Award against Nigeria

The palpable fears over the $9.6 billion dollars arbitral award against Nigeria, in favour of Process and Industrial Developments Limited – a foreign company, under the New York Arbitration Convention, is not misplaced. Nigeria has every cause to be afraid that her foreign assets could be seized by the judgment creditor, in fulfilment of the award.

Notably, the federal government has vowed to deal with the officials who entered into the dubious contract, during the regime of late Umaru Musa Yar’Adua. This column also urges the government to investigate the officials who did not take appropriate steps to defend the case, timeously during the arbitration.

In an arbitration, where the tribunal is properly constituted in accordance with the arbitration agreement, any party who in spite of appropriate notice, fails to present its case, is bound by the arbitral awards. So, President Muhammadu Buhari while investigating those who negotiated the contract, should also find out if those who were supposed to defend our cause, compromised.

After all, an arbitration is defined by learned authors, Ojomo and Orojo, as “a procedure for the settlement of disputes, under which parties agree to be bound by the decision of an arbitrator whose decision is, in general, final and legally binding on both parties.” Importantly: “the process derives its force principally from the agreement of the parties and, in addition, from the state as supervisor and enforcer of the legal process.”

So, for there to be an arbitration both parties must agree to submit present or future disputes to a third party (private judge – arbitrator) whose decision will be final and generally binding on the parties. Where the parties duly submitted to an arbitration, are there grounds on which the parties can legitimately challenge the award? Of course, they are grounds, but the premise for a successful challenge is very limited.

Orojo and Ajomo noted that as far back as the 1930s, there is limitedness of the grounds, for challenge. In Attah vs Amoah (1930) 1 WACA 16, the court held: “… it is clear that the trend of modern authority is to interpret the submission to arbitration so liberally that once an arbitrator has been selected, the parties must be assumed to have taken him for better for worse.”

Continuing, the court further noted: “an arbitrator being something more than a judge, his arbitrament will require more to upset it than would suffice in the case of an ordinary judgment, and not until this fact is duly appreciated will the time and money spent on such cases as this be saved” (emphasis mine).

Also, in Zermalt Holdings S. A. vs Nu-Life Upholstery Repair Ltd (1985) 275 Estate Gazette 1134, Bingham J. held: “as a matter of general approach, the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults in awards and with the objective of frustrating the process of arbitration.”

The learned judge went further to hold: “Far from it. The approach is to read an arbitration award in a reasonable and commercial way, expecting, as is usually the case, that there will be no substantial fault that can be found with it.” While the courts are generally circumspect about setting aside an arbitral award or arbitrament, they are general grounds, upon which an award can be set aside by the courts, if the necessary application is made timeously.

Locally, section 28(2) of the Arbitration and Conciliation Act, provides: “The court may set aside an arbitral award if the party making the application furnished proof that the award contains decisions on matters which are beyond the scope of the submission to arbitration….” Furthermore, Section 30(1) provides: “where an arbitrator has misconducted himself, or where the arbitral proceedings, or award, has been improperly procured, the court may, on the application of a party, set aside the award.”

Section 48, of the Act, which relate to International Commercial Arbitration and Conciliation, contains additional grounds. Such grounds include where the applicant shows that “a party to the arbitration agreement was under some incapacity”; “that the arbitration agreement is not valid under the law which the parties have indicated should be applied, or failing such indication, that the arbitration agreement is not valid under the laws of Nigeria.”

Other grounds include: “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.” While these general principles may apply elsewhere, there is a limitation about the court with the requisite jurisdiction to set aside an arbitral award.

In Adwork Ltd vs Nigeria Airways Ltd (2000) 2NWLR (Pt 645) 415 (CA) 422, Justice Oguntade JCA, (as he then was) held: “If the purpose of the application (by the defendants) was to determine that the judgment debt had been paid, it constituted an abuse of process since the same question could be or was being determined in the United Kingdom proceedings. If on the other hand, it was a subterfuge to use the court of Longe J as an appellate court over the decision of the arbitrator in England, which I believe it was, my simple reaction is that Longe J has no such jurisdiction.”

The challenge facing Nigeria, on this matter is enormous, since the courts with the jurisdiction over the matter are outside our shores, just like the arbitral tribunal and the laws that guided it. Clearly, the contract in question and the mismanagement of the arbitration, is a manifestation of one of the greatest ills of our country. Unfortunately, we see persons who have no requisite competences, get appointed to positions of authority, from where they put our country into peril.

While the federal government is entitled to stake the blame against the previous regimes, for what may amount to criminal misconduct, they must concentrate their energy to seek remedial measures where possible. As Nnaemeka-Agu J.S.C., held in Commerce Assurance Ltd vs Alhaji Buraimoh Alli (1992) 3 NWLR (Pt 232), “The underlying principle is that parties to a dispute have a choice. They may resort to the normal machinery for administration of justice by going to the regular courts of the land and have their dispute determined, both as to the fact and as to the law, by the courts.”

The learned Justice went on, “Or, they may choose the arbitrator to be the judge between them. If they take the latter course they cannot, when the award is good on the face of it, object to the award on grounds of law or of facts.” Our country needs the best legal hands to save our common patrimony from buccaneers.