BCC TROPICAL NIGERIA LTD. V. THE GOVERNMENT OF YOBE STATE OF NIGERIA & ANOR (2011)

BCC TROPICAL NIGERIA LTD. V. THE GOVERNMENT OF YOBE STATE OF NIGERIA & ANOR

(2011)LCN/4689(CA)

In The Court of Appeal of Nigeria

On Monday, the 11th day of July, 2011

CA/J/266/2010

RATIO

LEAVE OF THE COURT: WHETHER THE LEAVE OF THE COURT IS REQUIRED TO APPEAL AGAINST A FINAL RULING OF A JUDGE

APPEAL AS OF RIGHT: WHETHER AN APPEAL AGAINST AN INTERLOCUTORY DECISION OF A HIGH COURT THAT RAISES A QUESTION OF LAW IS AS OF RIGHT THAT DOES NOT REQUIRE LEAVE OF COURT

…by virtue of Section 241(1) of the 1999 Constitution, an appeal against interlocutory decisions of the High Court is as of right where the appeal raises a question of Law. ALAMIEYESEIGHA V. CHIEF JUSTICE OF NIGERIA (2005) 1 NWLR PART 906 PAGE 60. PER UZO I. NDUKWE-ANYANWU, J.C.A

GROUNDS OF APPEAL: WHAT THE COURT IS REQUIRED TO EXAMINE IN DETERMINING WHETHER A GROUND OF APPEAL RAISES A QUESTION OF LAW ALONE OR OF FACTS OR OF MIXED LAW AND FACTS

ARBITRATION CLAUSE: MEANING OF AN ARBITRATION CLAUSE IN A CONTRACT

In a contract, “An arbitration clause is a clause inserted in a contract providing for compulsory arbitration in case of dispute as to rights and liabilities under such contract. The purpose of that clause is to avoid having to litigate disputes that might arise” See the case of M.V. LUPEX V. N.O.C. AND SON LTD. (2003) 15 NWLR PART 844 PAGE 469. PER UZO I. NDUKWE-ANYANWU, J.C.A

ARBITRATION CLAUSE: EFFECT OF THE TERMINATION OF THE UNDERLYING CONTRACT ON THE ARBITRATION CLAUSE THEREOF

“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. The arbitration agreement and the underlying contract need not rise and fall together. It is trite that an arbitration agreement is not terminated by a breach of the underlying contract. HEYMAN V DARWINS LTD (1942) AC PAGE 356. It is only where a contract is void ab initio because one of the parties is a minor, then this ground would also affect the arbitration clause. PER UZO I. NDUKWE-ANYANWU, J.C.A

ARBITRATION: WHETHER IT IS EVERY DISPUTE OR DIFFERENCE THAT CAN BE REFERRED TO ARBITRATION

It is not every dispute or difference that can be referred to arbitration. Disputes that can be referred must be justiciable issues which can be tried as civil matters. These should include all matters in dispute about any real or personal property, disputes as to whether a contract has been breached by either party thereto, or whether one or both parties have been discharged from performance thereof. PER UZO I. NDUKWE-ANYANWU, J.C.A

ARBITRATION: WHETHER THE RIGHT TO ARBITRATION CAN BE WAIVED

By virtue of Section 2 of the Arbitration and Conciliation Act 1988, an arbitration agreement shall be irrevocable except by agreement of the parties, or by leave of Court, or a Judge. However, the right to go for arbitration is a personal right. It is not a constitutional right. Therefore, it can be waived by either of the parties to the agreement expressly or by contract. See KURUBO V ZACH-MOTISON (NIG.) LTD (1992) 5 NWLR PART 239 PAGE 102. PER UZO I. NDUKWE-ANYANWU, J.C.A

ARBITRATION: CONDITIONS THAT MUST BE SATISFIED BEFORE PARTIES CAN RESORT TO ARBITRATION

The case of NIGERIA LNG LTD. V. AFRICAN DEVELOPMENT INSURANCE CO. LTD (1995) 8 NWLR (Pt. 416) Page 677, per Uwaifo, J.C.A listed five conditions for a resort to arbitration. These are: (a) that there is an agreement between the parties thereto or a statutory provision which compels arbitration in such mutters; (b) that the parties before the Court are parties to the agreement or the transaction which compels arbitration; (c) that the arbitration sought is within the contemplation of the arbitration agreement or circumstances calling it; (d) that there is no sufficient reason why reference to arbitration should not be made; and (e) that the application for stay of proceedings pending arbitration was made in time as envisaged under Section 5 of the Arbitration Act”. PER MONICA B. DONGBAN-MENSEM, J.C.A

JUSTICES

MONICA B. DONGBAN-MENSEM Justice of The Court of Appeal of Nigeria

UZO I. NDUKWE-ANYANWU Justice of The Court of Appeal of Nigeria

PHILOMENA MBUA EKPE Justice of The Court of Appeal of Nigeria

Between

BCC TROPICAL NIGERIA LTD. Appellant(s)

AND

1. THE GOVERNMENT OF YOBE STATE OF NIGERIA
2. MINISTRY OF HOME AFFAIRS, INFORMATION AND CULTURE YOBE STATE Respondent(s)

UZO I. NDUKWE-ANYANWU, J.C.A (Delivering the Leading Judgment): This is an appeal against the Ruling of Yobe State High Court delivered on 12th July 2010 in Motion No. YBS/DT/HC/82m/2009 seeking, inter alia the appointment of an Arbitrator for the Respondents.
The statement of material facts as captured by the Appellant is as follows:
1. On the 6th of June, 2006, the Appellant and the Respondents hereon entered into a contract Price Variation Agreement, in respect of the construction of a Cultural Centre and City Hall for Yobe State, at Damaturu. The contract, Exhibit 1 to the Appellant’s motion, is contained in pages 9 to 13 of the record.
By clause 15 of Exhibit 1 (please see page 13 of the record) the parties agreed to submit any dispute arising from their contract “which fails amicable settlement, to arbitrators in accordance with the Arbitration and Conciliation Act” now cap A18 Laws of the Federation of Nigeria, 2004.
2. Following a disagreement/dispute between the parties, the Appellant herein gave the Respondent a Notice of Arbitration in accordance with the Arbitration Act. (Please see pages 17 to 20 of the record). When the Respondents did nothing, the Appellant, on the 29th day of October, 2009, filed the Application leading to this appeal.
3. While the Appellant’s application was pending the Respondents by their letter dated 27th January, 2010 (pages 27 to 29 of the record) purported to have terminated the contract between the parties. Relying on the fact of the termination of the contract, the lower Court dismissed the application holding thus:
“the termination of the contract whether rightly or wrongly inhibits this Court from granting this application, accordingly (sic) fails and is dismissed.”
The Appellant being dissatisfied with the Ruling filed its notice and 2 grounds of appeal on 26th July 2010. The Appellant filed his brief on 25th October 2010 and articulate one issue for determination viz:
“Does the termination of the contract between the parties by the Respondent inhibit the lower Court in law, from granting the Appellant’s Application”.
The Respondents filed a notice of preliminary objection which reads thus:
1. That the appeal of the Appellant is incompetent before this Hon. Court as no leave of the Court was sought and obtained.
The Respondents stated that the basis for their objections are as follows:
(1) That the grounds of the appeal of the appeal is (sic) a mixed law and fact.
(2) Section 242(1) of the 1999 Constitution provides that such an appeal requires leave of either the lower Court or this Court.
The Respondents prayed the Court to strike out this appeal.
The Respondents did not proffer any arguments in this regard. However the Appellant’s learned Counsel in his response submitted that the Appellant’s appeal is not covered by Section 242(1) of the 1999 Constitution rather it is covered by Section 241(1)(a) of the 1999 Constitution which provides as follows;
“An appeal shall lie from decisions of the Federal High Court or a High Court to the Court of Appeal as of right in the following cases:
(a) Final decisions in any civil or criminal proceedings before the Federal High Court or High Court sitting at first instance”.
Counsel submitted that this Ruling is a final decision since it has determined and finally disposed of the rights of parties. See GOMEZ V. CHERUBIM AND SERAPHIM SOCIETY (2009) 10 NWLR PART 1149 PAGE 223. FIDELITY BANK PLC V. M.T. TABORA (2009) 8 NWLR PART 1142 AT PAGE 83. FALOLA V. U.B.N. PLC (2005) 7 NWLR PART 924 PAGE 419.
Counsel urged the Court to dismiss this objection as being misconceived.

This Ruling delivered by the Judge in this application is a final decision which is covered by Section 241(1)(a) of 1999 Constitution. This does not require leave of Court. Rather it is as of right being a final decision of the Court which determines finally the rights of the parties WELLE V BOGUNJOKE (2007) 6 NWLR PART 1029 PAGE 123, FIRST RULES LTD V NNPC (2007) 2 NWLR PART 1018 PAGE 276, MADUABUCHUKWU V. MADUABUCHUKWU (2006) 10 NWLR PART 989 PAGE 475.
Moreover by virtue of Section 241(1) of the 1999 Constitution, an appeal against interlocutory decisions of the High Court is as of right where the appeal raises a question of Law. ALAMIEYESEIGHA V. CHIEF JUSTICE OF NIGERIA (2005) 1 NWLR PART 906 PAGE 60.

In determining whether a ground of appeal raises a question of law alone or of facts or of mixed law and facts, the Court is required to examine thoroughly the ground of appeal together with its particulars, in order to see whether the ground reveals a misunderstanding of the law by the lower Court, or a misapplication of the law to the facts already proved or admitted, in which case it would be a question of law ONIFADE V OLAYIWOLA (1990) 7 NWLR PART 161 PAGE 130, OLAREWAJU AND OGUNLEYE (1997) 2 NWLR PART 485 PAGE 12, SHANU V AFRIBANK (NIG) PLC (2000) 10 – 11 SC PAGE 1, MAIGORO V GARBA (2001) 2 WRN PAGE 1, EDERS AND COMPANY LTD V KUSAMOTU (2004) 4 NWLR PART 864 PAGE 519, IBIYEYE V. FAJULE (2006) 3 NWLR PART 968 PAGE 640.
In the instant case, the appeal is as of right, being a decision that determines finally the rights of the parties.
I therefore hold that the preliminary objection fails and is hereby dismissed.
I will therefore go into the substantive appeal of the Appellant.
The Respondents filed their brief on 22nd November 2010 and articulated one issue for determination viz: “Whether the learned trial Judge rightly dismissed the Appellant’s applications for the appointment of Arbitrator in the absence of a subsisting contract agreement between the parties”.
In response, the Appellant filed his Appellant’s Reply brief on 30th November 2010. Counsel adopted both briefs as his arguments in this appeal.
Issue One
The learned Appellant’s Counsel submitted that it is the law that an arbitration clause (such as clause 15 of Exhibit 1) in a written contract is quite distinct from other clauses in the contract. 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 regards to the obligations which the parties has undertaken should be settled by a tribunal of their own constitution and choice see ROYAL EXCHANGE ASSURANCE V. BENTWORTH FINANCE (NIG.) LTD. (1976) NSCC PAGE 648. See also HEYMAN AND I OR V. DARWINS LTD. (1942) 1 ALL E.R. PAGE 337.
On the authority of the above cases the Appellant appointed an arbitrator and notified the Respondents. The Respondents neglected or failed to appoint theirs which necessitated the applications to the High Court Damaturu.
Learned counsel to the Appellant argued further that an arbitration clause is only a procedural provision in a contract whereby parties to a contract agree to settle their dispute by arbitration. See MAGBAGBEOLA V. SANNI (2002) 4 NWLR PART 756 PAEE 193. Going for arbitration is a procedure chosen by the parties to ensure quick, simple and inexpensive dispensation of justice, devoid of the technicalities and attendant impediments of litigation in Court. See EBOKAN V. EKWERIBE AND SONS TRADING COMPANY (2001) 2 NWLR PART 692 PAGE 32 where it was held inter alia that:
“A Court shall not therefore upset the expectation of the parties except for the clearest evidence of wrong doing or manifest illegality on the part of the arbitrator”.
In conclusion learned counsel stated that the termination of the contract does not affect the arbitration clause therein. The clause provides for the procedure for settling the disputes which may arise from the contract or arising from the termination of the contract, by either party. See Section 2 of the Arbitration and Conciliation Act 2004 which provides as follows:
“unless a contrary intention is expressed therein an arbitration agreement shall be irrevocable except by agreement of the parties or by leave of the Court or a Judge”.
Counsel therefore urged the Court to hold that the agreement between the parties is irrevocable and was not affected by the termination of contract between the parties.
The learned Counsel to the Respondents in response submitted that they had terminated the contract and re-awarded the contract to another company and stated that that act extinguished any life issues to be referred to arbitration.
Learned Counsel argued further that in the contract the parties agreed that any of the parties can terminate the contract either voluntarily or by default. Counsel urged the Court to dismiss the appeal and affirm the decision of the lower Court.
In a contract,
“An arbitration clause is a clause inserted in a contract providing for compulsory arbitration in case of dispute as to rights and liabilities under such contract. The purpose of that clause is to avoid having to litigate disputes that might arise”
See the case of M.V. LUPEX V. N.O.C. AND SON LTD. (2003) 15 NWLR PART 844 PAGE 469.
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. The arbitration agreement and the underlying contract need not rise and fall together. It is trite that an arbitration agreement is not terminated by a breach of the underlying contract.
HEYMAN V DARWINS LTD (1942) AC PAGE 356.
It is only where a contract is void ab initio because one of the parties is a minor, then this ground would also affect the arbitration clause.

The Respondent wrongly argued that with the termination of the contract, the arbitration clause is also terminated. This is not so. The contract is terminated but there are other disputes arising from the termination that need to be resolved.
A dispute would arise if
(a) a claim is made-
(b) comprising in that claim is on allegation that the other party is liable for some or all that claim.
(c) There is a denial by that other party that it is so liable or a refusal or failure to answer the allegation made.
Accordingly there is a dispute once more unless and until the defendants admit that the sum is due and payable.
HALKI SHIPPING CORPORATION V SCOPE AND OILS LTD. (1998) 1 WLR PAGE 726.
It is not every dispute or difference that can be referred to arbitration. Disputes that can be referred must be justiciable issues which can be tried as civil matters. These should include all matters in dispute about any real or personal property, disputes as to whether a contract has been breached by either party thereto, or whether one or both parties have been discharged from performance thereof.
By virtue of Section 2 of the Arbitration and Conciliation Act 1988, an arbitration agreement shall be irrevocable except by agreement of the parties, or by leave of Court, or a Judge. However, the right to go for arbitration is a personal right. It is not a constitutional right. Therefore, it can be waived by either of the parties to the agreement expressly or by contract. See KURUBO V ZACH-MOTISON (NIG.) LTD (1992) 5 NWLR PART 239 PAGE 102.
The learned trial Judge misunderstood the Law and misapplied it to the facts of the case in holding that
“that termination of the contract whether rightly or wrongly inhibits this Court from granting this application, accordingly, (sic) fails and is dismissed”.
The contract was terminated by the Respondent which is within his rights as provided in the contract. However, the arbitration clause in the contract is irrevocable and I so hold.
The only issue articulated by the Appellant is therefore resolved in favour of the Appellant. The Ruling of the lower court is hereby set aside. The Appellant had prayed for “an order of this Honourable Court appointing an arbitrator for the Respondents having failed to appoint one within the time allowed by law. The Court hereby appoints Usman Abashiya of the Multi Door Court House High Court Federal Capital Territory as arbitrator for the Respondent.
I make no orders as to costs.

MONICA B. DONGBAN-MENSEM, J.C.A: I agree with the lead Judgment prepared by my learned brother Ndukwe-Anyanwu JCA allowing the appeal. Had the learned trial Judge averted his mind to clause 15 of the terms of the arbitration agreement, the learned Judge would have realized that an irreconcilable difference leading to the termination of the contract is in fact what sparks off the operation of the arbitration clause (Refer: HALKI SHIPPING CORPORATION V. SCOPE AND OILS LTD. (1998) 1 WLR PAGE 726). The case of NIGERIA LNG LTD. V. AFRICAN DEVELOPMENT INSURANCE CO. LTD (1995) 8 NWLR (Pt. 416) Page 677, per Uwaifo, J.C.A listed five conditions for a resort to arbitration. These are:
(a) that there is an agreement between the parties thereto or a statutory provision which compels arbitration in such mutters;
(b) that the parties before the Court are parties to the agreement or the transaction which compels arbitration;
(c) that the arbitration sought is within the contemplation of the arbitration agreement or circumstances calling it;
(d) that there is no sufficient reason why reference to arbitration should not be made; and
(e) that the application for stay of proceedings pending arbitration was made in time as envisaged under Section 5 of the Arbitration Act”.
Clause 15 of the parties’ agreement clearly brings the instant appeal under these requisite conditions. The fact that the contract was terminated as against a completion of some by the Appellant is indicative of a dispute. (Refer HARBOUR ASSURANCE COMPANY (UK) LTD V KANSA GENERAL INTERNATIONAL INSURANCE COMPANY LTD (cited in the lead Judgment). By clause 15 in Exhibit “1”, the parties elected arbitration as a convenient way of settling any dispute arising between them. The learned trial Judge should have granted the applications in terms of the agreement between the parties (Refer: generally Section 2 of Arbitration and Land Act 2004, see also MAGBAGBEOLA V. SENNI and M.V. LUPEX AND N.O.C. AND SONS LTD. (2003) 15 NWLR (Pt.844) page 469 at 9). The appeal is allowed.
I adopt the consequential orders made in the lead Judgment.

PHILOMENA MBUA EKPE, J.C.A: I have had the privilege of reading in draft, the Judgment just delivered by my learned brother IJZO I. NDUKWE-AYANWU, JCA. I am in complete agreement with all the issues raised therein.
This is an appeal the Ruling of the Yobe State High court presided over by Justice G.M. Nabaruma, delivered on the 12th day of July, 2010. The Appellant/Applicant had filed a motion in the Court No. YSB/DT/HC/82M/2009 seeking inter alia, the appointment of an Arbitrator for the Respondents.
The brief facts of this case are: that on the 6th day of June 2006 the Appellant entered into a contract agreement with Respondents in respect of the construction of a Cultural Centre City Hall for Yobe State at Damaturu. The contract was filed as exhibit 1 in the Appellant’s motion. By clause 15 of Exhibit 1, on page 13 of the Record of proceedings, the parties agreed to submit any dispute arising from the contract to arbitrators in accordance with the Arbitration and Conciliation Acts Cap. A. 18 Laws of the Federation of Nigeria, 2004.
Following a disagreement between the parties, the Appellant herein gave the Respondents a Notice of Arbitration in accordance with the Arbitration Act. The Respondents however failed to appoint an Arbitrator and on the 29th October, 2009, the Appellant filed an application before the lower court seeking an order of the Court to appoint an Arbitrator for the Respondents. While the said application was still pending, the Respondents by their letter dated the 27th day of January, 2010 terminated the contract between the parties. The lower court accordingly relied on the fact of the said termination of contract and dismissed the Appellants application before it.
I shall begin by first dealing with the Respondent’s preliminary objection which they based on the fact that the grounds of appeal are of mixed law and fact contrary to Section 242(1) of the 1999 Constitution. That the appellant did not seek the leave of either the court below or this Court to appeal Section 241(1) of the constitution provides as follows:
“An appeal shall lie from decisions of the Federal High Court or a High Court to the Court of Appeal as of right in the following cases:-
a. Final decisions in any civil or criminal proceedings before the Federal High Court or a High Court sitting at first instance.
I agree with Learned counsel for the Appellant that the decision of the lower court appealed against in this matter is a final decision and not interlocutory, in that the Ruling appealed against finally disposed of the right of the parties in the matter, completely and nothing is left pending in the court’ The Appellants appeal is therefore as or right and requires no leave of court. See GOMEZ V. CHERUBIM AND SERAPHIM SOCIETY (2009) 10 NWLR Pt 1149 223 @ 243 where an appeal is against an interlocutory decision of a court and it senses a question of facts or mixed law and fact, leave of court is required. However, an appeal is as of right and requires no leave of court, where the decision appeared against is either interlocutory or final provided the ground of appeal involves a question of law alone. See AYANSINA V.S. CO-OP BANK LTD. (1994) 5 NWLR (Pt 347) 742. In this case, the ground of appeal clearly states thus:
“The Learned trial Judge erred in Law when he refused to appoint the arbitration for the Respondents as sought by the Appellant on the ground that the termination of the contract between the parties by the Respondents inhibits the Court from granting the application and this occasioned a miscarriage of justice.”
The purported refusal of the Court below to appoint an arbitrator is a clearly legal point which to my mind needs no leave of court to appeal against.
In the light of all of the above, it is my view that the preliminary objection is misconceived and I do hereby dismiss it accordingly.
The lone issue for determination before this court therefore is:
Whether the Learned Trial Judge was right in dismissing the appellant’s application for the appointment of an Arbitrator in the absence of a subsisting contract agreement between the parties.
Clause 15 of the Contract agreement between the parties clearly provides that any dispute which defies amicable settlement in the contract shall be referred to arbitration in accordance with the Arbitration and Conciliation Act Cap 19 Laws of the Federal Republic of Nigeria 1990.
However, by virtue of Section 2 of the Arbitration and Conciliation Act 1988, an arbitration agreement shall be irrevocable except by agreement of the parties, or by leave of Court or Judge.
No doubt, the contract was terminated by the Respondent as is within his rights to do so and as provided in the contract.
However, I too hold that the arbitration clause in the contract is irrevocable and the issue formulated by the appellant is therefore resolved in favour of the Appellant. I too allow the appeal and set aside the decision of the Lower court. I abide by the consequential order made.