SACOIL 281 (NIG) LTD & ANOR v. TRANSNATIONAL CORPORATION OF (NIG) PLC
(2020)LCN/15247(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Wednesday, May 27, 2020
CA/L/1102/2016
Before Our Lordships:
Ugochukwu Anthony Ogakwu Justice of the Court of Appeal
Jamilu Yammama Tukur Justice of the Court of Appeal
Ebiowei Tobi Justice of the Court of Appeal
Between
1. SACOIL 281 NIGERIA LIMITED 2. EER 281 NIGERIA LIMITED APPELANT(S)
And
TRANSNATIONAL CORPORATION OF NIGERIA PLC RESPONDENT(S)
RATIO
WHETHER OR NOT ANY AGREEMENT WHICH OUSTS THE JURISDICTION OF A COURT WILL BE ENFORCEABLE
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. PER TOBI, J.C.A.
WHETHER OR NOT PARTIES ARE BOUND BY THE TERMS OF THEIR AGREEMENT
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). PER TOBI, J.C.A.
WHETHER OR NOT A COURT WILL ACT ON AN UNCHALLANGED AFFIDAVIT EVIDENCE
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. PER TOBI, J.C.A.
THE GENERAL PRINCIPLE APPLICABLE WHERE PARTIES HAVE EMBODIED THE TERMS OF THEIR CONTRACT IN A WRITTEN DOCUMENT
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.”PER TOBI, J.C.A.
THE EFFECT OF AN ARBITRATION VIS A VIS LITIGATION
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 a re 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. Bent worth Finance (Nig.) Ltd.(1976) 11 SC 183; Fawehinmi Construction Co. Ltd.v. O.A.U. (1998) 6 NWLR (Pt. 553) 171; Obembe v. Wemabod Estates Ltd. (1977) 5 SC 115; Chemia Products (UK) Ltd. v. Idowu (1963) 2 All NLR 249; Kurubo v. Zach – Motison (Nig.) Ltd. (1992) 5 NWLR (Pt. 239) 102 referred to.]”PER TOBI, J.C.A.
EBIOWEI TOBI, J.C.A. (Delivering the Leading Judgment): The ruling that culminated in this appeal is the ruling of 8/12/2015 delivered in Suit No. LD/778CMW/2015 – Transnational Corp. of Nig. Plc vs. Sacoil 281 Nigeria Limited & Anor by Hon. Justice Y.A. Adesanya (Mrs.) of the Lagos State High Court. At the lower Court, the Respondent (then Claimant/Respondent) instituted this action against the Appellants (then Defendants/Applicants) 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 as Claimant 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. The claim was as follows:
“a. A DECLARATION that the letter of the 1st Defendant to the Claimant dated 3rd December, 2014 and headed “Re: Notice of termination of Farm-out Agreement and Participation in respect of OPL 281” is contrary to the express and/or implied terms of Farm-out and Participation Agreement dated the 16th Day of October, 2010 (‘FOPA’) (as amended by the Deed of Amendment and Novation (‘DAN’) and further amended by the Deed of Amendment (‘DA’)) and therefore a wrongful termination, breach and repudiation of the FOPA (as amended by DAN and further amended by DA).
b. A DECLARATION that the Defendants are not, in the circumstances, entitled to any refund of the sum of US$8,750,000 (Signature Bonus) or any part thereof being their contribution for farm-in into OPL 281 and/or part consideration for the assignment of 20% participating interest each in OPL 281 by the Claimant.
c. A DECLARATION that the Defendants are not, in the circumstances, entitled to any refund of the sum of US$3.75 million (initially Transcorp Fee) or any part thereof being the total sum paid by the Defendants to the Claimant after the Claimant obtained the Award Letter for OPL 281.
d. A DECLARATION that the Defendants are not, in the circumstances, entitled to any refund or any payment whatsoever and/or howsoever from and/or by the Claimant.
e. The sum of US$50,000,000 (Fifty Million US Dollars) or its equivalent to be paid jointly and severally by the Defendants to the Claimant being Special Damages for wrongful termination, breach and repudiation of the Farm-out and Participation Agreement dated the 16th Day of October, 2010 (‘FOPA’) (as amended by the Deed of Amendment and Novation (‘DAN’) and further amended by the Deed of Amendment (‘DA’).
PARTICULARS OF SPECIAL DAMAGES
i. The sum of US$ 12,000,000 being Assignment Fee which the Claimant is entitled to under FOPA (as amended by DAN and DA)
ii. The sum of US$38,000,000 being Production bonuses which the Claimant is entitled to under FOPA (as amended by DAN and DA)
In the Alternative to (b) and (c)
f. The sum of US$ 12,500,000 to be paid jointly and severally by the Defendants to the Claimant being Special damages for wrongful termination, breach and repudiation of the FOPA (as amended by DAN and DA) by the 1st Defendant.
PARTICULARS OF SPECIAL DAMAGES
i. The sum of US$ 8,750,000 (Signature Bonus)
ii. The sum of US$ 3,750,000 (Initial Transcorp Fee)”
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 as contained on pages 186 – 199 of the record of appeal (pages 1 – 14 of the ruling) dismissing the application of the Appellants. The lower Court in its ruling, particularly on pages 197 – 199 of the record (pages 12-14 of the ruling) held as follows:
“Clearly Clause 18(4) is a foreign jurisdiction clause and certainly ousts the jurisdiction of the Nigerian Courts. Clause 18.4 completely oust the jurisdiction of the Nigerian Courts from entertaining any action for setting aside the Arbitral award whereas Sections 29 and 48 of the ACA specifically provide that the Nigerian Courts have jurisdiction to set aside an arbitral award….
…. As noted earlier, Clause 18(4) deprives the Claimant of rights guaranteed under the ACA i.e. the right to set aside any arbitral award, on matters that are beyond the scope of submission to arbitration for which an application can ordinarily be brought to set aside the award. This brings this case within the ambit of the decision and reasoning in Sonnar’s case.
On the other issues canvassed against the grant of this application, i.e. that all the parties to this agreement are Nigerian Companies, the evidence being available in Nigeria, thus implying great expense to proceed to arbitration outside Nigeria, I observe that these facts are contained in the Claimant’s averments in the statement of claim and the learned silk’s written address and not in any exhibit or counter affidavit, there is equally no contrary averments in the Defendants/Applicants affidavit before the Court.
See Nika Fishing Co. Ltd. Vs. Lavina Corp. (2008) 16 NWLR (Pt. 1114) 509.
On the other issues raised in opposition to this application, i.e. whether the terms of the Agreement are inoperable, in view of the submission of the learned counsel for the Defendants/Applicants is subjudice because the Claimant has instituted a separate action for the determination of that case, I would refrain from making a pronouncement on it. Suffice to say that it is the considered opinion of this Court that the justice of this matter does not support the exercise of the Court’s discretion in favour of this application.
On the totality of the foregoing, this application fails; it is accordingly dismissed.
I SO RULE”
The Appellants dissatisfied with the ruling of the lower Court has filed this appeal vide a notice of appeal dated and filed 13/7/2016 containing three grounds of appeal found on pages 200 – 203 of the record of appeal. The grounds are:
Ground 1:
The lower Court erred in law and arrived at a wrong decision when it refused the Appellant’s application dated 24 July 2015 to stay the proceedings before it pending reference of the dispute to arbitration.
Ground 2:
The lower Court erred in law when it held at page 12 of the ruling that Clause 18.4 of the Farm-Out and Participation Agreement is a foreign jurisdiction (sic) which ousts the jurisdiction of the Nigerian Courts and at pages 13 and 14 of the ruling, it concluded that the Clause 18.4 deprives the Claimant of rights guaranteed under the arbitration and Conciliation Act thereby bringing the case within the ambit of the decision and the reasoning in Sonnar’s case.
Ground 3:
The lower Court erred in law and arrived at a wrong decision when it held that “In M.V. Lupex Vs. NOC & S (supra), the Apex Court distinguished Sonnar’s from the case in hand, only on the basis that in Lupex case, the Respondent had voluntarily submitted to the jurisdiction of the English Tribunal in London and thus compromise its right to resort to litigation in Court” and thereby refused to grant the Appellant’s application for stay of proceeding pending arbitration on the basis of the Sonnar decision.
The Appellant’s brief dated and filed 8/11/2016 but deemed on 17/4/2018 was settled by Ibifubara Berenibara, Esq. In their brief, Appellants raised two issues for determination before this Court, to wit:
1. Bearing in mind the agreement of the parties to refer their disputes to arbitration in Clauses 18.2 and 18.3 of the FOPA, whether the lower Court was right to dismiss the application for stay of proceedings pending referral of the dispute to arbitration. (Distilled from Ground 1)
2. Whether the parties’ arbitration in the FOPA is synonymous with a foreign jurisdiction clause which falls within the ambits of the reason for the Supreme Court’s eventual decision in Sonnar v. Nordwind (Distilled from Grounds 2 and 3).
On issue one, it is the submission of learned counsel that the Respondent did not file any counter-affidavit to the affidavit in support of the application for stay of proceedings pending arbitration citing Nigeria Stored Products Research Institute vs. Board of Internal Revenue, Kwara State (2013) LPELR-22073 (CA) on the legal effect of a failure of a party to file counter-affidavit to a motion, which is that the party is assumed to have admitted the facts in the affidavit in support and therefore the Court can rely on the affidavit in coming to a conclusion. Learned counsel further submitted that parties are bound by the terms of their agreement and the Courts are to recognize and respect the sanctity of these agreements, relying on Arjay Ltd vs. A.M.S. Ltd (2003) 7 NWLR (Pt. 820) 577 @ 634; Sona Breweries Plc vs. Shina Peters & Anor (2005) 1 NWLR (Pt. 908) 478 @ 489. Learned counsel contended that it is not the duty of the Court to pick and choose aspects of the contract of the parties in favour of any of the parties citing Nwobi vs. Anukam (2001) WRN 38 @ 47. It is the submission of Appellants’ counsel that having voluntarily entered a solemn agreement to settle their disputes by arbitration, the Respondent should not be allowed to breach the agreement by commencing litigation to resolve their dispute arising from the FOPA. It is counsel’s argument that flowing from the clear and unambiguous provisions of Clauses 18.2 and 18.3 of the FOPA, the only interpretative jurisdiction the lower Court had, was to make a pronouncement on the clear and unambiguous agreement by giving full meaning to it. Learned counsel placed reliance on Obikoya vs. Wema Bank Ltd (1991) 7 NWLR (Pt. 201) 119 @ 129 – 130. It is the duty of the lower Court to determine whether, by the agreement of the parties under Clauses 18.2 and 18.3 of the FOPA, it should stay proceedings of the action instituted by the Respondent and refer the dispute to arbitration in line with Sections 4 and 5 of the Arbitration and Conciliation Act, 1988 (ACA), counsel submitted.
It is the contention of learned counsel for the Appellants that the only ground for which the lower Court could have refused an application for stay would be if the Appellants had waived their right to arbitration by delivering pleadings or taking any steps in the matter. For this proposition, counsel relied on MV Lupex vs. NOC & S (2003) 15 NWLR (Pt. 844) 469 @ 486. It is counsel’s further contention that the Appellants having not delivered pleadings or taken any steps in the proceedings other than entering appearance and applying for an order to stay proceedings pending arbitration, the lower Court jumped the gun by abdicating the sole issue for determination before it and employing its opinion regarding enforcement of arbitral award (an issue that was not presented to it for determination). Relying on Section 34 of the ACA, it is the submission of learned counsel that the lower Court’s power to interfere with the parties’ agreement to arbitrate their dispute is limited to the situation provided by the ACA itself. On this note, counsel submitted finally that the lower Court had no basis for refusing staying its proceedings pending referral of the dispute to arbitration in accordance with the arbitration agreement of the parties.
On issue two, it is the stance of learned counsel that where a party to an arbitration agreement governed by the Arbitration and Conciliation Act, in defiance of the agreement institutes an action in Court, the options opened to the other party to the agreement, is to either continue with the proceedings at the Court by filing his defence processes or applying to the Court for an order staying proceedings of the Court pending referral of the dispute to arbitration. Learned counsel referred to Section 5 of the ACA and the case of K.S.U.D.B. vs. Fanz Const, Ltd (1990) NWLR (Pt. 142) 1. It is counsel’s submission that parties in a commercial transaction are at liberty to choose the venue for the resolution of their disputes, and the Courts are bound to respect the agreement of the parties as the Court is not required to employ sentiment in any form in construing the agreement of parties relying on Nika Fishing Co. Ltd. vs. Lavina Corporation (2008) 16 NWLR (Pt. 1114) 509. It is further submitted that having agreed to international arbitration, it is too late in the day for the Respondent to place reliance on the case of Sonnar vs. Norwind (1987) All NLR 549, and allege that the forum is not convenient, or that it is an infringement of its constitutional right to commence actions in a Nigerian Court. Counsel also submits that it is immaterial that the parties are Nigerians and have their places of business in Nigeria; where they agree that the place of arbitration shall be outside Nigeria, the arbitration as agreed by them to be an international arbitration as defined by Section 57(2)(b)(i) of the ACA.
Learned counsel contends that the lower Court failed to appreciate that the facts and circumstances of the Sonnar’s case is totally different from those in the instant case to which the Supreme Court decision in the MV Lupex’s case applies. It is learned silk’s submission that the lower Court was misled by an obiter in the Sonnar’s case to arrive at its decision which is capable of encouraging parties to an arbitration agreement to breach their agreement, even after taking benefit of the agreement. Learned counsel contended that the issue before the Court was not any procedural issue on how the arbitration will be conducted or how an arbitral award could be enforced or set aside. Rather, it was an application to stay proceedings pending reference to arbitration as agreed by the parties; which does not require the lower Court delving into an issue like setting aside an arbitral award. It is also the contention of learned counsel that parties in a commercial transaction are at liberty to subject the resolution of their dispute to any Court with competent jurisdiction relying on Nika Fishing Co. Ltd vs. Lavina Corporation (supra). Counsel argued that the lower Court had a duty to stay proceedings unless there is a compelling cause provided by the Respondent for it not to so grant the application. It is learned counsel’s position that the lower Court only picked out a portion (dictum) of Oputa JSC in the Sonnar’s case to support its decision that it is a matter of public policy for the Court not to divest itself of jurisdiction placed on it by the Constitution. Counsel submitted that the facts of this case are not impari materia with the facts in the Sonnar’s case and the lower Court ought not to have applied that decision to this case for the following reasons:
a. The Appellants’ application at the lower Court is to stay proceedings pending arbitration and not to stay proceedings in preference for a foreign Court.
b. A stay of proceedings pending arbitration does not deprive the lower Court of jurisdiction, and would not warrant the lower Court striking out the action pending referral to arbitration. Whereas under the Sonnar’s case, the Federal High Court had struck out the matter for the German Court to assume jurisdiction.
c. There was no issue relating to the loss of the right of action by the Respondent if the suit was stayed pending arbitration. But in the Sonnar case, the Plaintiffs/Appellants would have lost the right to institute an action in Germany as the matter was statute-barred under German law.
d. There was no allegation that the FOPA is “a take it or leave it type of contract” (in view of Oputa JSC relating to the Bill of Lading), by one that was agreed by parties.
e. The Respondent herein did not file an affidavit or provide any form of evidence to show that the referral of the dispute to arbitration will create any form of injustice to it. But in the Sonnar case, both counsel admitted and indeed provided strong evidence from German lawyers that if the Federal High Courts gives up jurisdiction, the Plaintiffs will not have any live-action in Germany.
It is the contention of learned counsel that the onus of proving that injustice would result where stay is granted (or proceedings relating to arbitration determined in London), lies on the Respondent. This, counsel submitted was the silent condition for refusing an application for stay of proceedings in preference for a foreign Court as emphasized in the Sonnar’s and Nika’s cases. It is the contention of learned counsel that the Respondent did not provide any evidence to warrant the lower Court’s refusal to stay the proceedings nor did it file any affidavit at the lower Court disclosing strong cause that the Respondent will suffer injustice where the matter is stayed pending arbitration. Counsel therefore, submitted that the lower Court failed to consider the trite principle of law that the address of counsel cannot take the place of evidence. Counsel cited the case of Calabar Central Co-Operative Thrift & Credit Society Ltd & Ors. vs. Bassey Ebong Ekpo (2008) LPELR-825 (SC). Learned counsel posited that there is absolutely no basis for the lower Court’s decision as the Respondent did not depose to an affidavit to justify or establish injustice if the application for stay of proceeding pending arbitration is granted and that the written address of counsel cannot take the place of required evidence. It is further argued that the lower Court could not have resorted to the Respondent’s averments in its statement of claim to look for facts in support of the Respondent for the Appellants’ application, when:
a. It is not the lower Court’s duty to investigate and search for factual evidence in favour of the Respondent. See Ibrahim-Ohida vs. Military Administrator, Kogi State (2000) FWLR (Pt. 12) 2107 at 2126.
b. The Court did not state the facts being relied on from the statement of claim; and
c. The Appellants could not have filed any defence to the statement of claim in view of Section 5 of the ACA, which precludes them from filing any defence if they intend to adhere to the arbitration agreement, and not waive their rights. See Ariori v. Elemo (1983) ANLR 1 @ 22.
Learned counsel, therefore, submitted that the lower Court actually embarked on a voyage of discovery and investigation just to refuse the Appellants’ application and aid the Respondent to reprobate or renege on its agreement with the Appellants.
It is the contention of learned counsel that even though the lower Court was not required to concern itself with Clause 18.4 of FOPA, as that was not the basis of the application before it, the lower Court still got its conclusion wrong; as the fact that the ACA provides that the Nigerian Court has jurisdiction over the Sections 29 and 48 of the ACA referred to by the lower Court, does not provide that the Nigerian Court has jurisdiction to the exclusion of any other Court or tribunal. Learned counsel relied on Laura Ubani vs. Jeco Shipping Line & Anor. (1988) 3 NSC 483 @ 495; Comet Shipping Agencies vs. Panalpina World Trans. (1989) 2 NSC 500 @ 512. It is the argument of learned counsel that if the nebulous and dangerous concept of public policy relied on by the lower Court as its basis for refusing the Appellants’ application for stay of proceedings pending arbitration, is allowed to stand, even in the absence of strong evidence of injustice from the Respondent, then indeed a dangerous precedent would have been set, that could eventually boomerang. Learned counsel called upon this Court to exercise its powers vested in it under Section 15 of the Court of Appeal Act, Cap C36, LFN 2004, and grant the said application in the interest of justice and keeping with the sanctity of contracts.
The Respondent’s brief dated and filed 15/3/2019 and deemed on 23/3/2020 was settled by Uchenna Ozoagbo Esq. In its brief, Respondent raised two issues for determination viz:
1. Whether the lower Court was right in dismissing the Appellants’ application for stay of proceedings of the suit and referring the dispute between the parties to arbitration.
2. Whether the case of Sonnar v. Nordwind is applicable to this instant case.
On issue one, it is the submission of learned counsel that the learned trial Judge was right when her Lordship dismissed the Appellants’ application for stay of proceedings of the suit. It was contended by learned counsel that the reasons why the lower Court refused the application of the Appellants at the lower Court for stay of proceedings of the suit are because the lower Court found that the arbitration agreement which is contained in Clause 18 (18.1 – 18.4) of the Farm-Out Participation Agreement (FOPA) between the parties:
a. Ousts the jurisdiction of the Nigerian Court as argued by the Respondent.
b. Is contrary to and violates statutory provisions, that is, the Arbitration and Conciliation Act (ACA)
It is the submission of the learned counsel that the law is well established that a Court should not give effect to any contract that ousts its jurisdiction. Reliance was placed on Sonnar (Nig) Ltd & Anor vs. Partenreedri M.S. Nordwind & Anor (1987) All NLR 549 @ 576. It is further submitted by learned counsel that the lower Court was therefore right not to give any effect to the arbitration clause contained in Clause 18 of FOPA having found in its ruling that the said agreement ousted the jurisdiction of the Court. Learned counsel also submitted that the law is well established that no Court will enforce any obligation arising from a contract that is contrary and/or violates a statute as such a contract is illegal, null and void citing Corporate Ideal Insurance Ltd vs. Ajaokuta Steel Company Ltd & Ors (2014) Vol. 2 MJSC (Pt. 1) 1. Learned counsel argued that the submission of the Appellants that the Court must give effect to the agreement of parties and that the only ground upon which the Court can refuse an application for stay of proceedings is when the Appellants had delivered pleadings in the suit, is erroneous. He went further to state that where it has been found that the arbitration agreement between the parties robs the Court of its jurisdiction in favour of another foreign forum, the lower Court ought not to give effect to such a contract and was right by not giving effect to it. For this, counsel relied on the Sonnar’s case and the case of Nnadozie vs. Mbagwu (2008) 3 NWLR (Pt. 1074) 363 at 394 – 395.
It is the contention of learned counsel that the Appellants’ argument that parties are bound by the terms of a contract (which contract, he submitted, is void according to law), is certainly misconceived and erroneous and should be discountenanced entirely. He relied on Nnadozie vs. Mbagwu (supra); Corporate Ideal Insurance Ltd vs. Ajaokuta Steel Company Ltd & Ors (supra). It is the submission of counsel that the cases of Arjay Ltd vs. A.M.S. Ltd, Oladeji vs. Nigerian Breweries Plc; Nwobi vs. Anukam (supra), which was referred to by Appellants’ counsel to the effect that parties and Courts are bound by the terms of their contract is inapplicable to the instant case in that:
a. The respective contracts in those cases were valid as they were not entered into in contravention of any law.
b. Whereas, in this instant appeal, the Arbitration Contract upon which the Appellants have relied on is void as same is in contravention with the provisions of the ACA. He, therefore, urged this Court to discountenance those cases.
Learned counsel for the Respondent submitted that the Appellants were misconceived when they argued in their brief that the lower Court should have ignored Clause 18.4 of the Arbitration agreement in determining the Appellant’s application for stay of proceedings before it. He cited Mbani vs. Bosi & Ors (2006) 11 NWLR (Pt. 991) 400. Learned counsel further submitted that the lower Court was entitled to look at the entire arbitration agreement including Clause 18.4 to properly determine the Appellants’ application which it did. Learned counsel urged this Court to uphold the finding of the lower Court that the lower Court can only refuse an application for stay of proceedings pending arbitration under the condition provided under Section 5 of the ACA; which finding is absolutely against the Appellants and supports the contention of the Respondent. It is the final submission of learned counsel that in the circumstances of this case, the lower Court was satisfied that there were sufficient reasons why the matter should not be referred to arbitration in accordance with the agreement. On this note, learned counsel urged this Court to decide this issue in favour of the Respondent.
On issue two, it is the submission of learned counsel that the case of Sonnar vs. Nordwind (supra), is wholly applicable to the instant case and the lower Court rightly relied on it. It is the contention of counsel that from the facts of the Sonnar’s case, some salient facts are noteworthy:
a. In the Sonnar’s case, the agreement between the parties contained a Clause which ousts the jurisdiction of the Federal High Court in determining the dispute between the parties just as in the instant case in favour of a Court in the foreign jurisdiction.
b. The Defendant in that case applied to the Federal High Court for an Order for stay of proceedings just as the Appellants did in the lower Court.
c. The Plaintiff in that case timeously responded to the application of the Defendant showing strong reasons why the Court must refuse the application of the Defendant just as in the Respondent did in this case.
It is the further submission of learned counsel that from the above, it is clear that the reasoning and the decision in the case of Sonnar is totally applicable to the instant case in that:
a. The facts of the Sonnar case are on all fours with the facts of the instant case.
b. The question before the lower Court, which is the same question that the Supreme Court had to decide in the Sonnar case, was whether the Respondent has shown strong cause against the grant of the application….
c. The lower Court carefully considered the grounds of the Respondent’s objection to the Appellants’ application for stay of proceedings particularly the ground that the arbitration agreement is one that purports to ousts the jurisdiction of the lower Court.
d. Finally, the lower Court rightly found that given the provisions of Section 18(4) of the FOPA, the instant case is within the ambit of the decision and reasoning in the Sonnar’s case….
It is based on the above that learned counsel urged this Court to discountenance the argument of the Appellants which purports to state otherwise.
Learned counsel relying on Alubankudi vs. A.G., Fed. (2002) 17 NWLR (Pt. 796) 338 posited that the law is well settled that argument which do not arise from an issue for determination go to no issue and as such this Court should discountenance the Appellants’ argument on the non-provision of evidence by the Respondent at the lower Court and the jurisdiction of the High Court under the ACA. Learned counsel contended that the argument of the Appellants on the Respondent’s failure to file any affidavit evidence at the lower Court disclosing strong cause is erroneous, stating that the Respondent’s challenge of the application for stay is essentially on grounds of law relying on Okonkwo vs. Okolo (2016) LPELR-40931 (CA). It is the stance of learned silk that the Court is entitled to look at the documents frontloaded by the Respondent placing reliance on Agbaisi vs. Ebikorefe (1997) 4 NWLR (Pt. 502) 630 @ 648.
It is the argument of learned counsel that the contention of the Respondent at the lower Court is not whether Courts of foreign jurisdiction have the power to determine the dispute between the parties, nor is it whether parties can by agreement confer jurisdiction on a foreign Court as wrongly argued by the Appellants but rather, it is the exclusivity that the parties granted to the English Court which has the effect of ousting the jurisdiction of the Nigerian Court in the face of the agreement that the Nigerian Arbitration and Conciliation Act shall govern the arbitration that the Court relied on and found to be contrary to public policy. Finally, learned counsel submitted that this is not a case that Section 15 of the Court of Appeal Act will be invoked at all as the lower Court already made a pronouncement on the application of the Appellants. He, therefore, urged this Court to discountenance the arguments of the Appellants and dismiss this appeal with substantial cost.
The Appellant filed a reply brief on 13/3/2020 but deemed as properly filed on 23/3/2020. It is the general submission of learned counsel in replying to the submissions of the Respondent as follows:
a. That the submission of the Respondent that the arbitration agreement contained in Clause 18 of the FOPA is illegal and consequently the lower Court was right in not granting the stay of proceedings is incorrect. He urged this Court to note the provision of ACA which provides that parties who enter into arbitration agreement may submit themselves to a foreign jurisdiction and to conduct the arbitral proceedings outside Nigeria, thereby making the arbitration an international arbitration. He relied on Sections 57(2)(a), 47(1 & 2), and 48(a)(ii) of the ACA and the case of Apostle Philip Ilesanmi vs. Segun Esan & Anor CA/L/891/2010 (unreported) delivered on 30/3/2012.
b. That the cases of Nnadozie vs. Mbagwu (supra) and Corporate Ideal Insurance Ltd vs. Ajaokuta Steel Company Ltd (supra) referred to by the Respondent do not support the Respondent’s case.
c. Lastly, it is the submission of counsel that one of the duties of every counsel making a presentation to Court is to properly direct the Court and not to deceive the Court. He relied on P.I.P.C.S. Ltd vs. Vlachos (2008) 4 NWLR (Pt. 1076) 1, 17.
He urged this Court to uphold the Appellants’ argument that the decision of the lower Court was wrong and discountenance the arguments of the Respondent and allow the appeal.
The appeal that is before this Court is against the decision of the High Court of Lagos State delivered on 8/12/15 wherein the application of the Appellants to stay the proceedings of the action instituted by the Respondent pending the arbitration in line with the agreement of the parties was refused. The main issue for determination is whether the lower Court was right in so holding. From the arguments before this Court it would appear that one of the main considerations in this appeal, is whether Clause 18 of the FOPA (as amended by DAN and DA) is against the provision of the ACA. The Respondent answered this inquiry in the positive while the Appellants answered it in the negative. In this respect, various positions and legal principles were taken by both learned counsel in the various briefs that were adopted in support of the case of the parties. I will however generally state some trite legal principles which are elementary in law. I do this for the easy flow and understanding of this judgment.
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.
The Appellants’ counsel does not have a problem with that position of the law. Indeed no lawyer should have a problem with that as that is the proper position of the law. 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).
Having stated the above trite legal principle; we can now address the application before the lower Court which is now on appeal. The Appellants and the Respondent entered into an agreement between them on how disputes between them will be sorted out. This is contained in Clause 18 of the FOPA which in summary states that when dispute arise between the parties, the dispute will be resolved by arbitration. This is specifically stated in Clause 18.2 of the FOPA (as amended by DAN and DA). A dispute arose between them and the Respondent filed a suit before the lower Court that is Suit NO: LD/778CMW/2015. On receipt of the processes in the suit, the Appellants filed appearance but filed no pleadings, instead, they filed a motion for stay of the proceedings and for the lower Court to refer the matter to arbitration as agreed by the parties in FOPA, as amended. The application was supported by an affidavit. The Respondent did not file any counter-affidavit but rather challenged the application on grounds of law. The main ground of opposition is that the agreement is contrary to the provision of ACA, that is, the Arbitration and Conciliation Act of the Federal Republic of Nigeria. The Respondent’s case in the lower Court is to the effect that the agreement if enforced will oust the jurisdiction of the Court in Nigeria and therefore the agreement is unlawful, against public policy, and in the circumstance the motion for stay should not be granted. The lower Court after considering the processes before it and considering the submission of counsel to the parties in the considered ruling dismissed the application in agreeing with the submission of the Respondent’s counsel. The decision of the lower Court which is on appeal before this Court is as to whether; the lower Court was right in refusing the application for stay of proceedings of the main suit when the matter has not been looked into by arbitration as agreed by the parties. The question, therefore, is whether the agreement truly ousts the jurisdiction of the Court in Nigeria to look into the matter and whether the agreement contravenes the provision of the ACA? The answer to these questions will determine whether this appeal will succeed or not. If the answers are to the positive, that is to say in agreeing with the Respondent, the appeal will fail but if on the other hand, I hold that the agreement does not foreclose the parties right of action after the arbitration and therefore is not in any way violating the provisions of ACA, that in substance agreeing with the Appellants, the appeal will be allowed. This is the real, live, and narrow issue before this Court in this appeal.
Parties in their briefs have formulated issues for determination that best captures their grievances in line with the grounds of appeal. The Appellants formulated two issues for determination same was the position with the Respondent. The issues formulated by both parties are not radically different from each other. 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). I will however adopt the issues for determination formulated by the Respondent though with slight variation as they are clear and straight forward. The issues for determination in this appeal, therefore, are formulated as follows:
1. 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.
2. Whether the lower Court’s reliance on the case of Sonnar vs. Nordwind in arriving at its decision is justifiable.
The grouse of the Appellants in this appeal clearly from the facts of the case as contained in the address of all the parties is the failure of the lower Court to grant their application for stay of proceedings despite the fact that parties agreed to resolve their dispute by arbitration. The premise for the lower Court in refusing the application for stay is that the agreement of the parties ousts the jurisdiction of the Nigerian Courts in favour of a foreign Court. Is this true? This is what we are to determine in the course of this appeal. In its judgment, the lower Court at page 197 of the record of appeal (page 12 of the judgment) held thus:
“Clearly Clause 18(4) is a foreign jurisdiction clause and certainly ousts the jurisdiction of the Nigerian Courts. Clause 18.4 completely oust the jurisdiction of the Nigerian Courts from entertaining any action for setting aside the Arbitral award whereas Sections 29 and 48 of the ACA specifically provide that the Nigerian Courts have jurisdiction to set aside an arbitral award….”
The facts of this case have been stated above but for completeness in addressing the issues now, a brief restatement of the facts will not be out of place here. The parties entered into an agreement which agreement was terminated by the 1st Appellant whereof the Respondent took out a writ of summons in the lower Court. The Respondent at the lower Court made the following claims:
“a. A DECLARATION that the letter of the 1st Defendant to the Claimant dated 3rd December, 2014 and headed “Re: Notice of termination of Farm-out Agreement and Participation in respect of OPL 281” is contrary to the express and/or implied terms of Farm-out and Participation Agreement dated the 16th Day of October, 2010 (‘FOPA’) (as amended by the Deed of Amendment and Novation (‘DAN’) and further amended by the Deed of Amendment (‘DA’)) and therefore a wrongful termination, breach and repudiation of the FOPA (as amended by DAN and further amended by DA).
b. A DECLARATION that the Defendants are not, in the circumstances, entitled to any refund of the sum of US$8,750,000 (Signature Bonus) or any part thereof being their contribution for farm-in into OPL 281 and/or part consideration for the assignment of 20% participating interest each in OPL 281 by the Claimant.
c. A DECLARATION that the Defendants are not, in the circumstances, entitled to any refund of the sum of US$3.75 million (initially Transcorp Fee) or any part thereof being the total sum paid by the Defendants to the Claimant after the Claimant obtained the Award Letter for OPL 281.
d. A DECLARATION that the Defendants are not, in the circumstances, entitled to any refund or any payment whatsoever and/or howsoever from and/or by the Claimant.
e. The sum of US$50,000,000 (Fifty Million US Dollars) or its equivalent to be paid jointly and severally by the Defendants to the Claimant being Special Damages for wrongful termination, breach and repudiation of the Farm-out and Participation Agreement dated the 16th Day of October, 2010 (‘FOPA’) (as amended by the Deed of Amendment and Novation (‘DAN’) and further amended by the Deed of Amendment (‘DA’).
PARTICULARS OF SPECIAL DAMAGES
iii. The sum of US$ 12,000,000 being Assignment Fee which the Claimant is entitled to under FOPA (as amended by DAN and DA)
iv. The sum of US$ 38,000,000 being Production bonuses which the Claimant is entitled to under FOPA (as amended by DAN and DA)
In the Alternative to (b) and (c)
f. The sum of US$ 12,500,000 to be paid jointly and severally by the Defendants to the Claimant being Special damages for wrongful termination, breach and repudiation of the FOPA (as amended by DAN and DA) by the 1st Defendant.
PARTICULARS OF SPECIAL DAMAGES
iii. The sum of US$ 8,750,000 (Signature Bonus)
iv. The sum of US$ 3,750,000 (Initial Transcorp Fee)”
While the suit was pending, the Appellants brought a motion for stay of proceedings before the lower Court pending arbitration. The Court after listening to the argument of counsel delivered a considered ruling dismissing the application of the Appellants. The dismissal of the Appellants’ application is what has culminated into this appeal. This fact is not in dispute. Also not in dispute is the fact that parties agreed before anything else to resolve their dispute by arbitration. This is agreed by the parties. This is unchallenged by the Respondent. It is of interesting note that the Respondent did not file a counter-affidavit. The legal implication of that is clear. 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).
I will now address each of the formulated issues for determination. I will start with issue 1. The most relevant document to consider in addressing this issue is the agreement entered into by the parties. As earlier mentioned, there is no dispute that the parties had in the comfort of their offices with a sound mind and based on the advice of their counsel have entered into an agreement, that is FOPA (as amended) to the effect that should any dispute arise, the matter will be sent to arbitration for settlement. This is not ambiguous and in fact it is clear and not open to double interpretation. This is an agreement that the parties entered into and therefore by the provision of the law, they are bound by same. For the avoidance of doubt, I will reproduce the clauses of the FOPA as amended. Farm-Out and Participation Agreement entered by the parties is found on pages 23 – 59 of the record of appeal. The relevant clauses which the Appellant relied on for the application are clauses 18.2 and 18.3 found on page 50 of the record of appeal. The said clauses read:
“18.2 Resolution of Disputes
The parties shall act in good faith to amicably settle any dispute arising out of or in connection with this Agreement, including without limitation, any dispute as to the existence, scope, interpretation, validity or enforceability of this agreement (including tort or statutory claims) (“Dispute”). Any dispute between the parties shall be exclusively and finally resolved by arbitration as set out in this clause 18. 18.3 Arbitration
The Arbitration shall be conducted in accordance with the Arbitration and Conciliation Act Cap. A18, Laws of the Federation of Nigeria, 2004, except to the extent of conflicts between the Arbitration and Conciliation Act and the Provisions of this Agreement, in which event the provisions of this agreement shall prevail. The Chairman of the Nigerian Chartered Institute of Arbitrators shall be the appointing authority. The place of Arbitration shall be London, England.”
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. That the Respondent did not file a counter affidavit is a risk which legal consequences the Respondent will bear. The Respondent’s counsel submitted that he was opposed to the application on points of law. This is within his prerogative and he is allowed by law to so do. The implication of this is that the Respondent will not be allowed to refer to any fact but must limit the opposition to law. If that is what the Respondent did here, then no problem. Anything more than that means there will be a problem. The premise of the Respondent opposition is that the FOPA as amended ousts the jurisdiction of the Nigerian Courts to decide on the matter. The law as stated above is that any agreement which ousts the jurisdiction of a Court is unlawful. That is the law. It is however a fact that needs to be averred to in an affidavit whether the FOPA as amended is an agreement that ousts the jurisdiction of the Court. It is my firm opinion that the Respondent ought to have filed a counter affidavit in the light of the averments in the affidavit in support. The failure to file a counter-affidavit implies that all the averments in the affidavit are deemed admitted by the Respondent. Let me at this stage state in clear terms that I do not agree with the submission of counsel to the Respondent that the Appellants were wrong in addressing this issue when it was not made as a ground of appeal. I am firm on this point in stating that the Appellant need not raise a specific ground of appeal as in arguing issue 1 which is whether the lower Court was right in refusing the application, the argument will necessarily dovetail to some of the points the lower Court relied on. On this premise, I do not agree with Respondent’s counsel that the argument on the Respondent’s failure to file counter-affidavit and its attendant consequence should be jettisoned.
Now, back to issue 1. 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. InThe 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.”
The above cases and much more have given judicial approval to the appropriateness of arbitration clause in an agreement between the parties and the fact that the Court will give credence to the arbitration clause in an agreement. The Respondent’s position is that giving life to the arbitration clause will foreclose the parties from litigating on the matter. The understanding of the Respondent is that once the dispute is submitted to arbitration (more so that the arbitration is an international arbitration) the Courts in Nigeria are foreclosed from deciding the matter when brought before any Court in Nigeria. The lower Court seems to agree with this position relying on the Sonnar case in holding that stay of proceeding will not be granted. I will address the Sonnar case in this judgment when addressing issue 2 but suffice it to say that the legal effect of submitting any dispute to arbitration does not foreclose the regular Court from adjudicating on the matter when brought before it. 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 a re 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. Bent worth Finance (Nig.) Ltd.(1976) 11 SC 183; Fawehinmi Construction Co. Ltd.v. O.A.U. (1998) 6 NWLR (Pt. 553) 171; Obembe v. Wemabod Estates Ltd. (1977) 5 SC 115; Chemia Products (UK) Ltd. v. Idowu (1963) 2 All NLR 249; Kurubo v. Zach – Motison (Nig.) Ltd. (1992) 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 Onyekwuluje & Anor vs. Benue State Govt & Ors (2015) 16 NWLR (Pt. 1484) 40; (2015) LPELR-24780 (SC) per Kekere-Ekun thus:<br< p=”” style=”box-sizing: inherit; margin: 0px; padding: 0px;”>
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“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 the 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.”
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); Adegbola & Ors vs. Idowu & Ors (2017) LPELR-42105 (SC); Vandighi vs. Hale (2014) LPELR-24196 (CA). The Respondent has not stated any reasonable ground upon which the said application could be refused.
It is the contention of the Appellants that the lower Court went beyond the scope of clauses 18.2 and 18.3 to consider clause 18.4 (b) and the case of Sonnar (Nig) Ltd & Anor vs.Partenreedri M.S. Nordwind & Anor (1987) All NLR 549, a case which Appellants’ counsel alleges is not on all fours impari materia with the facts of this case, in arriving at its decision. Clause 18.4 (b) of the agreement between the parties reads:
“18.4 Enforceability
…b. Except for proceedings to preserve property pending determination by the arbitrator(s) or to enforce an award, the mandatory exclusive venue for any judicial proceedings permitted in this agreement is a Court of competent jurisdiction in London, England. The parties consent to the jurisdiction of these Courts and waive any defenses they may have regarding jurisdiction.”
Is the lower Court permitted to consider this clause in its decision despite the fact that the application before it was for stay of proceedings pending arbitration? The law is well settled that Courts must confine themselves to matters before them and not go 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).
All the lower Court should be concerned with, is whether in the light of the agreement between the parties and the position of the law on stay of proceedings, it ought to grant or refuse stay. I agree that there was no need for the lower Court to have gone on a voyage of discovery to that provision of the agreement in deciding the issue of stay. The lower Court in considering the issue of enforcement has gone beyond the scope of the application.
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:<br< p=”” style=”box-sizing: inherit; margin: 0px; padding: 0px;”>
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“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 (2011 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.
The question the lower Court was called to determine was in relation to clauses 18.2 and 18.3 that dealt with resolution of disputes and arbitration respectively, contained in the agreement of the parties and no further. 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. InNissan 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 its step taken in the proceedings. It is evident from the record that the Respondent did not file 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. InSINO-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 COTECNA DESTINATION INSPECTION LIMITED VS BOYSON NIGERIA LIMITED 2013 LPELR 22063 (CA) this Court Ikyegh, Pemo, Abubakar JJCA held;- “In consideration, an application for stay of proceedings brought pursuant to Sections 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 exercised 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.”
In the ruling of the lower Court on page 193 of the record (page 8 of the ruling) his lordship agreed with the above position when the Court held thus:
“As rightly argued by the learned counsel for the Claimant/Respondent, an agreement by parties to submit to arbitration and agreement to submit to foreign Court are different, are governed by different considerations and have different legal incidents. While the effect of a foreign jurisdiction clause Court is to oust the jurisdiction of a local Court in favour of a foreign Court, an arbitration clause does not oust the jurisdiction of a local Court; it simply postpones the right of the contracting parties to resort to litigation whenever the other party chooses to submit the dispute to arbitration…”
Having held in this wise, the lower Court, in my mind ought not to have gone any further but on the foregoing grant the application of the Appellants.
In the light of the foregoing, I do not see my way clear to hold for the Respondent on this issue. I am firm in resolving issue 1 in favour of the Appellants.
I will now address issue 2 which is whether the case of Sonnar (Nig) Ltd & Anor vs. Partenreedri M.S. Nordwind & Anor (supra) is applicable to this case. The Respondent counsel made heavy weather of the case and submitted that the facts of the case on appeal is on all fours with the case of Sonnar. The question this honourable Court is called upon to answer on this issue is as to whether the aforementioned case is applicable to this instant case. For a better understanding, the facts of the case are hereunder reproduced in summary.
The Plaintiffs, Sonnar Nig. Ltd. and Public Impex traders entered into an agreement (which is evidenced by a bill of lading) with the Defendants: Partenreedric Norwind (the ship owners who are based in Germany and the issurer of the Bills of Lading), Bandridge Shipping Company (based in Liberia) and Chaiyapon rice company based in Thailand. The agreement was for the shipping of 25,322 bags of parboiled long grain rice from Thailand to Nigeria. Clause 3 of the bill states that where a dispute arises under the bill of lading, this should be decided where the carrier has his principal place of business and under the law of that country. The carrier is the 1st Defendant, Partenreedric M. S. Norwind of Germany.
A dispute arose for the non delivery of 25,322 bags of parboiled long grain rice. The Plaintiffs brought a suit claiming general and special damages for the breach. The Defendants contended that the forum for litigation in respect of the action was west Germany not Nigeria. The
Federal High Court after hearing evidence granted a stay of proceedings. The Court of Appeal affirmed the decision of the Federal High Court. Dissatisfied, the Appellant appealed to the Supreme Court. The Supreme Court allowed the appeal and dismiss the application for stay of proceeding on the ground that if stay is granted, the party would not have the opportunity to bring an action in the Germany Court. This will spell injustice for the Appellant. The Supreme Court had sufficient averment before it to draw the conclusion that granting the application for stay in Sonnar case will lead to injustice and miscarriage of justice.
From the facts of the case presented above, some facts stand out which are highly distinguishable with respect to this case currently on appeal.
1. It involves a contract with an international flavor.
2. Parties had agreed prior to settling any disputes that arise in the Courts of Germany
3. There was an application for stay by the Defendant pending reference to the foreign jurisdiction
4. The essence of the application for stay was to oust the jurisdiction of the Nigerian Court in favour of a foreign Court<br< p=”” style=”box-sizing: inherit; margin: 0px; padding: 0px;”>
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5. The application for stay was refused because there was reason advanced in the case of the Appellant that showed that granting the application will lead to injustice.
Having read the judgment of the Court in the case in question and juxtaposing it with the judgment of the lower Court and the argument of Respondent’s counsel, I do not see how it is related to the facts of this case currently on appeal before this Court. For some reason, both cases seem to have an application for stay of proceedings but that is as far as it goes. The stay in the earlier case was pending reference to a foreign Court, whereas the stay in this suit currently on appeal is pending reference to arbitration. 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 1st Respondent 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 (2001) 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.”
I do not agree with the submission of learned counsel for the Respondent and indeed the lower Court that the decision of Sonnar case is on all fours with the case before this Court on appeal. The Sonnar case cannot be used as an authority to refuse the application as the lower Court did, as the facts are not materially the same and therefore the facts of the case before this Court can be distinguished from the facts in the Sonnar case. I have brought out some differences above but the main reason why I cannot follow the Sonnar case is that the Supreme Court in that case was compelled to allow the appeal not on grounds that the arbitration clause ousts the jurisdiction of a Nigerian Court but for other reasons which the Appellant in the appeal in Sonnar case presented before the Court. The Appellant in the Sonnar case filed a counter affidavit wherein it stated a substantial reason why granting the application will create injustice. These are statements of facts. There is no such averment at the lower Court. This is a big difference in the case of Sonnar and the case before this Court. The Appellant in the Sonnar case showed strong reasons why the application should be refused. These strong reasons were stated in the affidavit evidence. There is no such strong reason before the lower Court. The lower Court, in my opinion, got it right on what will be required from the Respondent to refuse the application when his lordship held on page 194 of the record thus;
“In the determination whether or not to grant a stay pending reference to arbitration, the Court proceeds on the premise that it is bound to grant a stay where the agreement contains an arbitration clause, unless it is satisfied that there is sufficient reason to justify the refusal to refer the dispute to arbitration.”
The lower Court got the position right but got the conclusion wrong as from the records there is no strong reason given by the Respondent for which the lower Court should have relied upon to refuse the application.
In the light of the foregoing this issue is resolved in favour of the Appellants.
Having resolved both issues in favour of the Appellants, I find that this appeal is meritorious and same is hereby allowed. The decision of the lower Court delivered on 8/12/2015 in Suit No. LD/778CMW/2015 – Transnational Corp. of Nig. Plc vs. Sacoil 281 Nigeria Limited & Anor. by Hon. Justice Y.A. Adesanya (Mrs.) is hereby set aside. As a consequence, stay of proceedings is hereby ordered in the above suit pending reference to arbitration for the parties to amicably settle their dispute.
I award the sum of N500,000 (Five Hundred Thousand Naira) as cost in favour of the Appellants against the Respondent.
UGOCHUKWU ANTHONY OGAKWU, J.C.A.: My Lord and learned brother, Ebiowei Tobi, JCA, afforded me the privilege of reading in draft, the comprehensive leading Judgment which has just been delivered in this appeal.
In his characteristic penchant for detail, my Lord, Ebiowei Tobi, JCA, has fully, effectively and efficiently covered the field in respect of all the issues thrust up in this appeal. It will be inutile and repetitive to rehash the principles of law that have been correctly considered and applied in the leading judgment. However, in avowing my concurrence, I only wish to say a few words on the settled legal position on sanctity of contracts.
The abecedarian principle of law in respect of contracts and agreements is expressed in the Latinism pacta convent quae 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 at 44, A-G NASARAWA vs. A.G PLATEAU (2012) LPELR (9730) at 29 and BLUENEST HOTELS LTD vs. AEROBELL NIGERIA LTD (2018) LPELR (43568) at 22. The parties in their agreement provided for reference of any dispute to arbitration. In violation of this provision, the Respondent commenced an action at the lower Court. The Respondent cannot be heard to so do; it is bound to keep to the pact to which it voluntarily entered into, id est, reference of any dispute to arbitration. That is the bargain to which the Respondent must be held. The lower Court was therefore wrong when dismissed the Appellants’ application for stay of proceedings pending arbitration. The Appellants had not taken any steps in the proceedings before they applied for stay of proceedings pending arbitration and the Respondent did not depose to any counter affidavit in opposition to the application giving sufficient reasons why the dispute should not be referred to arbitration in line with the agreement between the parties. Section 5 of the Arbitration and Conciliation Act preserves the power of the Court to stay proceedings in order for a matter to be referred to arbitration and the lower Court was in error when it failed to exercise the said power.
It is for the foregoing reason, and the more detailed reasoning and conclusion in the leading judgment, that I am allegiant to the ineluctable resolution that this appeal is meritorious. l therefore, equally allow the appeal and on the same terms as set out in the leading judgment. I abide by the order as to costs.
JAMILU YAMMAMA TUKUR, J.C.A.: I had a preview of the lead judgment just delivered by my learned brother EBIOWEI TOBI JCA and I adopt the judgment as mine with nothing useful to add.
Appearances:
BERENIBARA ESQ., appears with him,
R. IRENEN ESQ. For Appellant(s)
AANU OGUNRO ESQ. For Respondent(s)
