By B.C Obilor
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Introduction:
The complexity of commercial transactions and the uncertainty in human relationships, coupled with the infallibility of humans make disagreements and misunderstanding inevitable in commercial relationships. It is due to the likelihood of disputes and the uncertainty of human actions that it has become necessary that parties while contracting, provides the mode of settling the disputes that may arise from such contractual relationship. Sometimes parties go for arbitration instead of litigation which takes a longer time. Where parties decide to adopt arbitration, it is pertinent to ascertain whether any of the parties can decide subsequently to resort to litigation.
DISPUTE RESOLUTIONS IN COMMERCIAL TRANSACTIONS
There are different modes of settling disputes arising from commercial transactions. Disputes can be settled either through litigation or through alternative dispute resolution mechanism. It is due to the fact that litigation takes a longer time, hence appears to hamper commercial transactions that an alternative means of resolutions of disputes such as Arbitration mediation, Negotiation, inter alia, were birthed.
Consequently, parties to a contractual transaction are at liberty to choose the dispute resolution mechanism to adopt in event of disputes arising from the commercial transaction. Most cases, parties resort to alternative disputes resolution mechanism due to its enormous advantages. One of such alternative mechanisms is arbitration. Thus, to achieve this, contracting parties may insert an arbitration clause in the contract or execute an independent arbitration agreement to that effect.
CAN A PARTY IGNORE AN ARBITRATION AGREEMENT?
It is trite law that where a clause in an agreement provides that any difference or dispute in an agreement shall be referred to an arbitrator, both parties ought to honour and comply with provisions of the clause. SEE SCOA (NIG) OLC vs. STERLING BANK PLC (2016) LPELR-40566(CA). Borrowing from words of my learned senior, M.P Ogele, this position of the law is as clear as summer sky. Thus any party that wishes or desires to deviate from such an agreement is going contrary to the terms of the agreement.
It must be noted that arbitration proceedings is a conventional process and parties cannot be forced to arbitrate a dispute unless he agrees to it and the courts are duty bound to enforce such agreements. SEE OGUN STATE HOUSING CORPORATION vs. ENGINEER OLU OGUNSOLA (2000) 14 NWLR (pt.687) and METROLINE (NIG) LTD &ORS vs. DIKKO (2018) LPELR-46853(CA) ONYEKWULUJE & ANOR vs. BENUE STATE GOVERNMENT & ORS ( 2015) LPELR-24780(SC) . In otherwords, where a party voluntarily accepts an arbitration agreement, such a party is bound by such agreement, as cannot approbate and reprobate at the same time.
SUBMITTING TO ARBITRATION DOES NOT OUST THE JURISDICTION OF THE COURT.
It must be noted that the inclusion of an agreement to submit a dispute to arbitration does not generate the heat of ouster of jurisdiction of the court. It merely postpones the right of either of the contracting parties to resort to litigation. Where in a contract there is a clause on arbitration, it is considered as a sine qua non, that is, a condition precedent to the exercise of jurisdiction. SEE SINO-AFRIC AGRICULTURAL & IND COMPANY LTD & ORS vs. MINISTRY OF FINANCE INCORPORATION & ANOR (2013) LPELR – 22370.
It must be further noted that submitting to arbitration is a condition precedent to the exercise of jurisdiction. Thus, the only remedy available to an aggrieved party is to apply for a stay of proceeding against the intended suit. This can only be validly done before taking any step towards the proceeding. It is my view that any step aside from entering of appearance will rob the court of the power to grant the stay of proceeding and will also foreclose the right of the aggrieved party to the enforcement of the arbitration clause. SEE section 5 of the Arbitration Act and SINO-AFRIC AGRICULTURAL & IND COMPANY LTD & ORS vs. MINISTRY OF FINANCE INCORPORATION & ANOR ( Supra).
CONCLUSION
Just like every other contractual terms, parties are at liberty to choose whether to include or exclude arbitration agreement in their contractual relationship. Thus, in line with the laissez faire liberalism freedom of contract, parties have the right to pick and choose the terms of their contract. However, where such decisions have been made, in the absence of fraud, duress or other vitiating elements, such a party cannot be allowed to dishonour such agreements. The sanctity of contractual transactions must be preserved and protected and enforcing arbitration agreement is one of such ways.
It must however be noted that, whereas a party to an arbitration agreement cannot decide to ignore such agreement, both parties may agree to dispense with the arbitration agreement and adopt litigation as a means of settling the dispute.
Written by B.C OBILOR ( bcobilor@nigerianbar.ng)
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Authored by Ben Ijeoma Adigwe Esq., ACIarb (UK), LL.M, Dip. in Artificial Intelligence, Director at the Delta State Ministry of Justice, Asaba, Nigeria.
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