tribunal while the matter is pending before the Court.

5. (1) If any party to an arbitration agreement commences any action in any Court with respect to any matter which is the subject of an arbitration agreement, any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the Court to stay proceedings.

(2) A Court to which an application is made under Subsection (1) of this Section may, if it is satisfied-

(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and

(b) that the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, make an order staying the proceedings.”

I agree with the Appellant’s Counsel that essentially whereas under Section 4, it is the Court that makes an order that the parties should submit to arbitration. Under Section 5, the Court does not order the parties to submit to arbitration, hence the need to satisfy the Court of the willingness and readiness to arbitrate.

Thus, the implication of an order made under Section 4 is that a party who fails and or refuses to submit to arbitration flouts an order of Court and contempt proceedings could be commenced against him. On the other hand, under Section 5, there being no order of Court to arbitrate, one of the parties could decide not to arbitrate and would not be in contempt.

However, it is one of the basic canons of interpretation that a legislation should be read as a whole and not examined in microscopic bits to find the intention of the legislature. See ODUTOLA HOLDINGS LTD & ORS v. LADEJOBI & ORS (2006) LPELR – 2260 (SC), NOBIS- ELENDU v. INEC & ORS (2015) LPELR – 25127 (SC), NWOBIKE v. FRN (2021) LPELR- 56670(SC). – Per H. M. Ogunwumiju, JSC

ARBITRATION – DUTY OF A PARTY SEEKING STAY OF PROCEEDING PENDING ARBITRATION – CONDUCT OF COURTS IN INTERPRETING STATUTES

My Lords, I am persuaded that we must look at the heading of both sections of the statute to clarify any ambiguity. See OGBONNA v. A. G. IMO STATE (1992) 1 NWLR Pt. 220 Pg. 647, OYO STATE BOARD OF INTERNAL REVENUE v. UNIVERSITY OF IBADAN (2013) LPELR – 2215.

While the heading of Section 4 reads “Arbitration agreement and Substantive claim before Court”, Section 5 reads “Power to stay proceedings”. Learned Appellant’s Counsel has insisted that the application for stay of proceedings was brought under Section 4 of the Act and that the Court is only obliged to grant the stay without more, no questions asked. I beg to disagree with that position. A clear interpretation of Section 4(1) shows that the section talks about the party asking for stay submitting his statement on the substance of the dispute presumably to the arbitrators and in that case, the Court must refer the parties to arbitration about to be commenced or already commenced and continued. There was nothing on the face of the Appellant’s motion paper to show that it had prepared its statement to be submitted to arbitration. My Lords, it is apparent that the intention of the draftsmen of the Arbitration and Conciliation Act is that Section 4 will only apply where the arbitration proceedings has in fact been initiated i.e. either party may have filed their statement before the arbitral tribunal. This position is expressly corroborated by Section 4(2) of the Act which provides that the arbitral proceedings may nevertheless be commenced or continued while the matter is pending before the Court. This simply means that the arbitral proceedings must have already come alive at the time the application for stay of proceedings is being brought before the Court.

Therefore the law in Section 4(1) requires the applicant to file the motion for stay of contemporaneous with the time the “first statement” of the party in respect of the substance of the dispute is submitted to the arbitrator. In this case, the Appellant herein who was the applicant at the trial Court did not submit any material to show that an arbitrator had been appointed by either of the parties to whom a “first statement” of the substance of the dispute should have been submitted. My Lords, the requirements of Section 5 highlights the interpretation of Section 4(1) given above.

In Section 5(1), the draftsmen referred to “delivery of pleadings” or taking any other steps in the Court proceedings.

My Lords, the phrase “first statement” is used in Section 4(1) of the Act as against “pleadings” in Section 5 (1) of the Act. Section 4 requires the application to be made not later than “when submitting his first statement on the substance of the dispute” while Section mandates the Applicant to bring the application “at any time after appearance and before delivering pleadings”. It is my view that it was intended by the draftsmen of the Arbitration and Conciliation Act that Section 4 of the Act will apply when the arbitral proceedings has been initiated and the Applicant brings the application for stay of proceedings “not later than when submitting his statement of the dispute”. There is nothing known as “first statement on the substance of the dispute” in our adjudicatory system before the Court. What is more,Section 4(1) expects the applicant to make his application for stay of proceedings not later than when submitting his first statement of the substance of the dispute. This means that the Applicant’s application for stay ought to be brought at a time when arbitral proceedings have been initiated. The jurisprudence behind this is very simple. A party who is seeking stay of proceedings pending arbitration just like in a case of stay of proceedings pending appeal is duty bound to show its utmost and genuine desire to submit before the arbitral tribunal. It could never have been the intention of the draftsmen of the Act that an application for stay of proceedings pending arbitration will be granted as a matter of course. Consequently, even if the Appellant’s application was brought under Section 4 of the Act there was no material before the two Courts below to justify the grant of the application.

Furthermore, by the wordings of Section 5 of the Act, it is my view that Section 5 was the applicable provision in the instant case as it was apparent that the arbitral proceedings was yet to commence and as such it was the duty of the Appellant to have shown by documentary evidence that it was ready and willing to submit to the arbitration and that the application sought was not a ruse or a sham to deprive the Respondent its right of access to Court. This they failed to do.

In Section 4, there must be in existence an arbitration proceedings or specific things done by the applicant like appointing an arbitrator(s), filing its statement e.t.c before it can move the Court to stay proceedings.

In Section 5, there must be an existing Court proceedings in which the applicant has not taken steps more than filing an appearance before it can apply for stay of proceedings. With the existence of the Court proceedings, the applicant must show that the Court proceedings must stop and abide the outcome of the arbitration. The onus to prove that it was ready prior and after the initiation of the proceedings must be discharged. – Per H. M. Ogunwumiju, JSC

ARBITRATION – CONDUCT OF PARTIES WHERE AN ARBITRATION CLAUSE EXISTS

Thus, the law of arbitration envisages that where an arbitration clause exists and there is a dispute as in this case about the quality, nature and amount of work done vis-a-vis the invoices submitted and payments made, the parties should submit these technical and delicate issues inherent in the subject of the contract to an impartial arbitrator or a group of arbitrators versed in the technical nuances of the contract for proper resolution. Afterwards, when that portion of the dispute is resolved between the parties, then the contract may be mutually terminated before the parties go further to fulfill other yet to be performed portions of the works hitherto contracted. – Per H. M. Ogunwumiju, JSC

ARBITRATION – CONDUCT OF COURTS IN DECIDING WHETHER TO GRANT AN APPLICATION FOR STAY OF PROCEEDINGS PENDING ARBITRATION

My Lords, the consistent and conventional wisdom on this issue has been proclaimed in several decisions. I will highlight the various positions of the superior Courts on this issue.

In O.S.H.C v. OGUNSOLA (2000) 14 NWLR Pt. 687 Pg. 431- CA, the Respondent claimed the sum of N1,969,861.20 and Pleadings were filed and exchanged. Before the case went on trial, the Defendant/Appellant applied in limine to stay proceedings in the case pending a reference of the dispute to arbitration in accordance with the agreement signed by both parties. The application was refused and dismissed by the trial Court and the case was ordered to proceed to trial where judgment was given in favour of the Respondent. At the Court of Appeal, the Respondent argued that the issue of arbitration clause was not raised and was never sought by the Appellant throughout the proceedings. The Court held that there is consensus by both parties that they are bound by the terms of the contract agreement which they duly executed or signed. What was in dispute in that case and emphasized was whether or not there was a formal request (or application) before the lower Court for the proceedings to be stayed and for the dispute to be referred to arbitration. The Court of Appeal held that since the Appellant had acted timeously by making his request or application for stay of proceedings at the lower Court pending arbitration, the learned trial judge should have ordered a stay of proceedings and referred the matter to a referee for arbitration. Judgment was awarded in favour of the Appellant. The Court also held that parties to a written contract are bound by the terms of the contract provided such terms are not illegal or contrary to public policy. The application was brought in that case under Section 5 of the Act.

In “M. V.” PANORMOS BAY v. OLAM (NIG) PLC – (2004) 5 NWLR Pt. 865 Pg. 1- CA, the Appellant’s action was filed pursuant to Section 4(1) and 5(1) of the Arbitration and Conciliation Act. The issue there was whether the trial Court was right to hold that there was a valid, subsisting, binding and irrevocable arbitration agreement between the parties. Also, whether a finding by the trial Court that the Defendants who were the applicants and who had not taken any steps in the proceeding had enough grounds to have entitled the trial judge to order the parties therein to go for arbitration outside the jurisdiction of this Country having regards to Section 20 of the Admiralty Jurisdiction Decree and Section 5(2) of the Arbitration and Conciliation Act. The Court held Per Galadima J.C.A (as he then was) thus:

“I have held that Section 20 of the Admiralty Jurisdiction Decree (supra) is a statutory limitation to the enforcement of the purported arbitration agreement contained in the bills of lading herein. Therefore by reference to the clear provisions of the said Section 20 of the Decree, this Court could declare the arbitration agreement null and void. Alternatively, if however this position is unattainable in law, then a finding by the learned trial Judge that there is a valid, subsisting, binding and irrevocable arbitration agreement between the parties and that the defendant had not taken any steps in the proceedings could not in any case have entitled the trial judge to order the parties herein to go for arbitration outside the jurisdiction of this Country since Sections 2 and 4 of the Arbitration and Conciliation Act are controlled and limited by Section 5(2) of the same Act.” (emphasis mine)

The Court also held that it was not enough for the Appellant to merely depose that they were ready and “willing to do all things necessary for causing the said matter to be decided by arbitration and for proper conduct of such arbitration” and refused the application for stay of proceedings because there was sufficient reason why the matter could not be referred to arbitration.

In ONWARD ENTERPRISES LTD. v. M.V MATRIX – (2010) 2 NWLR Pt. 843 Pg. 530 – CA, the issue in that case was whether the trial Court exercised its discretion under Section 5 of the Arbitration and Conciliation Act judicially and judiciously. When the Respondents in this case brought their application for stay of proceedings, they tendered certain documents which indicated that they had appointed their own arbitrator and had communicated same to the Appellant. The Court held that by appointing their arbitrator in compliance with Clause 40 of the charter-party agreement endorsed by both parties, the Respondents fulfilled their own obligation. The approach of the Respondents clearly indicated that they were ready and willing to do all things necessary for the proper conduct of the arbitration in line with Section 5(2) of the Arbitration and Conciliation Act.

In M.V. LUPEX v. NOC & S. LTD (2003) 15 NWLR pt. 844 Pg. 469- SC, the parties in this case agreed to refer their disputes to arbitration in London under the English law. The Tribunal in England had started hearing the dispute and parties had begun to present their respective cases before it. This Court overturned the judgments of the two Courts below which refused stay and ordered a stay of proceedings.

On the issue of discretion, the Court held per Uthman Mohammed JSC thus:

“Ephraim Akpata, JSC in the book “The Nigerian Arbitration Law” is apt on the issue of staying proceedings where parties have agreed to refer their dispute to arbitration in a contract. He expressed his opinion in the following exposition:

“That the power to order a stay is discretionary is not in doubt. It is a power conferred by statute. It however behoves the Court to lean towards ordering a stay for two reasons; namely;

1. a) The provision of Section 4(2) may make the Court’s refusal to order a stay ineffective as the arbitral proceedings “may nevertheless be commenced or continued” and an award made by the arbitral Tribunal may be binding on the party that has commenced an action in Court.

1. b) The Court should not be seen to encourage the breach of a valid arbitration agreement particularly if it has international flavour. Arbitration which is a means by which contract disputes are settled by a private procedure agreed by the parties has become a prime method of settling international commercial disputes. A party generally cannot both approbate and reprobate a contract. A party to an arbitration agreement will in a sense be reprobating the agreement if he commences proceedings in Court in respect of any dispute within the purview of the agreement to submit to arbitration.”

Judges and Courts exercise their discretion in accordance with rules of law and justice and not according to private opinion. An exercise of discretion is a liberty or privilege to decide and act in accordance with what is fair and equitable under the peculiar circumstances of the particular case, guided by the spirit and principles of law.

Where parties have chosen to determine for themselves that they would refer any of their dispute to arbitration instead of resorting to regular Courts, a prima facie duty is cast upon the Courts to act upon their agreement. See Willesford v. Watson (1873) 8 Ch. App. 473.”

In SAKAMORI CONSTRUCTION (NIG) LTD v. LAGOS STATE WATER CORPORATION (2021) LPELR 56606(SC), the Appellant filed the matter in the Court of trial and applied for summary judgment on 15/07/2009. But the Respondent, for reasons best known to it, neither entered appearance nor reacted to the Appellant’s originating processes et al, inspite of the proper service evidently effected on it. The Appellant’s application for summary judgment in question was heard and ruling was reserved for delivery on 11/12/2009. It was at that point in time on 11/12/2009, that the Respondent deemed it expedient to wake up from slumber and file an application for stay of proceedings, thereby seeking to momentarily arrest the judgment of the trial Court. This Court held Per Ibrahim Mohammed Musa Saulawa, JSC thus:

“In my considered view, the answer to that pertinent question is not far-fetched. This Court has had cause in a plethora of authorities to reiterate the fundamental principle, that any agreement to submit a dispute to arbitration, does not automatically oust the jurisdiction of the Court. Therefore, either party to such an agreement may, prior to when submission to arbitration or award is made, commence legal proceedings regarding any claim or cause of action contained in the submission. See HARRIS VS. REYNOLDS (1845) 7QB71, OBEMBE VS. WEMABOD ESTATES LTD (1977) LPELR-SC466/1975.”

The Court also held that failure of the Respondent to enter appearance after the Appellant filed its action in the trial Court goes against the provisions of Section 5 of the Arbitration and Conciliation Act. – Per H. M. Ogunwumiju, JSC

RATIO DECIDENDI – CONDUCT OF COURTS IN RELATION TO RATIO DECIDENDI

This Court is bound by precedent when the facts of the previous decisions have similar material facts with the case before the Court.

See DALHATU v. TURAKI (2003) 15 NWLR Pt. 843 Pg. 310, NOBIS-ELENDU v. INEC & ORS (2015) LPELR-25127 (SC), DR. UMAR ARDO v. ADMIRAL MURTALA NYAKO & ORS (2014) LPELR – 22878 (SC),NIGERIA AGIP OIL COMPANY LTD v. CHIEF GIFT NKWEKE (2016) – LPELR – 26060 (SC) and most importantly, the pronouncement of MUHAMMAD, JSC in the case of NWABUEZE v. THE PEOPLE OF LAGOS STATE (2018) LPELR-44113 (SC) where his Lordship held thus:

“It is therefore settled that a Court … is bound by its own or the ratio decidendi of a higher Court in an earlier case, if the issues of fact and the legislation the Court considers subsequently are same or similar … where the lower Court, as in the instant case, holds itself bound by the decision… on the same or similar facts, Appellant’s grudge against the lower Court’s decision cannot therefore, be taken seriously…” – Per H. M. Ogunwumiju, JSC

ARBITRATION – DUTY OF AN APPLICANT SEEKING STAY OF PROCEEDINGS PENDING ARBITRATION

I agree with the Court below when it held on page 178-179 of the Record thus:

“… There must be documentary evidence showing the applicant wrote to the respondent notifying her of the willingness to resort to arbitration over the dispute and also specifying in the letter or correspondence for the arbitration for the ratification or approval of the other party…”

See M.V PANORMOS v. Olam (2004) 5 NWLR (Pt. 865) 1 and ONWARD ENTERPRISES LTD. v. M. V. MATRIX (2010) 2 NWLR (Pt. 1179) Pg. 530. – Per H. M. Ogunwumiju, JSC

COURTS – DISCRETIONARY POWERS OF THE COURT TO GRANT STAY OF PROCEEDINGS PENDING ARBITRATION

Firstly, it is common place that where a party to an agreement which has an arbitration clause proceeds to file a suit in the event of a dispute, the defendant would naturally pray the Court for a stay of proceedings pending arbitration. See Fawehinmi Construction Co. Ltd vs Obafemi Awolowo University (1998) LPELR-1256 (SC), Sakamori Construction (Nig) Ltd v Lagos State Water Corporation (2021) LPELR – 56606 (SC). However, the grant of such application is entirely at the discretion of the Court which should only be exercised in favour of the application upon the Court being satisfied that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement. Here, the Applicant has enormous duty to demonstrate to the Court why reference of the matter to arbitration should be made. – Per J. I. Okoro, JSC

 

ARBITRATION – POWERS TO STAY PROCEEDINGS PENDING ARBITRATION

Secondly, it is instructive to note that the power to stay proceedings pending arbitration is only provided under Section 5 of the Arbitration Act. See also Kano State Urban Development Board v Fanz Construction Co. Ltd (1990) LPELR – 1659 (SC), ANISMINIC V Foreign Compensation Commission & Anor (1969) 1 All ER 208 at 213. This is quite different from the procedure at Section 4 of the Act which envisages a situation where arbitral proceedings may have already commenced or continued and an award made by the tribunal while suit is pending before the Court. In such situation, the trial Judge upon becoming aware that an arbitral proceeding is already on course in the same subject matter pending before him, has a duty to order a stay of proceedings and refer the parties to arbitration. – Per J. I. Okoro, JSC

ARBITATION – WHETHER THE PROVISION OF S.5 OF THE ARBITRATION ACT OUSTS THE JURISDICTION OF THE COURT

Per SAULAWA, JSC, in SAKAMORI CONSTRUCTION (NIG) LTD V. LAGOS STATE WATER CORPORATION (2021) LPELR-56606(SC) (PP. 21-23 PARAS. A), in posing this question, answered thus:

“My Lords, I think the pertinent question that ought to be posed at this point in time, is whether or not the provision of Section 5 of the Arbitration Act have automatically ousted the jurisdiction of the Court, the very moment an arbitration clause comes in to issue?

In my considered view, the answer to that pertinent question is not far-fetched. This Court has had a cause in a plethora of authorities to reiterate the fundamental principle, that any agreement to submit a dispute to arbitration, does not automatically oust the jurisdiction of the Court. Therefore, either party to such an agreement may, prior to when submission to arbitration or award is made, commence legal proceedings regarding any claim or cause of action contained in the submission… At common law, the Court has no jurisdiction to stay such proceedings. Where, however, there is provision in the agreement, as in Exhibit 3, for submission to arbitration, the Court has jurisdiction to stay proceedings by virtue of its powers under Section 5 of the Arbitration Act (Cap. 13 of the Laws of the Federation) … Thus, if the defendant abstains from asking for stay, or if the trial Court in its discretion deems expedient to refuse to stay action (as in the instant case), then the Court being duly seized of the dispute, and it is by its decision alone, that the rights of the respective parties ought to be settled.

At page 29 of the lead judgment, my learned brother opined and I concur, that “Section 5 was the applicable provision… as it was apparent that the arbitral proceeding was yet to commence and as such, it was the duty of the Appellant to have shown by documentary evidence that it was ready and willing to submit to the arbitration and that the application sought was not a ruse or a sham to deprive the Respondent its right of access to Court. This they failed to do.” – Per U. M. Abba-Aji, JSC

MARGINAL NOTES – MEANING OF MARGINAL NOTES – CONDUCT OF COURTS IN INTERPRETING STATUTES

Marginal notes, otherwise known as side notes or section heads are short notations appearing above or beside each section of a statute or regulation. While marginal notes are not part of a statute, they provide an interpretative aid to Courts and are useful in considering the purpose of a section and the mischief at which it is aimed. See per Eso, JSC in OLOYO V. ALEGBE (1983) 2 S.C.N.L.R. 35 AT 57; Per Idigbe, JSC in UWAIFO V. AG BENDEL STATE (1982) 7 SC 124 AT 187 – 188, OSIEC & ANOR V. AC & ORS (2010) LPELR – 2818 (SC), INAKOJU & ORS V. ADELEKE & ORS (2007) LPELR – 1510 (SC), YABUGBE V. C.O.P (1992) LPELR – 3505 (SC).

In similar vein, the law is that in order to discover the real intention of the lawmakers in enacting a statute, all the relevant sections to the issue in controversy, or better still the entire provisions of the statute, must be read together. See A.P.C. V. A.S.I.E.C. (2022) 12 NWLR (PT. 1845) 411, UMEANO V. ANAEKWE (2022) 6 NWLR (PT. 1827) 509, NWOBIKE V. FRN (2021) LPELR – 56670 (SC). – Per Adamu Jauro, JSC

ARBITRATION – THE IMPLICATION OF S.4 & S.5 OF THE ARBITRATION AND CONCILIATION ACT

Taking into consideration the marginal notes of Sections 4 and 5 of the ACA as well as the wordings of both sections, it is obvious that Section 4 applies to matters already pending before an arbitral tribunal or at least where a party has taken concrete steps towards commencing arbitration. This is made clear by Section 4(1) which provides that the application for stay of proceedings be brought not later than when “submitting his first statement on the substance of the dispute” as well as Section 4(2) which provides that “arbitral proceedings may nevertheless be commenced or continued”. A “first statement on the substance of the dispute” is unknown to our Court proceedings, but exists in arbitral proceedings. Contrariwise, Section 5(1) of the ACA provides that “If any party to an arbitration agreement commences any action in any Court with respect to any matter which is the subject of an arbitration agreement, any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the Court to stay the proceedings.” The provision for “pleadings” in contrast to “first statement on the substance of the dispute” used in Section 4(1) shows that Section is applicable to instances where an action is instituted in Court without the commencement of arbitral proceedings, such as the instant case. There is nothing on record to show that the Appellant has instituted arbitral proceedings or taken concrete steps towards doing so. It is thus clear that it is Section 5 of the ACA rather than Section 4 that is applicable to the Appellant’s application before the trial Court.

By Section 5(2)(b) of the ACA, a Court to which an application for stay of proceedings is made under subsection may grant the application if it is satisfied that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement and that the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration. In the affidavit in support of the Appellant’s application at the trial Court, there is nothing to demonstrate its willingness to do all things necessary to the proper conduct of the arbitration. For this reason, the lower Court was right to hold that the Appellant did not fulfil the conditions for stay of proceedings and referral to arbitration as it had not shown any willingness to arbitrate. – Per Adamu Jauro, JSC

CASES CITED

STATUTES REFERRED TO

1. Constitution of the Federal Republic of Nigeria 1999 (as amended)
2. Arbitration and Conciliation Act, Cap A18 LFN 2004
3. Arbitration and Conciliation Act Cap 19 Laws of the Federal Republic of Nigeria 1990

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