Sep 4, 2018

REJOINDER: Case Review; Dr. Charles D. Mekwunye v. Lotus Capital Limited & Ors. | Abayomi Asorobi Esq.



A rejoinder to the article written by Chizaram Uzodinma published on www. lexology.com on August 22 2018 captioned “In applying for stay of proceedings pending arbitration under section 5(2)(b) of the Arbitration and Conciliation Act, the applicant does not have to adduce documentary evidence showing the steps he has taken in respect of the commencement of the arbitration.[1]


                                               

I have read with keen interest the article written by Chizaram Uzodinma which was published on August 22 2018 on www. lexology.com. Whilst the writer had succinctly stated the facts of the case and accurately summarized the submissions of the parties in the case of Dr. Charles D. Mekwunye v. Lotus Capital Limited & Ors, it is apposite for the sake of intellectual acuity to delve rather briefly to the advent of arbitration in Nigeria.

The principal legislation that governs arbitration is the Arbitration and Conciliation Act (ACA) 1988 (Laws of the Federation of Nigeria 2004 Cap A18), which is a federal statute. Though, ACA was enacted since 1988, arbitration as a means of dispute resolution nonetheless was far from popular in the 90s as most disputes were seen as a thug of war by the parties who believed the Court of law was the arena for them to ventilate their grievances and possibly arm twist their opponents.

Some Lawyers who made big gains from these litigations had also on several cases advised their clients that an action in court was the best way to seek a redress.

However, as commercial activities grew and as disputes inevitably arose, the need for a faster and cheaper means of dispute resolution became pressing, thus recourse to arbitration grew in turn.

Though the ACA provides the framework of arbitration in Nigeria, the case of NIGERIA LNG LTD. V. AFRICAN DEVELOPMENT INSURANCE CO. LTD (1995) 8 NWLR (Pt. 416) Page 677, per Uwaifo, J.C.A (as he then was) listed five conditions for a resort to arbitration. These are:

“(a) that there is an agreement between the parties thereto or a statutory provision which compels arbitration in such mutters;

(b) that the parties before the Court are parties to the agreement or the transaction which compels arbitration;

(c) that the arbitration sought is within the contemplation of the arbitration agreement or circumstances calling it;

(d) that there is no sufficient reason why reference to arbitration should not be made; and

(e) that the application for stay of proceedings pending arbitration was made in time as envisaged under Section 5 of the Arbitration Act".

At this juncture, it is expedient to state that Section 5 (2) (b) of the Arbitration and Conciliation Act is the legislation upon which the case review of Mekwunye v. Lotus Capital Limited & Ors as articulated by Chizaram Uzodinma and this rejoinder is centered.



Section 5 (2) (b) of the Arbitration Act enjoins a party seeking a Stay of proceedings pending arbitration to commence or initiate the arbitral process for the conduct of the Arbitration it craves before making the application for stay to the Court, the failure of such party to do so would amount to its failure to comply with the condition precedent for the grant of its application for stay of proceedings. For the sake of emphasis we shall reproduce the provision of Section 5 of the ACA thus,



“5. (1) If any party to an arbitration agreement commences any action in any court with respect to any matter which is the subject of an arbitration agreement any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings.

(2) A court to which an application is made under subsection (1) of this section may, if it is satisfied-

(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and

(b) that the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, make an order staying the proceedings.”  (underlining ours)



Section 5 (2) of the Arbitration and Conciliation Act, as can be seen, gives the court the powers to make an order of stay of proceedings pending arbitration but clearly placed a condition precedent which must be met before such power can be exercised in favour of the applicant.



The failure of an applicant to comply with Section 5 (2) (b) of the Arbitration and Conciliation Act as interpreted in the M.V Panorama Bay’s case and the UBA’s case(Supra), imposes on the court a mandatory obligation to refuse the applicant’s application for a Stay of Proceedings pending arbitration.



The Court of Appeal in the case of UBA v. TRIDENT CONSULTING LIMITED (2013) 4 CLRN 119 whilst elucidating the provision of Section 5 (2) (b) of ACA held that for an application for stay of proceedings pending reference to arbitration to succeed, the Applicant must adduce documentary evidence showing the steps he has taken in respect of the commencement of the arbitration. The court further held that the Applicant must exhibit a letter showing that he had notified the other party of his intention to refer the dispute to arbitration and proposing the appointment of an arbitrator, per Ikyegh, JCA held thus:



 “Before a stay may be granted pending arbitration, the party applying for a stay must demonstrate unequivocally by documentary and/or other visible means that he is willing to arbitrate. He does it satisfactorily by notifying the other party in writing of his intention of referring the matter to arbitration and by proposing in writing an arbitrator or arbitrators for the arbitration. In the instant case, the only paragraph of the affidavit evidence of the appellant relevant to the matter deposed in paragraph 8 thereof that,

‘I was informed by Mr. Ugochukwu Okwesili, a Legal Officer in the applicant Bank in a meeting in our office at 57 Marina, Lagos on the 13th day of May, 2009 at about 2:30pm while reviewing this matter and I verily believe him that the parties are unable to resolve the matter amicably and that the applicant is ready to do everything necessary to the proper conduct of the Arbitration in respect of the dispute alleged to have arisen between the parties.’

The deposition above is not enough. There must be documentary evidence showing the applicant wrote to the respondent notifying her of the willingness to resort to arbitration over the dispute and, also, specifying in the letter or correspondence an arbitrator or arbitrators proposed to be appointed for the arbitration for the ratification or approval of the party.”(underling ours).



The Court had earlier held in the case of M.V Panorama Bay v. Olam(Nig) Plc (2004) 5NWLR PT 865, 1 at 16 C-D, Galadima JCA stated the law thus:

“It is the party praying for arbitration as an ‘applicant’ that has the duty to comply with Section 5(2)(b) of the Act by commencing the proceedings.”

One of the issues for determination before the Court of Appeal in Mekwunye v. Lotus Capital Limited & Ors, was whether the High Court was right to have ignored section 5(2)(b) of the ACA as interpreted by the cases of M.V Panorama Bay By v. Olam(Nig) Plc (Supra) and UBA v. TRIDENT CONSULTING LIMITED.

The court of Appeal in Mekwunye v. Lotus Capital Limited & Ors however disagreed with its earlier decision in UBA v Trident Consulting Limited (supra) and held that placing the burden of presenting documentary evidence to support an application for stay of proceedings pending arbitration constitutes a departure from the plain provisions of section 5(2) of the ACA particularly in cases where the applicant has deposed to facts in that regard.

The court noted that the purpose of a deposition in an affidavit is to provide oral or documentary evidence to support an application filed in court. Thus, the affidavit in itself constitutes evidence which is deemed admitted where not countered or controverted. The court further stated that the reasoning in UBA v Trident Consulting Limited (supra) would only be potent where an applicant's deposition in the affidavit in support of an application for stay is challenged and/or contradicted by a respondent.



It is essential for the sake of this rejoinder to note that the Court of Appeal in the case of UBA v. TRIDENT CONSULTING LIMITED made no distinction whatsoever between a challenged and unchallenged affidavit evidence as it relates to presenting documentary evidence showing the applicant’s willingness to resort to arbitration over the dispute. The Court simply held that there must be documentary evidence showing the applicant’s willingness to resort to arbitration over the dispute and, also, that the Applicant should specify in a letter or correspondence an arbitrator or arbitrators proposed to be appointed for the arbitration for the ratification or approval of the party. One would then wonder the basis upon which the Court in Mekwunye’s case drew a distinction between a challenged and unchallenged affidavit evidence when it should have simply followed the clear decision of UBA v. TRIDENT CONSULTING LIMITED where the court held that “Before a stay may be granted pending arbitration, the party applying for a stay must demonstrate unequivocally by documentary and/or other visible means that he is willing to arbitrate” whether the affidavit evidence was challenged or unchallenged. There was indeed no basis for this distinction.



In my humble view, the Court of Appeal in Dr. Charles D. Mekwunye v. Lotus Capital Limited & Ors wrongly relied on the case of ONWARD ENTERPRISES LIMITED v. MV. ‘MV. “MATRIX” & ORS (2008) LPELR-4789(CA), to depart from the case of M.V Panorms By (Supra). The Court in the Onward’s case simply held that stay of proceedings pending reference to arbitration in a foreign country could be granted in deserving cases. This decision had absolutely nothing to do with Section 5(2)(b) of the Arbitration and Conciliation Act.



It is pertinent to note that the Court of Appeal in Onward Enterprises Limited v M.V. "Matrix" & Ors.(supra) and the Supreme Court in the case of M. V. Lupex (Supra), were not called on to interpret and did not in fact interpret the provisions of Section 5(2)(b) of ACA. Yet, the Court in Mekwunye’s case used these cases as a basis to depart from the settled interpretation of Section 5(2)(b), clearly expounded by the Court of Appeal in the cases of M.V Panorama Bay v. Olam(Nig) Plc (Supra) and UBA v. TRIDENT CONSULTING LIMITED (Supra).



In the author’s view, there is therefore no conflict as it involves the interpretation of the provision of Section 5(2)(b) of the Arbitration and Conciliation Act between the Supreme Court case of M. V. Lupex (Supra), which never interpreted the said section and the Court of Appeal cases of M.V Panorama Bay v. Olam (Nig) Plc (Supra) and UBA v. TRIDENT CONSULTING LIMITED (Supra). The Supreme Court decision in M.V. Lupex v.N.O.C. & S. Ltd (2003) 15 NWLR (Pt.844) 469 was simply to the effect that where parties have agreed to refer their dispute to arbitration, it behoves the court to lean towards ordering a stay of proceedings.

As a corollary to the above, the Court of Appeal in Mekwunye’s case apparently abandoned the binding cases of M.V Panorama Bay v. Olam (Nig) Plc (Supra) and UBA v. TRIDENT CONSULTING LIMITED (Supra), which were on the point before it to follow inapplicable cases of ONWARD ENTERPRISES LIMITED v. MV. ‘MV. “MATRIX” & ORS (Supra) and M.V. Lupex v.N.O.C. & S. Ltd (Supra).

Furthermore, unlike the case of Mekwunye v. Lotus Capital Limited & Ors, where the Respondent neither commenced arbitration nor provided documentary evidence showing steps it had taken in that respect, the Respondent in the ONWARD’S case had commenced arbitration by appointing their arbitrator. The Court in the ONWARD’S case on the finding of facts in that case noted thus, “The process of arbitration was already triggered/commenced when respondents appointed their own arbitrator as far back as 22nd July, 2002, 20 days after appellants suit was commenced before the lower court. Learned counsel urged the court to uphold the findings of the trial Judge appearing at pages 220 - 222 of the record”.

We must emphasize that the Court of Appeal in Mekwunye’s case did not overrule the cases of UBA v Trident Consulting Limited (supra) and M.V Panorama Bay By v. Olam(Nig) Plc. It only took a different position on the issue of providing documentary evidence to demonstrate willingness to participate in arbitration, pursuant to section 5(2)(b) of the Arbitration Act. The decision in Mekwunye v. Lotus Capital Limited & Ors in this respect thus forms a conflicting decision with the earlier decisions of the Court in UBA v Trident Consulting Limited (supra) and of M.V Panorama Bay v. Olam(Nig) Plc.

It is an established principle of Law that Court of Appeal is bound by its decision. Please see APGA & ORS v. UBA & ORS (2011) LPELR-9177. This follows the age long principle of stare decisis which aims at avoiding judicial anarchy and the quagmire that will be occasioned by conflicting decisions of the same court on the same issue.



In Black's Law Dictionary (Eighth Edition) at page 1443, stare decisis was defined thus:

"The doctrine of precedent, under which it is necessary for a court to follow earlier judicial decisions when the same points arise again in litigation....." 

That said, it is my view that the Court of Appeal having failed to properly distinguish the Mekwunye’s case from the UBA v. TRIDENT CONSULTING LIMITED (2013) 4 CLRN 119, is bound by the decision of the Court in the UBA’s case. Its refusal to follow the UBA’s case especially when it was brought to its notice by the Appellant amounts to the court flouting the age long principle of stare decisis and plethora of Supreme Court authorities. The decision of the court in the UBA’s case is clear and unambiguous and the proper forum to determine the rightness or wrongness of the said decision is the Supreme Court.



Further, the question before the court in the Mekwunye’s case was whether the trial court’s decision was right in the light of the decision of the Court of Appeal in the UBA’s case. The lower court was not called upon by any of the parties in the Mekwunye’s case to overrule the decision of UBA v. TRIDENT (Supra). It is a trite principle of Law, reiterated by Court of Appeal in the case of AGA & ORS. v. ONAH & ORS (2012) LPELR-22103(CA) (Pp. 43-44, paras. G-A) thus, “It is not for this court to suo motu embark on an unsolicited surgical expedition to overrule itself”.



In our humble view, the position asserted by Chizaram Uzodinma that the decision in UBA v Trident Consulting Limited where the Court of Appeal held that “Before a stay may be granted pending arbitration, the party applying for a stay must demonstrate unequivocally by documentary and/or other visible means that he is willing to arbitrate” no longer stands as law is erroneous and a misconception of the law. It is long settled that where there are two or more conflicting decisions of a higher court the lower court is free to choose which of the decision is to follow. See Adegoke Motors v. Odesanya (1988) 2 NWLR (Pt. 74).



In the case of OBIAKOR & ORS v. OKAFOR (2017) LPELR-43309(CA), the Court in specific words held thus, “there is a principle in jurisprudence that suggests that where a lower Court is faced with conflicting positions of a higher Court on an issue with one position having one or two decisions of the higher Court in its support and the other position is supported by an avalanche of decisions of the higher Court, it is foolishness for the lower Court to follow the position with the few decisions as against the other position - Onuoha v. State (1989) 1 NSCC 411 at 421." Per ABIRU, J.C.A. (Pp. 11-12, Paras. E-A).

Against the backdrop of the above case, the cases of UBA v Trident Consulting Limited (supra) and M.V Panorama Bay v. Olam(Nig) Plc wherein the interpretation of Section 5(2)(b) of ACA had been settled should be given preference over the decision in case of Mekwunye v. Lotus Capital Limited & Ors, which stands alone, until Section 5(2)(b) is given a definite interpretation by the Supreme Court which is the Apex Court of the land.

The decision of the Court of Appeal in Mekwunye v. Lotus Capital Limited & Ors has been appealed and same is pending at the Supreme Court, where the Supreme Court has been called upon, inter-alia to determine whether the Court of Appeal was right to have deviated from the established principle of law postulated in the earlier cases of UBA v Trident Consulting Limited (supra) and of M.V Panorama Bay v. Olam(Nig) Plc, especially in line with the decision in KASSIM v. STATE (2017) LPELR-42586(SC) where the Apex Court held thus, “I agree. The principle is correct and it is in tandem with the principle of stare decis which is a rule of adherence to judicial precedents. It postulates that when a point or principle of law has been officially decided or settled by a ruling or pronouncement of a competent Court in a case in which it is directly and necessarily involved, it will no longer be considered as open to examination or to a new ruling by the tribunal”.

Having mentioned the pendency of the appeal against the decision of the Court of Appeal in the Mekwunye’s case, we are assured that the Supreme Court of Nigeria will lay to rest (as it always does) the confusion created by the Court of Appeal in the Mekwunye’s case when it finally determines the appeal before it.

Conclusively, this rejoinder digs beyond the rightness or wrongness of the interpretation of Section 5(2) of ACA by the Court of Appeal in the Mekwunye’s case, into the imminent danger of the incessant failure of the Court of Appeal to be bound by its own decision. Whilst the Court of Appeal intensely preaches the adherence to the principle of stare decisis and in fact on several occasions reprimanded the lower courts for their failure to adhere to the said principle, the Court of Appeal itself have failed time and time again to practice what it so passionately preaches.

In my forthcoming article titled “The era of conflicting decisions, the confusion and the Court of Appeal”, I shall whilst juxtaposing various Court of Appeal conflicting decisions in several areas of law, lay bare the imminent danger of the failure of the Court of Appeal to be bound by its own decision and/or the adorned principles of stare decisis                         




Abayomi Asorobi Esq. Senior Associate at Charles Mekwunye & Co.

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