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ARBITRATION AND LITIGATION ARE NOT MUTUALLY EXCLUSIVE

Dictum

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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DECISIONS THAT EMPHASISE THAT A PARTY APPLYING FOR STAY MUST HAVE SUBMITTED TO AN ARBITRAL PANEL FIRST

✓ In O.S.H.C v. OGUNSOLA (2000) 14 NWLR Pt. 687 Pg. 431CA, the Respondent claimed the sum of N1,969,861.20 and Pleadings were filed and exchanged. Before the case went on trial, the Defendant/Appellant applied in limine to stay proceedings in the case pending a reference of the dispute to arbitration in accordance with the agreement signed by both parties. The application was refused and dismissed by the trial Court and the case was ordered to proceed to trial where judgment was given in favour of the Respondent. At the Court of Appeal, the Respondent argued that the issue of arbitration clause was not raised and was never sought by the Appellant throughout the proceedings. The Court held that there is consensus by both parties that they are bound by the terms of the contract agreement which they duly executed or signed. What was in dispute in that case and emphasized was whether or not there was a formal request (or application) before the lower Court for the proceedings to be stayed and for the dispute to be referred to arbitration. The Court of Appeal held that since the Appellant had acted timeously by making his request or application for stay of proceedings atthe lower Court pending arbitration, the learned trial judge should have ordered a stay of proceedings and referred the matter to a referee for arbitration. Judgment was awarded in favour of the Appellant. The Court also held that parties to a written contract are bound by the terms of the contract provided such terms are not illegal or contrary to public policy. The application was brought in that case under Section 5 of the Act.

✓ In “M. V.” PANORMOS BAY v. OLAM (NIG) PLC (2004) 5 NWLR Pt. 865 Pg. 1CA, the Appellant’s action was filed pursuant to Section 4(1) and 5(1) of the Arbitration and Conciliation Act. The issue there was whether the trial Court was right to hold that there was valid, subsisting, binding and irrevocable arbitration agreement between the parties. Also, whether a finding by the trial Court that the Defendants who were the applicants and who had not taken any steps in the proceeding had enough grounds to have entitled the trial judge to order the parties therein to go for arbitration outside the jurisdiction of this Country having regards to Section 20 of the Admiralty Jurisdiction Decree and Section 5(2) of the Arbitration and Conciliation Act. The Court held Per Galadima J.C.A (as he then was) thus: “I have held that Section 20 of the Admiralty Jurisdiction Decree (supra) is a statutory limitation to the enforcement of the purported arbitration agreement contained in the bills of lading herein. Therefore by reference to the clear provisions of the said Section 20 of the Decree, this Court could declare the arbitration agreement null and void. Alternatively, if however this position is unattainable in law, then a finding by the learned trial Judge that there is a valid, subsisting, binding and irrevocable arbitration agreement between the parties and that the defendant had not taken any steps in the proceedings could not in any case have entitled the trial judge to order the parties herein to go for arbitration outside the jurisdiction of this Country since Sections 2 and 4 of the Arbitration and Conciliation Act are controlled and limited by Section 5(2) of the same Act.”

✓ In ONWARD ENTERPRISES LTD. v. M.V MATRIX (2010) 2 NWLR Pt. 843 Pg. 530 CA, the issue in that case was whether the trial Court exercised its discretion under Section 5 of the Arbitration and Conciliation Act judicially and judiciously. When the Respondents in this case brought their application for stay of proceedings, they tendered certain documents which indicated that they had appointed their own arbitrator and had communicated same to the Appellant. The Court held that by appointing their arbitrator in compliance with Clause 40 of the charter-party agreement endorsed by both parties, the Respondents fulfilled their own obligation. The approach of the Respondents clearly indicated that they were ready and willing to do all things necessary for the proper conduct of the arbitration in line with Section 5(2) of the Arbitration and Conciliation Act.

✓ In M.V. LUPEX V. NOC & S. LTD (2003) 15 NWLR pt. 844 Pg. 469SC, the parties in this case agreed to refer their disputes to arbitration in London under the English law. The Tribunal in England had started hearing the dispute and parties had begun to present their respective cases before it. This Court overturned the judgments of the two Courts below which refused stay and ordered a stay of proceedings. On the issue of discretion, the Court held per Uthman Mohammed JSC thus: “Ephraim Akpata, JSC in the book “The Nigerian Arbitration Law” is apt on the issue of staying proceedings where parties have agreed to refer their dispute to arbitration in a contract. He expressed his opinion in the following exposition: “That the power to order a stay is discretionary is not in doubt. It is a power conferred by statute. It however behoves the Court to lean towards ordering a stay for two reasons; namely; a) The provision of Section 4(2) may make the Court’s refusal to order a stay ineffective as the arbitral proceedings “may nevertheless be commenced or continued” and an award made by the arbitral Tribunal may be binding on the party that has commenced an action in Court. b) The Court should not be seen to encourage the breach of a valid arbitration agreement particularly if it has international flavour. Arbitration which is a means by which contract disputes are settled by a private procedure agreed by the parties has become a prime method of settling international commercial disputes. A party generally cannot both approbate and reprobate a contract. A party to an arbitration agreement will in a sense be reprobating the agreement if he commences proceedings in Court in respect of any dispute within the purview of the agreement to submit to arbitration.”

✓ In SAKAMORI CONSTRUCTION (NIG) LTD v. LAGOS STATE WATER CORPORATION (2021) LPELR 56606(SC), the Appellant filed the matter in the Court of trial and applied for summary judgment on 15/07/2009. But the Respondent, for reasons best known to it, neither entered appearance nor reacted to the Appellant’s originating processes et al, inspite of the proper service evidently effected on it. The Appellant’s application for summary judgment in question was heard and ruling was reserved for delivery on 11/12/2009. It was at that point in time on 11/12/2009, that the Respondent deemed it expedient to wake up from slumber and file an application for stay of proceedings, thereby seeking to momentarily arrest the judgment of the trial Court. This Court held Per Ibrahim Mohammed Musa Saulawa, JSC thus: “In my considered view, the answer to that pertinent question is not far-fetched. This Court has had cause in a plethora of authorities to reiterate the fundamental principle, that any agreement to submit a dispute to arbitration, does not automatically oust the jurisdiction of the Court. Therefore, either party to such an agreement may, prior to when submission to arbitration or award is made, commence legal proceedings regarding any claim or cause of action contained in the submission. See HARRIS VS. REYNOLDS (1845) 7QB71, OBEMBE VS. WEMABOD ESTATES LTD (1977) LPELR-SC466/1975.”

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PARTIES ARE BOUND BY ARBITRAL AWARD

Once parties have consented to arbitration, they have also consented to accept the final award by the arbitrator.

– Nimpar, JCA. Dunlop v. Gaslink (2018)

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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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PROOF REQUIRED UNDER EVIDENCE ACT NOT APPLICABLE TO ARBITRATION PROCEEDINGS

Proof as required under the Evidence Act is not applicable in arbitral proceedings as provided for in Section 256(1)(a) of the Act which says that: “This Act shall apply to all judicial proceedings in or before any Court established in the Federal Republic of Nigeria, but it shall not apply to – (a) Proceeding be an arbitrator.” Absence of evidence in proof of facts submitted to an arbitrator, required under the Evidence Act, is not a ground for setting aside an arbitral award.

– Garba, JCA. Dunlop v. Gaslink (2018)

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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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JURISDICTION CAN BE RAISED AT ANYTIME NOT APPLICABLE TO ARBITRATION

For instance, the general position of the law that the issue of jurisdiction of a Court can be raised at any stage of the proceedings of a case, even for the first time at the appellate stage, is not applicable to arbitral proceedings before an arbitral Tribunal because the Act, in Section 12(3) has provided the stage at which a challenge to the jurisdiction of the arbitral Tribunal is to or may be raised by a party.

– Garba, JCA. Dunlop v. Gaslink (2018)

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