COTECNA DESTINATION INSPECTION LIMITED v. BOYSON NIGERIA LIMITED
(2013)LCN/6548(CA)
In The Court of Appeal of Nigeria
On Friday, the 29th day of November, 2013
CA/L/347/2008
RATIO
WHETHER A GRANT OF AN APPLICATION FOR STAY OF PROCEEDINGS IS AT THE DISCRETION OF THE COURT
It is trite that an application for stay of proceedings is not granted as a matter of course, but at the discretion of the Court – OLU OF WARRI V. AGWU (1994) 1 NWLR (Pt.319) 192; AKILU v. FAWEHINMI (No.2) (1989) 2 NWLR Pt.102 page 122. Per RITA NOSAKHARE PEMU, J.C.A.
JUSTICES:
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
RITA NOSAKHARE PEMU Justice of The Court of Appeal of Nigeria
TIJJANI ABUBAKAR Justice of The Court of Appeal of Nigeria
Between
COTECNA DESTINATION INSPECTION LTD – Appellant(s)
AND
BOYSON NIGERIA LIMITED – Respondent(s)
RITA NOSAKHARE PEMU, J.C.A. (Delivering the Leading Judgment): This is an interlocutory appeal against the Ruling of O. A. Ipaye J (Mrs.) in Suit No.LD/45/95 delivered on the 19th of January 2006.
The learned trial Judge, after hearing the application for stay of further proceedings filed on the 31st of March 2005 dismissed same.
FACTS
The Appellant was the 1st Defendant in the lower Court in Suit No LD/45/05, while the Respondent was the Claimant. The Appellant had by Motion on Notice filed on the 31st of March 2005 prayed the Court below for an order, staying further proceedings in the suit, pending reference to, and determination of the dispute between the Claimant and the Defendant by Arbitration, in accordance with the arbitration agreement between the parties.
At the Court below, the Respondent had claimed against the Appellant the following:
(a) “The sum of N28,662,750.00 being outstanding balance of the contract sum at N4,800,000 monthly from Dec. 29, 2004 – 31st Oct. 2004, N10,031962.50 being interest at the rate of 35% on the outstanding
balance of N28,662,750.00 as at 37/10/04 and the sum of N4,800,000.00 compensation for loss earning and or one month sum for termination of contract”
(b) “A declaration that any money in account of the 1st Defendant in custody of the 1st Defendant up to the sum of N43,494,772.50 belongs to the Claimant and such should not be withdrawn by the 1st Defendant except for the settlement of the Claimants claim”
“An interest at rate of 35% on the sum of N3,494,712.50 from the 1st Nov. 2004 till final determination of this suit and thereafter at the rate of 75% till final liquidation of the Judgment sum”
(d) “The sum of N5,000,000.00 as general damages”
(e) “An order of the Court restraining the 2nd Defendant from releasing any money and/or transferring any money in her custody to any account foreign or domestic for and on behalf of the 1st Defendant forthwith until Judgment and final liquidation of the Judgment sum in this suit” – pages 1-2 of the Record of Appeal.
The claim was based on a contract between the parties, for provision by the Respondent of physical security of two (2) X-ray Scanners in Lagos ports, which belong to the Appellant. The Respondent, in conjunction with documents filed, also filed an Agreement dated 29th December 2003 which evidenced the contract. The Appellant’s Motion on Notice to stay further proceedings was in respect of the suit filed by the Respondent pending reference to and determination of the dispute between the parties by arbitration. He relied on the provisions of clause 21 of the Formal Service Agreement dated 29th December 2003 pleaded and filed by the Respondent and annexed as Exhibit 1to the Appellant’s application.
The learned trial Judge, after hearing submissions of learned counsel for the respective parties, dismissed the motion on the 19th day of January 2006.
The Appellant is dissatisfied with the decision of the lower court and has filed a Notice of Appeal on the 2nd of February 2006, pursuant to the Practice Direction of this Honourable Court.
The Notice of Appeal is at pages 138-141 of the Record of Appeal and it has three (3) Grounds of Appeal.
The Appellant filed his brief of argument on the 1st of March 2012. It is settled by Uzoma Azikiwe.
The Respondent filed his brief of argument on the 7th of June 2012. It is settled by Muyiwa Akinbobola, Esq.
On the 4th of November 2013, learned counsel for the respective parties adopted their respective briefs of argument.
The Appellant distilled one issue for determination from the three Grounds of Appeal. It is
“Whether the learned trial judge was wrong when he held that the Appellant’s application dated 31st March, 2005 was without merit, dismissed some and failed to stay proceedings in respect of Suit No. LD/45/2005 pending reference to and determination of the dispute by arbitration”
The Respondent also formulated one issue for determination. It is
“Whether the learned trial judge was wrong at dismissing the Appellant motion for stay of further proceedings dated 31/3/05 holding that the letter of award of contract dated 29th December 2003 by the Appellant to the Respondent constitutes a valid contract that guides the relationship between the parties till its termination and service contains no Arbitration clause as against the service agreement also dated 31st December 2003 unexecuted by the Appellant but contained arbitration clause”
The Agreement which purportedly regulates the contract between the parties is at pages 15-19 of the Record of Appeal. But a cursory look at the concluding part of the Agreement dated 29th December 2003, show that it was signed by only one party and that is one N. N. Okonkwo, Managing Director for BOYSON NIGERIA LIMITED – the Respondent in this Appeal (Claimant in the Court below).
The Agreement was also witnessed for the Respondent by one Nwaolisa C. O. Secretary to the Company. The Agreement is of 21. Paragraphs and I deem it necessary to reproduce the twenty-first paragraph.
“Any dispute arising out of or relating to this Agreement which cannot be mutually resolved between the parties shall be referred to arbitration in accordance with the arbitration and conciliation Act cop 19 of the Laws of the Federation of Nigeria 1990,
It is pertinent to consider whether the said written agreement of 29th December 2003 as it is, signed by only one party to the agreement, carries any force of law. At page 16 of the Record of Appeal is a letter from the Appellant to the Respondent also dated 29th December 2003. I shall reproduce same verbatim.
Mr. N. N. Okonkwo
CEO Boyson (Nig) Ltd
1, Gafari Balogun Street,
Ikeja – Lagos
Nigeria.
Our Ref.: 29.12.03/LDR/007 Lagos, 29 December 2003
Subject CDIL Scanners Security Service
Dear Sir,
Pending signature of a formal contract, we hereby confirm our agreement to appoint your Company to protect the physical security of our 2 X-Ray scanners on location in both Lagos ports (Apapa and Tincan).
The security will be assured from this day onward by 8 armed guards running in 3 shifts on 24 hours basis, seven days week.
The agreed cost to Cotecna Destination Inspection Limited is set at N160,000 (Naira hundred and sixty thousand only) a day. This amount can be reviewed in future in line with actual threat situation.
This agreement can be terminated at 30 (thirty) days notice by each party.
Yours faithfully,
Signed
General Manager (Scanners)
(Nigeria) ”
This explains why the agreement proper has not been signed by the Appellant. But this does not remove the fact that there is an arbitration clause in the Agreement.
Section 4(1) of the Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria has this to say
“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 a stay of proceedings and refer the parties to arbitration”
Section 5 (1) and (2) has this to say
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 on arbitration agreement, any party to the arbitration agreement may, at any time after appearance and before delivery any pleadings or taking any other steps in the proceedings, apply to the Court to stay the proceedings.
5(2) A Court to which on application is made under subsection (1) of his 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.”
It is apparent on the face of the Records that the parties had been exchanging various letters, and indeed their conduct shows that there exists a contract between them.
Paragraph 8(a) of the Statement of Claim is instructive. It says
“The claimant avers that a formal service agreement duly executed by her whereof conditions and terms of contract therein enshrined was prepared but was never executed by the 1st Defendant till she unilaterally revoked the contract despite her promises to execute same in favour of the Claimant. The unexecuted service agreement dated 29th December 2003 is hereby pleaded and shall be relied upon at the trial”
This averment stands uncontroverted by the 1st Defendant/Appellant. The facts therein are therefore deemed admitted. It is on the unexecuted Agreement that the arbitration clause is – paragraph 21 therein.
The Appellant had argued that the letter dated 29th December 2003, constituted a valid contract between the parties because it was a prior document which is sufficiently explicit and. unambiguous, and which contains the key terms of the bargain, especially as it relates to Commencement, Pricing and Termination.
He argues that the Arbitration Agreement between the Appellant and Respondent binds the parties. That the Respondent is bound to have the subject matter of its Suit No. LD/45/2005 referred to and determined by arbitration as it had bound itself in writing.
He submits that the Court had a duty to give effect to that arbitration agreement citing Sections 1 (1) (a) and (c) and 2 of the Arbitration and Conciliation Act. Let me reproduce Sections 1 (1) (a) and (b) of the Act.
Section 1 (1) (a) of the Conciliation and Arbitration Act stipulates that
1(a) “Every arbitration agreement shall be in writing contained in a document signed by the parties.
Section 1 (1) (c) stipulates that
“Every arbitration agreement shall be in writing contained in an exchange of points of claim and of defense in which the existence of an arbitration agreement is alleged by one party and not denied by another”
The Appellant had cited THE OWNERS OF MV LUPEX V. NIGERIAN OVERSEAS CHARTERING AND SHIPPING LIMITED (2003) 15 NWLR (Part 844) 469 at 491 (G-H); NIGERIA LNG LIMITED V. AFRICAN DEVELOPMENT INSURANCE CO. LTD (1998) 8 NWLR (part 416) 677 at 681.
He urges Court to allow the appeal as the letter dated 29th December 2009 did not constitute the contract between the parties.
The Respondent had argued that the learned trial Judge was right when he held that the letter of 29th of December 2003 constitutes a valid contract and that it contains no Mandatory arbitration clause whereupon the Court cannot accede to the Appellant’s prayers for stay of further proceedings in the matter pending, reference to, and determination of the dispute by Arbitration.
He argues that before a Court can stay proceedings pending reference to arbitration, there are certain conditions that must be met. They are
(1) There must be a valid agreement containing arbitration.
(2) Both parties to the action must be parties to the valid agreement.
Citing NIGERIA LNG VS. A.D.I.C. LTD (1995) 1 NWLR (pt.416) ps. 677 @ Pg 681.
He submits that these conditions are lacking in the present case. This is because there was no valid agreement between the Appellant and the Respondent containing any arbitration clause to govern the contract awarded by the Appellant to the Respondent by its letter dated 29th of
December 2003.
He submits that there is no valid Agreement and the purported one was not signed by one of the parties. Furthermore, that for the Court to invoke the provisions of Section 4(1) of the Arbitration and Conciliation Act, there must be a valid agreement containing Arbitration, and the parties to the suit must be subject of an Arbitration Agreement. That this is not so in the instant case.
I am more poised to agreeing with the Respondent’s submission.
This is because, a cursory look at the purported Contract Agreement, it is signed by only one of the parties, although the letter of 29th December 2003 talks about the fact that the letter is not yet signed. But it is on this unsigned agreement that there is an Arbitration clause in its Clause 21. There is nothing about Arbitration Clause on the letter of 29th of December 2003.
As earlier observed, the averment in paragraph 8(a) of the Statement of Claim was not controverted by the Defendant. The facts therein are deemed admitted
It is apparent that the only valid contract agreement between the parties is the letter of award with reference No.29.12.03.LDR/001 of 29th December 2003 – page 16 of the Record of Appeal. This did not contain an Arbitration Clause.
It is apparent also that the Respondent never took the option of going to arbitration.
It is trite that an application for stay of proceedings is not granted as a matter of course, but at the discretion of the Court – OLU OF WARRI V. AGWU (1994) 1 NWLR (Pt.319) 192; AKILU v. FAWEHINMI (No.2) (1989) 2 NWLR Pt.102 page 122.
I am of the view that there was no valid Agreement executed between the parties, and even if there was, there exists no Arbitration clause to necessitate of stay of further proceedings of the suit.
Stay of further proceedings can only be wielded by the courts in exceptional circumstances. They are that
(a) The action must be shown not only that it might fail but that it cannot possibly succeed or that for some reasons it ought not to go on.
(b) The action is shown to be frivolous, vexation or an abuse of the process of the Court.
(c) No cause of action is disclosed, and
(d) There is need to preserve the RES from being destroyed – AKILU v. FAWEHINMI No 2 (supra).
The Appellant in an application for stay of proceedings, must present his application in good faith in order to succeed.
The Respondent, submits that the application for stay of further proceedings at the Lower Court was not brought in good faith.
In considering 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 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.
I am of the view that the only issue for determination be and is hereby resolved in favour of the Respondent and against the Appellant, as the learned trial Judge was right when he dismissed the Appellant’s application dated 31st March 2005, and failed to stay proceedings in respect of Suit No. LD/45/2005 pending reference to and determination of the dispute by arbitration.
The Appeal lacks merit and is hereby dismissed. The decision of Honourable Justice O. A. Ipaye (Mrs.) J. contained in a Ruling delivered on the 19th January 2006 in Suit No. LD/45/95 is hereby affirmed.
Parties to bear their respective costs.
JOSEPH SHAGBAOR IKYEGH, J.C.A.: The letter replicated in page 16 of the record of appeal (the record) and helpfully reproduced in page 6 of the judgment prepared by my learned brother, Rita Nosakhare Pemu, J.C.A. opened with the words “pending signature of a formal contract…” So the letter in question made a provisional agreement between the parties affected by it. A formal service agreement pleaded in paragraph 8(a) of the statement of claim which is contained in page 4 of the record was intended to replace the conditional or provisional agreement. The formal service agreement was not fully executed by all the parties before the action was filed in the court below.
The legal effect is that the provisional or conditional agreement subsists or is pending until a choate formal agreement is executed by the parties concerned with the agreement. See by analogy Obaike v. Benue Cement Company Plc (1997) 10 NWLR (Pt.522) 435. The conditional agreement in question does not have an arbitration clause. It cannot, in the circumstance, be used to predicate a stay of further proceedings or action pending arbitration. The unexecuted agreement pleaded in paragraph 8(a) of the statement of claim, (see page 4 of the record) however, has an arbitration clause; but being an inchoate or incomplete agreement it cannot anchor a stay of further proceedings pending arbitration.
Consequently, I am in absolute agreement with the lucid lead judgment of my learned brother, Pemu, J.C.A., which I adopt as my own judgment to hold that the court below was right to dismiss the application for a stay of proceedings pending arbitration. And for these reasons and for the thorough treatment of the issues in the lead judgment, I too find no merit in the appeal and hereby dismiss it and affirm the Ruling of the court below (Ipaye, J.). Parties to bear their costs.
TIJJANI ABUBAKAR, J.C.A.: I had the privilege of reading before now the read judgment prepared and delivered by my learned brother PEMU, JCA.
The reasoning and conclusion is adopted by me, my brother thoroughly analysed the sole issue for determination, the analysis left no room for me to add anything useful.
Appellants appeal lacks merit it is therefore dismissed. The decision of the lower court is also affirmed by me. Parties shall bear their respective costs.
Appearances
U. H. Azikiwe, G. O. Ojo with R. N. Chukwuocha. For Appellant
AND
For Respondent
