A rejoinder to the article
written by Chizaram Uzodinma published on www. lexology.com on August 22 2018
captioned “In applying for stay of proceedings pending arbitration under
section 5(2)(b) of the Arbitration and Conciliation Act, the applicant does not
have to adduce documentary evidence showing the steps he has taken in respect
of the commencement of the arbitration.[1]”
I have read with keen interest
the article written by Chizaram Uzodinma which was published on August 22 2018
on www. lexology.com. Whilst the writer had succinctly stated the facts of the
case and accurately summarized the submissions of the parties in the case of Dr. Charles D. Mekwunye v. Lotus Capital
Limited & Ors, it is apposite for the sake of intellectual acuity to delve
rather briefly to the advent of arbitration in Nigeria.
The principal legislation that
governs arbitration is the Arbitration and Conciliation Act (ACA) 1988 (Laws of
the Federation of Nigeria 2004 Cap A18), which is a federal statute. Though, ACA
was enacted since 1988, arbitration as a means of dispute resolution
nonetheless was far from popular in the 90s as most disputes were seen as a
thug of war by the parties who believed the Court of law was the arena for them
to ventilate their grievances and possibly arm twist their opponents.
Some Lawyers who made big gains
from these litigations had also on several cases advised their clients that an
action in court was the best way to seek a redress.
However, as commercial activities
grew and as disputes inevitably arose, the need for a faster and cheaper means
of dispute resolution became pressing, thus recourse to arbitration grew in turn.
Though the ACA provides the
framework of arbitration in Nigeria, the case of NIGERIA LNG LTD. V. AFRICAN DEVELOPMENT INSURANCE CO. LTD (1995) 8 NWLR
(Pt. 416) Page 677, per Uwaifo, J.C.A (as he then was) listed five
conditions for a resort to arbitration. These are:
“(a) that there is an agreement
between the parties thereto or a statutory provision which compels arbitration
in such mutters;
(b) that the parties before the
Court are parties to the agreement or the transaction which compels
arbitration;
(c) that the arbitration sought
is within the contemplation of the arbitration agreement or circumstances
calling it;
(d) that there is no sufficient
reason why reference to arbitration should not be made; and
(e) that the application for stay
of proceedings pending arbitration was made in time as envisaged under Section
5 of the Arbitration Act”.
At this juncture, it is expedient
to state that Section 5 (2) (b) of the Arbitration and Conciliation Act is the
legislation upon which the case review of Mekwunye v. Lotus Capital Limited
& Ors as articulated by Chizaram
Uzodinma and this rejoinder is centered.
Section 5 (2) (b) of the
Arbitration Act enjoins a party seeking a Stay of proceedings pending arbitration
to commence or initiate the arbitral process for the conduct of the Arbitration
it craves before making the application for stay to the Court, the failure of
such party to do so would amount to its failure to comply with the condition
precedent for the grant of its application for stay of proceedings. For the
sake of emphasis we shall reproduce the provision of Section 5 of the ACA thus,
“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 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 proceedings.
(2) A court to which an application is made under subsection (1) of
this 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.” (underlining ours)
Section 5 (2) of the Arbitration
and Conciliation Act, as can be seen, gives the court the powers to make an
order of stay of proceedings pending arbitration but clearly placed a condition
precedent which must be met before such power can be exercised in favour of the
applicant.
The failure of an applicant to
comply with Section 5 (2) (b) of the Arbitration and Conciliation Act as
interpreted in the M.V Panorama Bay’s case
and the UBA’s case(Supra), imposes
on the court a mandatory obligation to refuse the applicant’s application for a
Stay of Proceedings pending arbitration.
The Court of Appeal in the case
of UBA v. TRIDENT CONSULTING LIMITED
(2013) 4 CLRN 119 whilst elucidating the provision of Section 5 (2) (b) of
ACA held that for an application for stay of proceedings pending reference to
arbitration to succeed, the Applicant must adduce documentary evidence showing
the steps he has taken in respect of the commencement of the arbitration. The
court further held that the Applicant must exhibit a letter showing that he had
notified the other party of his intention to refer the dispute to arbitration
and proposing the appointment of an arbitrator, per Ikyegh, JCA held thus:
“Before a stay may be granted pending
arbitration, the party applying for a stay must demonstrate unequivocally by
documentary and/or other visible means that he is willing to arbitrate. He
does it satisfactorily by notifying the other party in writing of his intention
of referring the matter to arbitration and by proposing in writing an
arbitrator or arbitrators for the arbitration. In the instant case, the
only paragraph of the affidavit evidence of the appellant relevant to the
matter deposed in paragraph 8 thereof that,
‘I was informed by Mr. Ugochukwu
Okwesili, a Legal Officer in the applicant Bank in a meeting in our office at
57 Marina, Lagos on the 13th day of May, 2009 at about 2:30pm while reviewing
this matter and I verily believe him that the parties are unable to resolve the
matter amicably and that the applicant is ready to do everything necessary to the
proper conduct of the Arbitration in respect of the dispute alleged to have
arisen between the parties.’
The deposition above is not
enough. There must be documentary evidence showing the applicant wrote to
the respondent notifying her of the willingness to resort to arbitration over
the dispute and, also, specifying in the letter or correspondence an arbitrator
or arbitrators proposed to be appointed for the arbitration for the
ratification or approval of the party.”(underling ours).
The Court had earlier held in the
case of M.V Panorama Bay v. Olam(Nig) Plc (2004) 5NWLR PT 865, 1 at
16 C-D, Galadima JCA stated the law thus:
“It is the party praying for arbitration as an ‘applicant’ that has the
duty to comply with Section 5(2)(b) of the Act by commencing the proceedings.”
One of the issues for
determination before the Court of Appeal in Mekwunye v. Lotus Capital Limited
& Ors, was whether the High Court was right to have ignored section 5(2)(b)
of the ACA as interpreted by the cases of M.V Panorama Bay By v.
Olam(Nig) Plc (Supra) and UBA v. TRIDENT CONSULTING LIMITED.
The court of Appeal in Mekwunye
v. Lotus Capital Limited & Ors however disagreed with its earlier decision in
UBA v Trident Consulting Limited (supra) and held that placing the burden of presenting documentary evidence to support an
application for stay of proceedings pending arbitration constitutes a departure
from the plain provisions of section 5(2) of the ACA particularly in cases
where the applicant has deposed to facts in that regard.
The court noted that the purpose of
a deposition in an affidavit is to provide oral or documentary evidence to
support an application filed in court. Thus, the affidavit in itself constitutes
evidence which is deemed admitted where not countered or controverted. The
court further stated that the reasoning in UBA v Trident Consulting Limited
(supra) would only be potent where an applicant’s deposition in the affidavit
in support of an application for stay is challenged and/or contradicted by a
respondent.
It is essential for the sake of
this rejoinder to note that the Court of Appeal in the case of UBA v. TRIDENT
CONSULTING LIMITED made no distinction whatsoever between a challenged and
unchallenged affidavit evidence as it relates to presenting documentary
evidence showing the applicant’s willingness to resort to arbitration over the
dispute. The Court simply held that there must be documentary evidence showing
the applicant’s willingness to resort to arbitration over the dispute and,
also, that the Applicant should specify in a letter or correspondence an
arbitrator or arbitrators proposed to be appointed for the arbitration for the
ratification or approval of the party. One would then wonder the basis upon which
the Court in Mekwunye’s case drew a distinction between a challenged and
unchallenged affidavit evidence when it should have simply followed the clear
decision of UBA v. TRIDENT CONSULTING LIMITED where the court held that “Before a stay may be granted pending
arbitration, the party applying for a stay must demonstrate unequivocally by
documentary and/or other visible means that he is willing to arbitrate”
whether the affidavit evidence was challenged or unchallenged. There was indeed
no basis for this distinction.
In my humble view, the Court of
Appeal in Dr. Charles D. Mekwunye v. Lotus Capital Limited & Ors wrongly
relied on the case of ONWARD ENTERPRISES LIMITED v. MV. ‘MV. “MATRIX” & ORS
(2008) LPELR-4789(CA), to depart from the case of M.V Panorms By (Supra). The Court in the Onward’s case simply held
that stay of proceedings pending reference to arbitration in a foreign country
could be granted in deserving cases. This decision had absolutely nothing to do
with Section 5(2)(b) of the Arbitration and Conciliation Act.
It is pertinent to note that the
Court of Appeal in Onward Enterprises Limited v M.V. “Matrix” &
Ors.(supra) and the Supreme Court in the case of M. V. Lupex (Supra), were not
called on to interpret and did not in fact interpret the provisions of Section
5(2)(b) of ACA. Yet, the Court in Mekwunye’s case used these cases as a basis
to depart from the settled interpretation of Section 5(2)(b), clearly expounded
by the Court of Appeal in the cases of M.V Panorama Bay v. Olam(Nig) Plc
(Supra) and UBA v. TRIDENT CONSULTING LIMITED (Supra).
In the author’s view, there is
therefore no conflict as it involves the interpretation of the provision of
Section 5(2)(b) of the Arbitration and Conciliation Act between the Supreme
Court case of M. V. Lupex (Supra), which
never interpreted the said section and the
Court of Appeal cases of M.V Panorama Bay v. Olam (Nig) Plc (Supra) and UBA v. TRIDENT CONSULTING LIMITED (Supra).
The Supreme Court decision in M.V. Lupex v.N.O.C. & S. Ltd (2003) 15
NWLR (Pt.844) 469 was simply to the effect that where parties have agreed to
refer their dispute to arbitration, it behoves the court to lean towards
ordering a stay of proceedings.
As a corollary to the above, the
Court of Appeal in Mekwunye’s case apparently abandoned the binding cases of M.V
Panorama Bay v. Olam (Nig) Plc (Supra) and UBA v. TRIDENT CONSULTING
LIMITED (Supra), which were on the point before it to follow inapplicable cases
of ONWARD ENTERPRISES LIMITED v. MV. ‘MV. “MATRIX” & ORS (Supra) and M.V.
Lupex v.N.O.C. & S. Ltd (Supra).
Furthermore, unlike the case of
Mekwunye v. Lotus Capital Limited & Ors, where the Respondent neither
commenced arbitration nor provided documentary evidence showing steps it had
taken in that respect, the Respondent in the ONWARD’S case had commenced
arbitration by appointing their arbitrator. The Court in the ONWARD’S case on
the finding of facts in that case noted thus, “The process of arbitration was already triggered/commenced when
respondents appointed their own arbitrator as far back as 22nd July, 2002, 20
days after appellants suit was commenced before the lower court. Learned
counsel urged the court to uphold the findings of the trial Judge appearing at
pages 220 – 222 of the record”.
We must emphasize that the Court
of Appeal in Mekwunye’s case did not overrule the cases of UBA v Trident
Consulting Limited (supra) and M.V Panorama Bay By v. Olam(Nig) Plc. It
only took a different position on the issue of providing documentary evidence
to demonstrate willingness to participate in arbitration, pursuant to section
5(2)(b) of the Arbitration Act. The decision in Mekwunye v. Lotus Capital
Limited & Ors in this respect thus forms a conflicting decision with the
earlier decisions of the Court in UBA v Trident Consulting Limited (supra) and
of M.V Panorama Bay v. Olam(Nig) Plc.
It is an established principle of
Law that Court of Appeal is bound by its decision. Please see APGA & ORS v. UBA & ORS (2011)
LPELR-9177. This follows the age long principle of stare decisis which aims
at avoiding judicial anarchy and the quagmire that will be occasioned by
conflicting decisions of the same court on the same issue.
In Black’s Law Dictionary (Eighth Edition) at
page 1443, stare decisis was defined thus:
“The doctrine of precedent, under which it
is necessary for a court to follow earlier judicial decisions when the same
points arise again in litigation…..”
That said, it is my view that the
Court of Appeal having failed to properly distinguish the Mekwunye’s case from
the UBA v. TRIDENT CONSULTING LIMITED
(2013) 4 CLRN 119, is bound by the decision of the Court in the UBA’s case.
Its refusal to follow the UBA’s case especially when it was brought to its
notice by the Appellant amounts to the court flouting the age long principle of
stare decisis and plethora of Supreme Court authorities. The decision of the
court in the UBA’s case is clear and unambiguous and the proper forum to
determine the rightness or wrongness of the said decision is the Supreme Court.
Further, the question before the
court in the Mekwunye’s case was whether the trial court’s decision was right
in the light of the decision of the Court of Appeal in the UBA’s case. The
lower court was not called upon by any of the parties in the Mekwunye’s case to
overrule the decision of UBA v. TRIDENT (Supra). It is a trite principle of
Law, reiterated by Court of Appeal in the case of AGA & ORS. v. ONAH &
ORS (2012) LPELR-22103(CA) (Pp.
43-44, paras. G-A) thus, “It is not
for this court to suo motu embark on an unsolicited surgical expedition to
overrule itself”.
In our humble view, the position asserted by Chizaram Uzodinma that the decision in UBA v Trident Consulting
Limited where the Court of Appeal held that “Before a stay may be granted
pending arbitration, the party applying for a stay must demonstrate unequivocally
by documentary and/or other visible means that he is willing to arbitrate” no longer stands as law is erroneous
and a misconception of the law. It is long settled that where there are two or
more conflicting decisions of a higher court the lower court is free to choose
which of the decision is to follow. See Adegoke
Motors v. Odesanya (1988) 2 NWLR (Pt. 74).
In the case of OBIAKOR &
ORS v. OKAFOR (2017) LPELR-43309(CA), the Court in specific words held thus, “there is a principle in jurisprudence that
suggests that where a lower Court is faced with conflicting positions of a
higher Court on an issue with one position having one or two decisions of the
higher Court in its support and the other position is supported by an avalanche
of decisions of the higher Court, it is foolishness for the lower Court to
follow the position with the few decisions as against the other position –
Onuoha v. State (1989) 1 NSCC 411 at 421.” Per ABIRU, J.C.A. (Pp. 11-12,
Paras. E-A).
Against the backdrop of the above case, the cases of UBA v Trident
Consulting Limited (supra) and M.V Panorama Bay v. Olam(Nig) Plc wherein the interpretation of Section 5(2)(b)
of ACA had been settled should be given preference over the decision in case of
Mekwunye v. Lotus Capital Limited & Ors, which stands alone, until
Section 5(2)(b) is given a definite interpretation by the Supreme Court which
is the Apex Court of the land.
The decision of the Court of
Appeal in Mekwunye v. Lotus Capital Limited & Ors has been appealed and
same is pending at the Supreme Court, where the Supreme Court has been called
upon, inter-alia to determine whether the Court of Appeal was right to have
deviated from the established principle of law postulated in the earlier cases
of UBA v Trident Consulting Limited (supra) and of M.V Panorama Bay v.
Olam(Nig) Plc, especially in line with the decision in KASSIM v. STATE (2017)
LPELR-42586(SC) where the Apex Court held thus, “I agree. The principle is correct and it is in tandem with the
principle of stare decis which is a rule of adherence to judicial precedents.
It postulates that when a point or principle of law has been officially decided
or settled by a ruling or pronouncement of a competent Court in a case in which
it is directly and necessarily involved, it will no longer be considered as
open to examination or to a new ruling by the tribunal”.
Having mentioned the pendency of
the appeal against the decision of the Court of Appeal in the Mekwunye’s case,
we are assured that the Supreme Court of Nigeria will lay to rest (as it always
does) the confusion created by the Court of Appeal in the Mekwunye’s case when
it finally determines the appeal before it.
Conclusively, this rejoinder digs
beyond the rightness or wrongness of the interpretation of Section 5(2) of ACA
by the Court of Appeal in the Mekwunye’s case, into the imminent danger of the
incessant failure of the Court of Appeal to be bound by its own decision.
Whilst the Court of Appeal intensely preaches the adherence to the principle of
stare decisis and in fact on several
occasions reprimanded the lower courts for their failure to adhere to the said
principle, the Court of Appeal itself have failed time and time again to
practice what it so passionately preaches.
In my forthcoming article titled “The era of conflicting decisions, the
confusion and the Court of Appeal”, I shall whilst juxtaposing various Court
of Appeal conflicting decisions in several areas of law, lay bare the imminent
danger of the failure of the Court of Appeal to be bound by its own decision
and/or the adorned principles of stare
decisis
Abayomi Asorobi Esq. Senior Associate at Charles
Mekwunye & Co.
Photo Credit – www.tmc.com.ng
