by Legalnaija | Jan 29, 2021 | Uncategorized
INTRODUCTION
This paper attempts to discuss the arbitral
institutions and the considerations parties and counsel must contemplate in
selecting an arbitral institution, which is a crucial process and can indicate
from the on-set, the seat of arbitration which is primary in initiating,
deliberating and enforcing an arbitral award.
This discourse provides a comparative
analysis of some top global arbitration institutions and the advantages or
challenges arbitration institution users must reflect on in choosing an
institution, as well as providing a further insight into the growing trend in switching
between Arbitration and Mediation and its efficacy in resolving international
disputes with a particular focus on the emerging areas in Africa, particularly
Nigeria.
ARBITRATION
AGREEMENT VIS-À-VIS ARBITRATION CLAUSES
Most arbitration agreements are entered
into as exit strategies, they are inserted into agreements without much thought
as to the dynamics of the arbitration proceedings in the event the contractual
relationship actually goes wrong.
No partner wants to be the one proffering
detailed solutions as to how their marriage should be dissolved if it gets to
that, but as much as we all want a happy ending, some marriages must dissolve.
Thus, when things go wrong, parties have to ensure that their arbitration
agreements fulfil their expectations of an easy way out; the best ‘exit
strategy’.
Practice has shown that parties enter into
arbitration agreements either in compliance with global standards and trend or
with limited background information. This presentation focuses on guiding
individual and businesses in choosing the ‘right’ arbitration institution when
drafting arbitration agreements.
The foremost choice to make in drafting
arbitration agreements is to decide on what form the terms should take, as an
ad-hoc arbitration or institutional arbitration.
An ad hoc arbitration clause, requires a
less formal structure. Hence, it may be preferable for parties to create a
detailed structure for the arbitration in the agreement, or else agree to the
application of non-administered arbitration rules like that of the United
Nations Commission on International Trade Law (UNCITRAL).
In institutional arbitration, the task of
agreeing to relevant procedures can be fairly easy, as all institutions have
their set of rules governing the conduct of the arbitration process if there is
no contrary agreement between the parties.
A survey of international arbitration users
in 2015 found that 79% of the arbitrations they were involved in over the
previous five years (2010-2015) were institutional arbitrations (2015
International Arbitration Survey: Improvements and Innovations in International
Arbitration by the School of International Arbitration at Queen Mary University
of London. The survey is available on the QMUL’s website).
There are several reasons for this
preference for institutional arbitration. An institution can lend political or
moral weight to awards. More practically, because institutional rules are
designed to regulate the proceedings comprehensively from beginning to end, the
institutions are better suited to cater for contingencies that might arise,
even if (as sometimes happens) a party fails or refuses to cooperate. By
incorporating an institution’s rules into the contract, contracting parties
also avoid the time and expense of drafting a suitable ad hoc clause.
As noted above, the institution will also
assume administrative responsibility for the arbitration, and take care of
fundamental aspects of the arbitration procedure. The fees and expenses of the
arbitration are, with varying degrees of certainty, regulated, and some
arbitral institutions independently vet awards to ensure enforceability.
WHY
CHOOSE AN ARBITRATION INSTITUTION?
Arbitration institutions have their
distinct features in terms of their modus and form. Some of these features are
determined by the institutions based on their peculiar services, like the
expensive commencement fee of the International Centre for Settlement of
Investment Dispute, while others are not so much in control of the
institutions, like territorial locations.
The London Court of International
Arbitration (LCIA) for example, is expectedly situate in London. Therefore,
just like determining what size of shoes to buy according to the size of one’s
foot, so is choosing an arbitration institution according to the peculiarity of
the nature of business or relationship entered into.
It is imperative that parties decide what
arbitration institution with a profound knowledge of the various systems and
mechanisms of the institution and how they best fit in with their business.
There are many institutions to choose from.
As a general rule, newly formed institutions or institutions without a proven
track record should be avoided.
That aside, there is no magic formula for
choosing between them. Increasingly, institutions and institutional rules are
offering similar processes with little to distinguish them. An example is the
widespread introduction of mechanisms such as emergency arbitration, once a key
distinguishing feature of only certain leading institutions. Such similarity
leads parties to look to more subjective factors in deciding which institution
to use: familiarity with the institution, their opinion of the international
acceptability or reputation of a given institution, the proactiveness and
responsiveness of the institution’s staff, and the institution’s neutrality or
“internationalism”.
It is important to recognise that
institutional arbitration rules provide only a framework for the procedure of
the arbitration. The way in which the arbitration is conducted will be
determined by the specific approach of the arbitrators. Factors such as their
degree of experience in international arbitration, legal background and
training, and views on the legal issues for determination in the arbitration
will influence their approach. It is therefore essential to consider carefully
the approach you want the tribunal to take when selecting your arbitrator.
In choosing an arbitration Institution,
certain criteria have to be taken into consideration. Some of the major ones
include:
(i)
The seat of the arbitration;
(ii)
The level of involvement of the arbitration
Institution;
(iii)
Privacy;
(iv)
Fast track arbitration and early determination;
(v)
The
relative abilities and expertise of the institutions with respect to types of
subject-matters;
(vi)
The relative experience and ability of
the institutions’ administrators or secretariats respecting case
administration;
(vii)
Relative
reputation insofar as reputation may enhance or undermine the prospects for
enforcement of an arbitral award;
(viii)
Cost,
both administrative and arbitrator fees; and
(ix)
Whether
certain institutions are better suited for arbitration in certain locations.
The Seat
of Arbitration
The ‘seat’ of arbitration, although
abstract in form, is a subject of a legal conflict. Simply, the ‘seat’ of
arbitration is the legal domicile or home of international arbitration. It
provides for the nation’s Arbitration Law that would govern the arbitration.
On the other hand, the ‘venue’ or ‘place’
of arbitration refers to the specific geographical location for the purpose of
the arbitration proceedings. The principles that guide courts to resolve the
disputes of seats are the provisions of the arbitration clause.
Generally, seats imply the laws of the
arbitration that would guide the arbitration procedure while the venue
determines the physical location of the arbitration. The Arbitration law of
Nigeria (The Arbitration and Conciliation Act of 2004) does not expressly
provide for the seat or venue of arbitration, however the court in NNPC v LutinInv Ltd (2006) 2 NWLR (pt. 965)
506 interpreted the usage of ‘place’ to also mean ‘venue’.
In a proceeding to enforce the award of
USD6.6 billion arbitration award against Nigeria, Nigeria argued that the
arbitration was supposed to be seated in Nigeria and not England and therefore
the award should not stand. The court held that reference to ‘venue’ in an
arbitration agreement referred to the legal seat. The agreement in this matter
was actually couched to allow the Arbitration and Conciliation Act of 2004
(ACA) to be applicable, but it went ahead and provided that the venue of the
Arbitration should be London, England or as parties agree. Although Nigeria
successfully overturned the award, it was not based on the ‘seat’ argument, but
on public policy grounds. The court found that since the proceeding took place
in London, Nigerian courts cannot set aside the award. The court’s decision was
based on the following reasons:
- The
clause referred to venue “of the arbitration”, implying that it would
apply to the whole proceedings. This was compared with the language used
in the Nigerian ACA to refer to the physical location, for example where a
tribunal may “meet” or “hear witnesses, experts or the parties”.
- The
clause stated that the venue of the arbitration “shall be” London. If the
reference to “venue” was to where the hearings would take place, it would
be inconvenient for this to be in London given the location of the
parties. The court reasoned that this was not something that the parties
were likely to have intended. In addition, the arbitration agreement
allowed the “venue” to be changed only by the parties, not the tribunal.
The selection of the hearing venue is typically decided by the
arbitrators, further indicating that the parties intended to refer to the
legal seat.
- Reference
to the rules of the Nigerian ACA was not inconsistent with the choice of
England as the seat. Any non-mandatory provisions of the Arbitration Act
1996 were displaced and only the mandatory provisions would continue to
apply.
The seat is a key factor in
any arbitration. It provides a “home” for the arbitration, determines the law
governing the relationship between the tribunal and the courts, and also
determines which court has supervisory jurisdiction over the arbitration
(giving them the power to, among other things, set aside an award). The seat
will also determine where the award has been made, which is significant when
trying to enforce the award.
The physical location of an
arbitration does not have the same legal significance. Generally speaking, the
location is decided based on convenience of all involved. It does not need to
be (and frequently isn’t) the same as the legal seat of the arbitration.
It is important for parties
to designate the legal seat of an arbitration in their arbitration agreement.
This case underlines the benefits of using clear terms when referring to the
intended seat in an arbitration agreement to ensure that the legal seat is
where the parties intended and to avoid unnecessary procedural disputes.
Level of Institutional Involvement
Arbitral institutions have
varying levels of involvement in managing and administering arbitrations.
Institutions such as the Hong Kong International Arbitration Centre (HKIAC),
for example, promote their “light touch” approach with rules
emphasising party autonomy and entrusting the arbitrators with the primary
decision-making power. Other institutions, such as the International Court of
Arbitration of the International Chamber of Commerce (ICC), are known for more
intensive involvement in arbitrations. One practical example of these
contrasting approaches is in respect of scrutiny of arbitral awards.
Institutions like the ICC and the Singapore International Arbitration Centre
(SIAC) engage in a mandatory scrutiny and approval of draft awards of the
tribunal. The ICC Court performs the scrutiny process and may lay down
modifications as to the form of the award and, without affecting the tribunal’s
liberty of decision, may also draw the tribunal’s attention to points of
substance. The idea is to prevent the award suffering from defects in form or
substance that could give rise to difficulties at the enforcement stage. Many
other institutions, such as the HKIAC, London Court of International
Arbitration (LCIA), and the Arbitration Institute of the Stockholm Chamber of
Commerce (SCC), do not scrutinise or approve awards, leaving it to the tribunal
to render a valid award. This difference reflects the varying views about the
value of the scrutiny process, some parties consider the additional quality
assurance to be a benefit, while others see it as imposing unnecessary delay
and expense.
Cost of the Arbitration
There is no straight jacket as to which
institution is best, but each institution has its attendant advantage to
parties according to the peculiarity of the circumstance of each case. Let us
look at the cost variation of five popular Arbitration institutions to help
drive this point. The institutions are:
- The
International Court of Arbitration of the International Chamber of
Commerce(ICC)
- The
London Court of International Arbitration(LCIA)
- The
Arbitration Institute of the Stockholm Chamber of Commerce(SCC)
- The
Singapore International Arbitration Centre(SIAC)
i.
The International Court of Arbitration of the
International Chamber of Commerce(ICC)
In an ICC proceeding, the
arbitrator’s fee and administrative charges depend on the amount in dispute (ad
varolem system). The ICC offers a cost calculator on its website, which will
provide an estimate of the cost of an ICC proceeding according to the current
fee standards.
For the arbitrator’s fee, the ICC Rules set a
minimum and maximum amount. The ICC Court determines the exact cost by taking
into consideration the specific circumstances of the proceeding, such as, for
example, how complex the case is or how timely the tribunal rendered the award.
Where there is a tribunal involving three members, the arbitrator’s fee is
multiplied by three.
The administrative charges are based on a fixed
percentage of the amount in dispute.
ii.
The London Court of International Arbitration(LCIA)
In LCIA arbitration, the arbitrator’s fee and
administrative charges are largely fixed on an hourly rate basis.
After a party has nominated or the LCIA has
selected an arbitrator, the LCIA’s Secretariat asks the arbitrator to advise
the hourly rate applied in the case. The LCIA’s Schedule of Costs generally
sets a cap to this hourly rate, which is currently GBP 450 (USD 608.93 as of
10January2018).
In practice, the LCIA Court will recommend a
certain maximum rate based on the circumstances of the case before the
arbitrator advises the Secretariat about their hourly rate. The recommended fee
is often lower than the maximum rate. Normally, arbitrators follow the LCIA
Court’s recommendation. In cases with a modest amount in dispute, arbitrators
have charged hourly rates of between GBP 150 and GBP 200.
Administrative charges consist of the time-based
charges of the Secretariat, a non-refundable registration fee and an additional
fee equal to 5% of the total arbitration fee. The hourly fees of the members of
the Secretariat vary between GBP 150 and GBP 250, depending on the member’s
function in the Secretariat.
iii.
The Arbitration Institute of the Stockholm Chamber
of Commerce(SCC)
As in
the case of an ICC proceeding, the SCC’s arbitrator’s fee and administrative
charges depend on the amount in dispute. The SCC also offers a cost calculator
on its website.
As with
the ICC Rules, for the arbitrator’s fee, the SCC Rules set a minimum and a
maximum amount. However, where there is a three-member tribunal, the
arbitrator’s fee is not multiplied by three. Instead, the SCC’s cost schedule
defines the fee for the chairman of the tribunal only. The co-arbitrators
generally receive only 60% of such fee.
The
administrative charges are based on a fixed percentage.
As
typical for the ad varolem system, the costof the proceeding
is dependent on the value of the transaction in dispute; the higher the value,
the higher the cost. Overall, arbitrators’ fees and administrative charges are
considerably lower when compared to the ICC. The higher the amount in dispute
is, the bigger this gap is, which means that in proceedings with a high amount
in dispute, the cost difference is substantial.
iv.
The
Singapore International Arbitration Centre(SIAC)
As
in ICC and SCC arbitration, the SIAC’s arbitrator’s fee and administrative
charges depend on the amount in dispute. The SIAC offers a cost calculator on its website also.
For
the arbitrator’s fee, the SIAC Schedule of Fees sets only a maximum amount payable to each
arbitrator. As an alternative to the
Schedule of Fees, the parties may agree on another method for determining the arbitrator’s fees. For the
administrative charges, the SIAC
Schedule of Fees also sets a cap only.
The
SIAC costs range somewhere in the middle between those of the SCC and the ICC. In comparison to the
SCC, the gap between costs is
subject to the amount in dispute involved.
NOTE:
It
is important to note that the institution would not only claim a first filing fee but will also require some
pre-payments to be made. (The
International Centre for Settlement of Investment Dispute requires a $25,000 upfront before a
matter is submitted to it). Those pre-payments
may be claimed before any meaningful step in the proceeding. Also, the total cost of an arbitration proceeding is
more than the sum of arbitrator’s
fee and administrative charges. Depending
on the applicable law in the arbitration proceeding, these legal fees may become a major cost
driver. For example, even if the LCIA
appears to be an affordable option compared to the ICC and SIAC, assuming that the seat of
arbitration was London and the applicable
law was English law, costs might add up quickly when a Turkish party requires legal advice from an English law firm.
Conclusively, when it comes to cost,
although it is important, it is not everything. The ICC is the most expensive
institution; it is yet the most popular. There are other attendant
considerations when deciding an arbitral institution, although cost is
important.
Privacy
Privacy of arbitral proceedings is one of
the key advantages of arbitration. The seat of the arbitration will often
determine what level of privacy and confidentiality is provided and, where
confidentiality is regarded as important, contracting parties should cater for
it in their arbitration agreement. That said, the approach of the institution
towards confidentiality may also be a factor when choosing the arbitral
institution; not all institutions provide for it as a default rule. The LCIA
and DIFC-LCIA Arbitration Centre (DIFC-LCIA) rules, for example, require the
parties to keep confidential all awards in the arbitration, as well as all
materials created for the purposes of the arbitration, and all other documents
produced by a party in the proceedings not otherwise in the public domain. Deliberations
of the tribunal also remain confidential, and neither institution publishes
awards without the prior written consent of the parties and the arbitral
tribunal. The ICC Rules, on the other hand, do not automatically oblige parties
to keep awards, materials and documents confidential, but simply empower the
tribunal, upon the request of a party, to make orders concerning the
confidentiality of proceedings or any other matters in connection with the
arbitration. Further, its Rules do not expressly prohibit publication of
awards, and the ICC regularly publishes anonymised excerpts from awards. From 1
January 2019 the ICC has adopted an opt-out approach to publication of its
awards: underacted awards may be published within 2 years of notification,
unless a party objects or requests redaction.
Expertise
in Certain Types of Cases/Industries
Another distinguishing feature that parties
may look for is whether the institution has expertise in the particular type of
case likely to arise under their contract or in the particular industry in
which they operate. A number of specialist institutions have been set up to
handle disputes in particular areas and industries. Examples include:
·
The Panel of Recognised International
Market Experts in Finance (P.R.I.M.E. Finance), an institution offering
mediation, arbitration and other dispute resolution services to the finance
sector;
·
The World Intellectual Property
Organisation (WIPO) Arbitration and Mediation Centre, which caters for
intellectual property and technology disputes;
·
The Court of Arbitration for Sport (CAS),
which administers sports-related arbitrations; and
·
The Chambre Arbitrale Maritime de Paris
which administers and supervises maritime arbitrations.
These institutions publish rules tailored
to the types of disputes they deal with, and maintain rosters of arbitrators
who specialise in those types of disputes. Most of the major arbitral
institutions (like the ICC and LCIA) do not specialise in this way; the
argument being that there is no need for the institution to be specialised as
long as the selected arbitrator is a specialist, or is permitted by the
institution’s rules to appoint experts and/or rely on expert evidence from
party-appointed experts. Nevertheless, parties may feel more comfortable
dealing with an institution that specialises in its field.
Fast-Track
Arbitration and Early Determination
In a survey of international arbitration
users, 92 per cent of respondents were in favour of the adoption of a
simplified “fast track” arbitration procedure for claims under a
certain value (2015 International Arbitration Survey: Improvements and
Innovations in International Arbitration by the School of International
Arbitration at Queen Mary University of London). Certain institutions provide
for expedited arbitration, which can be on a documents-only basis and before a
sole arbitrator. For example, under the SIAC Rules, the expedited procedure can
be applied for where the aggregate amount in dispute does not exceed SGD 6
million, the parties agree to use the procedure, or in cases of exceptional urgency.
The SCC also has separate expedited rules which the parties can agree to use.
As from 1 March 2017, the new ICC expedited procedure will automatically apply
to ICC arbitrations where the amounts in dispute are below USD 2 million.
Parties can choose to use the procedure for higher value cases. If contracting
parties want to have the flexibility to adopt a fast-track procedure, this
should be taken into consideration.
COMPARATIVE
ANALYSIS OF SOME TOP ARBITRATION INSTITUTES
Various arbitration institutions have their
own system of operations according to various features. Let us look at some of
the top institutions and how they operate regarding the following:
Suitability/particularity, method of
commencing actions, number of arbitrators, appointment of arbitrators,
procedure, timeframe for preparation of award.
1.
Hong-Kong
International Arbitration Centre:
i.
Suitability:International
arbitrations of all types, and is a common choice for transactions involving a
party from the People’s Republic of China.
ii.
Method
of Commencing Actions:By notice in writing to HKIAC and all other
parties.
iii.
Number
of Arbitrators:In the absence of agreement between the parties, HKIAC
decides whether one or three is appropriate.
iv.
Appointment
of Arbitrators:Where there is one arbitrator, the parties jointly
designate an arbitrator, failing which HKIAC will appoint. Where there are
three arbitrators, each party designates one arbitrator and the designated
arbitrators nominate the presiding arbitrator, failing which the HKIAC will
appoint.
v.
Procedure:Subject
to the HKIAC Rules, the tribunal has discretion on how to conduct proceedings
vi.
Timeframe
for Preparation of Award:Save for arbitrations under the expedited
procedures, there is no prescribed time frame for delivery of an award.
2.
International
Court of Arbitration of the International Chamber of Commerce (ICC):
i.
Suitability:International
arbitrations of all types, particularly where the parties come from very
different backgrounds or those where administrative support or guidance is of
benefit.
ii.
Method
of Commencing Actions:By request sent to the Secretariat of the
ICC Court, which then notifies the respondent.
iii.
Number
of Arbitrators:In the absence of agreement between the parties, one,
unless the ICC decides three is appropriate.
iv.
Appointment
of Arbitrators:The parties by agreement or nomination (to be confirmed
by the ICC Court). In the absence of agreement, the ICC Court will appoint the
arbitrators.
v.
Procedure:The
parties may supplement the Rules in their arbitration agreement. Subject to the
Rules, the tribunal has discretion in how to conduct proceedings.
vi.
Timeframe
for Preparation of Award: Six months from the signature of the
Terms of Reference unless the ICC Court specifies otherwise. This is extendable
and the ICC can take the efficiency and expeditiousness of the tribunal’s
handling of the dispute into account when deciding fees. Extensions are
typically granted.
3.
London
Court of International Arbitration (LCIA)
i.
Suitability:International
arbitrations of all types. Often used in disputes involving either a Russian
and/or Common Wealth of Independent States (CIS)related party and/or a party
ultimately controlled by a Russian/CIS entity
ii.
Method
of Commencing Actions: By request sent to the LCIA and the
respondent.
iii.
Number
of Arbitrators:In the absence of agreement between the parties, one,
unless the LCIA decides three is appropriate.
iv.
Appointment
of Arbitrators:The LCIA Court with reference to the methods or
criteria agreed by the parties. The parties can nominate an arbitrator but only
the LCIA Court can appoint.
v.
Procedure:The
parties and tribunal shall make contact within 21 days of notification of the
formation of the tribunal. The parties may agree on joint proposals for the conduct
of the arbitration and are encouraged to do so in consultation with the
tribunal.
vi.
Timeframe
for Preparation of Award: As soon as reasonably possible (the
tribunal shall endeavour to do so no later than three months following the
parties’ last submissions), in accordance with the timetable notified to the
parties and the Registrar.
INSTITUTIONAL
ARBITRATION IN AFRICA
Currently, nearly 100 arbitration
institutions of various sizes and areas of focus exist across Africa.
As expected, most of these institutions
will not earn strong global or even regional reputations. At the moment, at
least, the ICC and the LCIA continue to dominate international arbitration in
Africa, as they do international arbitration worldwide. In a 2018 survey of
almost 800 arbitration practitioners and users by White & Case and Queen
Mary University, African respondents chose the ICC and LCIA as the top two
institutions. The Lagos Court of Arbitration (LCA) ranked as the highest
African arbitration institution, although in sixth place. So, despite the
multitude of emerging African arbitration institutions, most African users
appear to continue to prefer to resolve their disputes primarily under the
auspices of the ICC and LCIA.
The reasons for this are complex and
multi-faceted, though this preference is most likely linked to the ICC’s and
the LCIA’s proven track records and substantial experience, which underlie
their well-established reputations. The emphasis on reputation, recognition and
experience effectively results in a greater weighting towards long-established
institutions. This means it may take a long time before newer arbitration
institutions in Africa can build their own international following and
performance track record.
No matter how high-quality an arbitration
institution’s administration, it takes a long time for that quality to
translate into reputation and then utilization. For example, the Singapore
International Arbitration Centre (SIAC) commenced operations in 1991, but did
not register 90 new cases in one year until 2006. The number of new SIAC cases
increased to 160 in 2009, and SIAC has received a steady inflow of new cases
each year since then, with 479 new cases in 2019.
Recent trends suggest that parties are
increasingly using top African arbitration institutions to resolve their
disputes. According to survey respondents in the School of Oriental and African
Studies (SOAS) Arbitration in Africa Survey 2020 Report, the top five arbitral
centres in Africa are the Arbitration Foundation of Southern Africa (AFSA), the
Cairo Regional Centre for International Commercial Arbitration (CRCICA), the
Kigali International Arbitration Centre (KIAC), the Lagos Court of Arbitration
(LCA), and the Nairobi Centre for International Arbitration (NCIA). CRCICA
had administered a total of 1,385 cases at the end of 2019, including 82 new
cases in 2019 alone. AFSA also has a caseload of approximately 60
international matters in addition to its domestic caseload of about 500
matters.8The caseloads of KIAC, NCIAand the LCA are also growing,
while the MCCI Arbitration and Mediation Centre (MARC), the alternative dispute
resolution arm of the Mauritius Chamber of Commerce and Industry, also remains
a high profile centre. In addition, regional institutions like OHADA’s Court of
Justice and Arbitration are reformingtheir systems to play a more prominent
role as an international arbitration-administering institution. In November
2017, the OHADA Council of Ministers approved an update to the Uniform Act on
Arbitration and the Common Court of Justice and Arbitration Rules to reflect
recent developments in international arbitration practice.
The increase in the number of cases
administered by top African arbitral institutions may be a sign that these
institutions are coming of age and developing their reputations. The growth,
even if slow, of these institutions shows that users are having good
experiences with them, including state-of-the-art facilities11and
well-trained work forces dedicated to the efficient management of arbitration
disputes. Modern, party-friendly rules that cater to users’ needs also reassure
parties that their disputes will be resolved in a fair, efficient and
transparent manner.
MECHANISM;
INTERFACE BETWEEN ARBITRATION AND MEDIATION
The ability of an institute to combine both
arbitration and mediation develops a hybrid process. An agreement between both parties can create
a pathway for a filter process yielding a relationship that can intertwine
mediation and arbitration in a process. That is mediation can take place prior
to the commencement of the arbitral process or after its commencement and vice
versa.
In an arbitration process, the dispute is
settled by an arbitrator which is binding on both parties, while in a mediation
process, the mediator does not make the decision, but guide both parties in
resolving the dispute in a confidential manner and help both sides tackle
difficult subjects. A mediator is a facilitator.
The ability of an
institution to combine both arbitration and mediation process to ensure a
collaborative agreement, there must be a combined use of mediation and
arbitration emerging in a dispute resolution approach inoffering parties a
number of benefits. These include resolving parties’ disputes cost-effectively
and quickly and obtaining a binding and internationally enforceable decision.The
agreement between the parties can acknowledge and provide for a filter process
i.e. a contractual recognition that mediation can take place prior to the
commencement of the arbitral process or after its commencement.
This is done by incorporating
mediation in a tiered dispute resolution clause. The parties can agree that a
mediation will take place at any stage of the arbitration process. This has the
advantage of providing a formal mechanism for resolution of the entire dispute
which statistically has a reasonable prospect of success before moving on to a
more complex and expensive arbitration with the associated disadvantages of
that process. It gives the parties a final opportunity to resolve the dispute
amicably and has positive consequences in terms of the prospect of maintaining
a commercial or other relationship.
However, to date there
has been little agreement on several aspects of the combined use of processes.
The academic debate is ongoing about acceptable ways of combining mediation and
arbitration. At the same time, there is little evidence to suggest that practitioners
actually use a combination of mediation and arbitration. In a recent empirical
study of the current use of mediation in combination with arbitration, the
results reveal that the combined approach is used to a relatively low extent,
which contrasts with widespread recognition of the benefits that it seems to
offer. In vast majority of cases, the mediation and arbitration stages are
conducted by different neutrals, while the mediation stage usually involves the
use of caucuses.
The United Nations
Convention on International Settlement Agreements Resulting from Mediation (the
“Singapore Convention” or the “Convention”) came into force on 12 September
2020. The Singapore Convention is a significant step for international
commercial dispute resolution, enabling enforcement of mediated settlement
agreements among its signatories. For international businesses this means that
they are presented with another viable and effective alternative to litigation
and arbitration in resolving their cross-border disputes, especially during the
global COVID-19 pandemic.
By facilitating a
negotiated settlement between parties, mediation can usually provide them with
a faster, more cost-effective and commercial method of resolving disputes than
resorting to litigation and arbitration. With the aid of neutral and qualified
professionals, mediated settlements focus parties onto what really matters to
them, ironing out their differences swiftly in confidentiality while preserving
businesses’ reputation and their long term relationship. However, until the
Singapore Convention, no harmonised enforcement mechanism existed for these
negotiated settlements. Hence, the only remedy for a party who was faced with
an opponent refusing to honour the terms of such negotiated settlement, was to
bring an action for breach of contract and then seek to have the subsequent
judgment enforced, potentially in multiple jurisdictions. This was an expensive
and inefficient deterrent for parties to even consider mediation for the
resolution of their disputes, so they instead turned to arbitration or
litigation from the outset. Now, the Singapore Convention has the potential to
greatly increase the appeal of mediation as a mechanism of resolving commercial
disputes with a cross-border dimension. The Convention provides parties who
have agreed a mediated settlement with a uniform and efficient mechanism to
enforce the terms of that agreement in other jurisdictions, in the way that the
New York Convention on the Recognition and Enforcement of Arbitral Awards (the
“New York Convention”) does for international arbitral awards.
CHALLENGES
OF THE ARBITRATION INSTITUTIONS
The growing use and evolution of
arbitration has led to a burgeoning number of global and regional arbitral
institutions. Every institution is thus competing to secure, keep or expand its
own share of the arbitration world.
New arbitral institutions have been set up
in places such as Central Asia and Africa.
In November 2018, the Tashkent
International Arbitration Centre (TIAC) was established in Uzbekistan. TIAC
aims to be a viable alternative to arbitrating at Paris or London based
institutions. TIAC’s paradigms of success are cost, efficiency, compliance with
international best practices and top-class arbitrators. TIAC arbitration rules
adopt the latest thinking in arbitration. For instance, the rules enhance
transparency and legitimacy by giving additional powers to arbitrators (e.g.
Articles 10 and 20 of the TIAC Rules).
In Africa, the African Court of Mediation
and Arbitration (CAMAR) was established in April 2019. The Court, aiming to
open new perspectives and a better-organized legal framework, handles disputes
involving states, African companies and multinationals operating in the
continent. Such disputes have thus far been resolved before institutions in The
Hague, Paris or London. As rightly observed by Gregory Travaini, CAMAR “could
well be a contributing step towards the “Africanization” of arbitration”.
The ever-expanding list of new institutions
all over the globe, illustrated by examples above, has provoked strong
competition among the existing and new institutions. Internationally accredited
and well-known institutions, notably in Europe and Asia, have responded with
significant efforts in revising their respective arbitral rules (e.g. ICC Rules
2018 or Hong Kong International Arbitration Centre (HKIAC) Rules 2018).
The surplus of arbitral institutions has
some negative effects. Among others, the perceived efforts to attract users by
offering an increased number of services and tailor it to their own needs may
have a direct impact on the efficiency of the proceedings, which is one of the
key features of arbitration, by leading thus to unnecessary or even unwelcome
delays and costs. A risk of greater concern is that “sham” institutions or even
institutions that have no expertise or resources to administer arbitrations
properly will, in a spill over effect, also harm the profile of established
institutions and international arbitration in general. A recent example is the
18 billion Egyptian pound award administered by the Cairo-based International
Arbitration Centre (IAC), where the Egyptian Criminal Court sentenced to
prison both, the executive director of the IAC, under whose auspices the
award was rendered, and the administrative secretary to the IAC of the arbitral
institution in Cairo, for aiding and abetting the fraud. The question, yet to be
answered, is whether this recent case will have any impact on the caseload of
the IAC in the future.
CONCLUSION
AND RECOMMENDATIONS
The best way for arbitral institutions is
to establish cooperation between themselves and build similar rules. On 19 December
2017, the Singapore International Arbitration Centre (SIAC) launched its
Proposal on Cross-Institution Cooperation for Consolidation of International
Arbitral Proceedings (Proposal). By way of inspiration, AFSA and the Shanghai
International Arbitration Centre have created the China-Africa Joint
Arbitration Centre (CAJAC) in Johannesburg and Shanghai. Other innovative
efforts for cooperation include the Memorandum of Understanding (“MoU’s”)
signed by the ICC aiming to facilitate knowledge sharing and best-in-class
services on this field. More recently, Saudi Arabia’s Centre for Commercial
Arbitration (SCCA) and Dubai International Financial Centre (DIFC) Courts have
also signed a MoU. These “mutual assistance” agreements mark a milestone in the
cooperation and operation of arbitral institutions all over the globe, as they
strive towards harmonization and consistency among arbitral rules. Therefore,
as rightly stressed by Mr. Travaini, it seems that “cooperation would be more
fruitful than dry competition”.
PROFILE
OF MR OYETOLA MUYIWA ATOYEBI, SAN
Mr.
OyetolaMuyiwaAtoyebi, SAN, is a
seasoned Arbitrator and legal expert with expertise in commercial andcross
border disputes,with a formidable level of expertiseand over a decade’s worth of experience in the practice
of Alternative Dispute Resolution mechanisms (ADR).
Drawing on expertise from a technical and
commercial background, he has market-leading and in-depth insight into a range
of industries, and has successfully
resolved and managed several business disputes through efficient,
cost-effective and impartial ways of overcoming barriers at any stage of
conflict.Hehas been
appointed as Presiding Arbitrator and as Member of several panels on countless Arbitral
proceedings. He has served on
both Domestic and International Arbitral Tribunals and he approaches issues with
a clear understanding of the commercial objectives of the different references.
His
outstanding performance has attracted international recognitions and awards. He
is the youngest lawyer in Nigeria’s history to be conferred with the highly
coveted rank of a Senior Advocate of Nigeria (SAN). He is the Managing Partner
of OMAPLEX Law Firm, an established law firm driven by technology
innovation. As an expert in emerging areas of law practice, he has core
competence in Commercial Transactions, ADR ,Intellectual Property, Cyber
Security and Fintech. He is described as the go-to person when it comes to
complex issues that arise in dispute resolution.
REFERENCES
1. The
United Nations Commission on International Trade Law Arbitration Rules (as
revised in 2010). Please note that UNCITRAL is not an arbitral institution and
does not administer arbitrations.
2. 2015 International
Arbitration Survey: Improvements and Innovations in International Arbitration
by the School of International Arbitration at Queen Mary University of London.
The survey is available on the QMUL’s website:
http://www.arbitration.qmul.ac.uk/research/2015.
3. See the
2018 International Arbitration Survey: The Evolution of International
Arbitration by the School of International Arbitration at Queen Mary University
of London, which recorded the reasons for respondents’ preference for certain
institutions. The top three reasons were “general reputation and
recognition of the institution”, “high level of administration
(including efficiency, pro-activeness, facilities, quality of staff)”, and
“previous experience of the institution”. The survey is available on
the QMUL’s website: http://www.arbitration.qmul.ac.uk/research/2018.
4. Paragraphs
40-46 of the ICC’s updated Note to Parties and Arbitral Tribunals on the
Conduct of the Arbitration under the ICC Rules of Arbitration.
5. 2015 International Arbitration Survey:
Improvements and Innovations in International Arbitration by the School of
International Arbitration at Queen Mary University of London. Its 2018 survey,
The Evolution of International Arbitration, also reflected this preference,
with increased expedited procedures for claims regarded as one the key
improvements that would lead to greater use of international arbitration across
all industries and sectors. Both surveys are available on the QMUL’s website: http://www.arbitration.qmul.ac.uk/research/.
6. https://uncitral.un.org/en/texts/arbitration
by Legalnaija | Jun 6, 2020 | Uncategorized
Applicable requirements
as to form of arbitral awards
·
Must an award take any particular form (eg, in writing, signed,
dated, place, the need for reasons, delivery)?
The primary legislation applicable to arbitration is the
Arbitration and Conciliation Act, Chapter A18, Laws of the Federation of Nigeria 2004 (ACA).
Section 26 of the
ACA states that an arbitral award shall be in writing and signed by the
arbitrator or arbitrators, and that if the arbitral tribunal comprises of more than one arbitrator,
the signatures of a
majority of the
members of the
arbitral tribunal shall suffice providedthe reason for the absence of any signature is stated.
Furthermore, the award shall state the reasons upon which its
conclusions are based unless the parties have agreed that no reasons are to be
given or the award is on agreed terms under section 25 of the ACA (consent award).
The award shall also state the date on which it was made and the place of arbitration. A copy of the award shall be
delivered to each party.
Applicable procedural law
for recourse against an award
2 Are there
provisions governing modification, clarification or correction of an award?
Section 28 of the
ACA provides that a party may, within 30 days of receipt of an
arbitral award, with notice to the other party, request the arbitral tribunal
to correct in the award any errors in computation, any clerical or
typographical errors or any errors of a similar nature, and give an interpretation of a specific point or part
of the
award. The tribunal shall revert within 30 days. The tribunal may also on its
own volition, within 30 days of the
date of the
award, correct any error.
The parties can also request the arbitral tribunal to make an
additional award as to the claims presented in the arbitral proceedings but
omitted from the award. An additional award shall be made within 60 days of the request.
Applicable procedural law
for recognition and enforcement of arbitral awards
·
May an award be appealed to or set aside by the courts? If so,
on what grounds and what procedures? What are the differences between appeals
and applications for set-aside?
An arbitration award is final and there is no provision for an
appeal arising therefrom under Nigerian law. However, sections 29 and 30 of the ACA provide three
grounds for setting aside a domestic award.
Section 29(2) provides that the court may set aside an arbitral
award if a party
makes an application (on notice to the other party) and furnishes proof that
the award contains decisions on matters that are beyond the scope of submission to
arbitration. However, if the
decisions on matters submitted to arbitration can be separated from those not
submitted, only that part of the
award that contains decisions on matters not submitted may be set aside.
Section 30(1) provides two further grounds for setting aside an
arbitral award. The first ground is if an arbitrator has misconducted himself or herself. The instances of misconduct were set out
by the Supreme Court of Nigeria
in Taylor Woodrow (Nig.) Limited v S.E. GmbH [1993] 4 NWLR (Pt 286) 127.
Second, the court may set aside an award if it was improperly procured or
tainted by fraud.
Whereas an appeal attacks the merits of an arbitral award (which
is not permitted under Nigerian law), a setting aside application is
essentially a complaint that due process was not observed by an arbitral
tribunal in making an arbitral award.
With regard to international awards, section 48 of the ACA
(which mirrors article V of the New York Convention 1958) provides two grounds
for setting aside the award:
·
if a party making the application furnishes proof that – (i)
that a party to the arbitration agreement was under some incapacitation; (ii)
that the arbitration agreement is not valid under the law that the parties have
indicated should be applicable; (iii) that he or she was not given proper
notice of the appointment of an arbitrator, or of the arbitral proceedings, or
was otherwise not able to present his case; (iv) that the award deals with a
dispute not contemplate by, or falling within the terms of the submission to
arbitration; (v) that the award contains decisions on matters that are beyond
the scope of the arbitration; (vi) that the composition of the arbitral
tribunal or the arbitral procedure was not in accordance with the agreement of
the parties; (vii) where there was no agreement within the parties under
paragraph vi, that the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with this Act [the ACA]; or
·
if the court finds that – (i) that the subject matter of the
dispute is not capable of settlement by arbitration under the laws of Nigeria;
or (ii) that the award is against the public policy of Nigeria.
·
What is the applicable procedural law for recognition and
enforcement of an arbitral award in your jurisdiction? Is your jurisdiction
party to treaties facilitating recognition and enforcement of arbitral awards?
Section 51 of the ACA
provides that an arbitral award shall, irrespective of the country in which it
is made, be recognised as binding and shall, upon the award creditor’s
application, be enforced by the court.
Nigeria is a signatory to the New York Convention (NYC), and has
domesticated the Convention by incorporating it as the Second Schedule to the
ACA. Thus, a foreign arbitral award may be enforced in Nigeria under the ACA
or, directly pursuant to the New York Convention (Tulip Nigeria Ltd v Noleggioe
Transport Maritime [2011] 4 NWLR (Pt 1237) 254).
Nigeria ratified the International Centre for Settlement of
Investment Disputes (ICSID) Convention in 1965, and domesticated it through the
International Centre for Settlement of Investment Disputes (Enforcement of
Awards) Act 1967.
A foreign arbitral award may also be enforced pursuant to the
Reciprocal Enforcement of Judgments Act 1922, which was promulgated to ensure
ease of registration and enforcement of court judgments obtained in the United
Kingdom and certain Commonwealth countries and includes the enforcement of
arbitral awards in the definition of judgments, as long as they have become
enforceable as judgments of a court in the country in which the award was
handed down.
·
Is the state a party to the 1958 New York Convention? If yes,
what is the date of entry into force of the Convention? Was there any
reservation made under article I(3) of the Convention?
Nigeria is a party to the New York Convention. It acceded to the
Convention on 17 March 1970, which formally came into force in the territory of
Nigeria on 15 June 1970.
Nigeria made a reservation under article 1(3) of the Convention
to the effect that she would apply the Convention only on the basis of:
reciprocity to the recognition and enforcement of awards made only in the
territory of another contracting state party to the Convention, and to
differences arising out of legal relationships, whether contractual or not,
which are considered as commercial under the laws of the Federal Republic of
Nigeria.
Note, however, that in so far as recognition and enforcement of
arbitral awards in Nigeria is concerned, the reservation made relating to
reciprocity appears to have been waived by the provisions of section 51 of the
ACA (discussed in question 4).
Recognition proceedings
6 Which court
has jurisdiction over an application for recognition and enforcement of
arbitral awards?
Both the Federal High Court and the various state high courts
have jurisdiction to entertain an application to enforce an arbitral award, be
it domestic or foreign. Magbagbeola v Sanni [2002] 4 NWLR (Pt 756) 193. That
said, the Court of Appeal ruled in Kabo Air Limited v The O’Corporation Limited
[2014] LPELR 23616 CA, albeit in the context of the enforcement of a judgment
of the High Court of Gambia, that it is the particular court that would have
had original subject-matter jurisdiction over the underlying dispute that would
have capacity to entertain an application to enforce a foreign judgment arising
therefrom. Accordingly, it may be prudent to file an application for enforcement
of an arbitral award in the particular court; Federal High Court or state high
court, which would have had jurisdiction to entertain the subject matter of the
dispute that was resolved in the arbitration.
However, in respect of an ICSID award, the Supreme Court of Nigeria is the only
court with jurisdiction to entertain enforcement proceedings.
·
What are the requirements for the court to have jurisdiction
over an application for recognition and enforcement of arbitral awards? Must
the applicant identify assets within the jurisdiction of the court that will be
the subject of enforcement for the purpose of recognition proceedings?
For the court to have jurisdiction over an application for
recognition and enforcement of an award it must have jurisdiction over the
award debtor, either by virtue of the award debtor being present in Nigeria and
being served with process or by virtue of the award debtor being amenable to
service of process outside the jursidiction under the applicable rules of court
for this purpose. To exercise jurisdiction, the court must be satisfied that
the recognition and enforcement processes have been properly served on the
award debtor.
There is no requirement that an applicant must identify assets
within the jurisdiction of the Nigerian court that will be the subject of
enforcement for the purpose of recognition proceedings. This matter would only
come up after the enforcement order has been granted and the applicant wishes
to levy execution. At this stage, specific information on the defendant’s
assets will be required to enable the issue of execution processes.
8 Are the
recognition proceedings in your jurisdiction adversarial or ex parte?
Recognition proceedings in respect of an arbitral award are
usually adversarial as most of the
applicable rules of court
provide that recognition proceedings shall be ‘on
notice’. Although Order 52, Rule 16(1) of the Federal High Court (Civil Procedure) Rules 2009 provide
that the proceedings may be commenced ex parte, the court will invariably order
the respondent to be put on notice since any resultant order would affect the
respondent’s assets.
9 What
documentation is required to obtain the recognition of an arbitral award?
The following documentation is required to be attached to the
enforcement application under the ACA 1988:
·
the duly authenticated original award or a duly certified copy
thereof;
·
the original arbitration agreement or a duly certified copy
thereof; and
·
if an award or arbitration agreement is not made in the English
language, a duly certified translation thereof into the English language.
In addition to the above statutory requirements, the courts have
also required:
·
the name and last known place of business of the person against
whom the award is intended to be enforced; and
·
a statement that the award has not been complied with, or
complied with only in part.
See: Imani & Sons Ltd v Bil Construction Co Ltd [1999] 12
NWLR [Pt. 630] 253.
·
If the required documentation is drafted in another language
than the official language of your jurisdiction, is it necessary to submit a
translation together with an application to obtain recognition of an arbitral
award? If yes, in what form must the translation be?
Yes, it is necessary to submit a translation as required under
section 51(2)(c) of the
ACA. The translation shall be certified by a court-approved translator or by a
diplomatic agent. A full translation is necessary.
11 What are the other
practical requirements relating to recognition and enforcement of arbitral
awards?
A party seeking leave to enforce an award will have to pay the
applicable filing fee. The fees will be assessed by the appropriate court
registry on a scale that is reviewed from time to time. At present, the Federal
High Court charges on the average, a sum equivalent to US$150 as filing fees
for an application for the recognition and enforcement of a foreign arbitral
award. The various state high courts charge a sum equivalent to less than US$100
as filing fees.
If the court recognises an award and grants leave to enforce,
the mode of enforcement will determine the fees that are payable. For instance,
if the award creditor chooses the route of filing garnishee proceedings to
attach the monies in the bank accounts of the award debtor, the filing fee
payable for a garnishee proceeding is about 3,000 naira. However, if there are
no available funds, the award creditor would have to apply for a writ of fieri
facias to execute the award against the movable assets of the award debtor.
This route is quite expensive as the court sheriff may have to enlist the
assistance of recovery
specialists and other external agents to secure these assets. The costs of this
exercise will lie between 150,000 and 200,000 naira.
12 Do courts recognise and
enforce partial or interim awards?
Yes, the courts will recognise and enforce partial or interim
awards in so far as it is a final determination of the substantive issues and
questions in a reference, as distinct from procedural orders and directions.
Indeed, a partial award was enforced in Celtel Nigeria BV v Econet Wireless Ltd
& Ors [2014] 2 CLRN 63.
·
What are the grounds on which an award may be refused
recognition? Are the grounds applied by the courts different from the ones
provided under article V of the Convention?
Section 52 (2) of the ACA 1988 list the grounds for refusal of
enforcement. These grounds are essentially drawn from article V of the NYC and
can be broadly split into two.
First, if the
party against whom an award is sought to be enforced furnishes proof of the
presence of vitiating elements, such as: that the arbitration agreement was
invalid by reason of the incapacity of one of the parties thereto, or that it
was not valid under the governing law of the jurisdiction of either the contract or the seat of arbitration; or that the
award deals with a dispute that does not fall within the terms of the submission to
arbitration; or that the composition of the arbitral tribunal, or the arbitral procedure, was not in
accordance with the agreement of the parties; or that the award has been set aside by a court at
the seat of
arbitration.
Second, if the
court finds that the subject matter of the dispute is not arbitrable under Nigerian law, or that
enforcement of the
award would be against public policy.
Apart from the statutory grounds, the courts have ruled that an
arbitral award (domestic or foreign) will not be recognised or enforced if it is statute barred.
The enforcement application must be filed within the six years after the cause
of action
arose (City Engineering Nigeria Limited v Federal Housing Authority [1997] 9
NWLR (Pt 520) 244).
·
What is the effect of a decision recognising the award in your
jurisdiction? Is it immediately enforceable? What challenges are available
against a decision recognising an arbitral award in your jurisdiction?
Once the proceedings for recognition and enforcement of an award
are properly initiated, and the award is recognised; it is immediately
enforceable as if it were a judgment of the court in Nigeria. Shell Trustees
(Nig.) Ltd v Imani & Sons (Nig.) Ltd [2000] 6 NWLR (Pt 662) 639.
The award debtor is entitled to challenge the recognition
decision on its merits before the appellate courts.
·
What challenges are available against a decision refusing to
recognise an arbitral award in your jurisdiction?
Any final decision of the state high court or Federal High Court
refusing recognition can be challenged by an appeal to the Court of Appeal, and
subsequently to the Supreme Court if necessary.
·
Will the courts adjourn the recognition or enforcement
proceedings pending the outcome of annulment proceedings at the seat of the
arbitration? What trends, if any, are suggested by recent decisions? What are
the factors considered by courts to adjourn recognition or enforcement?
Considering that one of the grounds for refusal of enforcement
of an award is that the award has been set aside or suspended by a court in
which, or under the law of which, the award was made, it is highly likely that
the courts will adjourn recognition or enforcement proceedings pending the
outcome of annulment proceedings at the seat of the arbitration.
There are no reported cases we are aware of in which this issue
has arisen in Nigeria.
·
If the courts adjourn the recognition or enforcement proceedings
pending the annulment proceedings, will the defendant to the recognition or
enforcement proceedings be ordered to post security? What are the factors
considered by courts to order security? Based on recent case law, what are the
form and amount of the security to be posted by the party resisting
enforcement?
Section 52 (3) of the ACA 1988 provides that if an application
for setting aside of the award has been made at the seat, the court before
which the recognition or enforcement is sought may, if it considers it proper,
postpone its decision and may on the application of the party claiming
recognition or enforcement of the award, order the other party to provide
appropriate security.
We are not aware of any case law in Nigeria in which this
specific issue has been determined. However, drawing on the analogous situation
in maritime practice where a defendant may be ordered to provide security for
the release of an arrested vessel, it has been held that the factors which
would be considered by the court in ordering security for costs include: (i)
whether the plaintiff’s claim is bona fide and not a sham; (ii) if there is an
admission by the defendant on the pleadings or elsewhere which shows that the
defence (or the annulment application as the case may be) is weak; (iii) if it
appears by credible evidence that there is reason to believe that the defendant
will be unable to pay the costs of the action if the defence (or annulment
application) is unsuccessful; (iv) if the residence of the defendant is
incorrectly stated in its papers, unless the misstatement is innocent and made
without any intention to deceive; (v) if a defendant is only temporarily
resident in the jurisdiction and has no known assets therein which can be
attached; (vi) whether the application for security for costs is being used
oppressively so as to stifle an otherwise genuine claim. Oduba v Houtmangracht
[1997] 6 NWLR (Pt 508) 185.
·
Is it possible to obtain the recognition and enforcement of an
award that has been fully or partly set aside at the seat of the arbitration?
In case the award is set aside after the decision recognising the award has
been issued, what challenges are available against this decision?
Although there is no reported case law on this issue; given the
provisions of section 52(2) of the ACA 1988 (listed above), it is safe to say
that the Nigerian courts will not ordinarily entertain an application to
recognise and enforce an award that has been set aside at the seat.
In a situation where the fact that the award has been set aside
at the seat of the arbitration was not brought to the court’s attention during
the recognition proceedings; the award debtor can, before the award was
enforced, apply to the enforcing court to set aside the decision on grounds
premised upon the annulment of the award. However, once the award has been
enforced and satisfied, it will not be possible to reverse the enforcement on
this basis.
Service
·
What is the applicable procedure for service of extrajudicial
and judicial documents to a defendant in your jurisdiction?
The different State High Courts and the Federal High Court have
different rules for service. Thus, the procedure for service of extrajudicial
and judicial documents to a defendant in Nigeria will depend on the applicable
State High Court Rules or the Federal High Court Rules. In most instances, the
rules require judicial processes to be personally served on the award debtor
(if a natural person), or to be served at the award debtor’s registered office
or advertised place of business (if a juridical entity) within the
jurisdiction. It is important to note however that where the documents to be
served are issued by a court or tribunal outside Nigeria, it is the procedure
prescribed by the Federal High Court Rules that will apply.
·
What is the applicable procedure for service of extrajudicial
and judicial documents to a defendant out of your jurisdiction?
The various rules of court require the applicant to file a
without-notice application to obtain leave of the court to serve extrajudicial
and judicial documents on a defendant who is out of jurisdiction. The grounds
upon which such leave will be granted are stated in the various rules of court
and generally require that the applicant establish a nexus between the
defendant and/or the cause of action and the forum. Once leave is granted, the
court will require satisfactory proof of service (ie, an acknowledgement slip
duly signed or stamped, or other reliable document that evidences service).
Identification of assets
·
Are there any databases or publicly available registers allowing
the identification of an award debtor’s assets within your jurisdiction?
There are no publicly available registers allowing the
identification of an award debtor’s assets in Nigeria in a situation where no
information exists as to the identity of these assets. There are publicly
available registers by which the status of known assets may be confirmed or
verified. For example, information about land ownership can be found at the
land registry in each state.
·
Are there any proceedings allowing for the disclosure of
information about an award debtor within your jurisdiction?
Order IX (Judgment Summons) of the Judgment Enforcement Rules
made pursuant to section 94 of the Sheriffs and Civil Processes Act (SCPA) 1945
empowers a court, upon a judgment (or award) creditor’s application, to issue a
summons to compel a judgment (or award) debtor to disclose his or her assets
within the jurisdiction.
Section 9 of Order IX
provides that upon the issue of a judgment summons, the judgment debtor may
file in duplicate a full statement and account of all property of whatever
nature belonging to him, whether in expectancy or possession, and whether held
exclusively by him or jointly with others, or by others in trust for him,
excepting the necessary wearing apparel of himself and his family and the
necessary implements of his trade, if any, to the value of ten naira, and of
the places respectively where such property is to be found.
If at the hearing of the summons the judgment debtor shall
satisfy the court that he or she has made a full surrender and discharge of his
property, failing which he or she may be committed to prison.
Enforcement proceedings
·
Are interim measures against assets available in your
jurisdiction? May award creditors apply such interim measures against assets
owned by a sovereign state?
Interim measures are available in Nigeria. An applicant can
invoke the powers of the courts to grant injunctive orders in all cases in
which it appears to the court to be just or convenient so to do. These powers
can be exercised to grant injunctive orders to preserve assets both before and
during enforcement proceedings. Any such interim measure may be made either
unconditionally or upon such terms and conditions as the court may consider
appropriate.
In practice, the applicant may be required to demonstrate that
there is a real risk of dissipation of these assets before the enforcement
proceedings are initiated and completed.
The above relief would not be exercised against assets owned by
a sovereign state. Nigerian law upholds the doctrine of sovereign immunity,
which protects the assets of a foreign sovereign from execution.
·
What is the procedure to apply interim measures against assets
in your jurisdiction? Is it a requirement to obtain prior court authorisation
before applying interim measures? If yes, are such proceedings ex parte?
An application for interim measures will be commenced ex parte
on grounds that the assets may be irretrievably dissipated if the award debtor
is given notice of the application. Any interim order made by the court will be
served on the award debtor alongside a substantive application for
interlocutory relief. The interim order will abate after a fixed period (seven
or 14 days in most instances). The court may grant an extension for a further
period. Within this period, it is expected that the substantive application
will be argued and, if successful, an interlocutory injunctive order
restraining dealing with the asset will be issued by the court to preserve the
asset until the final determination of the enforcement proceedings.
·
What is the procedure for interim measures against immovable
property within your jurisdiction?
The procedure for obtaining interim measures against immoveable
property is same as the procedure in question 24.
·
What is the procedure for interim measures against movable
property within your jurisdiction?
The procedure for obtaining interim measures against movable
property is same as the procedure outlined in question 24.
27 What is the procedure for
interim measures against intangible property within your jurisdiction?
On the assumption that intangible property as referred to here
relates to property such as shares in a company, etc; the procedure for
obtaining interim measures against such property will be fact specific and
depend on the type of intangible property involved. This procedure will be a
modified version of the procedure outlined in question 24.
·
What is the procedure to attach assets in your jurisdiction? Is
it a requirement to obtain prior court authorisation before attaching assets?
If yes, are such proceedings ex parte?
Any party who has been granted leave to enforce an award by the
court will be able to enforce it as though it were a court judgment. If there
is no stay of execution or of proceedings because of a pending appeal or
challenge to the award, the award creditor will apply to attach assets
belonging to the award debtor. An application will need to be made by the
judgment creditor to the court for the issuance of a writ of attachment, which
will need to be signed by the judge.
Note that there are some statutory limitations in place against
attachment or execution against certain state property. For example, section 84
of the Sheriffs and Civil Processes Act (SCPA) 1945, the consent of the
Attorney General of either the Federation or individual state must be obtained
before attaching public funds. This can be a difficult process as the consent
of the Attorney General to attach state funds is notoriously difficult to
obtain. That said, a writ of mandamus to compel the Attorney General’s consent
may be obtained from the courts if such consent is unreasonably refused (Onjewu
v Kogi State Ministry of Commerce and Industry & Ors [2003] 10 NWLR (Pt.
827) 40).
29 What is the procedure for
enforcement measures against immovable property within your jurisdiction?
An award creditor can apply to the court for a writ of execution
against the immovable property of the award debtor if no moveable property of
the judgment debtor can, with reasonable diligence, be found, or if the movable
property is insufficient to satisfy the award and the costs of execution
(section 44 of the SCPA).
30 What is the procedure for
enforcement measures against movable property within your jurisdiction?
The SCPA details various methods of execution of a judgment
debt. First, a writ of fieri facias (fifa) can issue against movable property.
The writ empowers the Sheriff to seize and sell an adequate quantity of goods
belonging to the award debtor until the judgment debt is satisfied.
Second, garnishee proceedings may be commenced to order a third
party who is indebted to, or in custody of funds belonging to the award debtor
to pay directly to the judgment creditor the debt due or so much of the debt as
may be sufficient to satisfy the award and the costs of the enforcement
proceedings.
Third, a judgment summons can be issued to cause the award
debtor to attend court and be examined on oath concerning his ability to pay
the debt. If the court is satisfied that the debtor can pay but chooses not to,
he or she may be committed to prison. If, however, it is proven that the debtor
has genuine difficulty in paying, the court can make orders such as payment of
the debt in instalments.
31 What is the procedure for
enforcement measures against intangible property within your jurisdiction?
On the assumption that intangible property as referred to here
relates to property such as shares in a company, that property can be attached
by a court order in satisfaction of the award debt. The court’s order to divest
ownership of such shares from the award debtor for the purpose of satisfying
the debt would be served on the company secretary and the company’s registrars
to ensure compliance. Indeed, section 151(2) of the Nigerian Companies and
Allied Matters Act, Chapter C20, Laws of the Federation of Nigeria 2004, provides that company shares can be transferred
by an instrument of share transfer, or by operation of law.
Enforcement against
foreign states
·
Are there any rules in your jurisdiction that specifically
govern recognition and enforcement of arbitral awards against foreign states?
There are no specific rules.
33 What is the applicable
procedure for service of extrajudicial and judicial documents to a foreign
state?
Diplomatic channels are used for the service of legal documents
on a foreign state. Such documents are transmitted through the Nigerian
Ministry of Justice and the Nigerian Ministry of Foreign Affairs to the
government of the foreign state (Order 7, Rule 18 of the Federal High Court
Rules 2009).
·
Are assets belonging to a foreign state immune from enforcement
in your jurisdiction? If yes, are there exceptions to such immunity?
The Diplomatic Immunities and Privileges Act (DIPA) 1962
protects the official residence and offices of the envoy of a foreign state
from attachment or seizure by judicial process in Nigeria.
Aside from the limited diplomatic immunity contained in the
DIPA, the common law doctrine of sovereign immunity will avail, in the absence
of an express waiver, to protect the assets of foreign sovereigns from
execution in Nigeria.
·
Is it possible for a foreign state to waive immunity from
enforcement in your jurisdiction? If yes, what are the requirements of such
waiver?
Section 2 of the DIPA allows a foreign state entitled to
immunity to waive such immunity in the same way that a person who is entitled
to the benefit of a statutory provision can decide to waive it and allow the
transaction to proceed as though the provision did not exist.
Having said that, while it is settled that jurisdictional
sovereign immunity can be waived, as was done in the cases of
African Reinsurance Corporation v Fantaye [1986] 3 NWLR (Pt 32) 811, African
Reinsurance Corporation v AIM Consult Ltd [2004] 11 NWLR (Pt 884) 223 and
Oluwalogbon v Government of UK
[2005] 14 NWLR (Pt 946) 760, it is doubtful that these authorities support, or
are applicable to the issue of, waiver
of
sovereign immunity against the attachment of sovereign assets, if the initial jurisdictional hurdle is cleared.
Source: www.spaajibade.com
by Legalnaija | Sep 19, 2016 | Uncategorized
Preliminary View
Arbitration is an old
dispute resolution mechanism. Some authors have traced its adoption to the
reign of King Solomon in the Bible. It is recorded that the dispute between the
two women over the living son was resolved by Kind Solomon in a manner consistent
with arbitral proceedings. Modern arbitration has proved useful in many
respects in commercial and industrial dispute settlement. Arbitration is partly
regulated by law (in terms of form and procedure), it is however largely based
on agreement by parties.
Arbitration agreement
simply implies that parties shall resolve any dispute arising from their
agreement by an arbitral panel and be bound by the decision from resolution.
When parties freely enter into an arbitration agreement, either of the parties
cannot resolve a dispute by resorting to a regular court. Where a party sues in
court, the other party can object to the suit and pray that the judicial
proceedings be stayed (i.e. put on hold) and urge the court to refer the
dispute to arbitration in accordance with the agreement of both parties.
However, agreement on
arbitration, like other private arrangements, may suffer failure from
unenforceability in some circumstances. Such circumstances are only called into
question when the court has to determine the defendant’s objection to the suit
or application for stay of judicial proceedings in order to enable parties
settle their dispute by arbitration in accordance with their agreement. One of
such circumstances is when the defendant “takes a step” in the judicial
proceedings rather than objecting or before objecting to the suit. In the said
circumstance, the defendant would be deemed to have taken steps and as such has
waived his right to insist on the arbitration agreement. The court would not
recognize the agreement that dispute be resolved by arbitration. What
constitutes these “steps” has however not been a subject of a settled law in
the Nigeria.
It would appear that the
decision of a court on the question of what amounts to taking steps will turn
of the peculiarities of the facts of each case. The determining factor is
whether the step taken is so clear as to amount to a total waiver or
abandonment of the right to insist on arbitration agreement. The foregoing will
ultimately turn on the following:
- (a) the nature of the process (if any)
filed by the defendant or any other act or conduct undertaken by the
defendant before raising the objection on ground of arbitration agreement
and/or applying for a stay of proceedings; and
- (b) the inconsistency of any
such step taken with the application for stay of proceedings to such
extent as to make the court to conclude that the right to apply for stay
of proceedings ought to be deemed to have been waived.
-
There is an uncertainty in
the state of the law. The misfortune created by uncertainty in the state of the
law appears to have stemmed from the blanket pronouncement of Fatai-Williams
JSC in the case of Obembe v. Wemabod Estates to the effect that “A
party who makes any application whatsoever to the court, even though it be
merely for application for extension of time, takes a step in the proceedings”.
A review of the line of
subsequent cases would provide insights into the misunderstanding of the facts
and decision in the Obembe’s case leading to the pronouncement made by
Fatayi-Williams CJN.
The First Step Taken
The checkered history of
the concept of taking steps before making an application for stay of
proceedings in Nigerian courts began with the case of Obi Obembe v. Wemabod
Estates Ltd. (1977) All NLR 130. If there was any earlier Nigerian case on
the point, it was neither referred to nor considered in the Obembe case.
In the Obembe case,
the appellant sued the respondent in the High Court of Lagos State for wrongful
termination of appointment as a consulting engineer claiming balance of fees
and reimbursable expenses for engineering work done in respect of a building
project for the respondent. The disagreement arose from their differences in
the quantity of steel recommended by the appellant for the project. The amount
claimed was based partly on the scale of fees laid down in a booklet published
by the Association of Consulting Engineers in London (Exhibit 3).
The respondent defended
the suit and did not file any motion for stay of proceedings even though clause
17 in part 11 of Exhibit 3 contained reference to arbitration in case of
dispute. In the judgment of the High Court, the appellant’s case was dismissed
on the ground that the appellant did not prove his case as he did not lead any
evidence or put in any document to support his case. However, the judge went
further to observe that even if the appellant succeeded in proving the amount
claimed, he (the judge) would have been unable to enter judgment in his favour
in view of clause 17 in part 11 of Exhibit 3.
On appeal to the Supreme
Court, it was held that the lower court was in error to have made the
observation. It is in the judgment of the Supreme Court that Fatayi-Williams
CJN made the general statement that has generated the confusion in the state of
the law regarding what constitutes steps before making application for stay of
proceedings pending arbitration. His lordship said at page 141 that:
“In order to get a stay, a
party to submission must have taken NO step in the proceedings. A party who
makes any application whatsoever to the court, even though it be merely for
application for extension of time, takes a step in the proceedings. Delivery of
a statement of defence is also a step in the proceedings.”
(Emphasis mine)
It is consoling, at least
for the purpose of permitting a distinction between the Obembe case and
other cases, that the Supreme Court itself stated the peculiarities of the Obembe’s
case to indicate the limited usefulness that the statement of Fatayi-Williams
CJN can serve in determining what constitutes steps in a proceedings when the
court observed at page 141 that:
“No stay was asked for the
defendants/respondents after they were served with the writ of summons. On the
contrary, they accepted service of the statement of claim, filed their own
statement of defence, testified in their defence, and took part in the
proceedings.”
Other Steps Taken So Far
It is important to review
few of the cases in which the courts have had opportunity to determine what
constitute steps in a judicial proceedings to defeat the right of a defendant
to insist that the dispute in a judicial proceedings be referred to
arbitration.
1.
K.S.U.D.B. v. Fanz Construction Ltd
(1990) 4 NWLR (Pt. 142) 1.
On the day this case came
up in Court, the defendant’s counsel applied to Court for an order of pleadings
and the Court ordered pleadings to be filed, giving plaintiff twenty-one (21)
days and defendant forty (40) days as requested by counsel. The Plaintiff filed
a statement of claim accordingly. Thereafter the defendant applied for stay of
proceedings. The application was rightly refused.
1.
Fawehinmi Construction Co. Ltd. v. O.
A. U [1998] 6 NWLR (Pt. 553) 171.
In 1998, the Supreme Court
had a golden opportunity to lay down the rule and correct the palpable error
that may arise from the wholesale adoption of the blanket judicial statement of
Fatayi-Williams CJN in the Obembe case. The opportunity arose in Fawehinmi
Construction Co. Ltd. v. O. A. U. But rather than overruling itself, the
Supreme Court towed the easier path of distinguishing the Obembe case
from the Fawehinmi case and held that the Obembe case has no
application to the case before it, thus, living the state of the law hazy and
susceptible to erratic interpretations of the sweeping statement of
Fatayi-Williams CJN in Obembe case.
In the Fawehinmi
case, the appellant (as plaintiff) took out a writ of summons against the
respondent (as defendant) claiming damages for breach of contract and wrongful detention
of its plants and machinery. On the same day the writ of summons was filed, the
appellant also filed a motion for mandatory injunction compelling the release
of its plants and machinery which motion was fixed for hearing on 3rd June
1987. On 25th May 1987, the respondent filed a motion for stay of proceedings
pending reference to arbitration in accordance with Clause 35 of the contract
between the parties. The motion for stay of proceedings was argued and was
later dismissed. Thereafter, the Court adjourned for hearing of the substantive
suit.
The appellant filed a
Statement of Claim and served same on the respondent. The respondent did not
file any Statement of Defence but rather it raised the issue that the suit was
not properly before the Court on ground that Section 46 of the University of
Ife Edict on pre-action notice was not complied with. The High Court overruled
the objection holding that the respondent had waived his right by taking steps
in the proceedings. The respondent’s appeal to the Court of Appeal was upheld
and the appellant’s suit was struck out by the Court of Appeal. The appellant’s
appeal to the Supreme Court was refused.
It is noteworthy that,
though the defendant in this suit went beyond arbitration agreement by invoking
statutory provision in order to make the suit incompetent, the Supreme Court
nonetheless held that the trial court ought to have upheld the objection to the
suit on ground that the plaintiff did not comply with the arbitration clause in
their contract.
On what amounts to “taking
a step in a proceeding”, the Supreme Court held at pages 183 – 184 as
follows:
“Now by appearing before
the trial in a court to raise preliminary issue of clause on arbitration to be
resorted to first before the trial in a court of law, could the defendant be
said to have waived its right? When parties enter into agreement and there is
an arbitration clause whereby the parties must first go for arbitration before
trial in Court it is natural for the defendant in a case where the other party
has filed a suit to ask for stay of proceedings pending arbitration. That does
not amount to submission to trial. In the case where such application is
refused the next step is to invoke a statutory right where it exists if that
right will make the suit incompetent. In the present case, s. 46(1) of the
Edict, (supra) was invoked by the defendant and the learned trial judge held it
was too late and that the defendant had waived its right. The right under
s.46(1) is very wide. Waiver is not all that simple, appearance by way of
demurrer is not enough to amount to waiver. When party has a right whether by
way of agreement or under statute he can exercise it at the earliest 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. Such failure to take advantage of a right must be so clear that there will
be no other reasonable presumption than that the right is let go. The
preliminary skirmishes in this case at the trial Court could not by any
imagination be presumed to be a waiver. The defendant had not filed his
statement of defence and service of the statement of claim on it is certainly
not a waiver by it. Had it filed a statement of defence but with indication
that the preliminary objection will be raised that the suit was not properly before
the Court, it would not (sic) have been a waiver. This would have distinguished
the dictum in Kano State Urban Development Board v. Fanz Construction Ltd.
(1990) 4 NWLR (Pt. 142) 1. It is therefore clear, that the defendant had not
taken any step in having the case heard by the trial Court and had not waived
its right under s.46(1) of the Edict. Obembe v. Wemabod Estates Ltd. (1977) 5
SC 115, 131-2 has no application in this case. There is no evidence of waiver
in this case.”
Of particular interest is
the dictum of the Court of Appeal in the above case quoted with approval by
Ogundare JSC (in the concurring judgment) at page 187 of the report. It was
held as follows:
“It is not enough to say
that the appellant entered an unconditional appearance and therefore he has
waived his (sic) right to complain about jurisdiction. The decision in Muni v.
Worsfold (supra) which was followed in the case of U.B.A. Trustees Ltd. v.
Nigergrob Ceramic Ltd. (sura) has determined that entering an appearance, even
unconditional, does not constitute a waiver of the right to object. It is
therefore not enough to say that the appellant having entered unconditional
appearance cannot raise the objection on the decision of the court. For it is
clear from the record that as soon as the appellant entered appearance, the
first step taken by its counsel was to protest against the jurisdiction of the
court by seeking a stay of its proceedings with a view to referring the case to
arbitration as set out in the agreement between the parties. The only step
taken after appearance therefore by the appellant was to protest against the
court hearing the case. If any step could be said to have been taken. (sic) it
is only in protestation.”
3. Confidence Insurance
Ltd. v. Trustees of O.S.C.E. (1999) 2 NWLR (Pt. 591) 373
In this case, upon the
commencement of the suit and service of the originating process, parties
exchanged pleadings. In its statement of defence, the appellant averred that
the respondent’s action was premature as the respondents did not exhaust
arbitration as agreed in the trust deed before resorting to litigation.
Judgment was entered against the appellant and he appealed against the refusal
to stay proceedings. The appeal was dismissed with the following dictum at page
388 paragraphs A-D as follows:
“While certain acts done
by a party may or may not constitute steps in the proceedings,
nevertheless some acts will surely be construed to mean “taking steps in the
proceedings.” For example, exchange of correspondence between parties or their
counsel after entering appearance or efforts made out of court to settle the
matter in controversy between the parties or moving the court to seek a
party’s desire that the matter be placed before arbitration panel cannot
ordinarily amount to taking other steps in this proceedings as to defeat a
party’s right to rely on the arbitration provision.”
4. M. V. Lupex v. N. O.
C. (2003) 15 NWLR (Pt. 844) 469
The next case to be
considered is the case of M. V. Lupex v. N. O. C. The dispute in this
case arose between the parties in respect of a charter-party agreement which
contained a clause that disputes should be resolved by arbitration. The
Respondent sued the Appellant at the Federal High Court claiming damages for
breach of the charter-party and thereafter obtained an order ex parte
for the arrest of the chartered vessel (M.V. LUPEX) which at the time had
berthed at the port of Warri. On becoming aware of the ex parte order,
the Appellant filed a motion on notice for the following orders:
1.
An order setting aside the order for the
arrest of the vessel, alternatively;
2.
An order for the release of the arrested
vessel unconditionally or upon such terms as the Court may direct;
3.
An order for stay of proceedings in the
suit sine die.
The Federal High Court
held that it had jurisdiction and refused the Appellant’s prayer to stay
proceedings. Also, the Court released the vessel on monetary condition. The
Appellant appealed to the Court of Appeal. The Court of Appeal dismissed the
appeal. The Appellant further appealed to the Supreme Court. The Supreme Court
allowed the appeal and granted stay of proceedings sine die to enable
parties resort to arbitration.
Mohammed JSC held at pages
488-489:
“Taking into consideration
all what I have considered above in this judgment, it is crystal clear that the
trial High Court could only have acted judicially and judiciously if it
exercised its discretion by ordering a stay of proceedings in the case at hand.
It is abundantly clear that the trial court had acted on wrong principles of
law and that it misapprehended the facts of this case when it refused to grant
the appellant’s application for stay of proceedings of the action filed before
it by the respondent. The court below is therefore in error to affirm the
decision of the trial Federal High Court in refusing to grant a stay of
proceedings.”
5. Enyelike v. Ogoloma
(2008) 14 NWLR (Pt. 1107) 247
In Enyelike v. Ogoloma,
the dispute arose between the parties from a lease agreement which contained an
arbitration clause. The Respondent sued the Appellant on 14th March 2000 before
the High Court of Rivers State contrary to the arbitration agreement. On 22nd
February 2000, the Appellant filed a Notice of preliminary objection seeking to
dismiss the suit. Thereafter the Appellant filed a conditional appearance out
of time and a motion for extension of time to file and serve his statement of
defence and counterclaim dated 12th February 2001. The Appellant pleaded the
arbitration agreement in his statement of defence and counterclaim.
The High Court of Rivers
State held (quoted at page 254 of the report) as follows:
“As can be seen in all the
authorities to above, there is something that a party to an arbitration cannot
do……he must not have taken any tangible step in the proceedings or as section 5
of the Arbitration Law, cap 10 put it, “taking any other steps”. In this
instant matter, the defendant/applicant not only entered a conditional
appearance out of time, after filing a motion for to enter appearance out of
time, but filed a motion on notice for an extension of time within which he can
file and serve his statement of defence and counterclaim dated 12/2/2001, and
this motion dismissing (sic) the suit for lack of jurisdiction. All these constitute
an act of “taking any other steps” committed by the defendant/applicant and
having done so, he cannot be heard to raise the issue of non-compliance with
the arbitration clause.” (Emphasis mine)
The Court of Appeal, Port
Harcourt agreed and held at pages 257-258 as follows:
“By virtue of the
provisions of subsection (1) of section 5 of the Arbitration and Conciliation
Act (supra), either the appellant or the respondents have the right to, at any
time after entering an appearance but before filing any pleadings (including
statement of defence) or taking any other steps (e.g. filing of motions etc),
apply to the court to stay proceedings. In the instant case, it’s rather
obvious that the appellant having already deemed it fit or expedient to file
(i) a statement of defence (ii) a counter claim to the respondents’ suit, it
was rather most inappropriate, to say the least for him to file the notice of
preliminary objection in question seeking that the suit be dismissed.”
(Emphasis mine)
6. Onward Enterprises
Ltd. v. MV Matrix & Ors (2010) 2 NWLR (Pt. 1179) 530
This is another case in
which the Court of Appeal did not follow the hardship in Obembe case
though distinguished the earlier case from the present one. The appellant (as
plaintiff) sued the respondent claiming damages for breach of contract of
affreightment and obtained an ex parte order on 2nd July 2002 for the
arrest and detention of the respondent’s vessel (M.V. Matrix). On 15th July
2002, the respondent filed two applications. While the first application was
for release of the vessel, the second application sought to shift the vessel to
anchorage pending the hearing of the application for release. The appellant
consented to the release of the vessel on 26th July 2002. On 11th July 2003,
the respondent filed a motion for stay of proceedings pending reference to
arbitration in London. The Court granted the motion for stay of proceedings.
The Court of Appeal at
page 551 took a step to state certain steps which can be regarded as waiver of
the right to insist on arbitration agreement wherein Mshelia JCA held as
follows:
“In the instant case,
respondents entered conditional appearance and filed two motions on notice
before the application for stay. One sought the release of the vessel, while
the second sought an order to shift the vessel to anchorage. The application
for stay of proceedings was the third application filed by the respondents. For
the appellant, the application to shift the vessel in particular amounts to a
step taken in the proceedings. It is evident from the record that the
respondents did not file any statement of defence nor applied for extension of
time to file any statement of defence. I agree with the submission of
respondents’ counsel that neither the application for the release of the vessel
nor the application to shift the vessel to anchorage pending the determination
of the application to release her from arrest constitute steps taken within the
contemplation of section 5 (1) of the Arbitration and Conciliation Act. It is
only acts done in furtherance of the prosecution of the defence that could be
said to amount to steps taken in the proceedings.”
7. Nissan (Nig.) Ltd. v.
Yaganathan & Anor (2010) 4 NWLR (Pt. 1183) 135.
The dispute in this case
arose from a contract in restraint of trade between the 1st Respondent and the
Appellant (his former employer). The contract contained arbitration clause. The
Appellant sued the 1st Respondent at the High Court of Lagos State for taking
up a new employment with the 2nd Respondent. On being served with the writ of
summons and other court process, the Respondents filed a notice of preliminary
objection seeking orders:
1.
To strike out the suit against the 2nd
Respondent for non-disclosure of a reasonable cause of action and for being
improperly joined in the suit;
2.
To strike out the suit for being
incompetent and non-compliant with the arbitration agreement; and
3.
For such further orders as the Court may
make in the circumstances.
The High Court granted
prayers (i) and (ii). Also, the Court stayed further proceedings in the suit
which was not one of the prayers in the notice of preliminary objection. At the
Court of Appeal, Lagos, one of the issues was whether the High Court was right
to grant a relief not claimed. The Court of Appeal allowed the appeal in part,
holding at pages 156-157 as follows:
“From decided authorities,
it is clear that the application to refer the matter to arbitration would
succeed if the application is made at any time after the applicant enters
appearance but before filing pleadings or taking any other steps in the
proceedings. In this case, the respondents entered conditional appearance on
15th January 2007 and the next day, 16th January 2007 filed a preliminary
objection seeking order of the court striking out the suit for non-compliance
with the arbitration clause. It ought to have been not for striking out the
suit, but for stay of proceedings to enable the parties go to arbitration. …………
The order granting a stay of proceedings pending resolution of their disputes
by arbitration as agreed between the parties is correct notwithstanding that
the respondents asked that the suit be struck out.”
8. Williams vs Williams
& 3 Ors. (2013) 3 CLRN 114.
The Appellant petitioned
for the winding up of the 4th Respondent on the grounds of alleged commission
of sundry illegalities by the 1st and 2nd Respondents, the alter ego of the 4th
Respondent; and the oppressive and discriminatory conduct of members of the 4th
Respondent in relation to the running of the affairs of the 4th Respondent.
Pursuant to section 5 of
the ACA, the 1st and 2nd Respondents filed a motion for stay of proceedings
pending arbitration as agreed by parties. Before the motion was heard, counsel
to the 1st and 2nd Respondents did the following:
(a) orally applied to the
court for an adjournment;
(b) gave an undertaking in
respect of a pending motion on notice in the substantive suit; and
(c) prayed the trial court
not to grant the prayers of interim injunction in the terms sought by the
Appellant.
The Appellant contended
that the 1st and 2nd respondents took steps in the substantive suit in view of
the above. The foregoing contention notwithstanding, the court upheld the 1st
and 2nd Respondents’ motion and stayed its proceedings in the matter pending
arbitration. The court further directed the Appellant to commence arbitral
proceedings pursuant to the parties’ written agreement. Dissatisfied with the
ruling of the trial court, the Appellant appealed to the Court of Appeal where
the Appellant, relying on the Obembe’s case, forcefully contended that the 1st
and 2nd Respondents had taken a step in the proceedings. Accordingly, the
Appellant submitted that the 1st and 2nd Respondents had lost their right to
ask for a stay of proceedings pending arbitration. The Appeal was refused.
9. S. A. & Ind. Co.
Ltd. v. Ministry of Finance Incorp (2014) 10 NWLR (Pt.1416) 515.
The dispute in this case
arose from a contract for supply of fertilizer between the 1st Appellant and
Kano Government (represented by the 2nd Respondent). The contract contained
arbitration clause. The Respondents sued the Appellants at the High Court of
Kano State for balance due under the agreement and for damages. Upon being
served with the originating process, the appellants filed their respective memorandum
of conditional appearance under protest. Thereafter, without delivering
pleadings, the appellants filed a motion for stay of proceedings pending
arbitration (though the third appellant filed a motion to strike out the
suit).
The High Court refused the
application for stay of proceedings. The Court of Appeal overruled the lower
court and granted stay of the proceedings. Nothing is said about taking step as
it was not in issue. However, the Court adopted the views expressed in Confidence
Insurance Ltd. v. The Trustees of Ondo State College of Education Staff Pension
(1999) 2 NWLR (Pt. 591) 373 at 386-387 paragraphs C-G where Achike, JCA as
follows:
“It is perfectly clear to
me that mere entering an appearance by the appellant, be it conditional or
unconditional appearance, is not controlling nor relevant to the party’s right
to rely on the arbitration clause inserted in the parties’ agreement. On the
contrary, it is in fact what happens after a party has entered an appearance
that matters in determining whether or not such a party can still take
advantage of the aforesaid arbitration clause.”
Making a Case against Obembe
v. Wemabod
In the determination of
the application to stay judicial proceedings in order that parties may go to
arbitration, the relevant question the court should consider is whether the
party applying for stay is “guilty” of doing something in the judicial
proceedings which negates his application for stay of judicial proceedings so
as to constitute waiver of his right to insist on arbitration. If the question
is answered in the affirmative, the application for stay of judicial
proceedings should be refused. Otherwise, stay should be granted.
However, the determination
of whether the particular step taken qualifies for waiver is not a simple
straight-forward task particularly in the face of Obembe case. Although,
as already indicated in the list of cases considered above, the courts have
done well in some cases by distinguishing the peculiarities in the Obembe case
from the one being decided to avoid the application of the sweeping statement
of Fatayi-Williams CJN that “A party who makes any application whatsoever to
the court, even though it be merely for application for extension of time,
takes a step in the proceedings”. The Obembe case still appears to
be a law to which a lazy recourse can be easily had where there is no judicial
willingness to distinguish the facts of the case being decided from those in Obembe
case to avoid the application of the far-reaching statement of
Fatayi-Williams CJN.
With due respect, the Obembe
case is not a useful authority for any issue bordering on whether a party
has taken steps that constitutes waiver. Also, the popular statement of
Fatayi-Williams CJN is not a statement of the law, rather it is a statement
made in error as it arose from the Supreme Court’s determination of a ground of
appeal complaining against an observation made in passing by the trial
judge. The trial judge observed that “Had I been in a position on the facts
to find any of the plaintiff’s claims proved I would have been unable to enter
judgment in his favour in view of the Arbitration Clauses 17 of Exh. 3 at page
37 which parties had agreed would govern their contract.” The foregoing
observation of the trial judge, in my respectful view, is an obiter dictum
as it did not form the basis of his dismissal of the plaintiff/appellant’s
case.
The law is trite that it
is only against the ratio decidendi in a judgment and not an obiter
dictum that an appeal (if any) can be lodged. The Supreme Court in A.I.C.
LTD V. NNPC (2005) 22 NSCQLR 903, at 925 (2005) 5 SC (PT. 11) 60 defined ratio
decidendi and obiter dicta as follows: “The ratio decidendi
of a case represents the reasoning or principle or ground upon which a case is
decided. Obiter simply means in passing, incidental, cursory. Obiter dicta
reflects, inter alia, the opinions of the Judge, which do not embody the
resolution of the Court.”
The ground and issue
formulated by the appellant in the Obembe case in respect of the
observation made by the trial judge ought to have been struck out by the
Supreme Court for being incompetent. Failure to strike out the ground and the
issue led to the popular statement by Fatayi-Williams CJN that “A party who
makes any application whatsoever to the court, even though it be merely for
application for extension of time, takes a step in the proceedings”. In CHAMI
V. UBA PLC. (2010) 6 NWLR (PT. 1191) 474 at 493 PARAGRAPHS E- F, the
Supreme Court made the point so clear that grounds of appeal must attack the ratio,
when it held thus: “It is settled law that issues for determination
must be distilled from Grounds of Appeal which Ground(s) must attack the ratio
decidendi of the judgment not anything said by the way, or obiter dicta or be
formulated in vacuo, as issue 5 in the instant case.” It is therefore my
humble view that the statement of Fatayi-Williams CJN was made per incuriam
which ought to be overruled or jettisoned by subsequent courts. It must be
noted however that even though the Supreme Court can depart from or overrule
the Obembe case, the Court of Appeal and all other inferior courts are
bound by it.
Generally speaking the
Supreme Court may depart from or overrule its previous decision under certain
circumstances and in accordance with laid down principles of law, such as where
it is shown or demonstrated that the earlier decision is either erroneous in
law, or given per incuriam or that it has become an instrument of
injustice etc, see Veepes Industries Ltd vs Cocoa Industries Ltd (2008) ALL
FWLR (Pt.425) 1667 at 1687; Bakare v. NRC (2007) ALL FWLR (Pt.391) 1663. In
addition to the above, where the decision complained of hinders the proper
development of the law (e.g. the law of arbitration) in which a broad issue of
public policy was involved, the Supreme Court may depart from such a decision.
It is therefore my humble submission that the decision in Obembe case
should be overruled by another panel of the Supreme Court for being a major
impediment to the development of arbitration law in Nigeria.
The Way the Law should Go
It is clear from the
totality of cases considered that if the arbitration law must develop and be
seen to be developing in Nigeria, the court should be more inclined to granting
stay of arbitration than refusing it. The steps that a defendant is alleged to
have taken in a judicial proceeding to defeat his right to arbitration must be
so clear and positive as to constitute a waiver of his right to insist on the
resolution of the dispute by arbitration. The following steps have been
highlighted, though not exhaustive, on what a defendant can do to frustrate his
right to go to arbitration, namely:
1.
filing an affidavit in opposition to
summons or motion for summary judgment, or
2.
filing and/or service of a statement
defence, or
3.
filing an interpleader summons, or
4.
filing of a counterclaim, or
5.
filing an application for leave to serve
interrogatories, or
6.
filing an application for stay of
proceedings pending the giving of security or costs
7.
filing an application for extension of time
to file and/or serve a statement of defence
8.
filing an application for an order for
discovery
9.
filing an application for an order for
further and better particulars,
10.
filing a motion to commence a third party
proceeding
