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ARBITRATION AND LITIGATION ARE NOT MUTUALLY EXCLUSIVE

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By the provisions of the Arbitration and Conciliation Act, parties to a contract can include an arbitration clause which allows for disputes to be settled by arbitration instead of litigation. At the end of the arbitration process, the agreement reached (i.e the award) will be enforced by the Courts after registration in Court. Where parties opt to arbitrate over disputes, it does not automatically oust the jurisdiction bestowed on the Court by the 1999 CRFN. Section 2(2) of the Arbitration Act states follows: “Unless a contrary intention is expressed therein, an arbitration agreement shall be irrevocable except by agreement of parties or by leave of the Court or judge.” (emphasis mine) Although it is preferable in many cases to go to arbitration rather than go to Court, it should be noted that arbitration and litigation are not mutually exclusive. Indeed the Court often complements and supplements the functions and powers of the arbitrator. For example, by stay of Court proceedings in appropriate cases; by the issue of subpoena; by making appointments where the parties cannot agree or where a party defaults; for the enforcement of awards and for setting aside awards where necessary. In these cases, the Court intervenes to ensure the proper functioning of arbitration.

— H.M. Ogunwumiju, JSC. UBA v Triedent Consulting Ltd. (SC.CV/405/2013, July 07, 2023)

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arbitration, litigation

ARBITRATION AGREEMENT MUST SATISFY THE NORMAL REQUIREMENT OF A CONTRACT

My Lords, every Arbitration Agreement must satisfy the normal requirement of a contract such as consensus, capacity and legal relationship. Like any other contract, the terms must be clear and certain. The Court would, however, lean towards a construction that will give effect to the intentions of the parties. Thus, where a contract contained an arbitration clause which merely reads “Arbitration if any, by the I.C.C. Rules of London”, the Court held that the words “if any” which were the basis of the opposition were either surplusage or abbreviation for “if any dispute arises” and therefore sufficient. See MANGISTAURAUNAIGAZ OIL PRODUCTION ASSOCIATION v. UNITED WORLD TRADE INC. (1995) LLYOD’S REP. 617. There must also be a valid underlying substantive contract in existence and an arbitration agreement the terms of which are certain and enforceable. The essence of the arbitration agreement is to refer disputes arising between parties to arbitration. The words by which the reference is made must therefore be clear and express, as an inference will not be implied. So also, what is referred must be clearly and sufficiently stated to ensure that jurisdiction is conferred on the arbitrator.

— H.M. Ogunwumiju, JSC. UBA v Triedent Consulting Ltd. (SC.CV/405/2013, July 07, 2023)

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PARTY CANNOT RESILE AFTER SUBMISSION TO CUSTOMARY ARBITRATION

On these facts of the customary arbitration by the Abuloma Council of Chiefs before whom the parties herein lead consensually submitted themselves to for the resolution of their dispute and the verdict of which arbitration was acceptable to all of them, it would no longer be open to either of the parties to subsequently back out or resile from the decision or verdict reached and pronounced upon the arbitration. See Oparaji v. Ohanu (1999) 9 NWLR (Pt. 618) 290, (2001) FWLR (Pt. 43) 385. The appellants are now estopped from resiling out of the customary arbitration of the Abuloma Council of Chiefs, which they voluntarily submitted their dispute with the respondents to, and agreed to accept the verdict of. Apart from this specie of estoppel operating as estoppel per rem judicatam; it also operates as estoppel by conduct by virtue of section 150 of the Evidence Act, 1990 (now section 169 of the Evidence Act, 2011). It is, therefore, unconscionable for the appellants, having by their words or conduct made the respondents to believe that they would be bound by the verdict of the Abuloma Council of Chiefs, to resile out of it and set up the suit, the subject of this appeal. See Joe Iga & Ors. v. Ezekiel Amakiri & Ors. (1976) 11 SC 1 at pages 12 – 13.

— Eko JSC. Benjamin v Kalio (2017) – SC/207/2006

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AWARD IS BINDING ON PARTIES

What the learned trial Judge recognized and ordered to be enforced was an arbitral award not a judgment. Appellant should have pursued in England by way of an appeal against the arbitral award but failed to do so. The award is binding on the parties and since the arbitral award is not fraudulently procured and it’s not against public policy, the court is bound to give effect to such award.

— Mshelia, JCA. Tulip v Noleggioe (2010) – CA/L/744/07

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SUBJECT MATTER OF ARBITRATION MUST BE WITHIN THE ORIGINAL CONTRACT

In BAKER MARINE (NIG) v. CHEVRON NIG. LTD (2006) 6 SC 21 at Pg. 31 &37; (2006) FWLR Pt. 326 Pg. 235 at 250, the issue in this Court was whether damages for the tort of conspiracy as opposed to that of breach of contract can be at large and that aggravated damages could be claimed and sustained by the arbitral award. This Court held that any award would be outside the arbitration agreement and the arbitrators are not allowed to re-write the arbitration agreement to include extraneous issues or parties outside the substantive contract between the parties.

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CONSIDERATIONS OF PUBLIC POLICY IN ARBITRAL PROCEEDINGS

As to public policy, in Cuflet Chartering v. Carousel Shipping Co Ltd [2001] 1 Lloyd’s Re 707 Moore-Bick J (as he then was) said: “Considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution … It has to be shown that there is some illegality or that the enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the state are exercised.”

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WHAT IS AN ARBITRATION AGREEMENT?

Arbitration is a procedure for the settlement of disputes, under which the parties agree to be bound by the decision of an arbitrator whose decision is, in general, final and legally binding on both parties. The process derives its force principally from the agreement of the parties and, in addition, from the State as a supervisor and enforcer of the legal process. So where two or more persons agree that a dispute or potential dispute between them shall be decided in a legally binding way by one or more impartial persons of their choice, in a judicial manner, the agreement is called an arbitration agreement. Common law, lex non scripta and statute are the two sources of arbitration law in Nigeria. The statutory source did not codify arbitration law to the exclusion of common law. See B. J. EXPORT & CHEMICAL CO. LTD v. KADUNA PETRO-CHEMICAL CO. LTD. (2003) FWLR Pt. 165 Pg. 445 at 469 C.A.

— H.M. Ogunwumiju, JSC. UBA v Triedent Consulting Ltd. (SC.CV/405/2013, July 07, 2023)

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