CORAM

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JOSEPH SHAGBAOR IKYEGH    JUSTICE. COURT OF APPEAL

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PARTIES

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1. THE SHELL PETROLEUM DEVELOPMENT COMPANY OF NIGERIA LIMITED

2. TOTAL E & P NIGERIA LIMITED

3. NIGERIAN AGIP OIL COMPANY LIMITED

APPELLANTS 

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CRESTAR INTERGRATED NATURAL RESOURCES LIMITED RESPONDENTS

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AREA(S) OF LAW

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ARBITRATION, INTERNATIONAL COMMERCIAL ARBITRATION, ANTI-ARBITRATION INJUNCTIONS, CONFLICT OF LAWS, INJUNCTIONS, JURISDICTION, CIVIL PROCEDURE, INTERIM ORDERS

 

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SUMMARY OF FACTS

This case involved an application for an anti-arbitration injunction filed by Crestar Integrated Natural Resources Limited (the Respondent/Applicant) seeking to restrain Shell Petroleum Development Company of Nigeria Limited and others (the Appellants/Respondents) from proceeding with or continuing arbitration proceedings initiated at the International Court of Arbitration (ICC) in London.

The arbitration proceedings (ICC Number 21012/TO) were commenced by the Appellants on April 20, 2015, pursuant to an arbitration clause (Clause 25) in a Sale and Purchase Agreement (SPA) between the parties. The arbitration clause specified London as the seat of arbitration and provided that the agreement would be construed in accordance with English law.

Prior to the commencement of the arbitration, the Respondent had instituted proceedings at the Federal High Court in Nigeria. The Appellants had filed motions challenging the jurisdiction of the Federal High Court and seeking to stay proceedings in favor of arbitration. The Federal High Court dismissed these motions on March 6, 2015, and March 30, 2015, respectively. The Appellants appealed these decisions to the Court of Appeal, and while the appeal was pending, they commenced the ICC arbitration proceedings.

The Respondent then filed this application seeking to restrain the Appellants from proceeding with the arbitration until the final determination of the appeal. The Respondent argued, among other things, that the arbitration clause was null and void as it violated Nigerian law, particularly the Nigerian Oil & Gas Industry Content Development Act, and that allowing the arbitration to continue while the appeal was pending would be vexatious, oppressive, and unconscionable.

The Appellants filed a preliminary objection challenging the jurisdiction of the Court of Appeal to grant an anti-arbitration injunction, arguing that Section 34 of the Arbitration and Conciliation Act (ACA) prohibits court intervention in arbitration proceedings except as expressly provided in the Act.

 

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HELD

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1. On the question of jurisdiction, while Section 34 of the Nigerian Arbitration and Conciliation Act prohibits court intervention in domestic arbitration proceedings except as provided in the Act, this case involved an international arbitration as defined under Section 57(2) of the Act. The court found that the restrictive interpretation of Section 34 applied in domestic cases did not necessarily apply to international arbitrations.

2. Drawing on interpretations of Article 5 of the UNCITRAL Model Law (which is similar to Section 34 of the ACA) and considering that the parties had chosen English law to govern their agreement, the court concluded that it had jurisdiction to grant an anti-arbitration injunction against foreign arbitral proceedings under Section 13 of the Federal High Court Act read with Section 15 of the Court of Appeal Act.

3. On the merits of the application, the court determined that exceptional circumstances existed justifying the grant of an anti-arbitration injunction. The court found it would be oppressive, vexatious, and unconscionable to allow the arbitration to proceed while the appeal was pending, as this would force the Respondent to engage in duplicative proceedings and incur unnecessary expenses.

4. The court emphasized that anti-arbitration injunctions should only be granted in exceptional circumstances, particularly when restraining foreign arbitration proceedings. However, the facts of this case warranted such intervention to prevent prejudice to the Respondent while the appeal on the validity of the arbitration agreement was being determined

The Court of Appeal therefore granted the anti-arbitration injunction, restraining the Appellants from proceeding with or taking any further steps in the ICC arbitration pending the final determination of the appeal.

 

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ISSUES

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1. Whether the Court of Appeal has jurisdiction to issue an anti-arbitration injunction as sought by the Applicant.

2. If the court has jurisdiction, whether it ought to grant the prayer for an anti-arbitration injunction in light of the circumstances of this case

 

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RATIONES DECIDENDI

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SECTION 34 OF THE ARBITRATION ACT – RESTRICTION ON COURT INTERVENTION IN DOMESTIC ARBITRATION

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The provisions of section 34 of the Arbitration and Conciliation Act… is mandatory in that the word ‘shall’ is one that does not accommodate a flexible interpretation of the directives being given therein… from all the provisions therein, no enactment for the determination prematurely of the proceedings of an arbitral tribunal is provided… In the instant case, the issuance of ex-parte interim injunction does not fall under the exceptions to section 34 of the Act. It is very clear from the intendment of the legislature that the court cannot intervene in arbitral proceedings outside those specifically provided. Where there is no provision for intervention, this should not be done… – Per TINE TUR, JCA (quoted by JOSEPH SHAGBAOR IKYEGH, JCA)

 

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SCOPE OF SECTION 34 – APPLICABILITY TO INTERNATIONAL ARBITRATION

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It is obvious from the above provision that the instant case is an international arbitration which falls within the ambit of paragraph (b)(i) of Section 57(2) to the effect that the place of arbitration is situated outside Nigeria where the parties have their place of business. In the instant case, parties who are Nigerian Companies agreed that London in the United Kingdom shall be the place of arbitration pursuant to Clause 25 of the SPA executed by the parties. To this extent, the provision of 34 of the Act and the interpretation thereon by this court in STATOIL NIG LIMITED (supra) and NIGERIAN AGIP EXPLORATION LIMITED & ANOR (supra) to the extent that Nigerian courts cannot intervene in arbitral matters is not applicable herein.– Per JOSEPH SHAGBAOR IKYEGH, JCA

 

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UNCITRAL MODEL LAW – INTERPRETATION OF ARTICLE 5 ON COURT INTERVENTION

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From the note of the UNCITRAL Secretariat on the provision of Article 5 of the Model Law, the following commentaries were made: ‘Another important consideration in judging the impact of Article 5 is that the above necessity to list all instances of court involvement in the model law applies only to matters “governed by this Law”. The scope of Article 5 is, thus, narrower than the substantive scope of application of the model law i.e. “international commercial arbitration” (Article 1), in that, it is limited to those issues which are in fact regulated, whether expressly or impliedly, in the model law, Article 5 would, therefore, not exclude court intervention in any matter not regulated in the model law.’ – Per JOSEPH SHAGBAOR IKYEGH, JCA

 

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DISTINCT REGIMES OF JUDICIAL INTERVENTION – LORD MUSTILL’S COMMENTARY

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While defining the role of courts in modern international commercial arbitration, Professor David AR Williams, QC, restated Lord Mustill’s commentary on Article 5 of the model law, where he echoed thus: ‘it will thus be seen that, contrary to what might at first sight be assumed – namely that the code of intervention by a court is to be found in the Model Law and nowhere else – the Commission (UNCITRAL) envisaged that in the field of international commercial arbitration two wholly distinct regimes of judicial intervention would be in force at the same time. In ‘matters governed by this law’, the code takes effect, and no relief may be sought in any other circumstances… But in matters not governed by the law, the courts of the enacting state may continue to offer all such remedies in all such circumstances as are available under existing law.’ – Per JOSEPH SHAGBAOR IKYEGH, JCA

 

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LIMITATION ON ARTICLE 5 – INAPPLICABILITY TO FOREIGN ARBITRATIONS

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Learned Author, Emmanuel Gaillard in his text, ‘Anti-Suit Injunctions in International Arbitration’, Juris Publishing Inc., 2005, p. Ill stated: ‘… It is important to point out that Article 5 of the Model Law, is only applicable if the arbitration is taking place where judicial intervention is sought; the prohibition on judicial intervention not provided for in the Model Law is therefore not applicable in connection with an arbitration taking place abroad or an arbitration the place of which has yet to be determined.’ – Per JOSEPH SHAGBAOR IKYEGH, JCA

 

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ENGLISH COURTS’ APPROACH – POWER TO GRANT ANTI-ARBITRATION INJUNCTIONS

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It is clear that the English Courts have jurisdiction under s 37 of the 1981 Act to grant injunctions restraining arbitrations where the seat of the arbitration is a foreign jurisdiction, although it is a power that is only exercised in exceptional circumstances and with caution… – Per GLOSTER J (quoted by JOSEPH SHAGBAOR IKYEGH, JCA)

 

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COURT OF APPEAL POWERS – AUTHORITY TO GRANT INJUNCTIONS

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By virtue of section 16 of the Court of Appeal Act, the lower court has all the powers of the trial court i.e. the powers of the Federal High Court has in the matter before it which is now before us on appeal. So in my view, in order to settle completely and finally the matters in controversy between the parties to this appeal in the matter before the lower court and in order to avoid multiplicity of legal proceedings concerning any of those matters, can grant, such remedies as any of the parties may appear to be entitled to… – Per AGBAJE, JSC (quoted by JOSEPH SHAGBAOR IKYEGH, JCA)

 

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TEST FOR GRANTING ANTI-ARBITRATION INJUNCTIONS – VEXATIOUS OR OPPRESSIVE PROCEEDINGS

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In order to establish exceptional circumstances, it will usually be necessary, as a minimum; to establish that the applicant’s legal or equitable rights have been infringed or threatened by a continuation of the arbitration, or that its continuation will be vexatious, oppressive or unconscionable, these being the principles which govern the grant of injunctions to restrain proceedings in a foreign court…”– Per HAMBLEN J (quoted by JOSEPH SHAGBAOR IKYEGH, JCA)

 

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PURPOSE OF INTERLOCUTORY INJUNCTIONS – PREVENTION OF INJUSTICE

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It is therefore appropriate here to state that interlocutory injunction is to mitigate the suffering of the party applying for it so that he will not be in unnecessary hardship during the pendency of the substantive suit. It is always good to prevent injustice that most invariably could not be cured properly at the end of the substantive case if it was not granted… – Per BELGORE, JSC (quoted by JOSEPH SHAGBAOR IKYEGH, JCA)

 

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PRESERVATION OF RES – FACTOR FOR GRANTING INJUNCTION

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One factor for granting interlocutory injunction is for the preservation of the RES. It is the province of the law that the res should not be destroyed or annihilated before the judgement of the court. – Per Supreme Court (quoted by JOSEPH SHAGBAOR IKYEGH, JCA)

 

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CAUTION IN GRANTING ANTI-ARBITRATION INJUNCTIONS – NOT GRANTED AS MATTER OF COURSE

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I must say here that the situation in the instant case is peculiar because injunction being sought by the Applicant is not merely an Anti-Arbitration injunction but one in which a foreign tribunal will be enjoined thereon. The need for caution in the grant of such injunctions in this respect cannot be over-emphasized. It is therefore imperative to note that this kind of injunction is not granted as a matter of course, but will generally only granted in exceptional circumstances. – Per JOSEPH SHAGBAOR IKYEGH, JCA

 

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RESTRAINT AT INTERLOCUTORY STAGE – AVOIDING PREMATURE DETERMINATION OF SUBSTANTIVE ISSUES

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The law is settled as expressed in plethora of judicial authorities that a court has a duty to ensure that it does not determine at the interlocutory stage, the issues that would arise for determination in the substantive suit. Reiterating on this position of the law, the Supreme Court in AKAPO v HAKEEM HABEEB (supra) at 287, Per KARIBI-WHYTE, JSC held: ‘It is of paramount importance to bear in mind the fact that the application before the court is for a grant of interim injunction pending the determination of the substantive claim brought by the plaintiff. The duty of the Judge in that situation is to ensure that he did not in the determination of the application determine the same issues that would arise for determination in the substantive action.’ – Per JOSEPH SHAGBAOR IKYEGH, JCA

 

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CONDITIONS FOR INTERLOCUTORY INJUNCTIONS – SUBSTANTIVE REQUIREMENTS

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Some of these conditions are: (a) the applicant must show that there is a serious question to be tried i.e. that the applicant has a real possibility of success at trial, notwithstanding the defendant’s technical defence (if any); (b) the applicant must show that the balance of convenience is on his side, that is, more justice will result in granting the application than refusing it; (c) that the applicant must show that damages cannot be an adequate compensation for his damage or injury, if he succeeds at the end of the day; (d) the applicant must show that his conduct is not reprehensible foe example that he is not guilty of any delay; (e) No order should be made for an interlocutory injunction should be made on notice unless the applicant gives a satisfactory undertaking as to damages save in recognized exceptions. – Per JOSEPH SHAGBAOR IKYEGH, JCA

 

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CASES CITED

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STATUTES REFERRED TO

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1. Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria, 2004, Sections 2, 7, 12, 23, 30, 31, 32, 34, 57(2), 58

2. Court of Appeal Act, Sections 15, 16

3. Federal High Court Act, Section 13

4. Nigerian Oil & Gas Industry Content Development Act, 2010, Sections 1, 51(1), 68

5. Senior Courts Act 1981 (UK), Section 37

 

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