COMMERCE ASSURANCE LTD VS ALHAJI BURAIMOH ALLI
In the Supreme Court of Nigeria
Friday, April 10, 1992
Case Number: SC. 73/1986
EPHRAI OMOROSE IBUKUN AKPATA, JUSTICE, SUPREME COURT
ADOLPHUS GODWIN KARIBI-WHYTE, JUSTICE, SUPREME COURT
SALIHU MODIGBO ALFA BELGORE, JUSTICE, SUPREME COURT
PHILIP NNAEMEKA-AGU, JUSTICE, SUPREME COURT
ABUBAKAR BASHIR WALI, JUSTICE, SUPREME COURT
COMMERCE ASSURANCE LTD
ALHAJI BURAIMOH ALLI
THE TWO ALTERNATIVE METHODS OF ENFORCEMENT OF AN AWARD
“Thus the two alternative methods are fundamentally different. The summary method treats the award as an existing judgment and only seeks to enforce it. The enforcement by action seeks to get a judgment in terms of the award. There can, therefore, be no question of a proceeding by way of a summary procedure to enforce the award being pleaded as estoppel per rem judicatam, as in that case the court itself decides nothing. It simply enforces the award as if it were a judgment. Where there is doubt, as I have stated, and it becomes unwise to enforce the award summarily, the court simply strikes out the application to enforce the award summarily, leaving the applicant free to commence an action.” Per NNAEMEKA-AGU, JSC
- NNAEMEKA-AGU, J.S.C. (Delivering the Leading Judgment): This is a further appeal by the defendant/company, Commerce Assurance Limited, against the judgment of the Court of Appeal, Ibadan Division, which had dismissed his appeal against the judgment of an Ibadan High Court presided over by Ademakinwa, J. The claim before the learned trial Judge was against Commerce Assurance Co. Ltd. and was for the following reliefs:
(a) A declaration that the Defendant/Company should pay to the plaintiff the sum of N82,019.4lk (Eighty-two thousand and nineteen Naira and forty-one kobo) which said sum of N82,019.41 is the award made on the 19th of March, 1980 in connection with an Arbitration in which Chief H. Ayo Ogunfeibo, Legal Practitioner appointed by both the plaintiff and the defendant in respect of difference/dispute arising from a Comprehensive Insurance Policy No. MV078/IB covering the plaintiffs Trailer No. OD 149A for the period 27/4/76 to 26/4/77 which said vehicle was involved in a road accident at A.T. and P. Round-About, Sapele, Bendel State of Nigeria on the 19th of December, 1976.
In the alternative, that the said award of N82,019.41k and all the interlocutory costs awarded during the Arbitration proceedings be ordered to be the judgment and/or order of this Honourable Court.
(b) The plaintiff also claims 15% interest from the date of the said award (i.e. 19/3/80) till the date of judgment in this case,”
After hearing, the learned trial Judge granted to the plaintiff the declaration he sought but disallowed the claim for interest.
For a completion of the background of the case, I should mention that before the present action was commenced, the plaintiff had commenced proceedings to enforce the award before another High Court Judge, Falade, J., in suit No. M/17/80. The learned Judge, upon an objection by the defendant in that suit, struck it out without going into the merits of the case. He refused to enforce the award; hence the plaintiff commenced this action.
I may further mention that when the present action was commenced, the defendant applied by a motion on notice to set aside the writ of summons on the grounds that:
(i) the defendants sued in the writ of summons is a misnomer, having been sued as Commerce Assurance Company Limited instead of Commerce Assurance Limited; and
(ii) in view of the previous proceeding in suit No. M/17/80 before Falade, J” the learned trial Judge in the instant case had no jurisdiction to entertain the suit.
The plaintiff had, on the other hand by a motion dated 15th December, 1980, applied to amend the name of the defendant from “Commerce Assurance Company Limited” to “Commerce Assurance Limited”, it was supported with an affidavit in which the plaintiff swore that it was a case of a misnomer and a mistake of counsel. In a considered ruling handed down on the 20th day of February, 1981, Ademakinwa. J., ruled against the defendant. On the first issue above, the learned trial Judge, after considering the relevant authorities, held as follows:
“It is clear from the foregoing observations that the principle was endorsed that where a wrong legal entity has been sued, such an error could be rectified by the substitution of the correct legal entity for the one wrongly sued, provided that the correct legal entity is put on notice so as to afford him an opportunity of being heard as to whether he could be properly substituted or not. Where the court is satisfied that a mistake sought to be corrected is genuine and not misleading, an amendment to correct (he name of a party may be allowed, notwithstanding that the effect of the amendment will be to substitute a new party. (See: Jeoba v. Owonifari (1974) 10 S.C. 157 at page 168). It is not contested that the “Commerce Assurance Ltd.” which is (he correct defendant in this case is not a juristic person; neither is it contested that the correct defendant has not been put on notice of the pendency of this suit. It is therefore my view that the misdescription of the defendant/company’s name is a misnomer, which could be cured by an amendment and to that extent the submission of the learned counsel for the defendant/company is untenable and is accordingly rejected,”
On the second issue above, the learned trial Judge held that there are two methods of enforcing an arbitration award, namely:
(i) By application directly to enforce the award; or
(ii) By application to enter judgment in terms of the award and so to enforce the judgment by one or more of the usual forms of execution.
Then he reasoned that as the former action under Falade, J., was merely struck out and not dismissed, it was not capable of creating an estoppel so as to deprive the court of jurisdiction. There can be no doubt that Famakinwa. J., correctly stated and applied the law on both of the above issues. In any event, the defendant did not appeal against his decision on the issues. I shall refer to the effect of this state of affairs in this appeal later on.
In the end the learned trial Judge, as I have stated, granted to the plaintiff the declaration he sought. The appeal by the defendant to the Court of Appeal, Ibadan Division, coram; Uche Omo, J.C.A. (as he then was), Sulu-Gambari and Omololu-Thomas, J.J.C.A, was dismissed; hence the defendant has appealed further to this Court. Parties filed and exchanged their briefs. The appellant filed an amended brief. Appellant formulated issues for determination which, according to it arose from the grounds of appeal filed. They are as follows;
“(1) Can an Arbitrator have jurisdiction in a matter without terms of reference agreed to and drawn up and signed by the parties notwithstanding that there is a clause in the contract between the parties that they should submit to Arbitration in the event of a dispute arising from the contract
(2) After an award has been made by an Arbitrator, and leave to enforce it has been refused by a competent High Court on the ground that the Arbitrator has no jurisdiction to sit on the Arbitration and that the award was invalid and a nullity, can another High Court in the same judicial Division have jurisdiction to commence trial on an action filed by the plaintiff for a Declaration on the adjudged invalid Award
(3) Can an Arbitral Award which has been declared unenforceable by a competent High Court be enforced again without a reversal of that judgment by a Superior Court
(4) What are the remedies for enforcing an Arbitral Award. Is it by originating Summons to enforce the Award or by application to enter judgment in terms of the Award or by seeking a declaration on the award by a Writ of Summons. If, after an award has been refused by High Court, will the party in whose favour the award was made be entitled to the second alternative remedy for the enforcement of the award one after the other i.e. by seeking leave by originating summons to enforce an award and if he fails by seeking declaration on the award by a writ of summons or filing another application to enter judgment in terms of the award.
(5) Can the Court substitute a new defendant for another non-existent one with or without notice to the new one to be substituted. Must the party substituted be served with all processes of the Court in the proceedings
(6) Whether the Court of Appeal is competent to review the award of damages under section 16 of the Court of Appeal Act if the trial Judge in the lower court found it excessive.”
I must, however, point out that most of these issues have been vitiated by some factual assumptions which are not borne out by the true facts of the case. For an example, issue number (3) carries with it the assumption that the award had been declared unenforceable. This was clearly not so. As I have stated, Falade, J., struck out the first action which was commenced by an originating summons. He did not go into the merits of the case. It was therefore wrong to posit an issue which is predicated on the assumption that he had declared the award unenforceable. I cannot overemphasize the fact that a proper issue for determination in an appeal ought to be a mirror of the facts of the case as ascertained in the court below. In formulating any issue for determination in an appeal, a party is entitled to formulate it with a slant favourable to his own case. But in doing so, he cannot mistate or mutilate the facts. Having regard to the grounds of appeal and the true facts of the case, I prefer the issues as formulated on behalf of the respondents, which run thus:
“(i) Whether a plaintiff whose claim was struck out and not dismissed by the court is estopped from bringing a fresh action before the court to enable its claim be determined on the merits and whether the respondent who had sought to enforce an arbitration award in this suit is barred from bringing an action for judgment on the award.
(ii) Whether the appellant can now complain of the excessiveness of the award made by the Arbitrator as the appellant did not apply to the court to have the award set aside or remitted when made and when the issue of the excessiveness of the award was not raised at at the trial.
(iii) Whether the Court of Appeal can exercise its power under section 16 of the Court of Appeal Act to review the award of damages when the point was not raised at the trial and whether the Court of Appeal can properly do so in this case even if the point had been raised at the trial.
(iv) Whether the appellant can now complain of the validity or otherwise of the Court’s Ruling of the 20th February, 1981, when the application of the respondent to amend “Commerce Assurance Company Ltd.” to read “Commerce Assurance Ltd.” was granted by the trial court without objection and when the said Ruling has not been set aside on appeal.
(v) Whether the Arbitration Clause as contained in Clause’ 8′ of the Policy of Insurance i.e. Exhibit’ A’ does not constitute a valid submission to Arbitration and whether the said Clause does not confer jurisdiction on the Arbitrator consented to by the parties.
(vi) Whether the terms of reference of an Arbitrator need be contained in a single or in a formal document”
I shall, however, connect these to the issues formulated on behalf of the appellants and whenever possible, consider them together.
I shall consider the first issue formulated on behalf of the appellant together with issues numbers (v) and (vi) for the respondent. It has been urged on behalf of the appellant that there cannot be a valid arbitration in the absence of some terms of reference subscribed to by both parties. This was indeed one of the grounds upon which Falade, J., struck out the first proceeding.’ On behalf of the respondent, however, it was submitted that as by clause 8 of the Policy of Insurance between the parties they agreed to refer any dispute as to a claim by the plaintiff on the defendant/company to arbitration, it constituted a sufficient submission of the dispute to arbitration, satisfied the requirement of agreement to such a submission, and gave the court jurisdiction to enforce the award.
In my view, the contention on behalf of the appellant on this point is totally misconceived. For although it is the law that to constitute a proper arbitration which the courts can enforce there must be an agreement to submit the matter to arbitration, it is equally true that a policy of insurance constitutes a contract between the insurer and the insured. A clause in such a policy dated 20th July, 1976, which provides that any dispute as to a claim by the insured against the insurers shall be referred to arbitration is a sufficient agreement to submit the dispute to arbitration, and any award by an arbitrator so appointed shall be binding on both parties thereto. In such a case, the High Court may adjudicate on the issue between the parties or direct the issue between them to be determined in accordance with the terms of agreement: see Baker v. Yorkshire Fire & Life Assurance Co. (1892) 1 Q.B. 144; Anglo-Newfoundland Development Co. v. R. (1920) 2 K.B. 214. p. 223, C.A. The learned authors of Halsbury’s Laws of “England. Vol.2 (4th Edn.) para. 522, put the contention of the appellant in this respect at rest when they stated:
“If the agreement is written, it (meaning arbitration provision) may he included in a particular contract by reference or implication. The agreement between the parties may incorporate arbitration provisions which are set out in other documents, but in’ order to be binding the arbitration provisions must be brought to the notice of both parties.”
See: Morgan v. William Harrison Ltd. (1907) 2 Ch. 137, C.A.; Clement v. Devon County of Devon Insurance Committee (1918) 1 K.B. 94, and Frank Fehr & Co. v. Kassam Jivral & Co. Ltd. (1949) 82 Le. L. Rep. 673. The defendant who is the author of the policy cannot claim that it did not have notice of the provision. It is surprising that the appellant, conscious of clause 8 of their own policy submitted to and fully took part in the arbitration proceedings before raising this question ex post facto. The law will not allow them to do so. See also -Kana State Urban Development Board v. Fanz Construction Co. Ltd. (1986) 5 NWLR (Pt.39) 74; also Heyman & Anors. v. Darwins Ltd. (1942) 1 All E.R. 337, p. 339. It is certainly not necessary, in view of clause 8 of the policy, that the parties should again formulate another agreement to submit their differences to arbitration. It is enough that clause 8 contemplates that they would submit their present and future differences to arbitration. This distinguishes this case from that of Caerleon Tinplate Co. v. Hughes (1891) 60 LJ.E.B. 640 which was cited in argument. In that case the bought-note signed by the defendants stated that any dispute between the parties would be referred to arbitration. But the sold-note signed by the plaintiff contained no reference to arbitration or anything else to show that a submission to arbitration was intended or agreed to. The position in this case is different. I must therefore resolve this issue against the appellant.
On issues numbered (3) and (4) by the appellant, it has been submitted that the judgment of Falade, J., is a final judgment and therefore constitutes res judicata. It pronounced on the arbitration as being a nullity and void. As the findings in a judgment by a High Court can only be set aside on appeal, and there was no appeal, the judgment stands and ousts the jurisdiction of any other High Court to adjudicate again in the matter, counsel submitted. He cited the case of May v. Mills (1914) 30 T.L.R. 287 in support.
In his own submission, learned counsel for the respondent pointed out that the earlier suit, No.M/17/80 was merely struck out and not dismissed. The ground for the striking out was that there was ex facie doubt as to the validity of the award. As it did not finally dispose of the rights of the parties in the case it was not a final judgment and, so, could not be pleaded as estoppel or bar the respondent from instituting another action, he submitted. It was not a determination on the merits. In the further submission of counsel, even if the decisions was final, the respondent was in law not barred from bringing an action for a declaration that the award should be paid since a person who has obtained an order for leave to enforce an arbitration is not prevented from bringing an action on the award. It was not a case of where a Judge was setting aside or varying an order made by another Judge of concurrent jurisdiction, he submitted. In support, he cited the following authorities:
China Steam Navigation Co. v. Van Luan (1905) 22 T.LR. 26;
In re Boks & Co. AND Peters Rushton & Co. Ltd. Arbitration (1919) 1 K.B. 491, at pp. 497; and
Russel 446-497 on Arbitration (18th Edn.) 329.
I wish to begin my consideration of the above submissions by noting that although there is now in force in Nigeria an Arbitration and Conciliation Act, (Cap. 19 Laws of the Federation of Nigeria, 1990) effective throughout the Federation with effect from the 14th of March, 1988, that Act does not apply in this case which was decided in the High Court. Ibadan, Oyo State, on the 16th of July, 1981. The old Arbitration Act (Cap.13 Laws of the Federation 1958) applied to Lagos only. Section 13 of the Arbitration Law of Oyo State, 1978, which re-enacted The Arbitration Law of the Western Region, (Cap. 9 of 1959) provides simply that:
“13. An award on a submission may, by leave of the court or a judge, be enforced in the same manner as a judgment or order to the same effect.”
This was an enabling provision which did not affect the existing procedures. It was presumably under the power conferred by this section that the respondent initially applied to enforce the award made in his favour. But in England, before provisions in pari materia with the above, such as under section 26 of the Arbitration Act of 1950, came into force, it had been settled and recognized that procedure by action upon an award was one that could be pursued where the objection raised was such as to render the validity of the award a matter of doubt. When such was the case, no order was made giving leave to proceed summarily under the award: See Re Books & Co. and peter, USHKIN & Co. Arbitration (1919) 1 K.B. 491; also May v. Mills (1914) T.L.R. 287. This principle was in fact one of the principles of the common law received in Nigeria in 1900. As in England, when provisions such as those in section 13 of the Arbitration Law of Oyo State were introduced, the view of the courts was that the new provisions were an alternative procedure to the existing common law procedure by action. The learned authors of Supreme Court Practice, 1979, recognised this position where they state in paragraph 3787 of Vol.2 thus:
“Two alternative methods of enforcement of an award are open to an applicant, namely:
1. By application directly to enforce the award …….or
2. By application to enter judgment in terms of the award and so to enforce the judgment by one or more of the usual forms of execution…..”
Thus the two alternative methods are fundamentally different. The summary method treats the award as an existing judgment and only seeks to enforce it. The enforcement by action seeks to get a judgment in terms of the award. There can, therefore, be no question of a proceeding by way of summary procedure to enforce, the award being pleaded as estoppel per rem judicatam, as in that case the court itself decides nothing. It simply enforces the award as if it were a judgment. Where there is doubt, as I have stated, and it becomes unwise to enforce the award summarily, the court simply strikes out the application to enforce the award summarily, leaving the applicant free to commence an action. That was indeed what Falade, J., himself had in mind when he stated:
“It is well settled that the procedure by action upon an award is one that ought to be pursued where the objections raised are such as to render the validity of the award a matter of doubt. Where there is no objection to the award, or where the objections raised are such as can be easily disposed of, the summary procedure is prompt and convenient; but where there are matters which may gravely affect the validity of the award, then it is proper that they should be dealt with by an action in which the facts can be fully ascertained, and no order should be made giving leave to proceed summarily under the award. -“See ln re Books & Co. and Peters Rushton & Co. Ltd. (1919) 1 K.B. 491 at 496.
From the totality of the evidence before me and the submissions made by the two counsel, there is a doubt on the face of the proceedings as to the validity of the award. In May v. Mills (1914) 30 T.L.R. 287 it was held that no order for the enforcement of any award should be made if there was a doubt on the face of the proceedings whether there had been a valid arbitration.
Taking into consideration the circumstances of this case therefore, I hold that the application is not well founded. The originating summons is therefore struck out.”
Thus he fully recognized, when he struck out the proceeding to enforce the award, that the respondent could proceed by way of an action. He did not intend to decide anything and so decided nothing. He only felt that there was some doubt as to the validity of the award and held that in such a circumstance the correct procedure was by way of an action. This was exactly what the respondent proceeded to do. As nothing was yet decided, the learned trial Judge’s striking out of the application could neither be final not operate as res judicata. The submissions on behalf of the appellant on these issues were therefore misconceived.
The fourth issue raised on behalf of the appellant has already been taken care of during my consideration of issues numbered 2 and 3. Furthermore, it was predicated on the premises that Falade, J., refused the award. He did no such thing.
From the portion of his judgment which I have set out above, he only felt that there was a ground for doubt as to the validity of the award, and so the proper procedure for its enforcement would be by action.
I agree with learned counsel for the respondent that as the learned trial Judge in his reserved ruling on the 20th of February 1981, held that the plaintiff/respondent suing “Commerce Assurance Company Limited” rather than “Commerce Assurance Limited” was a mere misnomer and proceeded to amend the name of the defendant accordingly but the appellant never appealed against the decision, it is not open to the appellant now to raise the point again in this appeal. The matter could only have been reopened by an appeal at the proper time, or by asking for leave and extension of time to raise it in this appeal. As there has been no appeal, the decision and the amendment made thereunder subsist.
There is no material before the court to support the submission on behalf of the appellant that Commerce Assurance Company Limited is not a juristic person and that an amendment cannot properly be made to substitute a juristic person for a non-juristic person. While the submission that an amendment cannot be made in order to substitute a juristic person for a non-juristic person is technically correct, it cannot avail the appellant. This is because the learned trial Judge found that what was involved was a mere misnomer. And it is settled that where an amendment sought relates to a mere misnomer, it will be granted almost as a matter of course. See on this: Sam Warri Esi v. Shell B-P Petroleum Development Co. of Nig. Ltd. (1958) SCNLR 384 (1958) 3 F.S.C. 94.
Finally, I shall deal with issue number 6 in which the appellant contends that, as the learned trial Judge was of the view that the quantum of the award was rather too high, he should have proceeded to reduce it to a reasonable figure. In his submission, an action seeking for a declaration of an award is almost like a new action. Learned counsel on behalf of the respondent submitted that the learned Judge had no power to do so. The correct procedure which the appellant could have adopted was to have applied within six weeks to set aside the award. Having failed to do so, and as the award was valid on the face of it, the award stands. He cited:
“Caledonian Railway Co. v. Turcan
Kano State U.D.B. v. Fanz Construction Co. Ltd. (supra)
Ita v. ldiok (1923) 4 N.L.R. 100
Now, I believe that the appellant’s contention on this issue reveals a lack of appreciation of the true nature of arbitration proceedings. The underlying principle is that parties to a dispute have a choice. They may resort to the normal machinery for administration of justice by going to the regular courts of the land and have their disputes determined, both as to the fact and to the law, by the courts. Or, they may choose the arbitrator to be the judge between them. If they take the latter course, they cannot, when the award is good on the face of it, object to the award on grounds of law or of facts. Smith, LJ, reiterated the principle in Montgomery Jones & Co. v. Liebenthal (1898) 78 L.T. 406 where he stated at p. 408:
“I for my part, have always understood the general rule to be that parties took their arbitrators for better or worse both as the decision of fact and decision of law.”
The West African Court of Appeal reiterated the same principle in the case of Foli v. Akese (1930) 1 W.A.C.A. 1, at p.2; so also the Privy Council in Larbi v. Kwasi & Ors. (1950) 13 W.A.C.A. 81, p.82. A person who has submitted to an arbitration cannot turn to the court to ask it to review the award when he believes that it is too high. As the learned authors of Russell on Arbitration (18th Edn.) put it at p. 314:
“The court has no power to alter an award; it can only set it aside or remit it to the arbitrator.”
See also: Hall v. Anderson (1825) 2 Bing. 476; Moore v. Butlin (1877) 7 L.J.Q.B. 20. But I must add that, as pointed out by learned counsel for the respondent, where a person affected by an arbitration award wishes to have it set aside, he must apply timeously, and before the successful party takes steps to enforce the award or have a judgment entered in his favour in terms of the award: see Efana Ekeng Ita v. Edet Idiok (1923) 4 N.L.R. 100. Applying the above principles to the present case, it follows that much as the learned trial Judge had criticised the award as rather too high, the award, which was made over ten years ago, stands as the learned Judge has no powers to tamper with it. The award could not be treated as just a court judgment on appeal before the learned Judge. The question of section 16 of the Court of Appeal Act does not arise. All the issues raised by the appellant having been resolved against it, the appeal fails and is dismissed. I assess and award costs of N1,000.00 against the appellant.
A. G. KARIBI WHYTE, J.S.C.: I have read the judgment of my learned brother P. Nnaemeka-Agu, J.S.C in this appeal. I agree with the reasoning therein and his conclusion dismissing this appeal. I also will and hereby dismiss the appeal.
Appellant shall pay costs assessed at N1,000 to the Respondent..
S. M. A. BELGORE, J.S.C.: I agree with the judgment of Nnaemeka-Agu J.S.C. that this appeal must fail. I adopt his reasoning and conclusion as mine in also dismissing this appeal with N1000.00 costs to the respondent.
I must by way of emphasis, explain that an arbitrators award is not per se final and thus a raison d’ etre for enforcement by asking for judgment on it. The award must not only be accepted by both sides to the arbitration but must also be valid and enforceable. If the award is not valid or enforceable or is not acceptable to one or any of the parties, the remedy open to that objecting party is a full dress action in Court and not a prayer to make the award a judgment of the Court.
A. B. WALI, J.S.C.: I have the privilege of reading before now, a copy of the lead judgment of my learned brother. Nnaerneka-Agu, J.S.C. I entirely agree with the reasoning and the conclusions arrived at thereafter, and I hereby adopt them as mine.
For those same reasons, I find no merit in this appeal. It is accordingly dismissed with N1000.00 costs to the respondent against the appellant.
E. O. I. AKPATA, J.S.C.: I have had a preview of the judgment of my learned brother, Nnaemeka-Agu, J.S.C, in this appeal. I agree basically with the reasoning and conclusion reached by him. Due to circumstances beyond my control I cannot contribute to this important appeal which raises a number of important legal issues. I dismiss the appeal with costs assessed at N1,000.00 to the respondent.
Chief Adedeji Adekoya For Appellant
G.O. Ojo For Respondent