CORAM

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PIUS OLAYIWOLA ADEREMI, JUSTICE, COURT OF APPEAL

SOWEMIMO, JUSTICE SUPREME COURT

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PARTIES

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HERERICK H. P. BARLAY UNITED BANK FOR AFRICA PLC APPELLANTS

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F.S.B. INT. BANK PLC CENTRAL BANK OF NIGERIA RESPONDENTS

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AREA(S) OF LAW

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SUMMARY OF FACTS

The 1st -3rd Defendants/Appellants were brought to a Federal High Court by the Plaintiff/Respondent on the following reliefs: an order of mandamus compelling the 3rd Defendant to investigate the role of the 1st Defendant’s fraudulent financial transaction resulting to a loss of N400 million by the Plaintiff, an order of injunction restraining the 2nd Defendant from employing the 1st Defendant while investigation by the 3rd Defendant is still on course, an order of injunction  restraining the 3rd Defendant from confirming and/or approving the appointment of the 1st Defendant by the 2ndDefendant in the course of investigation and  the sum of N400 million as special damages against the 1st Defendant for breach for fiduciary duties. During the proceeding at the Court, the 1st and 2nd Defendants brought an application for stay of proceeding that the main dispute between parties arose from an Arbitration Agreement. The trial Judge after taking arguments on both sides in a reserved ruling dismissed the application. Dissatisfied with the ruling of the trial court, the 1st and 2nd Defendants/Appellants appealed to the Court of Appeal.

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HELD

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Appeal Dismissed

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ISSUES

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Whether parties to a contract which contains an arbitration clause are relieved from their obligation to observe the provision of such clause solely on the ground that the claim or rights of a third party or to stranger to the Contract may be affected by the proposed arbitration.If the answer to question (1) is in the negative, what order should the court below have made on the application of the defendants in this case.Whether an arbitration clause in a contract can bind parties who are strangers to the contract.Whether a court can rightly refer to arbitration matters outside the scope of the arbitration clause.

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RATIONES DECIDENDI

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STAY OF PROCEEDINGS – THE ONUS OF PROVING THAT A STAY SHOULD NOT BE GRANTED REST ON THE PLAINTIFF

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‘‘The onus of showing that a stay should not be granted and that the proceedings should continue rests on the plaintiff, the originator of the suit.’’-PER ADEREMI JCA

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STAY OF PROCEEDINGS- PROPER TIME TO APPLY FOR A STAY OF PROCEEDINGS – DUTY OF THE COURT IN GRANTING AN APPLICATION FOR STAY OF PROCEEDINGS

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‘‘Indeed, a party who desires to request for a stay of proceedings must do so before or at the time of filing his pleadings. And a court before which such an application has been made, if satisfied that there is no sufficient reason why the matter should not be referred to arbitrator and that the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary for the proper take off of the arbitration, will make an order staying the proceedings’’. PER ADEREMI JCA

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ARBITRATION CLAUSE- WHEN CAN PARTIES TAKE THE ADVANTAGE OF AN ARBITRATION CLAUSE

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‘‘However, before any of the parties can be allowed by the court of law to take the advantage of an arbitration clause, such a clause must be mandatory, precise and unequivocal”. PER ADEREMI JCA

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ARBITRATION AND CONCILIATION ACT – PURPORT OF SECTION 4(1) AND (2) OF THE ARBITRATION AND CONCILIATION ACT

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“A court before which an action which is the subject of an arbitration agreement is brought shall, if any party 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. Sub-Section (2) Where an action referred to in sub-section (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.’’-PER ADEREMI JCA

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ARBITRATION CLAUSE – IMPLICATION OF AN ARBITRATION CLAUSE IN A CONTRACT

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“It has been firmly established that when an arbitration clause in a contract provides that any difference or dispute which arises shall be referred to arbitration and the parties are at one in asserting that they entered into a binding agreement, the clause for reference to arbitration shall apply even if the dispute involves an assertion by one party that circumstances have arisen, whether before or after the contract has been partly performed, which have the effect of discharging one or both parties from all subsequent liability under the contract.” PER ADEREMI JCA

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CASES CITED

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Heyman & An Vs Darwins Ltd (1942) A. C. 356.Hodgson Vs Reilway (1882) 9 Q.B.D. 188.

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STATUTES REFERRED TO

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Arbitration and Conciliation Act

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