CELTEL NIGERIA BV v ECONET WIRELESS LIMITED & Others (CA/L/895/2012) [2014] NGCA 30 (13 February 2014)

MAIN JUDGMENT

JOSEPH SHAGBAOR IKYEGH, J.C.A. (Delivering the Leading Judgment):

The appeal is against the Judgment by the High Court of Justice of Lagos State (the court below), by which it refused to set aside an arbitral award entered by an arbitral tribunal in respect of disputed Shareholders Agreement between the 1st respondent and the appellant together with the other respondents.
 

In outline the 1st respondent initiated an action at the court below seeking some declaratory reliefs against the other respondents and the appellant. While the action was pending, the 1st respondent issued a notice of arbitration against the other respondents and the appellant alleging breach of the Shareholders Agreement between them.

The Shareholders Agreement had an arbitration clause in the event of dispute arising therefrom.

Pursuant to Clause 25 of the Shareholders Agreement containing the arbitration clause, the 1st respondent wrote to the then Chief Judge of the Federal High Court (Ukeje, CJ) to appoint arbitrators to settle the dispute. Ukeje, CJ, declined to make the appointment. The 1st respondent by its suit at the High Court of Justice of Lagos State invoked the jurisdiction of the court to make the appointment. Before the court could make the appointment, the 1st respondent re-applied to the Chief Judge of the Federal High Court, (Mustapha, CJ), who had replaced Ukeje, CJ in office to constitute an arbitral tribunal to settle the dispute.

Mustapha, C.J. granted the request. He caused a three-man arbitral tribunal (Justice Sanyaolu (retired), Professor Fidelis Odita, (SAN), Mr. Michael Kuper, who declined the appointment and was replaced by Mr. Stephen Bates to resolve the dispute.
 

The arbitral tribunal heard the dispute. In the course of hearing the dispute the appellant and the 2nd, 4th, 6th, 7th 8th and 9th respondents raised preliminary objections challenging the jurisdiction of the arbitral tribunal to entertain the dispute on sundry grounds to the effect inter-alia that the arbitral tribunal was improperly constituted and that the proceedings before it amounted to an abuse of process as well as misconduct on the part of the arbitrators.

The arbitral tribunal took the preliminary objections along with the substantive matter.
 

At the end of the day, the arbitral tribunal overruled the preliminary objections and heard the dispute on the merit resulting in its partial award against the appellant and the other respondents. The arbitral tribunal, however, deferred decision on the 1st respondent's relief seeking an order that the appellant,6th respondent and the other respondents should pay all the costs, fees and expenses arising from the arbitral proceedings. The arbitral tribunal also deferred decision on the claim that all the respondents in the arbitration should pay to the 1st respondent interest at the rate of 10% per annum on all sums awarded by the arbitral tribunal to the 1st respondent who was the claimant before it.

In consequence of the partial award made by the arbitral tribunal, the appellant and the 2nd, 4th, 6th respondents applied to the court below to set aside the award on grounds, among others, that the arbitral tribunal wrongly assumed jurisdiction over the dispute. The court below dismissed the said applications.
 

Aggrieved, the appellant filed a notice of appeal with seven grounds of appeal. In a brief of argument filed on 14-1-13, the appellant raised the following issues for determination in the appeal –

"1.     Whether the learned trial Judge was right when she held that the 1st respondent could re-apply to the Chief Judge of the Federal High Court for the constitution of the Arbitral Tribunal after the invocation of the court's jurisdiction under section 7(3)(c) of the Arbitration and Conciliation Act, 1990? (Ground 1).

2.       Whether the learned trial Judge was right in failing to set aside the Partial Final Award on grounds that the Arbitral Tribunal decided the parties' rights under the Offer Letter Contract which was not the shareholders' contract upon which the arbitration was constituted? (Ground 2).

3.       Whether the learned trial Judge was right in holding that the decision of the Arbitral Tribunal touching on the meaning and effect of the Offer Letter Contract which was the subject of a pending suit No.: LD/841/2006 filed by the same Claimant did not constitute an abuse of process? (Ground 3).

4.       Whether the learned trial Judge was right in failing to decide issues relating to grounds 4, 5, 6 and 7 relied upon by the appellant for seeking a setting aside of the Partial Final Award? (Grounds 4, 5, 6 and 7)."

The appellant submitted under the first issue that in order to avoid absurd and uncertain results that would create an abuse of the process of the court, Section 7 of the Arbitration and Conciliation Act, Cap A18 Laws of the Federation of Nigeria, 2004, (ACA) representing the statutory mechanism for appointing arbitrators and the arbitration clause under Clause 25.1 of the Shareholders Agreement representing the contractual mechanism for appointing arbitrators should have been construed by the court below to the effect that both the said statutory and contractual mechanisms cannot be utilized by a party to obtain the appointment of an arbitrator on the premise that once one is utilized the other becomes spent for the purpose of the particular dispute.

It was, also, argued that in light of the fact that the 1st respondent had by a deposition under Section 7(3)(c) of the ACA informed the High Court of the failure of the appointing authority chosen by the disputants to appoint an arbitral tribunal before she approached the High Court of Lagos State to appoint an arbitral tribunal, it was not right for the 1st respondent to revert to the same appointing authority she had stated on oath refused to make the appointment to make the appointment.
Consequently, it was urged that the court below created uncertainty and absurdity leading to the use of both the statutory and the contractual mechanisms for the appointment of arbitrators by giving the party applying for the appointment the freedom to revert to the appointing authority that had earlier refused to make the appointment to make the appointment citing in aid the cases of C.C.B. (Nig.) Plc. v. Attorney-General of Anambra State (1992) 8 NWLR (Pt.261) 528 at 556, Campagne General De Geophysique v. Dr. Etuk (2004) NWLR (Pt.853) 20; upon which the appellant urged that it was wrong for the arbitral tribunal to assume jurisdiction: in the circumstances and that the court below was also wrong to uphold the arbitral tribunal's decision of partial award to the 1st respondent against the appellant and the 2nd, 4th, 6th, 7th, 8th and 9th respondents.

It was argued on the second issue that the arbitral tribunal exceeded its mandate by deciding in page 1075 of the record the rights of the parties under the Offer Letter Contract which was a separate contract from the Shareholders Agreement and had no arbitration clause and was not pleaded as a relief in the statement of claim, therefore its determination by the arbitral tribunal amounted to a misconduct warranting the setting aside of the award vide Section 48(a)(iv) and (v) of the ACA read with the cases of Taylor Woodrow (Nig.) Ltd. v. S.E. GMBH (1993) 4 NWLR (Pt.286) 127 and U.B.N. Plc v. Ayodare and Sons (Nig.) Ltd. (2007) 13 N.W.L.R. (Pt.1052) 567 at 595 - 596; it was urged that the arbitral tribunal having found in paragraph 285 of the award in page 299 of the record that the Offer Letter Contract and the Shareholders Agreement were inextricably linked and inseparable the court below ought to have set aside the award.

Arguments on the third issue are to the effect that the Offer Letter Contract was the subject of a pending suit No. LD/841/2006 filed by the 1st respondent as claimant at the High Court of Lagos State with reliefs fundamentally the same as the arbitration which was an abuse of process and, also, amounted to waiver or estoppels of the 1st respondent's rights to arbitrate, therefore the court below was wrong to uphold the award in its reasoning in pages 1066 - 1067 of the record citing in support the cases of The Owners of the M.V. Lupex v. Nigerian Overseas Chartering and Shipping Ltd. (2003) 15 NWLR (Pt.844) 469, Harriman v. Harriman (1989) 5 NWLR (Pt.199) 6 at 16, Saraki v. Kotoye (1992) 4 NWLR (Pt.264) 156 at 188, Michael Wilson and Partners Ltd. v. Sinclair and Ors, (20121 EWHC 2560 (Comm), Agu v. Ikewibe (1991) 3 NWLR (Pt.180) (pagination not supplied), Arubo v. Aiyeleru (1993) 3 NWLR (Pt.280) 126 at 142 (on inherent powers of the court to prevent abuse of its process)

It was further argued that a stay of proceedings pending arbitration applied for by three of the defendants in suit No: LD/841/2006 was dismissed by the court below which "surprisingly" did not take judicial notice of its ruling in its file to hold that no stay of proceedings was applied by the defendants; and, that even if the defendants in that suit had not applied for a stay of proceedings pending arbitration, the court below was still in charge of the dispute as its subsequent decision on the dispute would settle the rights of the parties vide Obi-Obembe v. Wemabod Estate (1977) All NLR 130 at 141.

The appellant contended on the fourth issue that she submitted four issues to the court below for determination which it did not determine contrary to established practice that all the issues presented before the court for adjudication must be pronounced upon by the court vide Oyelofu v. Durosimi (2001) 16 NWLR 1 at 14, Yesufu v. Adegoke (2007) 11 NWLR (Pt.1045) 1 at 29. The appellant proceeded to itemize the said undecided issues as those contained in grounds 4, 5, 6 and 7 of the originating motion in pages 1 - 3 of the record to wit -
 

(a)     that the arbitral tribunal misconducted itself by deciding the rights of the parties based on Clause 27.7 of the Shareholders Agreement in respect of escrow obligations created by another contract, the Offer Letter Contract, and inconsistently applied the said clause to find liability on the part of the appellant without corresponding liability on the part of the claimant in the arbitration;
 

(b)     that the arbitral tribunal misconducted itself by making inconsistent findings when it held that all the defects in the Offer Letter Contract were waived by the claimant on the one hand only to hold on the contrary that the switch shares were sold in breach of clause 17 of the Shareholders Agreement;
 

(c)     that the arbitral tribunal misconducted itself and committed an error of law on the face of the award in finding the appellant liable to damages on the basis of the Shareholders Agreement, Deed of Adherence of 26-5-2006 and equitable compensation when these causes of action were not pleaded by the 1st respondent, as claimant, in the arbitration;

(d)     and that the arbitral tribunal misconducted itself by making inconsistent finding and/or committed an error of law on the face of the award when it held that the sale of shares to the appellant could not be reversed and only damages could be granted only to turn round to grant a declaration that the transaction was null and void and conferred no rights on the appellant.
 

The appellant urged that Section 15 of the Court of Appeal Act, 2004 be invoked and the four undecided issues (supra) be decided by the Court as all the materials necessary for their determination are in the record and would not require additional or further materials for their determination citing in support Section 48(iv) of the ACA and Taylor Woodrow Nig. Ltd. v. S.E. GMBH (supra) for the resolution of the undecided issues (a) to (d) (supra) and for the setting aside of the award made by the arbitral tribunal in paragraphs 294 - 332 of the award with emphasis on paragraphs 294, 299, 308, 328 and 347 in pages 301-308 of the record on ground of misconduct, as the arbitral tribunal had found that neither the Offer Letter Contract nor Clause 17 of the Shareholders Agreement created an obligation for the Selling Shareholders to provide Amended Transaction documents and workable escrow arrangement for 1st respondent. It was, therefore, urged that there was no reason to find obligation against the Selling Shareholders and the appellant on the basis of Clause 27.7, as it amounted to a misconduct for the arbitral tribunal to rely on the general provision in Clause 27.7 to the detriment of the specific provision or obligations under clause 17 and its inconsistent finding that Clause 27.7 refers to all Shareholders, depending on the circumstances of the case, when the obligation under Clause 27.7 applies to all Shareholders without qualification, upon which an obligation was placed on the 1st respondent to point out the omission of First Bank Plc signature provision to save the transaction by affording the opportunity to the Selling Shareholder to have it remedied, therefore it was wrong to find liability on the basis of that clause on the part of one party only.

The appellant's brief further advocated that the finding of waiver of the breaches of Clause 17.2 of the Shareholders Agreement by the 1st respondent and the finding on the other hand that the sale of the switch shares through the Offer Letter Contract was a breach of the Shareholders Agreement in pages 314- 318 of the record amounted to a misconduct by the arbitral tribunal; that no relief was claimed against the appellant in the arbitration, therefore the arbitral tribunal had no jurisdiction to determine as it did in paragraphs 382, 383, 384 and 386 of the award in pages 320 - 321 of the record that the appellant breached Clause 27.7 of the Shareholders Agreement or Deed of Adherence which entitled the 1st respondent to more than nominal damages" thereby imposing liability on the appellant even in the absence of any relief pleaded against it contrary to section 19(1) of the ACA and the case of T.E.S.T. Inc. v. Chevron (Nig.) Ltd. (2011) 8 NWLR (Pt.1250) 464; and that by awarding the 1st respondent both of two alternative reliefs or remedies of voiding the share transaction and damages subject to proof at a future hearing the arbitral tribunal committed a misconduct or an error of law on the face of the award contrary to the cases of Taylor Woodrow (Nig.) Ltd. v. S.E. GMBH (supra) at page 12,Tang Man Sit v. Capacious Investment Ltd. (1996) AC 518 at 521 - 522, Afrotec Tech. Service (Nig.) Ltd. v. MIA and Sons Ltd. (2000) 15 NWLR (Pt.692) 730 at 790, Iyang v. Ebong (2002) NWLR (Pt.751) 284 at 339; upon which the appellant urged for the appeal to be allowed and the undecided four issues in question be decided by the Court under Section 15 of the Court of Appeal Act.

The 1st respondent filed her brief of argument on 20-2-13, in which these issues were distilled for determination –

"1.     Whether the lower court was correct in deciding not to set aside the Tribunal's Award on the basis of the matters which are now argued by the Appellant as Issues 1 - 3 in the Appeal. (Ground 1, 2 and 3 in the Notice of Appeal).

2.       Whether, as is now raised as Issue 4 in the Appeal, the lower court decided Grounds 4 - 7 as argued by the Appellant before the Lower Court. (Grounds 4, 5, 6 and 7 in the Notice of Appeal).

3.       If issue (2) above is answered in the negative, whether this Honourable Court should apply the provisions of Section 15 of the Court of Appeal Act Cap 36 Laws of Federation of Nigeria 2004 (the Court of Appeal Act), and if so, whether the decision of the Tribunal ought to be confirmed or set aside."

The 1st respondent prefaced its brief with the remarks that in determining whether or not to set aside an arbitral award the court of first instance concerns itself with whether the award was good on its face or justified, not whether upon the law and facts the award was objectionable, as there is no right of appeal to the court below over arbitral awards as to give the court below the power to come to a different conclusion from the arbitral tribunal for, the purpose of setting aside the arbitral award vide Unic v. Karima (1969) NCLR 247 at 253, Law and Practice of Arbitration and Conciliation in Nigeria by Orojo and Ajomo page 275, Mutual Life and General Insurance Ltd. v. Kodi Iheme (CA/L/461/2006, unreported, dated 18-1-13 at 24); yet the appellant has enlarged the appeal process by referring to the decision of the arbitral tribunal as if it was the decision of the court below in disregard of the correct approach which is whether the court below was right not to set aside the arbitral award; therefore the appellant should not be allowed to use the present appeal as an avenue to re-litigate for the third time what she had unsuccessfully canvassed at the arbitral tribunal and the court below on issues that she had agreed by Clause 25 of the Shareholders Agreement should be finally settled by arbitration vide Law and Practice of Arbitration and Conciliation in Nigeria (supra) at pages 274 -275.

It was further prefaced in the 1st respondent's brief that the grounds for intervening in an arbitral award for the purpose of setting it aside must be as provided by the ACA and UNCITRAL Model Law on International Commercial Arbitration 1985 (the Model Law), especially Section 34 of the ACA replicated with Article 5 of the Model Law and emphasized by Law and Practice of Arbitration and Conciliation in Nigeria 1999, page 269, to the effect that where the ACA does not provide for the intervention of the court, there should be no intervention with the arbitral award; that the court below correctly approached the issue when it stated that the grounds for setting aside an arbitral award are as contained in Sections 30 and 48 of the ACA.

The 1st respondent relied on its earlier submissions to the court below in respect of the issue of alleged excess of jurisdiction in addition to the submissions contained in its brief on the issue and; as to the allegation of inconsistency or ambiguity of the award, the 1st respondent also relied on the submission to the court below in paragraphs 40-46 of the 1st respondent's response in page 1 of the supplementary record and pages 775 - 776 of the main record in addition to the submissions made in the brief on the issue.

The 1st respondent cautioned in its brief that it is only if the operative or decisive part of an award as opposed to the part setting out the reasons for the award that the inconsistency or ambiguity ground for setting aside an arbitral award would apply vide Moran v. Lloyd's (1983) QB 542 at 550 where it was held that the passage in Halsbury's Law of England 4th Edition, Volume 2, paragraph 622 is incorrect, as the case of Ames v. Milward (1818) 8 Taunt, 637 had been misinterpreted by the learned authors and that the said misinterpreted case and the passage in Halsbury's Laws of England were what the Supreme Court relied upon in its judgment in Taylor Woodrow of Nigeria v. Suddeutsche Etna-Werk GMBH (1993) 4 NWLR (Pt.286) 127 at 141 -143.

The 1st respondent also cautioned that the inconsistency or ambiguity of the award ground has to be read in a reasonable and commercial sense so as to strive to uphold the award vide Zermalt Holdings SA v. Nu-Life Upholstery Repairs Ltd. (1985) 2 EGLR 14, Born's International Commercial Arbitration Vol.II, 3rd Edition (2009) 2656.

The 1st respondent's brief further stated that the power to set aside an award for error of law on the face of the award is not lightly exercised, because the court before whom an arbitral award is challenged cannot assume appellate jurisdiction over the award of the arbitral tribunal, and that three conditions must co-exist before an arbitral award may be set aside to wit -the alleged error must be on a point of law which was incidental to the matter before the arbitral tribunal, not on a point of law specifically referred to the arbitral tribunal for its determination; that the court looks only on the face of the award and any document actually incorporated within the award, not the pleadings or even the underlying contract, in determining the ground of error of law; and that the error must be material to the arbitrator's conclusion citing in support of the said submissions the cases of Taylor Woodrow of Nigeria Ltd. (supra) at 144 - 145, Baker Marina Nigeria Ltd; v. Danos and Curole Marina Contractors (2001) 7 NWLR (Pt.712) 337 at 351 - 352 and Law and Practice of Arbitration and Conciliation in Nigeria (supra) 282. The 1st respondent then indicated its reliance on the submissions to the court below for grounds 1 - 3 of the appellant's set aside submissions as additional arguments in the appeal.

The 1st respondent adopted its arguments in paragraphs 71 - 76 of the 1st respondent's response to the appellant's set aside application at the court below as part of the arguments in the appeal and added that the appellant's complaint related to the process of constituting the arbitral tribunal, not about compliance with the agreement between the parties which Section 48(a)(vi) of the ACA is concerned; that the act of constituting the arbitral tribunal was contractual, not judicial, which was, also, to enable rather than frustrate the arbitration process under Section 7(3) of the ACA and had nothing to do with waiver by the 1st respondent of the appointment procedure under Clause 25 of the Shareholders Agreement; and that, upon the appointment made by one of the appointer's under Clause 25 of the Shareholders Agreement, the other appointer's power to appoint under Section 7(3) of the ACA becomes defunct such that the first in time to appoint would be the one that made a valid appointment; therefore, the renewal of the application for appointment made to the Chief Judge of the Federal High Court was not an abuse of process, notwithstanding the first request for appointment was not terminated before the said renewal; and given that the purport of Section 7 of the ACA is to ensure that parties' agreement to arbitrate is upheld, wherever possible; therefore the said constitution of the arbitral tribunal by the CJ of the Federal High Court achieved the said objectives and should not be disturbed.
It was stressed in argument on the second issue that the Offer Letter Contract arose from the performance terms of Clause 17.2.2 of the Shareholders Agreement and that the arbitral tribunal did not assume jurisdiction to decide the parties' dispute under the Offer Letter Contract but on the performance not otherwise, as the said clause of the Offer Letter Contract was relevant and contemplated compliance by the parties thereto as was earlier argued under paragraphs 78 and 79 of the 1st respondent's response at pages 784 -785 of the record; that the comments made by the court below concerning suit 841 in page 1067 of the record were obiter and cannot form a complaint on appeal vide Ella and Ors. v. Agbo and Anor. (l1999) 8 NWLR (Pt.613) 139.

The 1st respondent also argued that the alternative basis for the finding by the arbitral tribunal that there was a breach of Clauses 17.1 and 17.2.2 of the Shareholders Agreement by reference to the requirements of Clause 27.7 of the Shareholders Agreement in the transfer of shares was within the jurisdiction of the arbitral tribunal and the said award should not be disturbed; all the more so Clause 27.6 of the Shareholders Agreement and the Offer Letter Contract are not inextricably linked as previously argued under paragraph 82 of the 1st respondent's response in pages 785 -786 of the record; and that as to the appellant's assertion that the 1st respondent did not plead breaches of the Offer Letter Contract as a basis for relief, as set out more fully in paragraphs 84 - 86 of the 1st respondent's response, is an "unmeritorious pleading point" which the arbitral tribunal rightly rejected, therefore issue 2 should be resolved in favour of the 1st respondent.
The 1st respondent relied on paragraphs 91-95 of its response to the appellant's submissions to the court below in pages 788 - 789 of the record to the effect that suit 841 concerned different rights arising from different contracts as held by the arbitral tribunal and upheld by the court below especially as VNL is not a party to the arbitration, but is a defendant in suit 841 showing, also, that the parties in both proceedings are not the same and that the relief sought in suit 841 is not identical with the arbitral subject-matter, the Shareholders Agreement, more so the two matters, even if they are the same, were not shown to have been commenced with the intention to irritate, harass and annoy the appellant and/or that the 1st respondent acted mala fide in the circumstance, as amplified by paragraph 94(e) of the 1st respondent's response in page 792 of the record.

The 1st respondent further contended that, even if there was an abuse of process; the remedy was to stay proceedings in the suit and proceed with the arbitration; that the principle of abuse of process does not apply to arbitral proceedings as argued in paragraph 91 of the 1st respondent's response in pages 788 - 790 of the record, as arbitral bodies are creatures of the parties' agreement and do not have inherent power or authority beyond that which is conferred on them by the parties; that public policy would only constitute a ground for setting aside an award in extreme cases, which is not the case here vide Profilati Italia Srl v. Painewebber Inc. (2001) 1 All ER (Comm) 1065 at paragraph 17; and that the application for a stay of proceedings was not made in favour of the arbitration in issue and is therefore irrelevant.

The 1st respondent further argued on the third issue that none of the conditions stipulated by Sections 30 and 48 of the ACA for the setting aside of arbitral award was met by the appellant; that estoppels or waiver were held by the arbitral panel to be inapplicable, so the arbitral proceedings and the said findings in paragraphs 125 - 126 and 130 - 132 of the award in pages 262 - 264 of the record are fatal to the appellant's claim of waiver/estoppels.

Consequently, it was urged by the 1st respondent that the fact that the same or similar factual issues underpin multiple claims would not prevent a party from commencing more than one action based on different causes of action, therefore there was no abuse of process and/or waiver/estoppels by the commencement of the action in suit 841 and the concurrent existence of the arbitration proceedings, so the issue should be resolved for the 1st respondent.

The 1st respondent 'referred to pages 1077 -1078 of the record to contend that the court below considered grounds 4 - 7 argued by the appellant before it in its judgment vide paragraphs 60 and 61 thereof with emphasis on page 1077 of the record where the court below decided the central issue whether or not to set aside the award either based on misconduct or error of law which subsumed the other issues and did not oblige the court below to determine the case as arranged by the appellant in the set aside application and that the said 'judicious and judicial determination did not occasion a miscarriage of justice vide Dalori v. Sadikwu (1998) 12 NWLR (Pt. 576) 112 at 121, Atoyebi v. Bello (1997) 11 NWLR (Pt. 528) 268 at 286, Ishola v. Folorunso (2010) 13 NWLR (Pt.1210) 169 at 211.

It was also argued by the 1st respondent that in the event the Court holds that Grounds 4 - 7 of the set aside application were not considered by the court below, the 1st respondent concedes that the said Grounds 4 - 7 can be determined by the Court under Section 15 of the Court of Appeal Act, in which in-case the 1st respondent contends that clause 27.7 of the Shareholders Agreement was submitted by the parties to the arbitral tribunal for arbitration of all disputes "arising out of or in relation to the interpretation of the Shareholders Agreement" which the arbitral tribunal determined, therefore the disagreement of the appellant with the award made by the arbitral tribunal does not amount to a misconduct by the arbitral tribunal vide Taylor Woodrow Nigeria Ltd. (supra).

The 1st respondent further argued that the arbitral tribunal merely interpreted Clause 17.22 of the Shareholders Agreement in the course of which it referred to issues of performance or