Category: Judicial Decision

NATURE OF DISPUTES THAT MAY BE REFERRED TO ARBITRATION

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  1. Introduction:

Arbitration is a process by which disputes or difference between two or more parties as to their mutual legal rights and liabilities is referred to and determined judicially with binding effect by the application of the law by one or more persons (the arbitral tribunal) instead of by a court.[1]

An arbitration agreement is therefore where two or more persons covenant that a dispute or a potential dispute between them shall be resolved and decided in a legally binding way by one or more impartial persons in a judicial manner, upon evidence put before him or them. The agreement is called an arbitration agreement or a submission to an arbitral proceeding when after a dispute has arisen, it is put before such person or persons for decision. The procedure is called arbitration and the decision when made is called an award.[2]

It is apposite to note that arbitration may either be voluntary or compulsory. In other words, it may be by parties’ agreement or by statutes. A voluntary arbitration is by mutual consent of the parties whilst a compulsory arbitration is that which is demanded by the provision of the statute.

2.    Meaning and test of ‘dispute’ for purposes of arbitration:

The word dispute means contention, discord, conflict, friction and antagonism. It also implies a conflict or controversy. If there was concord and harmony, then the parties have no valid legal basis to seek a reference to arbitration. Our apex Court has defined dispute to mean “act of arguing against, controversy, debate, contention as to right, claims and the like or on a matter of opinion.”[3]

A matter shall be referred to arbitration when it becomes clear or is to be interpreted to mean that a difference or dispute exists between the contending parties. Therefore, where a party admits liability of an existing debt but simply defaults to pay, or when a cause of action has been extinguished owing to the death of a party embedded in the Latin maxim, actio personalis noritur cum persona, then there is no dispute to arbitrate upon or relevant party to arbitrate with. The conflict which the parties to an arbitration agreement agree to refer to must consists of a justiciable issue triable civilly. A fair test of this is whether the difference can be compromised lawfully by way of accord and satisfaction.[4]

The next step is to determine whether the dispute or difference necessarily arises from or it is connected with the clause contained in the agreement i.e. it falls squarely within the scope of the parties’ agreement. If a party to an agreement has compromised his position by conceding to numerous alternative remedies to the other party, other than resort to arbitration, and by showing an intention to compromise, to an act of the party which he is complaining about, he has, in consequence, robbed himself of competence or premise of referring the subject matter of complaint to arbitration.[5]

3.    Arbitrable Disputes:

It is a general perception that any agreement that contains an arbitration clause shows a clear and unmistaken indication that the contract requires the parties to resolve their disputes through an arbitration process. Unarguably, arbitration is generally encouraged in Nigeria in particular and the international community in general because arbitration clauses reduce the court dockets to resolve disputes. Therefore, in keeping with the sanctity of agreements, the law is enthusiastic to ensure the validity of arbitration clauses notwithstanding any apparent inadequacy or lack in the normal formal language with legal contracts.

Hence, once parties covenant in their agreement to resolve their dispute through arbitration and an issue is perceived or is to be interpreted to mean a difference or dispute exists, such dispute shall be referred to arbitration. The difference or dispute must, however, arise from the clauses contained in the agreement i.e. fall within the scope of the parties’ agreement. Therefore, it is not every dispute or difference that can be referred to arbitration. The Disputes must be capable of being disposed of judicially, in a civil form. These disputes include all matters in controversy about any real or personal property, disputes as to whether a contract has been breached by either party thereto, or whether one or both parties have been discharged from performance thereof.[6]

Sections 48 (b) (i) & (ii) and 52 (2) (ii) of the Arbitration and Conciliation Act, CAP A18, Laws of Federal Republic of Nigeria[7] provide that even when an award has been procured and it becomes clear that an agreement on which the arbitral award was premised on arose from an invalid contract or the subject matter of the dispute is not capable of settlement or is contrary to public policy, such an award is bound to be set aside. This, therefore, reinforces the position that the dispute must be capable of settlement before it qualifies as an arbitrable dispute. This is also the same position in international arbitration under Chapter VII, Article 34 (2) b) and Chapter VIII, Article 36 1) a) i) & 1 b) of UNCITRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006.[8]

4.    Matters that cannot be referred to Arbitration:

It is trite that the disputes, which are the subject of an arbitration agreement, must not cover matters, which by the law of the State are not allowed to be settled privately or by arbitration usually because this will be contrary to public policy.[9]

It is manifestly clear that the following categories of matters cannot be the subject of an arbitration agreement as enunciated by the Nigerian Supreme Court and therefore cannot be referred to arbitration: –

  1. an indictment for an offence of a public nature;
  2. disputes arising out of an illegal contract;
  3. disputes arising under agreements that are void as being by way of gaming or wagering;
  4. disputes leading to a change of status, such as a divorce petition;
  5. any agreement purporting to give an arbitrator the right to give judgment in Therefore, a criminal matter, like the allegation of fraud does not admit of settlement by arbitration. This is because these issues are a matter of public concern. It is contrary to public policy to compromise such disputes.[10]

Similarly, the Nigerian Court of Appeal has held in two decisions[11] in Esso Petroleum and Production Nigeria Ltd & Anor. (SNEPCO) vs. NNPC unreported Appeal No. CA/A/507/2012; delivered on 22 July 2016 and Shell (Nig.) Exploration and Production Ltd & 3 others vs. Federal Inland Revenue Service unreported Appeal No. CA/A/208/2012; delivered on 31 August 2016 that tax disputes arising from a Production Sharing Contract (PSC) are not arbitrable because the subject matter of the dispute is within the exclusive jurisdiction of the Federal High Court. The rationale for the above decisions seems to appear that it may be contrary to public policy to compromise the revenues due and payable to the government. These decisions are currently subject of appeals to the final Court in Nigeria. Until then, they remain the authority that tax disputes are not arbitrable.

5.    Conclusion:

It is pertinent to note that by the provisions of Section 2 of the Arbitration and Conciliation Act 1988 (ACA). (Cap A18 Laws of the Federation of Nigeria 2004)[12] an

arbitration agreement shall be irrevocable except by agreement of the parties, or by leave of Court, or a Judge. Consequently, the mere fact that parties agree to proceed to arbitration once there is a dispute does not ipso facto make the agreement to arbitrate irrevocable because not all disputes are arbitrable. The disputes must be triable civilly. It should not be illegal or tainted with a crime or fraud.

However, it is worthy of mention that the right to go for arbitration is a personal right. It is not a constitutional right. Therefore, it can be waived by either of the parties to the agreement expressly or by contract, more particularly where the two contending parties submit their disputes to Court for determination.[13]

 

[1] Miss Nigeria –v- Oyedale (1960) NCLR 191

[2] C. N. Onuselogu Enterprises Ltd. -v- Afribank (Nigeria) Plc. (2005) 12 NWLR (Pt. 940) 577

[3] Plateau State & Anor. v. AG Federation & Anor.(2006) LPELR-2921(SC)

[4] Chief Felix K. Ogunwale v. Syrian Arab Republic (2002) 9 NWLR (Pt. 771) 127

[5] United World Ltd Inc. –v- MTS Ltd (1998) 10 NWLR (Pt.568) 106.

[6] BCC Tropical Nigeria Ltd. v. The Government of Yobe State of Nigeria & Anor. (2011) LPELR-9230 (CA).

[7] Sections 48 (b) (i) & (ii) and 52 (2) (ii) of the Arbitration and Conciliation Act, CAP A18, Laws of Federal Republic of Nigeria

[8] Chapter VII, Article 34 (2) b) and Chapter VIII, Article 36 1) a) i) & 1 b) of UNCITRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006

[9] B. J. Export & Chemical Company Ltd v. Kaduna Refining & Petro-Chemical Company Ltd (2002) LPELR- 12175(CA).

[10] Kano State Urban Development Board V. Fanz Construction Ltd. (1990) 4 NWLR (PT.142) 1 at 32-33.

[11] Esso Petroleum and Production Nigeria Ltd & Anor. (SNEPCO) vs. NNPC unreported Appeal No. CA/A/507/2012; delivered on 22 July 2016 and Shell (Nig.) Exploration and Production Ltd & 3 others vs. Federal Inland Revenue Service unreported Appeal No. CA/A/208/2012

[12] Section 2 of the Arbitration and Conciliation Act 1988 (ACA). (Cap A18 Laws of the Federation of Nigeria 2004)

[13] Kurubo v. Zach-Motison (Nig.) Limited (1992) 5 NWLR (Pt. 239) 102.

To Appeal or Not to Appeal: That is the question

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Appealability of National Industrial Court decisions on civil matters: the case of Skye bank Plc v. Victor Anaemem Iwu

Before the recent Supreme Court decision in Skye Bank Plc v. Victor Anaemem Iwu (2017) 16 NWLR (Pt. 24) 1, the issue of whether the decision of the National Industrial Court (NIC) on civil matters outside fundamental rights was appealable or not was sharply divided between two divergent decisions of the Court of Appeal. The two Divisions of the Court of Appeal interpreted the provisions of Sections 240, 241, 242, 243(2)- (4); 254C(5) and 254C(6) of the 1999 Constitution as amended.

The Ekiti Division of the Court of Appeal in four judgments: Local Government Service Commission, Ekiti State & Anor. v. Jegede (2013) LPELR – 21131 (CA); Local Government Service Commission, Ekiti State & Anor. v. Bamisaye (2013) LPELR – 20407(CA); Local Government Service Commission, Ekiti State & Anor. v. Olamiju (2-013) LPELR- 20409 (CA) and Local Government Service Commission, Ekiti State & Anor. v. Asubiojo (20130 LPELR – 20403 (CA), held that the decision of the NIC are appealable while the Lagos division of the Court of Appeal in Coca-Cola Nigeria Ltd v. Akinsanya (2013) 18 NWLR (1386) 225 and Lagos Sheraton Hotel & Towers v. HPSSA (2014) 14 NWLR (Pt. 1426) 45, held that the decisions of the NIC are not appealable, other than decisions on fundamental rights and criminal matters.

The Appellant in Skye Bank Plc v. Victor Anaemem Iwu (supra) at the Court of Appeal faced the quagmire that the panel of Justices constituted to hear the appeal may concur with either the views of the Lagos Division or the Ekiti Division of the Court of Appeal and still leaves the issue not fully settled. It was therefore apposite and commendable that Appellant’s counsel filed an application seeking the Court of Appeal to state a case on the appealability or otherwise of the judgment of the NIC to the Supreme Court in view of the constitutional issues and substantial points of law involved.

The Court of Appeal granted the application and formulated three issues for determination by the Supreme Court namely:

The Court of Appeal granted the application and formulated three issues for determination by the Supreme Court namely:

“(1) Whether the Court of Appeal as an appellate court created by the Constitution of the Federal Republic of Nigeria, 1999 (as amended) has the jurisdiction to the exclusion of any other court of law in Nigeria to hear and determine all appeals arising from the decisions of the National Industrial Court of Nigeria?

(2) Whether there exists any constitutional provision which expressly divested the Court of Appeal of its appellate jurisdiction over all decisions on civil matters emanating from the National Industrial Court of Nigeria?

(3) Whether the Court of Appeal’s jurisdiction to hear civil appeals from the decisions of the National Industrial Court of Nigeria is limited to only questions of Fundamental rights.

The Supreme Court in a full panel of seven Justices out of which only one Justice gave a dissenting judgment, and after considering all the relevant laws including the organic law and the Third Alteration to the Constitution 2010, the Court of Appeal Act and Rules s establishing the Court of Appeal and the National Industrial Court as well as the various decided cases, led to rest the divergent views that held sway prior to 30 June 2017. The Supreme Court in an illuminating judgment held as follows:

“In all, then, on a holistic interpretation of sections 240 and 243(1) of the 1999, appeals lie from the National Industrial Court to the Court of Appeal, that is, all decisions of the trial court are appealable to the Court of Appeal: as of right in criminal cases – Section 254C (5) and (6) and fundamental rights cases –section 243(2); and with the leave of the Court of Appeal, in all other civil matters where the National Industrial Court has exercised its jurisdiction, section 240 read conjunctively with section 243(1) and (4).

The apex court therefore answered the questions posed above as follows:

(a) The Court of Appeal has the jurisdiction, to the exclusion of any other court in Nigeria, to hear and determine all appeals arising from the decisions of the National Industrial Court;
(b) no constitutional provisions, expressly, divested the said Court of Appeal of its appellate jurisdiction over all decisions on civil matters emanating from the National Industrial Court, and
(c) as a corollary, the jurisdiction of the Court of Appeal to hear and determine civil appeals from the decision of the National Industrial Court is not limited, only to fundamental rights matters.”

We opine that the above decision of the Supreme Court has removed all barriers and assumptions that shrouded the issue of whether the judgment of the National Industrial Court is appealable or not and has stated in unequivocal terms that the decisions of the National Industrial Court on civil matters apart from fundamental rights are appealable but only with the leave of the Court of Appeal.