ARBITRATION AND LITIGATION IN NIGERIA: WHEN THE COURT WILL INTERFERE IN AN ARBITRAL PROCEEDINGS

In the art of sophisticated dispute resolution  the strategic fusion of  the available means of dispute resolution is indispensable, it will be naive to think otherwise. The success of the strategic fusion depends on the prosecutor of the agenda, he or she must think like a veteran general prosecuting a war, what matters is not losing some battles but winning the war.

An attempt at a strategic fusion of arbitration and litigation to resolve a commercial dispute can be seen in the recent  case of  AGIP v. NNPC &Anor in the Court of Appeal of Nigeria coram Sanusi;Tine Tur;Akomolafe-Wilson, JJ.CA. The case is reported in (2014) 6 CLRN. However, the case as summarized by Commercial Law Reports Nigeria Limited is as follows:  

The parties entered into a Production Sharing Contract (“PSC”) which provided that any dispute as to its interpretation or performance should be referred to arbitration.They disagreed on the interpretation and performance of the PSC, and the Appellant and 2nd Respondent issued a Notice of Arbitration against the 1st Respondent.The arbitral tribunal was appointed, the parties participated in the proceedings, and a partial award was made in favour of the Appellant and 2nd Respondent.The 1st Respondent was dissatisfied with the award and filed an originating motion at the Federal High Court Abuja seeking orders to: 

1. set aside the arbitral award; 
2. refuse the recognition and enforcement of the award; and 
3. stay further arbitral proceedings.

The 1st Respondent further filed an ex parte motion and sought interim orders restraining the Appellant and 2nd Respondent from taking or continuing to take any step in the arbitral proceedings and directing the parties to maintain status quo before the delivery of the partial award.

The high court granted the interim orders sought. The Appellant and 2nd Respondent applied for the orders to be discharged. That application was dismissed and the court further held that having refused the application to discharge the interim orders, the application for interlocutory injunction succeeded.

Dissatisfied, the Appellant appealed against the ruling. One of the issues raised for the determination of the Court of Appeal was:  

• “Whether the 1st Respondent's Motion on Notice for Interlocutory Injunctions ought to have been granted by the lower court.”  

While arguing this issue, the Appellant’s counsel submitted that nothing in the provisions of the Arbitration and Conciliation Act conferred power on the lower court to grant an interlocutory injunction restraining the continuation and completion of the arbitration proceedings.

On the other hand, the 1st Respondent’s counsel contended that the jurisdiction of the lower court to grant an order of injunction in the extant matter is consistent with the inherent powers of the court as entrenched by section 6(6)(b) of the Constitution of the Federal Republic of Nigeria 1999 (as amended). He submitted that by the combined effect of sections 29 and 34 of the Arbitration and Conciliation Act, the lower court was bound to intervene in the arbitral proceedings and it was right to have granted the interlocutory injunction.

The Court of Appeal noted that it is unusual for the courts to grant an injunction to restrain the completion of an arbitral award. Unanimously allowing the appeal, it held as follows:  

“Section 34 of the Arbitration and Conciliation Act (ACA) Cap A.18, Laws of the Federation of Nigeria, 2004 states specifically that –    

"A court shall not intervene in any matter governed by this Act except where so provided in this Act."   

…This court, (Lagos Division) very recently in the case of Statoil Nig Ltd & Anor v. NNPC & 2 Ors [(2013) 7 CLRN 72] made a pronouncement on the limit of court's intervention in arbitral proceedings; specifically on the principles of propriety of the court to grant injunction in Arbitration proceedings. The court stated that the intention of the legislature in making the provision in section 34 of the Arbitration and Conciliation Act, Cap. A18, Laws of the Federation of Nigeria, 2004 is to protect the mechanism of arbitration and to prevent the courts from having direct control over arbitral proceedings or to prevent the courts from intervening in arbitral proceedings outside the circumstances specified in the Act. 

In other words, the intention of the legislature is to make arbitral proceedings an alternative to adjudication before the courts, and not an extension of court proceedings. In this case, the issuance of an ex parte order of interim injunction was not permitted under the Arbitration and Conciliation Act. In the circumstance, the trial court erred when it made the order sought by the 1st respondent.   

In my humble view, since it is crystal clear that the courts are generally reluctant to intervene in the award of arbitral proceedings except in special circumstances as prescribed by the law, it appears to me that the courts will not encourage the grant of injunction to prevent the conclusion of the proceedings of an arbitral panel especially when an aggrieved party has the right to seek redress in court to set aside the Arbitral Award as provided by Sections 29, 30 and 48 of the Act.”    

Counsel:  

Babatunde Fagbohunlu,SAN with C. Ikwazom and Charles Abalaka for the Appellant

P.I.N. Ikwueto, SAN with Isaah Bozimo and C.P. Eze for the 1st Respondent

Oluyele Delano, SAN) with Ahmed Oyegbami for the 2nd Respondent