INTRODUCTION

The application of the rules of court or substantive law, more often than not, apply strictu sensu. Most general rules tend to have an exception in the eyes of the law and in other cases, the Judge exercising his power may also deviate from these general rules. Few case laws in enforcement procedure of arbitral awards, tend to show the attitude of the courts towards a deviation from the strict application of the relevant sections of the substantive law applicable to enforcement or set aside order of arbitral awards.

This article, by way of analysis of decided case laws on the enforcement of foreign arbitral awards in Nigeria, intends to bring to the fore, the attitude of the courts in deviation from the authoritative application of relevant sections of the Arbitration and Conciliation Act, (ACA) 2004. It is the writer’s view that the attitude of the courts in the cases analysed below, is a positive step towards the ease of enforcement of foreign arbitral awards in Nigeria.

Sundersons Ltd & Anor v. Cruiser Shipping PTE Ltd & Anor[1]

“Where an application for the enforcement of an arbitral award is brought before the court, the law provides that such application shall be brought attaching to it; 1) the original or certified true copy of the award, 2) the original or certified true copy of the arbitration agreement…”[2]

Brief Facts

By a charter party agreement dated 4th August 2006, the 2nd respondent chartered to the 1st appellant the ship “MV CRUISER” (of which the 1st respondent were registered owners) to load and carry cargo of about 23,000 metric tons of rice belonging to the 2nd appellant from Kakinada, India to Lagos and Port Harcourt in Nigeria.

A dispute arose between the parties, and pursuant to the charter party arbitration clause which was incorporated in the Bills of Lading, London arbitration was provided for. Both parties appointed one arbitrator each with a 3rd arbitrator to be chosen by the appointed two arbitrators. At the end of the arbitral proceedings, a final Award was made on the 15th of October 2009.

On the 27th of September 2010, the respondents, by application, applied to the lower Court to register and enforce the Award. Attached to the respondents’ application was a duly certified copy of the arbitration award and a fax copy of the arbitration agreement.

The appellants challenged the registration and enforcement of the award on the grounds that the respondents failed to put sufficient materials before the court to warrant the granting of the application. Specifically, the application was opposed on the grounds that an original or duly certified copy of the arbitration agreement was not attached to the application for enforcement.

The learned trial Judge, after taking the application, found for the respondents. In his Ruling, the lower court held inter alia:

“…The Final Award of Arbitration proceedings… are recognizable by the court and   enforceable… It shall be so enforced upon filing of a duty authenticated original award (sic) by    the Applicant herein, and I so rule. 23rd March, 2011 for mention.”

The Court further held that it was not against public policy to recognize and enforce arbitral Awards rendered in foreign venues agreed upon by the parties provided that it is just and proper to do so in the circumstances.

The appellants, dissatisfied with this Ruling, filed a Notice of Appeal on the grounds that the respondents had not satisfied all the conditions set out under Section 52(1) of the Arbitration and Conciliation Act (ACA) entitling them to the recognition and enforcement of the award. It submitted that the learned trial Judge ought to have struck out, dismissed or granted the application and not to make it recognizable or enforceable upon the filing of an authenticated charter party.

The Court of Appeal in upholding the decision of the trial court held that, the fact that the respondents failed to attach the original or certified true copy of the arbitration agreement in accordance with the provision of Section 51(2) of the ACA is not enough grounds to void the award as it would be prejudicial to the respondents. The Court further held that the ground on which the appellants sought for the refusal of recognition and enforcement of the arbitral award does not fall within the grounds provided in Section 52 of the ACA.

Commentary/Analysis

The objection of the Appellants in this case was that the processes filed by the respondents in its bid to enforce the award did not include the original copy of the arbitration agreement. Indeed Section 51(2) (b) of the ACA specifically provides amongst the documents to be laid before the court, the original or a duly certified copy of the arbitration agreement thereof.

The respondents, seeking enforcement of the arbitral award, failed to comply with the provision by not attaching the original arbitration agreement or a duly certified copy to its application. The lower court however noted that the appellants neither denied the authenticity of the award nor the validity of the arbitration agreement contained in the charter party or participation in the arbitration proceedings. Neither was there any complaint made on any of the grounds stipulated in Section 52 (grounds applicable to a set aside action). However, to the appellants, the court had no power to make the conditional order enforcing the award and should simply have either granted the application or struck out or dismissed same for the respondents’ default.

In interpreting Section 51(2)(b) of the Arbitration and Conciliation Act, the Court of Appeal was of the view that failure to attach an original copy of the agreement to the application did not render the application incompetent. The court, rather than strike out the application, exercised its discretion to enforce the award subject to the production of a duly authenticated original award.

It appears that the court rightly resisted refusing the application to set aside an international award on the technical ground. The court considered that there was no legitimate complaint against the arbitration agreement, the arbitral proceedings and the resultant award. To the Appellate Court, the lower court striking out or dismissing the application would have been prejudicial to the Appellants and the court rightly protected the interest of the parties by making an order enabling the enforcement of the international arbitral award.

The court struck a balance between technical requirements of the procedure for enforcement of awards and the need to preserve the sanctity of arbitration agreements freely entered into in circumstances where the resultant awards comply with international enforcement standards. The court affirmed that it is not against public policy to recognize and enforce arbitral awards rendered in foreign venues agreed upon by the parties.

Continental Sales Ltd v. R. Shipping Inc[3]

“(2) The court where recognition or enforcement of an award is sought or where application for        refusal of recognition or enforcement thereof is brought may, irrespective of the country in                   which the award is made, refuse to recognise or enforce any award-

  • if the party against whom it is invoked furnishes the court proof-

(iii) that he 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…”[4]

Brief Facts

The parties entered into a charter party agreement dated 10 July 2009 which provided that the transaction be governed by English law and where dispute arises, such dispute shall be referred to arbitration in London in accordance with the English Arbitration Act 1996.

A dispute arose between the parties in which the appellant by letter dated 11 August 2009 to the respondent admitted to being in breach of the charter agreement and acknowledged the lawful termination of the agreement and the respondent’s entitlement to recover damages as stipulated in the said agreement. The appellant failed to pay the stipulated damage sum and in accordance to the terms of the charter agreement, the respondent referred the matter to arbitration.

The respondent by email dated 31 August 2009 sent a notice of arbitration to the appellant, also requesting the appellant to nominate its own arbitrator. The appellant acknowledged the email invitation but however, failed to participate in the arbitral proceedings. The sole arbitrator appointed by the respondent therefore conducted the arbitral proceeding and found in favour of the Respondent.

The respondent via an application ex parte dated 15 December 2009 to the Federal High Court of Nigeria (the trial court) sought to register the award. On 15 January 2010, the court granted the respondent’s application to register the award but gave the appellant time within which to apply to set aside the registration. Pursuant to the order of the court, the respondent filed an undertaking as to damages dated 21 January 2010 and service of the court processes was effected on the appellant. Upon service of the court processes on the appellant, the appellant brought an application to set aside the order for registration of the award on the grounds that it was not notified of the London arbitration proceedings. The said application was dismissed by the trial court and the appellant appealed.

On appeal, the court of appeal in upholding the decision of the trial court held that in line with modern forms of communication, an email that was acknowledged constitutes a valid notice of arbitration under the English Arbitration Act 1996 and “[a] litigant who fails to avail himself of the opportunity to be heard does so at his own peril.”

Commentary/Analysis

The issue for determination in the appeal of this case was whether the trial court was right in registering the award dated 20 November 2009 notwithstanding the assertion by the appellant that it had no proper notice of the appointment of an arbitrator or of the arbitral proceeding contrary to the English Arbitration Act 1996. In considering this appeal, the court took note of the following legislations; Sections 14(4), 17(1) (2), 76(1)(2)(3) and (4)(a)(b) of the English Arbitration Act 1996; and Section 52(2) of the ACA, 2004.

The appellant commenced its argument by stating that the arbitrator misconducted itself when it failed to give the parties notice of time and place of meeting and failure to hear the parties. It further stated that the arbitrator violated the principles of fair hearing and audi alteram partem (let the other side be heard as well), it argued that the arbitrator ought to have taken consideration of the principle of fair hearing by giving the appellant the opportunity to be heard at the arbitration.  The appellant supported its argument citing the case of Bernuth Lines Ltd v. High Seas Shipping Ltd (the Eastern Navigator);[5] where the court held that email service constitutes proper notice when properly used and mutually agreed to by the parties in arbitral proceedings.[6] The appellant’s contention was therefore that in the instant case, in the absence of any agreement by the parties as to the mode of service of notice of arbitration, the Respondent was in breach of section 76(1)(2)(3) and (4)(a)(b) of the English Arbitration Act 1996.

The appellant concluded his argument by stating that by virtue of section 52(2)(a)(iii) of the ACA 2004,[7] an irregular notice of arbitration constitutes a ground for which the court may refuse recognition and enforcement of foreign arbitral awards.

The respondent in a simple response to the appellant’s argument submitted that Bernuths case which the appellant cited is a foreign case and so interpretation cannot be sought based on application of Nigerian law. The respondent drew the attention of the court to copies of emails evidenced in the records of the court showing notice of arbitration addressed to the appellant and also copies of all the proceedings of the arbitral process. The respondent therefore submitted that a party who deliberately failed to avail himself the opportunity of participating in arbitration cannot make use of technicalities to frustrate the arbitral process.

In upholding the decision of the trial court, the Court of Appeal held as follows. By virtue of Section 14(4) of the English Arbitration Act 1996, where parties are to appoint arbitrators, arbitral proceedings are commenced when one party serves on the other party written notice requiring it to appoint an arbitrator or agree to the appointment of an arbitrator.

By virtue of section 76(1)(2)(3) of the English Arbitration Act, the parties are free to agree on the manner in which any notice or other documents required or authorised to be given or served in pursuance of the arbitration agreement or for the purpose of the arbitral proceedings are to be served. If there is no such agreement, a notice or other documents may be served by any effective means.

The court relying on the Black’s Law dictionary[8] and the Oxford Advanced Learner’s Dictionary[9] defined ‘Effective means’ as ‘achieving a result’ or ‘producing the result that is wanted or intended.’ Since the intention of the email correspondence between the respondent, the respondent’s solicitor and the appellant was to achieve the result of communicating the progress of the arbitration proceedings at its various stages, there had been effective service of the entire arbitration process on the appellant. The spurious argument that the notice had not been served in writing is rather superfluous.[10]

Furthermore, the court of appeal held that previous dealings between the parties demonstrated that the parties had failed to indicate any limitation to their customary communication by email; this warranted an agreement as to the format of sending such emails. There was justifiable implied consensus that all communication between the parties may be concluded electronically. The court held that email is a form of communication that is set down in writing. It is not oral. The fact that it is electronic is immaterial, it can be downloaded and is as real as a hard copy of a letter.

It was obvious from the records that all communication between the parties, including the signing of agreements, had been performed electronically. Therefore, it was unconscionable for the appellant to claim that such form of communication had been ineffective. It stood to reason that any previously accepted and acceptable means of communication among the parties would remain an effective means of service of any subsequent notice of arbitration proceedings.

Finally, the court in interpreting Section 52(2)(iii) of the ACA 2004 held that; where recognition or enforcement of an award is sought, or where application for refusal of recognition or enforcement thereof is brought, irrespective of the country in which the award is made, the court may refuse to recognise or enforce the award if the party against whom it is invoked furnishes the court with proof that it was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case. Citing the case of Newswatch v. Attah,[11] the court held that; a litigant which refuses to avail itself of the opportunity to be heard does so at its own peril. In the case at hand, the appellant was effectively notified of all the stages of the arbitration process and was afforded every opportunity to be heard had it wished to state its side of the issue but refused and neglected to do so.

This case goes to show ones again Nigeria’s pro-arbitration stance regarding the enforcement of arbitration agreements and awards in Nigeria. The court further set as precedence the fact that an email under the contemplation of the English Arbitration Act, 1996 serves as a valid notice of arbitration especially where the court is satisfied that email communication serves as an ongoing means of communication between the parties whether agreed expressly or impliedly. All that is left now is consistency.[12]

This case further brings to the fore, the need for a review of the current ACA, to bring it in line with modern technologies and modern acceptable means of communication. It is also recommended that the ACA be reviewed to bring it in tune with Section 17 of the English Arbitration Act, 1996. The Section 17 allows the appointment of a sole arbitrator where one party fails to appoint an arbitrator within speculated time. This provision enables the speed of commencement of the arbitral process. Had the arbitration taken place in Nigeria, the respondent would have had to turn to the courts by virtue of Section 7 of the ACA 2004, to appoint an arbitrator. This in turn will open room for appeals if the appointment by the court is challenged which may led to inevitable delays in commencing the arbitral process.

CONCLUSION

Enforcement of foreign arbitral awards remains a valuable aspect of the arbitral process. As applauded by notable scholars and writers in this subject area, an award would be of no value if the party in whose favour the award was granted cannot enforce it.

The ACA though makes use of strict wordings in its relevant sections, the judicial attitude of our courts has also shown readiness in enforcing such awards especially where the grounds for set aside or refusal to enforce are mere technical grounds. The courts will not allow technicality to avail a party, where authenticity of the award is shown on the face of it.

 

  • Deinma is an Associate of Perchstone and Graeys (Solicitors, Advocates, Arbitrators). He holds an L.L.M. in International Commercial Law from the University of Aberdeen, Scotland. He is Associate member of the Chartered Institute of Arbitrators UK (ACIarb) and a member of the Institute of Chartered Mediators and Conciliators (ChMc).

[1] (2014) LPELR-22561 (CA).

[2] Section 51 (2) of the Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria, 2004.

[3] (2013) 4 NWLR (pt 1343) 67.

[4] Section 52 (2) (iii)

[5] (2006) 1 LLR, pp 537.

[6] ibid.

[7] Cap A18 LFN 2004.

[8] 19th Edition.

[9] 7th Edition 469.

[10] ibid.

[11] (2006) 4 SCNJ 232.

[12] Dorothy Ufot, ‘Appeal court rules on serving arbitration notice by E-mail’ (2013) https://www.proshareng.com/articles/Proshare%20Law/Appeal-court-rules-on-serving-arbitration-notice-by-E-mail/2591 accessed 5 November 2018.

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