FRENCH CONNECTION (NIG) LTD v. MABANI REAL ESTATE HOLDING (NIG) LTD
(2021)LCN/15116(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Thursday, March 04, 2021
CA/L/1029/2016
Before Our Lordships:
Hussein Mukhtar Justice of the Court of Appeal
Paul Obi Elechi Justice of the Court of Appeal
Patricia Ajuma Mahmoud Justice of the Court of Appeal
Between
FRENCH CONNECTION NIGERIA LIMITED APPELANT(S)
And
MABANI REAL ESTATE HOLDING NIGERIA LIMITED RESPONDENT(S)
RATIO
EFFECT OF AN ARBITRATOR DELEGATING A PART OF HIS AUTHORITY OR DUTY TO ANYBODY, ON ANY AWARD MADE IN SUCH ARBITRATION
An arbitrator being an adjudicator in the matter before him ought not to delegate any part of his authority or duty to anybody, for whatever reason. Acts of delegation of duties or authority in any form is tantamount to an infamous conduct that could render any award made in such arbitration liable to be set aside. The Supreme Court’s decision in Taylor Woodrow (Nig.) Ltd. v. S. E. GMBH [1993] 4 NWLR (Pt. 286) 127 at 142 – 143 at p 143 para D held thus: “For the avoidance of doubt, the following instances enunciated in the above case will certainly constitute acts of misconduct, that is to say:- where the arbitrator or umpire delegates any part of his authority, whether to a stranger or to one of the parties, or even to a co-arbitrator.” PER HUSSEIN MUKHTAR, J.C.A.
CIRCUMSTANCE WHERE A DEFENDANT WILL BE DEEMED TO HAVE WAIVE HIS RIGHT TO COMPLAIN ABOUT AN IRREGULAR PROCEDURE
The position of the law is that where an action was commenced by an irregular procedure and a Defendant did not complain but took part therein, he cannot later be heard to complain and take advantage of the irregularity – see NDAYAKO v. JIKANTORO & ORS. (2004) 8 MJSC PG. 163 (Page 226 paragraph 1 – 2 of the records). PER HUSSEIN MUKHTAR, J.C.A.
CIRCUMSTANCE WHERE AN ARBITRATOR WILL BE DEEMED TO HAVE MISCONDUCTED HIMSELF OR HERSELF
… the case of Christian lmoukhuede v. Charles Mekwuoye delivered on 14th November, 2014, where the Court at pages 26 – 28 of the judgment held per Jamilu Yammama Tukur, J.C.A. thus: “The decision of this Court in the case of Triana Ltd v UTB Plc [2009] 12 NWLR Pt. 1155 313 at 335 relying on the Supreme Court decision in TAYLOR WOODROW LIMITED v. SUDDEUTSCHE ETNA – WERK G.M.B.H [1993] 4 NWLR Pt. 286 at P. 127 is good law that where the arbitrator delegates any part of his authority whether to a stranger or to one of the parties or even to a co-arbitrator then he or she has misconducted himself/or herself and the award is liable to be set aside on that ground.” The arbitrator will be guilty of infamous conduct or misbehaviour where there is evidence against him of any of the following: a. failure to give a party or parties notice of time and place of meeting; b. deciding in default of defence without clear warning; c. having ex parte communication with one of the parties. An arbitrator ought not to delegate any part of his authority or duty to anybody for whatever reason. Acts of delegation of duties or authority in any form or deciding in default of defence without warning or having ex parte communication with one of the parties are tantamount to misconduct with the resulting effect of any award rendered in such arbitration being set aside on that ground. See Triana Ltd v. U.T.B Plc (2009) 12 NWLR (pt. 1155) 313 at 336 – 337; LSDPC v Adold/Stamn International (Nig) Ltd (1994) 7 NWLR (pt. 358) 545 SC at 564 para F. PER HUSSEIN MUKHTAR, J.C.A.
HUSSEIN MUKHTAR, J.C.A. (Delivering the Leading Judgment): This is an appeal against the judgment of the High Court of Lagos State per Justice O.H. Oshodi, delivered on the 15th day of June, 2016.
The Respondent commenced the suit as plaintiff by filing an originating summons dated and filed on the 10th day of December, 2015, wherein it sought the leave of the Court below to enforce the Award of Tunji Yusuf Esq., Arbitrator dated 12th November, 2015 and an order enforcing the said Arbitral Award in the matter between Mabani Real Estate Holding Nig. Ltd. v. French Connection Nig. Ltd. on the ground that the Award is final and binding on the parties.
The originating summons was supported by a thirteen paragraph affidavit, 9 exhibits, and a written address. In opposition, the Appellant filed a seven paragraph counter affidavit with seven exhibits and a written address in support.
Also, the Appellant filed on 25th January, 2016 a motion for an order setting aside the said Award of Tunji Yusuf Esq., dated 12th November, 2015. The application was based on 11
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grounds, namely: no Arbitration agreement between the Award Debtor and the Award Creditor but rather between the Award Debtor and Mabani Real Estate Nigeria Ltd; the condition precedent to commencing the arbitration was not complied with; the Award Creditor – Mabani Real Estate Holding Nigeria Limited had no right of action to commence the arbitration; the Notice of Arbitration or Notice commencing the arbitration is invalid; the arbitrator delegated his duties to third parties; the Award Debtor/Applicant was not given fair hearing; the arbitrator engaged in ex parte communication with the Award Creditor/Respondent; the arbitration was not conducted in accordance with the parties agreed procedure and or procedural rules; appointment not in accordance with the law; neither the Award Creditor nor the Award Debtor appointed any arbitrator let alone concurring to that appointed by either of them; the arbitrator did not warn the Award Debtor in any form that it will decide the dispute in default of defence or its defence.
The Appellant’s said application was supported by a seven paragraph affidavit, seven exhibits and a written address. In opposition, the
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Respondent filed a six paragraph counter affidavit. The counter affidavit was supported by seven exhibits and a written address. The Appellant filed Further/Reply affidavit to the Respondent’s counter affidavit as well as a Reply on Points of Law.
Both the Appellant’s application to set aside the Award and the Respondent’s application for leave to enforce the Award were argued on 4th March, 2016 and the judgment was delivered on 15th June, 2016, wherein the learned trial Judge set aside the award on one out of the eleven grounds upon which the Appellant’s application was based, it dismissed the application on the other grounds.
Being dissatisfied with that part of the judgment, the Appellant appealed against it by filing a Notice of Appeal predicated on seven grounds from which the Appellant distilled the following issues for determination:
1. Whether the learned trial Judge was right in holding that the arbitrator did not delegate his duties to Tunji K. Yusuf & Associates and to the Respondent.
2. Whether the learned trial Judge was right in holding that the Appellant waived its right to complain of the invalidity of the notice of arbitration.
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- Whether the learned trial Judge was right in holding that the arbitrator did not misconduct himself.
4. Whether the learned trial Judge was right in relying on the Respondents electronic mails.
The learned counsel for the Respondent E. O. Chukwu, Esq., who filed no brief, could not be heard. The Appellant’s four issues were however argued seriatim.
Issue One:
Whether the learned trial Judge was right in holding that the arbitrator did not delegate his duties to Tunji K. Yusuf & Associates and to the Respondent.
It was submitted for the Appellant that an arbitrator ought not to delegate any part of his authority or duty to anybody, for whatever reason. Acts of delegation of duties or authority in any form renders any award made in such arbitration liable to be set aside.
It was further submitted that delegation by an Arbitrator also constitutes misconduct for which an Award could be set aside. See Triana Ltd v. U.T.B. Plc. [2009] 12 NWLR (Pt. 1155) 313 CA at 334 para. F, where the
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Court of Appeal held thus:
“By virtue of Section 30 (1) of the Arbitration and Conciliation Act, the Court has power to set aside an award made by an arbitrator where he has misconducted himself.”
It was further submitted for the Appellant that the Court below should, for the foregoing reasons, have set aside the arbitrary award. The Court was urged to resolve the issue in favour of the Appellant against the Respondent.
An arbitrator being an adjudicator in the matter before him ought not to delegate any part of his authority or duty to anybody, for whatever reason. Acts of delegation of duties or authority in any form is tantamount to an infamous conduct that could render any award made in such arbitration liable to be set aside. The Supreme Court’s decision in Taylor Woodrow (Nig.) Ltd. v. S. E. GMBH [1993] 4 NWLR (Pt. 286) 127 at 142 – 143 at p 143 para D held thus:
“For the avoidance of doubt, the following instances enunciated in the above case will certainly constitute acts of misconduct, that is to say:-
where the arbitrator or umpire delegates any part of his authority, whether to a stranger or to one of the parties, or even to a co-arbitrator.”
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It was deposed in para 5 of the Appellants motion for setting aside the award to the Appellant thus:
“5. That I know that our lead Counsel – Prof. J.N.M. Mbadugha – further informed me in the manner, time, date, place, circumstance aforesaid and I verily believe same that the arbitrator in the arbitration – Tunji Yusuf Esq., delegated his duties to:
a. Tunji K. Yusuf & Associates carried out his duties through their letters of 6th and 16th October, 2015 – Exhibits MM4 – MM5 – respectively:
b. the Award Creditor carried out his duties through its letter of 2nd November 2015 – Exhibit MM6.
Tunji K. Yusuf & Associates is a partnership different from Tunji K. Yusuf the Arbitrator. The depositions that these were at the instances or delegation of the duties by the arbitrator were not successfully denied and the Court below was entitled to rely on same.
The law firm, Tunji K. Yusuf & Associates consists of other persons and thus Tunji K. Yusuf & Associates is a total stranger to the arbitral proceeding as it is a separate legal entity and distinct from the arbitrator. Exhibits
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MM4 – MM5 referred to in the counter affidavit were all signed for Tunji K. Yusuf & Associates which is different from Tunji Yusuf.
There was therefore a clear delegation of authority by the arbitrator, Tunji Yusuf Esq., to Tunji K. Yusuf & Associates and to the Respondent which acts constitutes misconduct as held in Triana Ltd v UTB Plc. [2009] 12 NWLR (pt. 1153) 313 at para. H and 335 para. H. Issue one is resolved in favour of the Appellant.
Issue 2:
Whether the learned trial Judge was right in holding that the Appellant waived its right to complain of the invalidity of the notice of arbitration.
The learned trial Judge held thus:
“However the notice does not meet the requirement of Article 3 of the Arbitration Rules which provides that the notice must include some information. To this Court, this inclusion of the information listed in Article 3 of the Arbitration Rules is just a procedural error, an irregularity and not that of a matter of substantive law which cannot be waived. The Respondent had waived this irregularity as it was present at the 1st sitting and also by its email dated 21st September, 2015 under the hand of
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Yemisi Sobamowo, the Respondent consented and approved Tunji Yusuf Esq., of 84 Lewis Street, Lagos Island to be the sole Arbitrator. At this first sitting, this Yemisi Sobamowo represented the Respondent and did not protest this invalid notice has been propagated by its counsel now 11. The position of the law is that where an action was commenced by an irregular procedure and a Defendant did not complain but took part therein, he cannot later be heard to complain and take advantage of the irregularity – see NDAYAKO v. JIKANTORO & ORS. (2004) 8 MJSC PG. 163 (Page 226 paragraph 1 – 2 of the records).
The learned counsel for the Appellant C. I. Okolo, Esq., argued that to constitute a waiver for non-compliance as envisaged under Article 3(3) of the First Schedule to the Arbitration and Conciliation Act 2004, the party complaining about the non-compliance must know about the non-compliance and yet proceeded with the arbitration. Article 30 of the First Schedule to the Act provides thus:
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“A party who knows that any provision of, or requirement under these Rules has not been complied with and yet proceeds with the arbitration without promptly stating his object to such non-compliance, shall be deemed to have waived his right to object.”
The Appellant has made some germane depositions in the supporting affidavit, thus:
“That I know that I was informed by the Award Debtor Applicant in the manner, place, date, time, circumstance aforesaid and I verily believe same that before now it was not aware that the Award Creditor’s Solicitors letter of 15th September, 2015 – Exhibit MM2 – suppose to contain or state all the facts deposed to in paragraph 4 above and that it became aware of that when it instructed our law firm on 20th January, 2016 and our Lead Counsel – Prof. J.N.M. Mbadugha – informed it of that.”
It was submitted for the Appellant that the foregoing depositions have shown clearly that the Appellant was not aware of the Respondent’s non-compliance with Article 3(3) of the First Schedule to the Act CAP A18 2004 and thus
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did not waive its right to complain of the consequential invalidity of the notice. The learned trial Judge therefore erred in holding that the Appellant waived its right of complaining of the invalidity of the notice of arbitration. The Court was urged to resolve the second issue in favour of the Appellant.
The provision of the Act clearly requires that for the Appellant to be said to have waived its right to object, it must have prior knowledge that any provision of the law or requirement under the rules was not complied with but yet proceeds with the arbitration proceedings without promptly objecting to such non-compliance, shall be deemed to have waived his right to object. In the instant case, the Appellant who was unaware of the irregularity could not have been said to waive its right to raise an objection. It follows therefore that the learned trial judge misconceived the law when he held that the Appellant had waived its right to object to the wrong procedure soon after becoming aware thereof and without taking further steps in the proceedings. This issue cannot but be resolved in favour of the Appellant and it is so resolved.
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Issue: 3
Whether the learned trial Judge was right in holding that the arbitrator did not misconduct himself.
It was submitted, for the Appellant that misconduct by an arbitrator, includes delegation of duty, and is one of the grounds for setting aside an award. See the case of Christian lmoukhuede v. Charles Mekwuoye delivered on 14th November, 2014, where the Court at pages 26 – 28 of the judgment held per Jamilu Yammama Tukur, J.C.A. thus:
“The decision of this Court in the case of Triana Ltd v UTB Plc [2009] 12 NWLR Pt. 1155 313 at 335 relying on the Supreme Court decision in TAYLOR WOODROW LIMITED v. SUDDEUTSCHE ETNA – WERK G.M.B.H [1993] 4 NWLR Pt. 286 at P. 127 is good law that where the arbitrator delegates any part of his authority whether to a stranger or to one of the parties or even to a co-arbitrator then he or she has misconducted himself/or herself and the award is liable to be set aside on that ground.”
The arbitrator will be guilty of infamous conduct or misbehaviour where there is evidence against him of any of the following:
a. failure to give a party or parties notice
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of time and place of meeting;
b. deciding in default of defence without clear warning;
c. having ex parte communication with one of the parties.
An arbitrator ought not to delegate any part of his authority or duty to anybody for whatever reason. Acts of delegation of duties or authority in any form or deciding in default of defence without warning or having ex parte communication with one of the parties are tantamount to misconduct with the resulting effect of any award rendered in such arbitration being set aside on that ground. See Triana Ltd v. U.T.B Plc (2009) 12 NWLR (pt. 1155) 313 at 336 – 337; LSDPC v Adold/Stamn International (Nig) Ltd (1994) 7 NWLR (pt. 358) 545 SC at 564 para F.
There was sufficient evidence showing that the arbitrator had misconducted himself and the award is liable to be set aside contrary to the findings of the Court below. This focuses my view to resolving the third issue in favour of the Appellant and against the Respondent.
Having resolved issues 1 to 3 in the
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Appellant’s favour, the fourth issue questions whether the learned trial Judge was right in relying on the Respondent’s electronic mails, is reduced to an insignificant academic question into which the Court would rather not delve.
The appeal has clear merit and is accordingly allowed. The judgment of the Court below should be and is hereby set aside.
The Respondent shall pay costs to the Appellant assessed at Fifty Thousand Naira Only (N50,000.00).
PAUL OBI ELECHI, J.C.A.: I have read in draft the lead judgment of my learned brother Hussein JCA in this appeal.
I agree with him that the appeal is meritorious and ought to be allowed.
I also allow the appeal and abide by the order as to costs.
Appeal Allowed.
PATRICIA AJUMA MAHMOUD, J.C.A.: I read in draft the lead judgment of my learned brother, Hussein Mukhtar, JCA. just rendered.
I agree with the thorough reasonings therein which led to the conclusions that this appeal has merit.
I align with my learned brother in allowing this appeal and setting aside the judgment of the trial lower Court. I also abide by the order for costs.
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Appearances:
…For Appellant(s)
…For Respondent(s)
