MR. KAYODE AKINTOLA SAMSON Vs THE FEDERAL REPUBLIC OF NIGERIA
April 1, 2025OJODOMO EKOMO ALFRED VS THE STATE
April 2, 2025Legalpedia Citation: (2020) Legalpedia (CA) 13111
In the Court of Appeal
HOLDEN AT LAGOS
Tue May 26, 2020
Suit Number: CA/L/1101/2016
CORAM
PARTIES
SACOIL 281 NIGERIA LIMITED
TRANSNATIONAL CORPORATION OF NIGERIA PLC
AREA(S) OF LAW
SUMMARY OF FACTS
The Respondent instituted this action against the Appellants vide a writ of summons and a statement of claim on the basis of a Farm-Out and Participation Agreement (“FOPA”) as amended by the Deed of Amendment and Novation (“DAN”) and the Deed of Amendment (“DA”) which the parties entered into. The Respondent in the action at the lower court was seeking for declarations and damages for wrongful termination, breach and repudiation of the FOPA (as amended by DAN and further amended by DA) against the Appellants who were Defendants in the lower court. At the lower court, the Appellants entered a conditional appearance and filed a motion for stay of proceedings pending the determination of the matter by arbitration; as stipulated in the agreement entered into by the parties. After reading the processes of the parties and listening to the oral submissions of counsel, the lower court gave its ruling dismissing the application of the Appellants. The Appellants dissatisfied with the ruling of the lower court have filed this appeal vide a Notice of Appeal containing three Grounds of Appeal.
HELD
Appeal Allowed
ISSUES
Whether the lower court was right in dismissing the Appellants’ application for stay of proceeding of the suit and referring the dispute between the parties to arbitration, in the light of the express agreement between the parties. Whether the lower court’s reliance on the case of Sonnar vs. Nordwind in arriving at its decision is justifiable
RATIONES DECIDENDI
JURISDICTION OF COURT – WHETHER THE COURT WILL ENFORCE ANY AGREEMENT WHICH TENDS TO OUSTS ITS JURISDICTION
“The point which is trite and in line with the legal principle is that no agreement which ousts the jurisdiction of a court will be enforceable as such an agreement will be contrary to public policy and indeed cannot be acceptable in law as the court always strive to guard its jurisdiction jealously. Such an agreement will not be enforced by any court in Nigeria as the law is trite that parties by agreement cannot waive a constitutional right. See Jonathan Enigwe & Ors vs. Michael Akaigwe & Ors (1992) 2 NWLR (Pt. 225)505; Jelili Ramoni vs. State (2017) LPELR-42712; Odu’a Investment Ltd vs. Talabi (1997) 10 NWLR (Pt. 523) 1. Let me for completeness however state that if the ouster clause is found in a decree, the court will enforce it and declaim jurisdiction. See Adeyemi- Bero vs. L.S.D.P.C. (2013) 8 NWLR (Pt. 1356) 238; Nwoboshi vs. State (1998) 10 NWLR (Pt. 568) 131”.-
TERMS OF AN AGREEMENT – GROUNDS ON WHICH PARTIES TO AN AGREEMENT ARE BOUND BY THE TERMS OF THE AGREEMENT
“Another position of the law, which no counsel can oppose, is that parties to an agreement are bound by the terms of the agreement and no person not even a court has power to input into an agreement or contract a term, which was not stated therein by the parties. See Chief S. O. Agbareh & Anor vs. Dr. Anthony Mimra & Ors (2008) LPELR-43211 (SC). For completeness again, such an agreement will not be binding if there is evidence that the agreement was fraudulently entered into, mistake, deception, or misrepresentation.
The point I am making as a preliminary issue is that while parties are bound by the terms of the agreement between them and such an agreement will be enforced but this is subject to the fact that such an agreement must conform with the law and must not fall under contracts or agreements that are unenforceable or against public policy. See Edilcon Nigeria Limited vs. UBA PLC (2017) 5-6 S.C (Pt. II) 33; Mr. Segun Babatunde & Anor vs. Bank of the North Ltd & Ors (2011) LPELR-8249 (SC)”.-
FORMULATION OF ISSUES FOR DETERMINATION- POWER OF THE COURT TO FORMULATE ISSUES FOR DETERMINATION
“The law permits me to formulate my issues for determination provided they arise from the ground of appeal. See Adeogun & Ors. vs. Fashogbon & Ors. (2008) LPELR-131 (SC); Ekunola vs. C.B.N. (2013) 15 NWLR (Pt. 1377) 224 S.C)”.-
UNDISPUTED FACTS – UNDISPUTED FACTS NEEDS NO FURTHER PROOF
“The law is well settled that undisputed facts need no further proof and the court will act on same. See Mba vs. Mba (2018) LPELR-44295 (SC); Olaiya vs. State (2017) LPELR-43714 (SC); Oguanuhu & Ors vs. Chiegboka (2013) LPELR-19980 (SC). –
STAY OF PROCEEDINGS – DUTY OF COURT IN AN APPLICATION FOR STAY OF PROCEEDINGS WITH RESPECT TO ANY MATTER, WHICH IS THE SUBJECT OF AN ARBITRATION AGREEMENT
“The law in Nigeria recognizes the role of arbitration in the settlement of disputes. In fact the law, that is, the ACA recognizes the application made by the Appellant. That is to say Sections 4 and 5 of ACA provides that it is not out of place to file for a stay of proceedings pending the referral of the matter to arbitration. When such an application is filed, the court is at liberty to grant such an application. I quote the provision of Sections 4 & 5 of ACA for the ease of reference.
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 or 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 the 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.
By the above provision, the court will grant the application if there is no sufficient reason given by the Respondent to the application stating why the application should not be granted. This means like it was done in the Sonnar case, the Respondent has a duty to present before the court evidence to show that it will suffer a miscarriage of justice if the stay is granted. The onus is on the Respondent to present evidence against the granting of the application for stay. If the Respondent fails to present such evidence by way of filing a counter-affidavit, the court will decide the application based on the facts as disclosed in the affidavit in support. The law as earlier stated is that a court will act on unchallenged affidavit evidence. See Danjuma Tanko vs. Osita Echendu (2010) 18 NWLR (Pt. 1224) 253; Federal Airport Authority Of Nigeria vs. Wamal Express Services Nigeria Limited (2011) 1-2 S.C (Pt. II) 93; Elizabeth Mabamije vs. Hans Wolfgang Otto (2016) 1 S.C (Pt. IV) 1. The only requirement is that such unchallenged evidence must be cogent and strong enough to sustain the case of the Applicant. See Ogoejeofo vs. Ogoejefor (2006) 1 FWLR (pt 306) 1750. –
ARBITRATION CLAUSE – DUTY OF COURTS TO GIVE EFFECT TO AN ARBITRATION CLAUSE CONTAINED IN AN AGREEMENT
“The Respondent having not denied the agreement, is bound by the terms therein stated. There is a long line of cases to the effect that where parties contract among themselves to carry out an obligation, such terms of their agreement is binding on them and the court must give effect to it. In Babatunde & Anor vs. Bank of the North Ltd & Ors (2011) LPELR-8249 (SC) the Supreme Court per Adekeye, JSC stated this principle thus:
“The law is that written contract agreement freely entered into by the parties is binding on them. A Court of law is equally bound by the terms of any written contract entered into by the parties. Where the intention of the parties to a contract is clearly expressed in a document, a contract agreement; the Court cannot go outside that document to give effect to the intention of the parties. The general principle is that where the parties have embodied the terms of their contract in a written document, extrinsic evidence is not admissible to add to, vary, subtract from or contradict the terms of the written instrument, Okonkwo v. C.C.B. (Nig.) Plc. (1997) 6 NWLR (pt.507) pg.48 Dalek (Nig) v. OMPADEC (2007) 7 NWLR (pt.1033) pg.402. U.B.N. Ltd. v. Ozigi (1994) 3 NWLR (pt.333) pg.385 at pg.404. Nneji v. Zakhem Con. (Nig) Ltd. (2006) 12 NWLR (pt.994) pg.297 SC. U.B.N. Ltd. v. Sax (1994) 8 NWLR (pt.361) pg.402.”
Similarly, in Larmie vs. Data Processing Maintenance and Services Ltd (2005) LPELR-1756 (SC) the principle was restated thus:
“The law is trite regarding the bindingness of terms of agreement on the parties. Where parties enter into an agreement in writing, they are bound by the terms thereof. This court, and indeed any other court will not allow anything to be read into such agreement, terms on which the parties were not in agreement or were not ad-idem. See Baba v. Nigerian Civil Aviation Training Centre, Zaria (1991) 5 NWLR (Pt.192) 388; Union Bank of Nigeria Ltd. v. B. U. Umeh & Sons Ltd. (1996) 1 NWLR (Pt.426) 565; S.C.O.A. Nigeria Ltd. v. Bourdex Ltd. (1990) 3 NWLR (Pt. 138) 380 and Koiki v. Magnusson (1999) 8 NWLR (Pt. 615) 492 at 514.”
Beyond giving effect to the agreement of parties, the courts have, in a plethora of cases been enjoined to give effect to arbitration clauses contained in the agreement of parties. In The Owners of the MV. Lupex vs. Nigerian Overseas Chartering and Shipping Ltd (2003) LPELR-3195 (SC), a case referred to by the Appellants, the Supreme Court held:
“Grounds for granting a stay of proceedings in cases where parties agree to resort to arbitration are many. Where the parties agreed that “all disputes that may arise between them in consequence of this contract having been entered into shall be referred to arbitration’ is held to be a strong ground for granting a stay of proceedings. See Re: Hohenzollern etc. Arb. (1886) 54 L.T. 596 and The Union of India v. E. B. Aaby’s Rederi A/S (1974) 2 All ER 874. In the case of the Chaparral (1968) 2 Lloyd’s Rep. 158 at 164 Lord Diplock dealt with the importance attached by the courts to the affirmation of voluntary agreement of parties and said as follows: “Where parties have agreed to submit all their disputes under a contract to the exclusive jurisdiction of a foreign court, I myself should require very strong reasons to induce me to permit one of them to go back on his word….” Coming back home, I think the comments made by 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; 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. 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.”
Furthermore, in Neural Proprietary Ltd vs. UNIC Insurance Plc (2015) LPELR-40998 (CA) this Court Ndukwe-Anyanwu, JCA held:
“… The Arbitration Clause is very explicit. The parties ought to refer their dispute for Arbitration before resorting to the law Courts. Where such an Arbitration Clause is included in a contract, the parties must submit to Arbitration concerning present and future disputes. The trial Court ought to respect the Arbitration Clause, the parties voluntarily included in their contract. The trial Judge was therefore right in granting an order for stay.”
Lastly, I will state one more case law on this trite principle in driving home the point. In Onward Enterprises Ltd vs. MV (2008) LPELR-4789 (CA) this Court per Nwodo, JCA held:
“It is a basic principle of law that where parties have agreed to submit all their disputes under a valid contract to the exclusive jurisdiction of foreign Arbitration panel, the regular Courts ought to give due regard to the voluntary contract of the parties by enforcing the arbitration clause as agreed by them. The parties in this case voluntarily submitted to International Commercial Arbitration which is governed in this country by the Arbitration and Conciliation Act Cap 19 Laws of the Federation of Nigeria, 1990 with specific reference to S. 57(1) and (2) of the Act. The Courts are under a prima facie duty to ensure agreement entered into between parties is executed by them. Consequently, they should never been seen to facilitate the breach of a valid arbitration agreement except in special circumstances. Likewise, a party to an arbitration agreement cannot both approbate and reprobate, having agreed to settle International Commercial disputes by arbitration, he cannot proceed to the regular Court and commence resolution of the dispute within the purview of the agreement to submit to arbitration unless he can show strong reasons to be permitted to be discharged from that agreement and thus be allowed to settle the dispute by regular Court proceedings instead of Arbitration. This is underscored by the provision in S. 4 and S. 5 of the Arbitration and Conciliation Act which empowers the Court to stay proceedings pending Arbitration. I refer to S. 5 already reproduced in the lead Judgment and S. 4(2) which for clarity I reproduce S. 4(2): “(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”. Thus the Court by exercising statutory discretion under S. 4 and 5 of the Arbitration and Conciliation Act would be upholding the commitment of parties in the Arbitration clause.”
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ARBITRATION CLAUSE – WHETHER AN ARBITRATION CLAUSE IN AN AGREEMENT FORECLOSES THE PARTIES FROM INSTITUTING AN ACTION IN A REGULAR COURT AFTER THE ARBITRATION
“Arbitration is just an initial procedure agreed by parties to settle dispute that arises between the parties. After the arbitration, the parties have a right to challenge the arbitration award including the arbitration procedure. This is as stated in Sections 29-32 and 48 of ACA, In the light of that, it is not correct as submitted by the Respondent’s counsel that the arbitration clause in FOPA as amended foreclose the jurisdiction of the court in Nigeria in favour of an arbitration body outside Nigeria. There are a handful of cases that states clearly the effect of an arbitration vis a vis litigation in regular courts. In R.C.O.S.A Ltd vs. Rainbownet Ltd (2014) 5 NWLR (Pt. 140) 516, this court held:
“Arbitration clause in an agreement is only procedural in that a provision whereby the parties agree that any dispute should be submitted to arbitration does not exclude or limit rights or remedies but simply provides a procedure under which the parties may settle their grievances. It is not an exclusion or ouster clause properly so called. Thus, the parties are free (sic), such clause notwithstanding, to pursue their claims in the courts subject, of course, to the right of the court to grant a stay of proceedings. [Obembe v. Wemabod Estates Ltd. (1977) 5 SC 115; Confidence Ins. Ltd. v. Trustees of O.S.C.E. (1999) 2 NWLR (Pt. 591) 373 referred to.] (Pp. 534-535, paras. H-B). Where parties to an agreement make provision for arbitration before an action can be instituted in a court of law, any aggrieved party must first seek the remedy available in the arbitration. Where a plaintiff fails to refer the matter to arbitration first, but commences an action in a court of law, a defendant shall take steps to stay the proceedings of the court and the court will stay the proceedings if it is satisfied that there is no sufficient reason why the matter should not be referred in accordance with the submission. A defendant applying for a stay of proceedings in an action pending arbitration, must not have delivered any pleadings or taken any steps in the proceedings beyond entering a formal appearance. It follows that once a defendant takes any step beyond formal appearance, he will be deemed to have waived his right to go to arbitration. This is so because the right to go to arbitration is a personal right and can be waived by the individual concerned. It is not a constitutional right which he shares in common with other members of the society.[Kano State Urban Dev. Board v. Fanz Construction Co. Ltd. (1990) 4 NWLR (Pt. 142) 1; City Eng. (Nig.)Ltd. v. F.H.A. (1997) 9 NWLR (Pt. 520) 224; Royal Exchange Assurance v. Bentworth Finance (Nig.) Ltd.(1976) 11 SC 183; Fawehinmi Construction Co. Ltd.v. O.A.U. (1986) 6 NWLR (Pt. 553) 171; Obembev. Wemabod Estates Ltd. (1977) 5 SC 115; Chemia Products (UK) Ltd. v. Idowu (1963) 2 All NLR 249;Kurubo v. Zach – Motison (Nig.) Ltd. (199 2) 5 NWLR(Pt. 239) 102 referred to.]”
The apex court has held that an arbitration clause is not an exclusion clause per se but rather it is a procedural aspect of the agreement between the parties when disputes arise. It, therefore, means that an arbitration clause in an agreement does not foreclose the parties from instituting an action in a regular court after the arbitration. The purport of an arbitration clause in an agreement is nothing near to the submission of the Respondent as it does not oust the jurisdiction of a regular court. The Supreme Court said this much in Onyekwuliye & Anor vs. Benue State Govt & Ors (2015) 16 NWLR (Pt. 1484) 40; (2015) LPELR-24780 (SC) per Kekere-Ekun thus:
“The effect of an arbitration clause in an agreement was well stated in: Royal Exchange Assurance v. Bentworth Finance (Nig.) Ltd. (1976) 11 SC (Reprint) 96 @ 107 lines 22-30 thus:
“An arbitration clause in a written contract is quite distinct from the other clauses. Whereas the other clauses in a written contract set out obligations which the parties undertake towards each other, the arbitration clause merely embodies the agreement of both parties that if any dispute should occur with regard to the obligations which the other party has undertaken to the other, such dispute should be settled by a tribunal of their own constitution or choice. The appropriate remedy therefore for a breach of a submission is not damages but its enforcement.”
See also: Obembe v. Wemabod Estates Ltd. (1977) 5 SC (Reprint) 70.
In Magbagbeola v. Sanni (2002) 4 NWLR (Pt. 756) 193 it was held that an arbitration clause is only procedural in that a provision whereby parties agree that any dispute should be submitted to arbitration does not exclude or limit rights or remedies but simply stipulates a procedure under which the parties may settle their differences. In other words, the existence of an arbitration clause I a contract merely postpones the right of the contracting parties to resort to litigation.”
I will refer to two more cases to drive home the point. This Court held so much in Oyo State Govt & Ors vs. Mogoke Ventures (Nig) Ltd (2015) LPELR-41731 (CA) where it held per Oniyangi, JCA:
“Where parties have chosen or determined for themselves that they would refer any of their disputes to arbitration instead of resorting to regular Courts, a prima facie duty is cast upon the Court to act upon their agreement. See M.V. LUPEX v. N.O.C. & S. Ltd (2003) 15 NWLR (pt. 844) 469. Therefore, and as in the instant appeal, where there is an agreement in writing to submit to arbitration concerning present or future disputes the arbitration clause and the contract which incorporates it are two distinct contracts. The contract which incorporates the arbitration clause by references is the underlying contract. It therefore suffices to say that the incorporation or inclusion of an arbitration clause in an agreement does not oust the jurisdiction of the Court. See Magbagbeola v. Sanni (2002) 4 NWLR (Pt. 756) 193. Alas where parties to an agreement make provision for arbitration before an action can be instituted in a Court of Law, any aggrieved party must first seek the remedy available in the arbitration. If a party thus goes straight to the Court to file an action without reference to the arbitration claims as contained in the agreement, the Court of law in which the action is filed is bound to decline jurisdiction in the matter. See Kurubo v. Zach-Motison (Nig) Ltd. (1992) 5 NWLR (pt. 239) 102.”
I find the illustration of Augie, JSC in Hanover Trust Limited vs. Unique Ventures Capital Management Co. Ltd & Anor (2014) LPELR-23359 (CA) very instructive and illuminating:
“To resolve this issue, we have to understand what a “Scott v. Avery Clause” is, and take it from there based on what we have so far. A Scott v. Avery Clause has been defined as “an express and clear provision in a contract that defers any dispute first to arbitration before any litigation is commenced” – see Duhaime.org-Legal Dictionary, wherein it was further explained as follows – “In the 1856 British case from which the rule of law draws its name, Alexander Scott and George Avery, at issue was a contract, which provided that any differences or dispute had to be referred to arbitration. A Scott v. Avery Clause makes arbitration a condition precedent to any Court action. The House of Lords reviewed the judicial treatment of such arbitration clause through the history of British Courts. Some of the Judges thought that such a clause would be against public policy; on attempt to avoid the Courts of law and the rule of law. Justice Campbell in Scott v. Avery – “… where it is expressly, directly and unequivocally agreed upon between the parties that there shall be no right of action whatever till the arbitrators have decided, it is a bar to the action that there has been no such arbitration.” The English Reports summary of the decision – “It is a principle of law that parties cannot by contract oust the Courts of their jurisdiction; but any person may covenant that no right of action shall accrue till a third person has decided on any difference that may arise between himself and the other party to the covenant.” In Russell on Arbitration the authors wrote – “While parties cannot by contract oust the jurisdiction of the Courts, they can agree that no right of action shall accrue in respect of any differences, which may arise between them until such differences have been adjudicated upon by an arbitrator. Such a provision is – termed a Scott v Avery Clause.” In Borowski v. Heinrich Fieldler 29 CPC 3d 264 (1994, ABQB), one of the litigants argued that they had a Scott v. Avery Clause, which read as follows – “Any controversy or claim arising out of or relating to this Agreement as the breach hereof shall be submitted by the parties to binding arbitration by submitting same for arbitration – – – and Judgment upon any award rendered in such arbitration may be entered in any Court having jurisdiction thereof.” Justice Murray of the Alberto Court of Queen’s Bench disagreed and wrote – “At common law on agreement to oust the jurisdiction of the Courts was invalid. However, if the parties agreed that their rights were to be determined by arbitration as a condition precedent to the accrual of a complete cause of action and therefore to the Courts having jurisdiction, such an agreement was valid. This was the case in Scott v. Avery” “The wording of the clause is the key. If the covenant is framed so there will be no cause of action until after arbitration, then the parties must arbitrate before seeking a remedy in the Courts of law, but, if the wording is such that the arbitration will only arise after a cause of action has arisen, then the Courts are not excluded.” In Borowski’s case (supra), the Canadian Court held that the clause was not a Scott v Avery Clause as it was merely an agreement to submit to arbitration – an arbitration clause – but not stated to be a condition precedent to litigation, and in Babcock & Wilcox Canada Ltd. v. Agrium Inc. 2003 ABQB 1004, also referred to by Lloyd Duhaime in his Dictionary, the Canadian Court held that – “Arbitration is not d condition precedent to litigation in the absence of express or implied terms making arbitration a condition precedent.” Back to Nigeria, the 1st Respondent did not complete what Fatayi-William, JSC (as he then was) held in Obembe V. Wemabod Estates (supra); he stated thus – “The other class is where arbitration followed by an award, is a condition precedent to any other proceedings being taken, any further proceedings, then being – – not upon the original contract but upon the award made under the arbitration clause. Such provisions in an agreement are sometimes termed “Scott v. Avery” clauses so named after the decision in Scott v Avery (1856) 5 H. L. Cas. 811, the facts of which are as follows – An insurance company inserted in all its policies a condition that, when a loss occurred, the suffering member should give in his claim and pursue his loss before a committee of members appointed to settle the amount, that if a difference thereon arose between the Committee and the suffering member, the matter should be referred to arbitration, and that no action should be brought except on the award of the arbitrators. In considering the scope of these provisions, the Court held that this condition was not illegal as ousting the jurisdiction of the Courts. In the case at hand, Clause 17 of the “Model Form of Agreement B” – – – reads- “Any dispute or difference arising out of this Agreement shall be referred to the arbitration of a person to be mutually agreed upon or, failing agreement, of some person appointed by the President for the time being of the Institution of Consulting Engineers.” This clause is clearly different from the “Scott v Avery” clause’ – – It belongs to the first class of arbitration clauses – – As we have pointed out earlier, any agreement to submit a dispute to arbitration, such as the one referred to above, does not oust the jurisdiction of the Court. Therefore, either party to such an agreement may, before a submission to arbitration or an award is made, commence legal proceedings in respect of any claim or cause of action included in the submission.”
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STAY OF PROCEEDINGS – DUTY OF COURT IN EXERCISING ITS DISCRETION IN GRANT OF AN APPLICATION FOR STAY OF PROCEEDINGS PENDING REFERENCE TO ARBITRATION
“I would like to restate that the application before the lower court that has culminated in this appeal is on stay of proceedings pending reference to arbitration. The law as stated above implies that such an application will be granted except there are reasonable grounds to refuse same. The relevant provision of ACA to this effect is Section 5 of the Arbitration and Conciliation Act, 1988 which provides thus:
“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 the 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.
The grant of an application such as this is discretionary, but just like every discretionary power of the court, it must be exercised judicially and judiciously. See SPDC & Ors vs. Agbara & Ors (2015) LPELR-25987 (SC); Aregbola & Ors vs. Idowu & Ors (2017) LPELR-42105 (SC); Vandighi vs. Hale (2014) LPELR-24196 (CA). –
COURT- DUTY OF COURT TO CONFINE ITSELF TO THE DETERMINATION OF MATTERS BEFORE IT
“The law is well settled that courts must confine themselves to matters before them and not going beyond that scope. See Irom vs. Okimba (1998) LPELR-1541 (SC); Bhojsons Plc vs. Kalio (2006) LPELR-777 (SC); and lastly, I will refer to the case of Obikoya vs. Wema Bank Ltd (1989) LPELR-2176 (SC) where the Supreme Court held:
“In an effort to persuade the court to accept his arguments, it is not unusual for a counsel to present his arguments on a much wider area than the subject-matter of the case calls for. But a Judge does not have such latitude. He must confine himself within respectable limits of the scope of the enquiry before the Court. A motion should be dealt with as a motion, whilst an appeal should be treated in all respects as an appeal. The Judge should not be seen to have prejudged a legal point which is yet to come before him in related proceedings otherwise he would disqualify himself from sitting on the latter aspect of the case.”
I agree with the Appellants’ Counsel that the lower court went beyond its scope as covered by the application in dealing with issues that has no direct relevance to the application for stay. The lower court ought to confine itself to the determination of whether there is sufficient ground in granting the Appellants’ application as that was the single and only job of the lower court. The mere fact that parties have agreed that in any event that a dispute arises, such dispute will be submitted to arbitration is enough ground for the lower court to grant the application for stay without more. See The Owners of the MV. Lupex vs. Nigerian Overseas Chartering and Shipping Ltd (supra) –
ARBITRATION CLAUSE- NATURE, IMPORTANCE AND PURPOSE OF AN ARBITRATION CLAUSE
“I make bold to say even if for any reason, clause 18.4 is unlawful and therefore unenforceable, it does not necessarily make the whole agreement unlawful particularly when the said clause deals with issues that can be severed from the other provisions. In fact, the importance of an arbitration clause was brought out by the Supreme Court per Fabiyi, JSC in NNPC vs. Clifco (Nig.) Ltd (2011) 10 NWLR (Pt. 1253) 209 when he held that even if the purpose of the agreement fails, the arbitration clause can survive. His lordship held thus:
“Generally, in arbitration agreements, where the arbitration clause is a part, the arbitration clause is regarded as separate. So where there is novation, purpose of contract may fail but the arbitration clause survives. See: Heyman v. Darwin Ltd. (1942) AC 356 at 373.The purpose of arbitration might have failed, but the arbitration clause which is not one of the purposes of the contract survives.”
Similarly, in Royal Exchange Assurance vs. Bentworth Finance (Nig) Ltd (1976) LPELR-2961 (SC), the court held
“An arbitration clause in a written contract is quite distinct from the other clauses. Whereas the other clauses in a written contract set out obligations which the parties undertake towards each other, the arbitration clause merely embodies the agreement of both parties that if any dispute should occur with regard to the obligations which the other party has undertaken to the other, such dispute should be settled by a tribunal of their own constitution and choice.”
Also in BCC Tropical (Nig) Ltd vs. Government of Yobe State of Nigeria & Anor (20110 LPELR-9230 (CA) this Court per Ndukwe-Anyanwu, JCA held:
“The Respondents terminated the contract after giving a 2 weeks notice to that effect in pursuance of one of the clauses in the contract. The Respondents had a right to terminate the contract which they did. However, does the termination of the contract extinguish the rights conferred on the parties by the arbitration clause in the contract? “The Rule is that the arbitration clause and the contract which incorporated it are two distinct contracts. The arbitration clause contains the parties agreement to resolve present and future disputes by arbitration. The contract which incorporates the arbitration clause by reference is the underlying contract. An arbitration agreement within a contract is thus separate from the contract”. Harbour Assurance Company (Uk) Ltd V Kansa General International Insurance Company Ltd (1993) QB 701. Consequently, where the underlying contract is void for illegality the arbitration clause could still survive as the illegality of the underlying contract would not impeach the arbitration agreement.
An arbitration clause in an agreement is not just a fanciful part of an argument that a party can jettison at will. A party should not append his signature to a contract with an arbitration clause if he does not intend to submit to arbitration. –
ARBITRATION CLAUSE – DUTY OF COURTS IN CONSIDERATION, AN APPLICATION FOR STAY OF PROCEEDINGS BROUGHT PURSUANT TO SECTION 4 AND 5 OF THE ARBITRATION ACT
“The courts in a long line of decided cases have been advised that where there is an application of this sort, the court should lean towards granting it. In Nissan Motor Co. Ltd vs. Nissan (Nig) Ltd & Ors (2017) LPELR-43339 (CA) this Court per Tukur, JCA held:
“…The current and general trend with respect to Arbitration clause as shown in the decisions of this Court is for the Courts to give effect to the agreement freely entered into by parties to go to Arbitration. To fully appreciate the current attitude of this Court with regard to applications for stay of proceedings pending Arbitration, I deem it fit to go on an excursion into some of the decisions of the Court on the point beginning with Onward Enterprises Ltd Vs MV Matrix & Ors 2008 LPELR 4789 (CA). In that case, Mshelia JCA in the lead judgment stated” “In the instant case, Respondent entered conditional appearance and file two motions on notice before the application for stay. One sought the release of the vessel while the second sought an Order to shift the vessel to anchorage. The application for stay of proceedings was the third application filed by the Respondent. For the Appellant, the application to shift the vessel in particular amounts to it step taken in the proceedings. It is evident from the record that the Respondent did not filed any statement of defence nor applied for extension of time to file any statement of defence. I agree with the submission of Respondent’s counsel that neither the application for release of the vessel nor the application to shift the vessel to anchorage pending the determination of the application to release her from arrest constitute steps taken within the contemplation of Section 5(1) of the Arbitration and Conciliation Act. It is only acts done in furtherance of the prosecution of the defence that could be said to amount to steps taken in the proceedings.” The Court refused to follow Panormos (supra) but instead followed the decision of the Supreme Court in M.V. LUPEX (Supra) as the correct position of the law on the point. In Sino-Afric Agriculture & Ind Company Ltd & Ors Vs Minister Of Finance Incorporated & Anor (2013) LPELR 22370 (CA) this Court held that the lower Court was wrong in refusing to make an Order staying proceedings in the suit pending Arbitration in view of Clause 12 contained in the contract agreement, since the purport of the Arbitration clause is to achieve amicable settlement between the parties. The record also shows that apart from entering appearance under protest the Appellants therein did not deliver any pleading in the lower Court. The Court set aside the order made by the lower Court and in its stead order stay of proceedings pending the determination of their dispute by an arbitrator to be appointed by the Chief Judge of Kano State. In Cotecnia Destination Inspection Limited Vs Boyson Nigeria Limited 2013 LPELR 22063 (CA) this Court Ikyegh, Pemo, Abubakar JCA held ;- “In consideration, an application for stay of proceedings brought pursuant to Section 4 and 5 of the Arbitration Act, the sanctity of the contract between the parties is usually of paramount importance to the Court. So long as there is a contract agreement which contains the terms which the parties freely and mutually adopt, sign and is not illegal or contrary to public policy, the Court would respect their will and grant the application as prayed. Ipso facto where an agreement made and signed by the parties stipulates that any dispute arising from it must first be referred to a referee none of the parties has a right to go to Court first before the dispute between them is referred to arbitration as provided in the agreement. But the Court can only give effect to what is legal in its basis.” The Appeal in that case against the decision of the lower Court refusing stay of proceedings pending appeal was dismissed because there was no Arbitration Clause in the agreement worthy of enforcement. In Williams Vs Williams 2014 LPELR 22642 (CA) this Court following the decision of the Supreme Court in the owners of the MV Lupex Vs Nigerian Overseas Chartering And Shipping Ltd (Supra) held that where the contract agreement embedded an Arbitration Clause, the duty of the Court is to give effect to the voluntary contract of the parties by enforcing the arbitration clause. The Court ordered all further proceedings in the lower Court to be stayed pending Arbitration, and directed parties to march to Arbitration. In Mobil Producing Nigeria Ltd Vs Suffolk Petroleum Services Ltd 2017 LPELR 41734 (CA) the Court in construing the provisions of Section 4 of the Arbitration and Conciliation Act held that where the records show that the Appellants being the requesting party had not submitted any statement on the substance of the dispute prior to filing its application for stay, the lower Court ought to obliged it with a stay of proceedings, where the Appellant was shown not to have taken any step in the dispute save to file the motion for stay. An analysis of the decisions of this Court reveals a common trend in line with the decision of the Supreme Court. In The Owners of the M.V. Lupex Vs Nigerian Overseas Chartering And Shipping Ltd (Supra) which leans towards the enforcement of the Arbitration Clause inserted in the agreement by the parties. The Apex Court stated on the point per Iguh JSC thus:- “The power of the Court to stay such proceedings is exercisable under and by virtue of Section 5 of the Arbitration and Conciliation Act and the Court is bound to stay the proceedings unless it is satisfied that there is sufficient reason to justify the refusal to refer the dispute to Arbitration.” In the instant case, it was contended by the 1st Respondent that the lower Court was right in refusing the application for stay of proceedings pending Arbitration because the Appellant’s notice of preliminary objection was a step taken in the proceedings. Now a careful analysis of the various decisions of this Court on the subject leaves me in no doubt that the taking of steps envisaged under Section 5 of the Arbitration Act (supra), which will entitled the lower Court to refuse the application for stay of proceedings pending appeal is a step taken in furtherance of the prosecution of the defence like the filing of a statement of defence, application for extension of time to file statement of defence. See: Onward Enterprise Ltd Vs MV Matrix & Ors (Supra). The Notice of Preliminary Objection filed by the Appellant which was shown from the records to have been withdrawn and struck out during the pre trial conference (page 277) do not in my view translate into taking steps in furtherance of the prosecution of the defence and do not also amount to steps taken in the proceedings within the contemplation of the provisions of Section 5 of the Arbitration Act (supra). The Apex Court in MV Lupex (Supra) further held that where any of the parties as in the instant case agreed that all disputes that may arise between them in consequence of the contract shall be referred to Arbitration is a strong ground for granting a stay of proceedings. The rationale is as held by the Supreme Court is that the Court should not be seen to encourage the breach of a valid Arbitration agreement particularly if it has international flavor. In the instant case, it is not in dispute that the Appellant and the 1st Respondent freely entered into the contract containing the Arbitration Clause which by its tenor has international flavor, by providing that any dispute, controversy or difference which may arise between the parties out of in relation to or in connection with this agreement or any breach thereof shall unless settled by mutual consultation in good faith be finally settled by arbitration in Tokyo Japan under the Rules of the Commercial Arbitration set forth by the Japan Commercial Arbitration Association. Each party hereto is bound by an Arbitration award rendered. Not only is the Arbitration agreement in the instant case having international flavor but the use of the word “shall” in same connotes mandatorines. It is a form of command or mandate and is not permissive See: Nwankwo Vs Yar Adua 2010 LPELR 2109 (SC) Now under such circumstances and in line with the principles laid down in MV Lupex (Supra) the lower Court should have exercise its discretion in favour of granting the application for stay of proceedings pending Arbitration which the Appellant and 1st Respondent freely agreed to resort to.”
Going further, in Transocean Shipping Ventures Private Ltd vs. MT Sea Sterling (2018) LPELR-45108 (CA) this Court per Ogakwu, JCA held:
“…The provision for arbitration is a mere matter of procedure for ascertaining the rights of the parties. There is nothing therein that excludes a right of action on the contract. But a party against whom an action has been brought may apply to the discretionary power of the Court to stay proceedings in the action so that the parties may resort to the procedure they have agreed upon. See Obembe vs. Wemabod Estates Ltd (supra) and City Engineering (Nig) Ltd vs. FHA (supra). In The Owners Of The Mv Lupex vs. Nigeria Overseas Chartering And Shipping Ltd (2003) LPELR (3195) 1 at 23-24, Iguh, JSC stated: “The law is also settled that the mere fact that a dispute is of a nature eminently suitable for trial in a Court is not a sufficient ground for refusing to give effect to what the parties have, by contract, expressly agreed to. See Re: An Application by the Phoenix Timber Company Ltd. (Appeal of V/O Sovfracht) (1958) 1 Lloyd’s Rep. 305 at 308. So long as an arbitration clause is retained in a contract that is valid and the dispute is within the contemplation of the clause, the Court ought to give due regard to the voluntary contract of the parties by enforcing the arbitration clause as agreed to by them. See Heyman and Another v. Darwins Ltd. (1942) Vol. 72 Lloyd’s Rep. 65.” See also Neural Proprietary Ltd vs. UNIC Insurance Plc 2015 LPELR (40998) 1 at 9-10. The rudimentary principle of law in respect of contracts and agreements is expressed in the Latinism pacta conventa qua neque contro leges neque dolo malo inita sunt omni modo observanda sunt, more commonly expressed as pacta sunt servanda, meaning that agreements which are neither contrary to the law nor fraudulently entered into should be adhered to in every manner and in every detail. See Sonnar Nig Ltd vs. Nordwind (1987) LPELR 1 at 44, A-G Nasarawa vs. A-G Plateau (2012) LPELR (9730) 1 at 29 and Bluenest Hotels Ltd vs. Aerobell Nigeria Ltd (2018) LPELR (43568) 1 at 22. Having established that the arbitration clause does not oust the jurisdiction of a Court and that the Court has a duty to give effect to the arbitration clause in the contract between the parties, not by striking out the action, but by staying proceedings in the action so that parties can be held to their bargain of resolving their disputes by arbitration; it becomes translucent that the lower Court erred when it struck out the Appellant’s action for want of jurisdiction.”
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COURT- DUTY OF COURT TO DETERMINE EACH CASE IN ACCORDANCE WITH THEIR PERCULIAR FACTS AND CIRCUMSTANCES
“The law has been reiterated in a number of cases that cases are to be decided on their peculiar facts and circumstances. In Owor vs. Christopher & Ors (2008) LPELR-4813 (CA) this court per Abdullahi, JCA while stating this trite principle held:
“Learned Counsel for the 1stRespondent rightly submitted in my view that the views canvassed by the Appellant are misconceived and clearly at variance with settled position of our law as manifestly enumerated by the lower Tribunal in its judgment at pages 419 to 426 of the record. In support of the above views, learned Counsel for the Appellant relied on the cases of Nwosu v. Udeaja (1990) 1 NWLR (Pt. 125) p. 188 and Ikeni v. Efamo (2000) 10 NWLR (Pt. 720) 1 at 11, 12 and 15. Let me pause at this stage and say that these cases on this issue are distinguishable and inapplicable to the instant appeal both on grounds of fact, law and mixed law and facts. I will explain. Firstly, a decision is an authority for what it actually decided since every Court is only entitled to decide the issue or issues raised on the claim or claims before it. See Western Steel Works v. Iron and Steel Workers (1987) 1 NWLR (Pt. 49) 284 at 297. Secondly, it is trite law that a previous decision is not to be followed where the facts or law applicable in that former decision are distinguishable from those in the latter case. See the case of Adisa v. Oyinwola (2000) 10 NWLR (Pt. 674) 116 at 168. Thirdly, the case of Nwosu v. Udeaja, Ikeni v. Efamo cited by the learned counsel for the Appellant are distinguishable from the instant case both on grounds of fact and law. The fact of the matter for instance in the case of Nwosu v Udeaja (supra) is on declaration of title to land and the Exhibits referred to therein are judgment of Court. Furthermore, the fact of the matter for instance in the case of Ikeni v. Efamo (supra) bothers on dispute over entitlement to compensation money payable by Nigerian Agip Oil Company Limited and on how to enforce judgment of previous Court which led to the Court raising the issue of Estopel res judicata therein. Finally, in the case of Adeniji v. Onogoruwa (supra) the fact of the case is on declaration of title to land and the Exhibits referred to therein be purchase receipts. The instant case dealt with election matter and the documents in issue are photocopies of the certified true copies of the public documents quite distinguishable both on fact and law from the three (3) cases cited by the learned Counsel for the Appellant. Against the backdrop of the above, I am of the view that even if those decisions were binding on the tribunal, it does not represent the law on this matter, but the Tribunal came to the correct decision, an appellate Court will not reverse that correct decision. See Lebile v. The Registered Trustees of Cherubim and Seraphim of Lion of Nigeria, Ugbonla & Ors (2003) 2 NWLR (Pt. 804) 399, at 422 to 423. The apex Court in that case held thus: “It does not matter that the Court below may not have gone into the available details of circumstances which, put together and considered, must lead to the conclusion that the Plaintiff’s claim was properly dismissed. It is in law enough that it reached the right decision as I consider it did. In other words, if the conclusion read by the Court below is correct, that cannot be affected by the fact that it was arrived at on insufficient or even some wrong reasons…”
I will also like to consider the statement of Wambai, JCA in Mai-Kiri vs. Yahaya (2018) LPELR-46595 (CA) on this point:
“I am aware that in a related case of Liman Gandi V Alh. Abdulkadir Yahaya Appeal No. CA/S/91/2017 delivered on 28th November, 2018, the facts of which are distinguishable and not on all fours with the present appeal, this Court allowed the appeal on ground of inconsistencies in the Respondent’s case and absence of proper evaluation of evidence by the trial Court. In that appeal unlikely in the present, there were material contradictions not only between the evidence of PW1 & PW2 but also as between their evidence and the pleaded fact on the question of actual quantity and the cost price of the bales of wrappers supplied to the Appellant. Those contradictions materially touch on the Appellant’s claim at the lower Court. Therein, while it was the evidence of PW1 that 160 dealers of wrappers were supplied to the Appellant at the total cost of N13, 120, 000 (Thirteen Million, One Hundred and Twenty Thousand Naira Only), the evidence of PW2 therein was that only 130 bales of wrappers at the total cost of N10, 400, 000.00 (Ten Million Four Hundred Thousand Naira Only) were supplied to the appellant. The computation of the figures were at variance with the pleadings in para. 20 of the statement of claim. While the appropriate quantity of bales that would have given the figure of N4,377,530.00 therein claimed, is approximately 50 bales, PW2 talked about 100 bales. These contradictions materially touch on the core of the Respondent’s claim. Another striking distinction between that appeal and the present one is that, in that appeal the appellant not only took the list of the debtors to the Respondent but respondent agreed to deal with the debtors directly. It is trite that it is the facts of any given case that will frame the issues for decision and the facts of two cases must be either the same or at least similar before the decision in one case can be used as a guide to the decision of another case. In Chief Gani Fawehinmi V. N.B.A. (No.2) (1989) 2 NWLR (Pt.105) 558 at 650, Oputa JSC of blessed memory had this to say inter alia: “… The facts of two cases must be either the same or at least similar before the decision in one can be used and even there as a guide to the decision in another case. What the former decision establishes is only a principle not a rule. Rules operate in all or nothing dimension. Principles do not. They merely form a principium, a starting point. Where one ultimately lands will then depend on the peculiar facts and circumstances of the case in hand.” Thus, as stated by the great jurist, decisions of Courts based on peculiar facts of one case cannot be applied across board to another case with distinct and different facts and circumstances. Decisions of Courts draw their inspiration and their strength from the very facts which framed those issues for decision. It follows that the decision of this Court in appeal NO. CA/S/91/2017 whose facts and circumstances are different from the present appeal cannot be a guide to this appeal.”
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TERMS OF AGREEMENT – PRINCIPLE OF LAW ON TERMS OF AGREEMENT
“The abecedarian principle of law in respect of contracts and agreements is expressed in the Latinism pacta conventa qua neque contro leges neque dolo malo initia sunt omni modo observanda sunt, more commonly expressed as pacta sunt servanda, meaning that agreements which are neither contrary to the law nor fraudulently entered into should be adhered to in every manner and in every detail. See Sonnar Nig Ltd vs Nordwind (1987) LPELR 1 at 44, A-G Nasarawa vs. A-G Plateau (2012) LPELR (9730)1 at 29 and Bluenest Hotels Ltd vs. Aerobell Nigeria Ltd (2018) LPELR (43568) 1 at 22”.-
CASES CITED
Not Available
STATUTES REFERRED TO
Arbitration and Conciliation Act, 1988|Court of Appeal Act, Cap C36, LFN 2004|
