SCOA NIGERIA PLC v. STERLING BANK PLC (2016)

SCOA NIGERIA PLC v. STERLING BANK PLC

(2016)LCN/8558(CA)

In The Court of Appeal of Nigeria

On Tuesday, the 3rd day of May, 2016

CA/L/170/2013

RATIO

COURT: IMPORTANCE OF JURISDICTION
It is now well established that jurisdiction is a threshold issue in adjudication by a Court of law. It therefore goes without saying that the determination of a matter by a Court will amount to a nullity if done without jurisdiction notwithstanding how right or correct the decision reached might be. It is the basis on which any Court or tribunal tries a case because it is the authority it has to decide a matter before it. The importance of jurisdiction to adjudicate on any matter by a Court cannot therefore be overemphasised.
See GALADIMA VS TAMBAI (2000) 6 SCNJ 190; YUSUF VS OBASANJO (2004) 5 SCM 193; AJAO VS ALAO (1986) 5 NWLR (PT 45) 802; UGBA VS SUSWAM (NO 2) (2012) 6 SC (PT 11) 56, A.G RIVERS STATE VS A.G AKWA-IBOM STATE (2011) 8 NWLR (PT 1248) 31. PER SAMUEL CHUKWUDUMEBI OSEJI, J.C.A.
WORDS AND PHRASES: MEANING OF AN ARBITRATION CLAUSE
An arbitration clause is a written consensus reached by the parties to a contract and as applicable to other written agreements it must be construed according to the language used by the parties therein without external imputation. An arbitration clause embodies the agreement of the parties that if any dispute should arise with regard to the obligations which both parties have undertaken to observe, such dispute should be settled by a third party or tribunal of their own choice and constitution. See L.S.W.C. VS SAKAMORI CONSTRUCTION (NIG) LTD (2011)12 NWLR (PT 1262) 569 and ROYAL EXCHANGE ASSURANCE VS BENTWORTH FINANCE (NIG) LTD (1976)11 SC 107. PER SAMUEL CHUKWUDUMEBI OSEJI, J.C.A.
ARBITRATION: EFFECT OF ARBITRATION CLAUSE IN AN AGREEMENT
It is trite that where a clause in an agreement provides that any difference or dispute arising out of the agreement shall be referred to an arbitrator, both parties ought to honour and comply with provisions of the clause. PER SAMUEL CHUKWUDUMEBI OSEJI, J.C.A.
ARBITRATION: CAN PARTIES BY CONTRACT OUST THE JURISDICTION OF THE COURT
The law is settled that parties cannot by contract oust the jurisdiction of the Court; but any person may covenant that no right shall accrue till a third person has decided on any difference that may arise between himself and the other party to the covenant. Where it is expressly, directly and unequivocally agreed upon between parties that there shall be no right of action whatever till the arbitrators have decided, it is a bar to the action that there had been no such arbitration. See A.I.D.C. v. NIGERIA L.N.G. LTD (2000) 4 NWLR (Pt.653) 494 SC; CITY ENGINEERING NIGERIA LTD V. FEDERAL HOUSING AUTHORITY (1997) 9 NWLR (PT.520) 224 SC.
Therefore, 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 popularly known in law as the Scott v. Avery Clause enunciated in SCOTT v. AVERY (1856) 10 ER 1121. PER ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.

JUSTICES

SAMUEL CHUKWUDUMEBI OSEJI Justice of The Court of Appeal of Nigeria

TIJJANI ABUBAKAR Justice of The Court of Appeal of Nigeria

ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria

Between

SCOA NIGERIA PLC Appellant(s)

AND

STERLING BANK PLC Respondent(s)

SAMUEL CHUKWUDUMEBI OSEJI, J.C.A. (Delivering the Leading Judgment): This is an appeal against the judgment of the High Court of Lagos State delivered by A.O. ADEFOPE-OKOJIE J. (Mrs.) on the 20th day of November 2012 wherein Suit No LD/998/2009 was dismissed.

Sometimes in 1996, the Appellant herein entered into a lease agreement with the Respondent(then known as Magnum Trust Bank Plc) in respect of its property situate at No. 67 Marina, Lagos at a yearly rent of N3, 387, 340 (Three million, three hundred and eighty seven thousand, three hundred and forty Naira) with effect from 1-9-1996. By clause 4 of the Agreement, the lease was renewable at a rent to be mutually agreed upon by the parties, but in the event of a disagreement on the rent to be paid, the matter shall be referred to an arbitrator. Sometimes in 2004, the Respondent by a letter dated 1-6-2004 indicated its interest in renewing the lease. This engendered the exchange of series of correspondences to negotiate an agreeable rent for the property. At a point, the Appellant offered to accept N 25 million. Subsequently, the Respondent deposited the sum of N45 million Naira into the

account the Appellant operates with said Respondent and stated in the accompanying letter that the money is for three years? rent at the rate of N15 million per annum. But the Appellant wrote to state that the rent was to be N22.5 million per annum and the N45 million will be treated as rent for two years. Disagreement over the actual rent payable continued till the Respondent gave notice and did vacate the property by 31-12-2008 and also issued a cheque in the sum of N33, 333, 33 as payment for arrears of rent for the period 1-9-2007 to 31-12-2008. This was not acceptable to the Appellant who then after further letters to the Respondent instituted an action in the Lower Court against the Respondent as Defendant wherein the following reliefs were claimed, vide a writ of summons and statement of claim dated 22-6-2009.
1. The sum of N15,000,000 (Fifteen million Naira) being balance of the rent due from the Defendant to the claimant on the property situate and known as No. 67 Marina, Lagos, Lagos State for the period 1st September 2004-30th August 2007.
2. Interest of 21% per annum on the said sum of N15, 000,000 (Fifteen million Naira) with

effect from 12th day of June 2009 until judgment and thereafter at the rate of 6% per annum until final liquidation of the judgment debt.
3. The sum of N1,500,000 (One million, five hundred thousand Naira) being cost of prosecuting this Suit.
The Respondent reacted by filing a statement of defence on 28-8-2009 and in response to it, the Appellant filed a reply to statement of defence on the 31-8-2009.

At the hearing of the Suit, one witness each testified for the parties. Upon conclusion of evidence, the parties filed and served their written addresses.
In a judgment delivered on the 20-11-2012, the suit was dismissed for lack of jurisdiction to entertain same.
The Appellant being aggrieved by the outcome of the judgment filed a notice of appeal dated 10-12-2012.
In compliance with the rules of this Court, the parties subsequently filed and served their briefs of argument which they also adopted at the hearing of this appeal on 1-3-2016.

?In the Appellant?s brief of argument settled by N.O. BALOGUN Esq and filed on 7-3-2013, the following three issues were formulated for determination from the three grounds of

appeal:-
(1) Whether it is proper for the trial Court to divest the Court of jurisdiction after parties have duly and voluntarily submitted themselves to the jurisdiction of the Court, inspite of an arbitration clause contained in the agreement executed by them, and after parties have fully participated in the trial conducted in the matter?
(2) Whether the Court was right in dismissing the Appellant/Claimant?s claims having purported in the matter?
(3) Whether the failure of the trial Court to consider and pronounce on all the issues placed before the Court at the trial, before dismissing the Claimant?s claims does not amount to a denial of the Appellant/Claimant?s right to fair hearing.

The Respondent?s brief of argument settled by KENECHI TINUADE Esq. Was filed on 25-5-2015 but deemed properly filed on 30-9-2015. Two issues were formulated for determination as follows:-
Whether the Lower Court was right to have held that the Court has been divested of jurisdiction to deliberate on the matter by virtue of the arbitration clause contained in clause 4 of the lease agreement between the parties.
(2) Whether

the Court below was right to have dismissed the Appellant?s suit for want of jurisdiction after taking fill trial.

The issues as raised by the Respondent fits into the Appellant?s issues 1 and 2. I will however adopt the three issues as raised in the Appellant?s brief for the determination of this appeal.

ISSUE ONE
Arguing on this issue, Learned Counsel for the Appellant, contended that where the parties have duly and voluntarily submitted themselves to the jurisdiction of the Court, inspite of any arbitration agreement that may have been entered into by them, the Court have full powers to assume jurisdiction and determine issues between them. He referred to Section 6(1) (2) and (6) of the 1999 Constitution to say that it gives the Court unfettered powers to adjudicate among parties and this power is jealously guarded by the Courts. He relied on the following cases: – CHIEF ALBERT ABIODUN ADEOGUN & ORS VS HON. JOHN OLAWOLE FASHOGBON & ORS. (2008) 5 SCNJ 363 NATIONAL UNION OF ELECTRICITY EMPLOYEES & ANOR VS BUREAU FOR PUBLIC ENTERPRISES (2001) 2 SCNJ 50.

While conceding that parties are bound by agreements

freely entered into by them, including that of reference to arbitration, as in this case, he however submitted that the situation is different where the parties have jettisoned the arbitration clause in the agreement voluntarily and submitted themselves to the jurisdiction of the Court. In this regard he contended that the decision of the Lower Court was not only contrary to principles of law but also resulted in the miscarriage of justice.

Learned Counsel then traced the sequence of events from the filing of statement of defence by the Respondent, the participation in pre-trial conferences, mediation sessions, leading of evidence at the trial proper, cross-examination and filing of final written addresses before judgment was delivered in the Suit by the Lower Court.

He then submitted that no further evidence is required to show that parties had duly and voluntarily abandoned any claim to the right to arbitration in the matter and had instead chosen to submit to the jurisdiction of the Lower Court.

?Learned Counsel further submitted that where a party believes that a matter ought to be referred to arbitration in the first place, the only

application such party can make is for a stay of proceedings pending arbitration and this must be done without taking any further step in the matter by virtue of Section 5(1) of the Arbitration and conciliation Act. He cited the case of FRAZMEX (NIG) LTD VS DONATEE CONCERNS (NIG) LTD (2011) ALL FWLR (PT 589) 1139 and OBI OBENBE VS WEMABOD ESTATE LTD (1977) 5 SC 132.
It was then submitted that the decision of the trial judge divesting the Court of the jurisdiction to entertain the suit after the parties had gone through full trial is contrary to law and a gross miscarriage of justice and should therefore be set-aside.

ISSUE TWO
Herein it was submitted that, assuming without conceding that the decision of the Learned Trial Judge to divest the Court of the jurisdiction to hear the matter was correct, the proper order to be made in the circumstance is that of striking out the suit and not an order of dismissal.

He added that if the order of the Lower Court dismissing the suit is allowed to remain, the Appellant cannot proceed with the prosecution of the suit again. He cited the following cases DANIEL TAYAR TRANS. ENT. (NIG) CO. LTD VS ALHAJI

LIADI BUSARI ANOR (2011) 1 SCNJ 1; THE YOUNG SHALL GROW MOTORS LTD VS AMORS OKONKWO & ANOR. (2010) 3 SCNJ 396 and MR PETER OBI VS INEC (2007) 7 SCNJ 1 at 23.

It was therefore submitted that having held that it has no jurisdiction to hear the matter, the Lower Court ought not to take any further step than to make an order striking out the suit and not to dismiss same.

ISSUE THREE
Dwelling on this issue, Learned Counsel for the Appellant submitted that by merely dismissing the Appellant?s claim without first considering and pronouncing on all the issues placed before it, the Lower Court had trampled on the Appellant?s right to a fair hearing and thereby occasioned a miscarriage of justice.
He added that out of the two issues submitted before the Lower Court for determination, the Learned trial judge dealt with only the first issue and left the second one unresolved and yet dismissed the suit in its entirety. This he argued is a breach of the Appellant?s right to fair hearing. This Court was then urged to set-aside the judgment of the Lower Court.

Replying on the Appellant?s issue No 1. The Learned Counsel for

the Respondent emphasised on the fundamental nature of jurisdiction in the adjudication of any matter and cited the case of MISCELLANEOUS OFFENCES TRIBUNAL VS OKOROAFOR (2001) 18 NWLR (PT 745) 295 AT 326 and MADUKOLU VS NKEMDILIM (1962) 2 SCNLR 341.

He referred to the lease Agreement between the parties and particularly clause 4 therein which provides for reference to arbitration in the event of any disagreement over the rent payable on the subject of the lease.
He also traced the history of what transpired between the parties starting from when the Respondent indicated interest in the renewal of the lease in 2004 and the series of correspondences between them over the proper amount to be paid as annual rent and the eventual institution of the suit at the Lower Court by the Appellant wherein the said Court in its judgment agreed that the dispute should have been referred to an arbitrator, who the parties agreed should fix the rents payable in accordance with clause 4 of the lease agreement.

Learned Counsel further submitted that by virtue of the said clause 4 of the lease agreement, the Lower Court is divested of the power and has no role to pay

in the assessment of the rent payable because such power has been exclusively reserved for the arbitrator by the parties.

He added that until the condition precedent contained in clause 4 is satisfied, no Court can assume jurisdiction to adjudicate on the reliefs sought by the Appellant.
It was also argued that once the jurisdiction of the Court has been divested by agreement of the parties, it is immaterial that they subsequently consented and participated in the trial because everything done therein will be a nullity. He cited the case of OKOLO VS UNION BANK OF NIGERIA LTD. (2004) 3 NWLR (PT 859) 87 at 108.

It was also submitted that the reasoning behind the decision of the Lower Court is not only because of failure to refer to an arbitrator, but also because no Court is in a position to grant the relief sought by the Appellant without the amount of rent payable by the Respondent being first resolved through arbitration.

On the Respondent?s issue No 2, that is whether the Lower Court was right to have dismissed the Appellant?s suit of want of jurisdiction after taking a full trial.
Learned Counsel for the Appellant

submitted that once evidence had been led in a full trial as in the instant case, the proper order to make is that of dismissal of the suit and not an order for striking out as argued by the Appellant moreso that it was found that there was no cause of action. He cited the case of AJAYI VS ADEBIYI (2012) 11 NWLR (PT 1310) at 175-176 and THOMAS VS OLUFOSOYE (1986) 1 NWLR (PT 18) 669 at 682-683.

He added that, where a party?s case fails to disclose a cause of action or where the cause of action is unsustainable, the proper order to make, irrespective of whether evidence has been taken is one of dismissal.
This Court was then urged to dismiss the appeal.
The Appellant filed a reply brief on 14-9-2015 but deemed properly filed on 30-9-2015. The submissions therein are well noted and shall be addressed as the need arises in this judgment.
I will consider the Appellant?s issues No 1 and 2 together. It is now well established that jurisdiction is a threshold issue in adjudication by a Court of law. It therefore goes without saying that the determination of a matter by a Court will amount to a nullity if done without jurisdiction

notwithstanding how right or correct the decision reached might be. It is the basis on which any Court or tribunal tries a case because it is the authority it has to decide a matter before it. The importance of jurisdiction to adjudicate on any matter by a Court cannot therefore be overemphasised.
See GALADIMA VS TAMBAI (2000) 6 SCNJ 190; YUSUF VS OBASANJO (2004) 5 SCM 193; AJAO VS ALAO (1986) 5 NWLR (PT 45) 802; UGBA VS SUSWAM (NO 2) (2012) 6 SC (PT 11) 56, A.G RIVERS STATE VS A.G AKWA-IBOM STATE (2011) 8 NWLR (PT 1248) 31.

In the instant case, the main issue in contention is whether the Lower Court was right to have held that it has no jurisdiction to hear the Appellant?s suit based on the content of clause 4 of the lease agreement between the parties which provided for reference to arbitration.
The Learned trial judge had after summarizing the submissions of the parties in their written addresses formulated two issues for consideration in the judgment as follows:-
(1) Whether this Court has jurisdiction to determine the matter.
(2) Whether the Claimant is entitled to the sum of N15, 000, 000 (Fifteen million Naira) being

balance of the rent due from the Defendant to the Claimant on the property situate and known as NO 67, MARIA, LAGOS, LAGOS STATE for the period 1st September ? 31st August 2007?

The Learned trial judge added as follows:-
?I shall however take both issues together.?
In the said judgment at pages 234 to 235 of the Record, the Learned Trial Judge held thus:-
The question thus is, whether the parties have complied with clause 4 and if so, what rent is the accepted rent on the property.
In interpreting clause 4, I shall give the words their simple and ordinary meaning. It was held by the Supreme Court in the case of DALEK NIGERIA LTD V. OIL MINERAL PRODUCING AREAS DEVELOPMENT COMMISSION (OMPADEC) (2007) 2 SC PAGE 305 that where words of a contract or agreement are clear, the operative words in it should be given their simple and ordinary grammatical meaning. If parties enter into an agreement they are bound by its terms. One or the Court cannot legally or properly read into the agreement, the terms on which the parties have not agreed.
The clear and ordinary meaning of CLAUSE 4 SUPRA is that the parties are unable to

agree on the rent to be paid, the dispute shall be referred to an arbitrator. In the event that they fail to agree on an arbitrator, recourse is had to the President of the Nigerian Institute of Estate Surveyors and Valuers. The decision of the arbitrator is final and binding on the parties.

It is thus correctly submitted by the Defence Counsel that the dispute should have been set before the arbitrator, who it is that the parties agreed should fix the rent.
It is not clear what happened at the arbitral proceedings, as there is no record to show what transpired. No decision of any arbitrator has been tendered, neither is there any record in the Court?s file.

It is immaterial, in my opinion, which party frustrated the arbitral proceedings, for the stipulation in the agreement between the parties is that it is the arbitrator who alone can determine the rent to be paid on the premises.
This Court, I hold, has no part to play on the issue of the determination of rent, and has by clause 4 of the agreement above, been divested of jurisdiction to deliberate on this issue.
I resolve both issues for determination against the Claimant and

I dismiss the Claimant?s suit.

From the above set out portion of the judgment of the Lower Court, it is clear that the Learned Trial Judge dealt with the issue of jurisdiction together with the merits of the suit before Court and on this basis dismissed the said suit.
Firstly, from a perusal of the parties written addresses, non of them raised the issue of jurisdiction for the consideration of the Lower Court. This is evident in the sole issue formulated by them and reproduced in the judgment at pages 230 and 231 of the Record. In the Defendant (now Respondent?s) written address, the sole issue formulated was:-
?Whether upon a renewal under the lease agreement (Exhibit C1) the Claimant unilaterally can increase the rent payable without the mutual agreement between the parties binding on the Defendant.?

The Appellant as the Claimant raised the following sole issue in its own written address:-
?Whether the Claimant is entitled to the sum of N15, 000, 000 (Fifteen million Naira) being balance of the rent due from the Defendant to the Claimant on the property situate and known as NO 67, MARINA, LAGOS, LAGOS

STATE for the period 1st September ? 31st August 2007?

It follows therefore, that the Learned Trial Judge adopted the issue raised by the Appellant but on her own raised the issue of jurisdiction as issue No 1. In other words the issue of jurisdiction was raised suo motu by the Lower Court. There is indeed nothing wrong with doing so given the position of the law that the question of jurisdiction being radically fundamental can be raised at any stage of the proceedings. It can be raised at any stage of the case both at the trial and on appeal by any of the parties.

The Court can equally raise it suo motu but when it is so raised by the Court, the parties must be invited to address the Court on it in order to prevent a miscarriage of justice.
See OLORIODE VS OYEBI (1984) 1 SCNLR 390; ODIASE VS AGHO (1972) 1 ALL NRL (PT 1) 170, PDP VS OKOROCHA (2012) 15 NWLR (PT 1323) 205 at 5 NWLR (PT 1292) 181, the Apex Court held at page 206 of the Report that:-
?It is the law that a Court should not raise a point suo motu, no matter how clear it may appear to be, and proceed to resolve same without inviting the parties or their counsel to

address the Court on the point. This is to avoid a breach of parties right to fair hearing.?
See also KATTO VS C.B.N (1999) 6 NWLR (PT 607) 390.

I will however stop this far because it is not one of the grounds of appeal neither is it one of the issues raised for determination in this appeal.

Nonetheless, and as earlier stated, the Learned Trial Judge took up the issue of jurisdiction so raised together with the issues in contention on the merit and concluded that the Court lacks jurisdiction to entertain the suit but went further to resolve the suit on the merit, resulting in the dismissal of same.

The law is trite and it has been emphasised again and again that jurisdiction is the very basis on which any Court or tribunal can hear a case. It is the life line of all trials in our Courts and as such any trial without jurisdiction is a nullity. See PDP VS OKOROCHA Supra at page 255.

Where an action before the Court is found to be incompetent whether by reason of locus standi or the parties in Court are incompetent which has resulted in the lack of the jurisdiction of the Court to hear the case, the proper order for the Court to

make in the circumstance is that of striking out and not dismissal.
See ABU VS KUYABA (2002) FWLR (PT 99) 1041. ADESOKAN VS ADETUNJI (1994) 6 SCJN 123; AGBENYI VS AGBO (1994) 7 NWLR (PT 359) 735, ONUMAJURU VS AKANIHU (1994) 3 NWLR (PT 334) 620.
In UKOLO VS UNION BANK OF NIGERIA LTD (2004) 2 SCM 187. It was held that the proper order to make where a Court has no jurisdiction to entertain an action is that of striking out.
Thus when a Court lacks jurisdiction to entertain a suit for any reason, the proper order to make is to strike out the suit and not to dismiss it. See OWNERS OF M.V ARABELLA VS NIGERIAN AGRIC. INSURANCE CORPORATION (2008) 4-5 SC (PT 11) 189; OHIAERI VS AKABEZE (1992) 2 SCNJ 76; UWAZURIKE VS A.G FEDERATION (2007) 2 SCNJ 369.

If a Court has no jurisdiction to hear and determine a matter, the proceedings remain a nullity ab initio, no matter how well conducted or decided. Given that a defect in competence is not only intrinsic, but extrinsic to the entire process of adjudication. A Court that lacks the vires to entertain a suit cannot exercise judicial powers thereon. See EGUNJOBI VS FEDERAL REPUBLIC OF NIGERIA (2012)12 S.C.

(PT IV) 148; NIGERIAN NATIONAL SUPPLY CO. LTD VS ESTABLISHMENT SIMA OF VADUZ (1990) 11-12 S.C. 209.

In the instant case, the learned trial judge considered the issue of jurisdiction together with the merits of the case and proceeded to make a general order dismissing the suit wherein it was held inter alia as follows:-
?This Court, I hold, has no part to play in the issue of the determination of rent, and has, by clause 4 of the Agreement above, been divested of jurisdiction to deliberate on this issue. I resolve both issues for determination against the claimant and I dismiss the claimant?s suit.?

The above holding no doubt runs contrary to the established principle of law that given the fundamental and radical nature of the issue of jurisdiction. The declaration of lack of jurisdiction in respect of the subject matter of a claim is an admission of legal incompetence or impotence to make any further or binding declaration in the cause before the Court. Hence, the only option available to the Court in such a situation is to strike out the suit or subject matter of the claim. This is so because, where a Court does not have

jurisdiction over a matter before it and it proceeds to hear and determine the matter, (as in this case) the entire proceedings no matter how well conducted would amount to a nullity. See UTIH VS ONOYIVWE (1991)1 SC (PT 1) 61 and GBAGBARIGHA VS TORUEMI (2012)12 SC (PT V) 54.

In my humble view, the proper procedure to have been adopted by the Lower Court was to first and foremost resolve the issue of jurisdiction one way or the other before delving into the merits of the suit and not to lump and resolve them together. Furthermore, having found that it lacks jurisdiction to entertain the suit, the only power left for the Court to exercise is that of striking out the suit, nothing more nothing less because any further action taken in the proceeding such as in the instant case where the issue of the lease Agreement vis-vis clause 4 was decided upon is null and void ab initio. See UTIH VS ONOYIVWE supra and LAKANMI VS ADENE (2003) 7 SCM 103.

It follows therefore that the order of the Lower Court dismissing the Appellant?s claim on the basis of lack of jurisdiction as well as the merits of the claim is a nullity. See OLOWU VS NIGERIAN NAVY (2011)12 SC

(PT II) 1.
On the issue whether it was proper for the Lower Court to divest itself of jurisdiction on the basis of the existence of an arbitration clause notwithstanding that the parties voluntarily participated in the whole trial of the case till judgment.

None of the parties disputes the fact that there is an arbitration clause in the lease Agreement (Exhibit CI) executed by them. The said clause 4 reads as follows:-
ARBITRATION LAWS
?There shall be a rent review of 1st September 1997 and 1st September 2000, respectively which shall be agreed between the Landlord and Tenant or determined as hereinafter provided and shall be the current market value of the demised premises.
PROVIDED THAT:
(a) If the parties are unable to agree as to the rent to be paid the matter shall be referred to an arbitrator to be appointed by the parties and in case of disagreement on the choice of arbitrator, the President of the Nigerian Institute of Estate Surveyors & Valuers and his fees shall be borne equally by the parties. (sic)
(b) The amount at which the rent shall be fixed by the Arbitrator appointed under this sub-clause shall be

such as in the opinion of the Arbitrator is a reasonable rent for the premises having regard to the rent obtainable for similar lands of similar area and amenities similarly situated provided that the rent shall not be less than the rent payable before such revision. His award shall be final and binding on both parties.?

?An arbitration clause is a written consensus reached by the parties to a contract and as applicable to other written agreements it must be construed according to the language used by the parties therein without external imputation. An arbitration clause embodies the agreement of the parties that if any dispute should arise with regard to the obligations which both parties have undertaken to observe, such dispute should be settled by a third party or tribunal of their own choice and constitution. See L.S.W.C. VS SAKAMORI CONSTRUCTION (NIG) LTD (2011)12 NWLR (PT 1262) 569 and ROYAL EXCHANGE ASSURANCE VS BENTWORTH FINANCE (NIG) LTD (1976)11 SC 107.

In the instant case, non of the parties had recourse to the provision of Clause 4 of the lease agreement. The Appellant opted to institute an action in the Lower Court to claim for rents

owed to it by the defendant. The Defendant responded by filing a statement of defence. It also participated in the pretrial conference, the mediation session as well as the full trial including calling of witness in defence and cross examination of the claimant?s witness. Both parties also filed and served their final written addresses culminating in the judgment of the Lower Court which is the subject of this appeal.

Given the above stated scenario, it calls for the question whether the Lower Court should divest itself of jurisdiction on the basis of non compliance with clause 4 of the Agreement by first referring the dispute over the rent payable to an arbitrator.

For the Respondent, the Appellants failure to comply with clause 4 of the Agreement divests the Lower Court of the jurisdiction to hear the suit and this cannot be waived by either of the parties.
But for the Appellant, granted that ordinarily non compliance with clause 4 will oust the jurisdiction of the Court, but the Respondent ought to have raised the issue timeously before taking any further steps in the proceedings in accordance with Section 5 of the Arbitration and

Conciliation Act, 2004. Therefore, having fully and wholly participated in the whole process of the trial of the suit up to the point of filling final written addresses, the Respondent can no longer complain because he is deemed to have waived the right to any objection on that ground.

It is trite that where a clause in an agreement provides that any difference or dispute arising out of the agreement shall be referred to an arbitrator, both parties ought to honour and comply with provisions of the clause.

It is also trite law that any agreement to submit a dispute to arbitration does not oust the jurisdiction of the Court. See OBEMBE VS WEMABOD ESTATES LTD. (1977) 5 SC 70. The jurisdiction of the Court can only be ousted based on certain qualifications as provided in the Arbitration and Conciliation Act.
In the instant case Section 5 of the Arbitration and Conciliation Act provides that:-
?If any party to an arbitration 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 proceedings.?

From the above set out provision, when parties enter into an agreement and there is an arbitration clause, it is natural for the defendant in a case where the other party has instituted an action in Court to apply for stay of proceedings pending arbitration. This must be done before taking any further steps in the proceedings. In OBEMBE VS WEMABOD ESTATES LTD supra, it was held by the Supreme Court that merely an application for extension of time amounts to taking steps in the proceedings and so is a delivery of the statement of defence, and such a scenario will deprive a defendant the chance or right to stop the proceedings before the Court.
The Respondent as defendant in the Lower Court went through the whole hog of the trial which is a violent departure from the requirements in Section 5 of the Arbitration and conciliation Act.

In the circumstance, l agree entirely with the Appellant that the Respondent had totally waived the right to insist on compliance with clause 4 of the lease Agreement. My stance finds support in the decision of the

Supreme Court in the case of FAWEHIMI CONSTRUCTION COMPANY LTD VS OBAFEMI AWOLOWO UNIVERSITY (1998) 6 NWLR (PT 553)171 or (1998) 5 SC 43, where it was held that:-
?When a party has a right whether by way of agreement or under a statute, he can exercise it at the earliest possible time and can equally waive it if the statutory right is not absolute and mandatory. The waiver must be clear and unambiguous like allowing all evidence to be taken or even decision given before challenging the hearing. It will then be shown that the party deliberately refused to take advantage of the right when it availed him.?

Furthermore in the case of FEED AND FOOD FARMS (NIG) LTD VS NNPC (2009) 6-7 S C 1 the Apex Court also held that matters affecting the jurisdiction of the Court should be categorized into two areas or compartments. These are matters affecting the public in the litigation process and those affecting the personal private or domestic rights of the party. While the former cannot in law be waived, the later can be waived in law.

In the instant case, the issue relates to the private or domestic right of the defendant in a lease Agreement

wherein the right to insist on reference to arbitration as per clause 4 therein was deemed to have been waived having fully participated in the whole proceedings of the action filed by the Appellant up to filing of final written addresses and adopting same.

I therefore hold that the Respondent has waived its right to insist on compliance with the provisions of clause 4 of the lease Agreement. The decision of the Lower Court that on the basis of the said clause 4 it lacks jurisdiction to entertain the claim is therefore held to be wrong.
The two issues are accordingly resolved in favour of the Appellant.

Having resolved issues 1 and 2, issue No. 3 becomes moot and any venture into it will amount to an unwarranted academic exercise.
On the whole it is my finding and I so hold that this appeal is meritorious and it is accordingly allowed.
The judgment of the High Court of Lagos State delivered by O.A. ADEFOPE OKOJIE on the 20th day of November 2012 is hereby set aside.

?It is accordingly ordered that Suit No.LD/998/2009 be transmitted back to the Chief Judge of Lagos State for immediate assignment to another Judge for a retrial. This

shall be done expeditiously.
N50,000 cost is awarded against the Respondent.

TIJJANI ABUBAKAR, J.C.A.: My learned brother Samuel Chukwudumebi Oseji, JCA granted me the privilege to read in draft the lead judgment just rendered.
I am in agreement with the reasoning and conclusion and therefore adopt the entire judgment as mine with nothing useful to add.

ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.: My learned brother, OSEJI, JCA, afforded me the opportunity of reading in draft the leading judgment, just delivered by him.
The law is settled that parties cannot by contract oust the jurisdiction of the Court; but any person may covenant that no right shall accrue till a third person has decided on any difference that may arise between himself and the other party to the covenant. Where it is expressly, directly and unequivocally agreed upon between parties that there shall be no right of action whatever till the arbitrators have decided, it is a bar to the action that there had been no such arbitration. See A.I.D.C. v. NIGERIA L.N.G. LTD (2000) 4 NWLR (Pt.653) 494 SC; CITY ENGINEERING

NIGERIA LTD V. FEDERAL HOUSING AUTHORITY (1997) 9 NWLR (PT.520) 224 SC.
Therefore, 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 popularly known in law as the Scott v. Avery Clause enunciated in SCOTT v. AVERY (1856) 10 ER 1121.

In the instant appeal, clause 4 of the lease agreement, which embodies the arbitration clause, reads:
There shall be a rent review of 1st September 1997 and 1st September 2000, respectively which shall be agreed between the Landlord and Tenant or determined as hereinafter provided and shall be the current market value of the demised premise.
PROVIDED THAT:
(a) If the parties are unable to agree as to the rent to be paid, the matter shall be referred to an arbitrator to be appointed by the parties and in case of disagreement on the choice of arbitrator, the President of the Nigeria Institute of Estate Surveyors & Valuers and his fees shall be borne equally by the parties.
(b) The

amount at which the rent shall of fixed by the Arbitrator appointed under this sub-clause shall be as in the opinion of the Arbitrator is a reasonable rent for the rent obtainable for similar situated provided that the rent shall not be less than the rent payable before such revision. His award shall be final and binding on both parties.

Apparently, 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. On the other hand, if the wording is such that arbitration will only arise after a cause of action has arisen, then the Courts are not excluded.

am of the firm view that clause 4 herein is not a Scott v. Avery Clause as it was merely an agreement to submit to arbitration, hence an arbitration clause, but not stated to be a condition precedent to litigation. Perhaps, I must say that Arbitration merely seeks to complement the Court process in resolving disputes by engaging in alternative dispute resolution process. Arbitration is not a condition precedent to litigation in the absence of express or implied

terms, making arbitration a condition precedent. Therefore, as it relates to the instant case, where parties had by an agreement stated that dispute between them be settled by arbitration without expressing that same will be made a condition precedent to exercising their right to access the Court, and subsequently, albeit, impliedly agree to submit the matter to Court without first resorting to Court, it is incumbent on the Court to whom the matter was submitted to adjudicate on the dispute that was competently brought before it.
A fortiori, Section 5 of the Arbitration and Conciliation Act, Cap 18, Laws of the Federation of Nigeria, 2004 states:
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 proceeding.
It is obvious from the above provision of the applicable Act that where, as in the instant case, a party to an arbitration commence an action in Court before

submitting the dispute to Arbitration, the other party may apply to the Court for stay the proceeding before it. However, such other party must not have filed and exchanged pleadings or taken any other steps in the proceedings. In the instant appeal, the parties had already gone through the whole journey of calling witnesses and even up to filing and exchanging of written addresses before the trial Court subsequently raised the issue of jurisdiction suo motu without hearing parties on the issues and thereafter dismissing the Appellant?s suit. Ipso facto, the proper order the Lower Court ought to have made, assuming that it had rightly found that it does not have jurisdiction, is to make an order of stay of proceedings pending arbitration and not an order of dismissal.

?For the above postulations and the well articulated reasoning contained in the leading judgment, I also find that this appeal is meritorious and is hereby allowed. I abide by the consequential order made in the leading judgment.

Appearances

N.O BalogunFor Appellant

AND

O. BalogunFor Respondent