Legalpedia Citation: (2023-03) Legalpedia 50596 (CA)

In the Court of Appeal

Holden at Lagos

Fri Mar 31, 2023

Suit Number: CA/L/456/2018

CORAM

MONICA B. DONGBAN-MENSEM JUSTICE COURT OF APPEAL

PARTIES

NOVA BIOMEDICAL CORPORATION

APPELLANTS

ACCOUNS NIGERIA LIMITED

RESPONDENTS

AREA(S) OF LAW

APPEAL, ARBITRATION, CONTRACT, PRACTICE AND PROCEDURE

SUMMARY OF FACTS

The 1st Appellant, which was the 2nd Defendant at the trial court (High Court of Lagos State), is a company involved in the business of production and supply of medical and laboratory equipment based in Massachusetts, United States of America. The 2nd Appellant and the Respondent are Nigerian companies involved in the promotion and distribution of medical and laboratory equipment.

The 1st Appellant and the Respondent entered into an agreement (NOVA BIOMECIDAL Distribution Agreement) for the Respondent to act as the exclusive distributor of the 1st Appellant’s products in Nigeria for two years. The agreement expired, but both parties continued the relationship until the appellant, by a letter, gave a notice of intention to discontinue the distribution agreement.

The Respondent, by a letter, pleaded for non-exclusive distribution to enable it to conclude some deals, instead of outright cancellation of the exclusive distribution agreement. The 1st Appellant, however, after complaining of the unsustainability of the relationship on account of poor performance and failure to meet the target on the part of the Respondent, refused to grant non-exclusive distribution as requested. Instead, it suggested the Respondent work together with the new distributor, the 2nd Appellant, to conclude the ongoing deals. The Respondent was aggrieved and commenced this suit against the Appellants. The 1st and 2nd Appellants each filed a notice of preliminary objection, which the learned trial judge dismissed and decided to assume jurisdiction over the matter.

The appellant is aggrieved by the decision; hence, the instant appeal.

HELD

Appeal allowed

ISSUES

1, Whether the learned trial judge was right when he dismissed the Appellants’ Notices of Preliminary Objection and decided to assume jurisdiction over the Respondent’s action?

RATIONES DECIDENDI

JURISDICTION – A COURT THAT ACTS WITHOUT JURISDICTION ACTS IN VAIN

The determination of the question whether the Court before whom an action comes for adjudication has jurisdiction is a radical and crucial matter relating to its competence to hear the action. Hence, whenever the issue of competence and/or jurisdiction is raised before a Court, it has invariably been considered both imperative and appropriate first to settle the question. It is the resolution of the issue that determines whether the Court can proceed to hear the matter before it. This is so because jurisdiction is the lifeline or life wire of every adjudication. A Court that acts without jurisdiction acts in vain as its decision is a nullity and liable to be set aside. See SHITTA-BEY V. AG FEDERATION (1998) 10 NWLR (PT.570) 392.  – Per A. S. Umar, JCA

JURISDICTION – JURISDICTION OF THE COURT IS DETERMINED BY THE CAUSE OF ACTION

The search for an answer to the question whether a court has jurisdiction begins from the claim as it is a well settled principle of law that jurisdiction of the Court is determined by the cause of action of the plaintiff as endorsed on the writ of summons – See ADEYEMI V. OPEYORI (1976) 9-10 SC. 31. – Per A. S. Umar, JCA

JURISDICTION – PARAMETERS TO DETERMINE THE COMPETENCE OF THE COURT TO ASSUME JURISDICTION

One of the most comprehensive parameters to determine the competence of the court to assume jurisdiction is the trinity test laid down by BAIRAMIAN, J.S.C in MADUKOLU & ORS V. NKEMDILIM (1962) LPELR-24023 (SC) (PP. 9-10 PARAS. F) (1962) 2 SCNLR 341. The test has become widely accepted in the judicial circle in this country and perhaps the decision is the most often-quoted decision on jurisdiction. The eminent jurist said

“Before discussing those portions of the record, I shall make some observations on jurisdiction and the competence of a court. Put briefly, a Court is competent when (1) it is properly constituted as regards numbers and qualifications of the members of the bench, and no member is disqualified for one reason or another; and (2) the subject matter of the case is within its jurisdiction, and there is no feature in the case which prevents the court from exercising its jurisdiction: and (3) the case comes before the court initiated by due process of law, and upon fulfillment of any condition precedent to the exercise of jurisdiction. Any defect in competence is fatal, for the proceedings are a nullity however well conducted and decided: the defect is extrinsic to the adjudication.”

It is only when these three conditions co-exist that a Court is said to have jurisdiction. See ADIGUN V. OSAKA (2003)5 NWLR (PT. 812) 95, 131, PARAS B-E. – Per A. S. Umar, JCA

JURISDICTION – AN ARBITRATION CLAUSE DOES NOT OUST THE JURISDICTION OF THE COURT

The position of the law is settled beyond equivocation that an arbitration clause does not oust the jurisdiction of a Court. In BILL & BROTHERS LTD & ORS V. DANTATA & SAWOE CONSTRUCTION CO. (NIG) LTD & ORS (2015) LPELR-24770(CA) (PP. 10-12 PARAS. A-A), this court, PER EKANEM, J.C.A, opined thus;

“The first point to be made is that an arbitration clause in an agreement does not raise the issue of jurisdiction of a Court. This is because the jurisdiction of a Court is donated to it by the Constitution of Nigeria and /or the statute establishing the Court. Parties cannot by their agreement seek to oust the jurisdiction so donated. It would be a constitutional apostasy to hold otherwise. An arbitration clause only postpones the right of either of the parties to the agreement to resort to litigation in Court whenever the other contracting party elects to submit the dispute under the agreement to arbitration.

Similarly, in SAKAMORI CONSTRUCTION (NIG) LTD V. LAGOS STATE WATER CORPORATION (2021) LPELR 56606 SC (PP. 40 PARAS. F-F), the apex court, PER PETER-ODILI ,J.S.C(rtd.) said

“It has to be pointed out that the law is well settled that the mere presence of an arbitration clause does not automatically oust the jurisdiction of a Court of law.”

See also TRANSOCEAN SHIPPING VENTURES PRIVATE LTD V. MT SEA STERLING (2018) LPELR-45108(CA) (PP. 23-25 PARAS. D); HANOVER TRUST LTD V. UNIQUE VENTURES CAPITAL MANAGEMENT CO. LTD & ANOR (2014) LPELR-23359(CA) (PP. 40-45 PARAS. F) MOBIL PRODUCING NIG UNLTD vs. SUFFOLK PETROLEUM SERVICES LTD (2017) LPELR (41734) 1 at 33-35. – Per A. S. Umar, JCA

ARBITRATION – WHEN A PARTY GOES STRAIGHT TO COURT WITHOUT REFERENCE TO ARBITRATION AS CONTAINED IN THE AGREEMEN

The correct position is as captured in the dictum of Niki Tobi J.C.A. as he then was in KURUBO VS. SACH –MOTSON NIGERIA LIMITED (1992) 5 NWLR (PT 239) 102 when the law lord said ‘‘that takes me to the Arbitration Clause. It is the law that 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. In other words where the law places a hurdle between a willing and prospective litigant and the court in terms of enforcing the process of the court, the litigant must first clear or race over the hurdle before he can enforce the court process. He cannot jump or beat the gun before the sports official shoots the gun for the commencement of the hurdle race. He could either get himself hurt or disqualify himself in the process. In either case, he is the loser and he will not like that. So let him take first steps first or first actions first. Generally, therefore, if a party goes straight to the court to file an action without reference to arbitration, as contained in the agreement, a court of law is entitled and indeed is bound to refuse jurisdiction in the matter. However, before a court of law can refuse jurisdiction, the arbitration clause must be mandatory, precise and unequivocal. And in this respect, the arbitration clause should contain the mandatory “shall” and not the permissive and discretionary “may.” Although in the canons of statutory interpretation, there are known instances when the word “may” could be construed as “shall”, it is certainly more advisable to use the word “shall” in an arbitration clause. That will make things easier for all – the litigants, the arbitrations and the courts. – Per A. S. Umar, JCA

ARBITRATION – PARTIES SHOULD NOT BE ENCOURAGED ON ANY PRETEXT TO RENEGE FROM ARBITRATION

…that the court of law must always respect the sanctity of the agreement of the parties – the role of the court is to pronounce on the wishes of the parties and not to make a contract for them or re-write the one they have already made for themselves. Arbitration clause has now become a regular feature of commercial agreements.

In the recent case of KWARA STATE GOVT & ORS V. GUTHRIE (NIG) LTD, (2022) LPELR 57678 SC (PP. 21 PARAS. A), Per OGUNWUMIJU, J.S.C, observed as follows “arbitration clauses are included in contracts to enable parties cut short litigation time and engage in the shorter and simpler method of dispute resolution. Parties should not be encouraged on any pretext to renege from arbitration clauses in order to clog the courts with litigations they had consented to subject to arbitration.” See also JFS INVESTMENT LTD V. BRAWAL LINE LTD & ORS (2010) LPELR-1610(SC) (PP. 52-53 PARAS. C); SONA BREWERIES PLC V. PETERS (2005) 1 NWLR (PT. 908) PG. 478. OWONIBOYS TECHNICAL SERVICES LTD. V. U.B.N. LTD. (2003) 15 NWLR (PT. 844) PG. 545.  S.E. CO. LTD. V. N.B.C. (2006) 17 NWLR (PT. 978) PG. 201. KURUBO VS. SACH –MOTSON NIGERIA LIMITED supra” – Per A. S. Umar, JCA

CONSEQUENTIAL RELIEF – WHEN A TRIAL COURT HAS POWER TO GRANT A RELIEF AS CONSEQUENTIAL RELIEF

…if, on the facts of the case, the appellants are entitled to a stay of proceedings, the mere fact that, it was not what they prayed for will not preclude the court from making the order. The position of the law is clear that where a person has not specifically asked for a relief from trial Court, a trial Court has power to grant such a relief as a consequential relief. See GARBA vs UNIVERSITY OF MAIDUGURI (1986) 1 NWLR (PT 18) 550. For instance, a Court can order an injunction even where it is not specifically claimed but appears incidentally necessary to protect established rights. See AMAECHI VS INEC EPR VOL 4 90 at 205. See NYAKO VS ADAMAWA HOUSE OF ASSEMBLY & ORS (2016) LPELR-41822(SC) at 55-56.” ACHU & ORS V. ETTA & ORS (2017) LPELR-43338(CA) (PP. 6-8 PARAS. F). – Per A. S. Umar, JCA

CONTRACTS – NOT EVEN COURTS CAN DETERMINE THE TERMS OF CONTRACTS BETWEEN PARTIES

The law is unequivocal that courts are not allowed to re-write agreements between parties that were freely and duly entered into by the said parties. This is because agremeents between parties are sacrosanct and the law recognizes and honours the agreement between parties as their express intentions and obligations towards each other. Parties are bound by the agreements they enter into, therefore the role of the court is to give agreements their literal interpretation and give effects to such agreements without importing what was not expressly stated in the agreement. This was the decision in LARMIE V. DATA PROCESSING MAINTENANCE AND SERVICING LIMITED. (2005) LPELR – 1756 (SC) 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 therefore. 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 limited V. B.U umeh and sons limited. (1996) 1nwlr(pt.426) 565; S.C.O.A. Nigerian Limitted v. bourdex limited. (1990) 3nwlr, (pt.138) 380; and Koiki V.magnusson (1999) 8nwlr (pt.615) 492 @ 514. – Per MOHAMMED J.S.C

Similarly, in AMINU ISHOLA INVESTMENT LIMITED V. AFRIBANK NIG. PLC. (2013) LPELR – 20624 (SC) the above principle was reemphasized as follows

“in NIKA FISHING CO.LTD V. LAVINA CORPORATION (2008) 16 NWLR (PT.1114) 509, the supreme court per Niki Tobi, (JSC) put the position this way “it is the law that parties to a agreement retain the commercial freedom to determine their own terms, no other person, not even the courts can determine the terms of contract between the parties thereto.  The duty of the court is to strictly interpret the terms of the agreement on its clear terms.”

ONNOGHEN JSC IN AUGUSTINE IBAMA V. SHELL PETROLEUM DEVELOPMENT COMPANY NIG. LTD (2005) 17 NWLR (PT.954) 364 lent his voice when he stated thus,

“it is trite law that the court can only interpret r enforce the agreement entered into by the parties and is incapable of making any contract between them.” Per ALAGOA JSC. – Per M. B. Dongban Mensem, JSC

CASES CITED

STATUTES REFERRED TO

1. Distribution Agreement
2. Laws of Commonwealth of Massachusetts, United States of America
3. U.N. Convention on Contracts for the international sale of Goods
4. U.N. Convention on International Trade Law(UNCITRAL)
5. Arbitration Law, Cap 10, Laws of Lagos State.

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