The concept of party autonomy is one which is at the core of arbitration; It presupposes that parties are at liberty to determine how their disputes should be resolved. To preserve the integrity of the arbitral process, the court must recognize and give effect to the mutual choice of the parties where it is shown to be voluntary. The equitable remedy of anti-suit injunction is a very vital tool for achieving this purpose, as it restrains parties who have voluntarily agreed to arbitrate, from proceeding to litigate in breach of their agreement. This article dissects the attitude of Nigerian courts to anti-suit injunctions, and finds that Nigerian Courts just like their counterparts in other common law jurisdictions, are willing to grant anti-suit injunctions in deserving cases and under certain circumstances.
There has recently been an increasing preference for arbitration for resolving commercial disputes. This is not unexpected, in view of numerous advantages arbitration offers, such as party autonomy, expeditious resolution of disputes, freedom of parties to choose governing laws, flexibility, finality and universal enforceability of arbitral awards based on the New York Convention which governs enforcement of awards in its 172 signatory states.
Arbitration is an alternative dispute resolution mechanism whereby parties voluntarily submit their disputes to an arbitrator or arbitrators, who would hear their dispute, examine evidence presented by the parties and then make an award which is enforceable just like a court judgment. Arbitration is usually predicated on parties’ agreement, usually inserted in the underlying contract in the form of an arbitration clause, stipulating that any dispute arising out of the contract shall be finally resolved by arbitration.
However, there may be situations where a party to an arbitration agreement may when a dispute has arisen, resort to litigation rather than submitting same to arbitration. Consequently, there is need for a mechanism that ensures parties adhere to their agreement and prevent either party from deviating from their agreement to arbitrate.
Conceptual Clarifications
Anti-Suit Injunctions
Anti-Suit Injunction is a court order forbidding a party to an arbitration agreement from filing an action in court in defiance of the agreement, or from continuing with a pending lawsuit which has already been filed. Anti-suit injunction is a kind of Jurisdiction in personam exercised by Courts in common Law jurisdictions to restrain a proceeding brought in breach of an arbitration agreement, and is predicated on the theory that if it is denied, the applicant would be deprived of their contractual right (Pacta sunct servanda). Application for ASI is usually made to either the court of the seat of arbitration or of the country whose law governs the arbitration. The origin of ASI dates back to 1615, when a court restrained the claimant from enforcing a judgment he fraudulently obtained, after he took his opponent’s main witness to a pub on the day the witness was supposed to testify, but lied to the judge that the witness was “deathly ill”.
Anti-suit injunction is the opposite of Anti-Arbitration Injunction (AAI) and they differ in the following ways:
While an AAI seeks to frustrate the initiation or continuation of arbitration, an ASI on the other hand seeks to prevent the initiation or continuation of a lawsuit already initiated in breach of an arbitration agreement; whilst ASI is an in personam order against a party who has breached an arbitration agreement by commencing litigation, an AAI seeks to prevent both the claimant and the tribunal or either of them from commencing or continuing an arbitration. ASI is used to protect the arbitral proceedings, by ordering discontinuance of a suit likely to occasion imminent harm, prejudice the subject matter or frustrate the arbitration.
Party Autonomy
The concept of party autonomy lies at the core of arbitration, and is predicated on the understanding that parties to an arbitration should be allowed to determine how their disputes should be resolved. Redfern and Hunter’s definition of party autonomy is perhaps, the most authoritative, according to them “Party autonomy is the guiding principle in determining the procedure to be followed in an international commercial arbitration. It is a principle that has been endorsed not only in national laws, but by international arbitral institutions and organizations. The legislative history of the Model Law shows that the principle was adopted without opposition”.
The principle of party autonomy is recognized in various national and international laws, and has formed the basis for determining enforceability of an arbitral award. In MV Lupex v. Nigeria Overseas Chartering & Shipping Limited, the Supreme Court recognized party autonomy in arbitration, by upholding the bindingness of an arbitration clause. Also, the Arbitration and Mediation Act reinforces the concept of party autonomy by providing that arbitration agreement is irrevocable except by agreement of both parties.
Therefore, once parties have voluntarily chosen arbitration as their preferred fora for resolution of their disputes, they and even the court are bound to preserve the sanctity of the agreement.
Legal Basis For Anti-Suit Injunction
Anti-suit injunction is an equitable remedy, hence, it can be granted by the Court under its inherent Jurisdiction with a view to doing substantial justice, even where no law expressly grants such power. The Constitution of the Federal Republic of Nigeria, in stating the extent of judicial powers vested in the courts, provides that it extends to all inherent powers of a court of law. According to the Court in Universal Oil Ltd. v. N.D.I.C., inherent powers are incidental powers exercised by the court for the purpose of doing substantial justice. Also, in PEARSE v. OLOYEDE & ORS, the court defined inherent jurisdiction, according to the court: “Inherent jurisdiction of the court” has been defined as a source of law which is peculiar and special to civil procedural law. The jurisdiction of the court which is comprised within the term “inherent”‘ is that which enables it to fulfill itself and effectively as a court of law”.. The courts have an inherent power to prevent abuse of court process through frivolous or vexatious suits.
The fact that ASI is an equitable remedy however, makes it discretionary. Thus, it is not granted as of right, but only where there exists exceptional circumstances necessitating its grant. Moreover, a party seeking for an ASI must show that there exists a valid arbitration agreement, and that he has taken active steps or is willing to take steps to arbitrate. There must be an imminent danger of a parallel proceedings capable of producing conflicting orders on the same issue if ASI is denied; the balance of convenience must favour its grant. Furthermore, an application for ASI must be brought timeously, and before the offending suit reaches an advanced stage, as undue delay may defeat the application. Also, the subject matter must be arbitrable, as certain matters have been held non-arbitrable under Nigeria law, such as tax disputes. In Kano State Urban Development Board v. Fanz Construction Limited, the Supreme Court declared certain disputes non-arbitrable in Nigeria. These include: “i. Indictment for an offence of a public nature; ii.. Dispute arising out of an illegal contract; iii. Disputes arising under agreements void as being by way of gaming or wagering; iv. Disputes leading to a change of status such as divorce petition; and v. Any agreement purporting to give an arbitrator the right to give judgment in rem.” It is submitted that an application for ASI in relation to dispute involving any of the above subject matters may be liable to be refused.
It could also be that the adverse party had colluded with a third-party to commence litigation to frustrate the arbitration.
In many common law jurisdictions, the courts always grant ASIs where the interest of justice demands. For instance, in the recent case of Unicredit Bank GmbH v RusChemAlliance LLC, an English Court of Appeal granted an ASI to restrain a Russian company from continuing a litigation commenced in breach of arbitration agreement. But where such application is shown to be vexatious or frivolous, such application may be dismissed with costs against the applicant.
It is submitted, that although English authorities are not binding on Nigerian courts, yet, being a common law jurisdiction, Nigerian courts will definitely be more persuaded to adopt the English courts’ position.
The New York Convention indirectly recognizes ASIs, albeit, the wordings seems to refer directly to stay of proceedings. It provides that:
“(1) Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration; (3) The Court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed”
The UNCITRAL Model Law is similarly worded, likewise the Nigerian AMA which equally contains a similar provision. Section 60 and second schedule equally incorporated the New York Convention, thus, its provisions are binding on Nigeria.
Although, the AMA does not expressly mention ASI, as it merely made reference to stay of proceedings. It is however submitted, that ASI and stay of proceedings have the same objective which is to restrain a party intending to or has commenced a lawsuit in breach of an arbitration agreement, and since the order is only directed against the parties and not the Court, then, there appears to be no reason why Nigerian courts should not grant ASI in deserving cases. Also, the Court’s power to grant ASI extends even to situations whereby the seat of arbitration is not Nigeria or the parties have not yet determined the seat. For instance, in the case of African Insurance Corporation v Aiteo Eastern E & P Company Ltd., the Queens Bench division of the High Court of Justice, England and Wales High Court of Justice Commercial Court, issued an Anti-Suit injunction to restrain a party who had commenced a lawsuit before the Nigerian Federal High Court, in the case of Aiteo Eastern E & P Company Ltd. v African Finance Corporation & ors, from continuing, pursuing or taking any step further in the proceedings or risk being held in contempt of court.
Nigerian Courts’ Attitude To ASIs
The Nigerian courts have always maintained the position that for a party to be entitled to grant of stay of proceedings or ASI, such party must bring the application timeously and before taking any step in respect of the proceedings before the Court, for where a party applying for ASI is found to have submitted to the jurisdiction of the court or taken active steps to defend the action, he would be deemed to have acquiesced or waived the right to arbitrate. Moreover, where the court has refused an application for ASI or stay of proceedings, it will be seized of power to finally determine the matter, the supreme court authority of Obi
“any agreement to submit a dispute to arbitration such as the one referred to above, does not oust the jurisdiction of the court. Therefore, either party to such an agreement may, before a submission to arbitration or an award is made, commence legal proceedings in respect of any claim or cause of action included in the submission… No stay was asked by the defendants after they were served with writ of summons … Moreover, if the court has refused to stay an action or if the defendant has abstained, as in the case in hand from asking it to do so, the court has seisin of the dispute, and it is by its decision, and by its decision alone that the rights of the parties are settled.”
It also appears that a party who has been served court processes in respect of a litigation commenced in violation of an arbitration agreement, has a duty to take prompt steps to bring the existence of the said arbitration agreement to the court’s attention, otherwise, any delay would amount to waiver of the right to arbitrate. In Vessel MT Sea Tiger v ASM (HK) Ltd, the appellant was served with the originating process, but took no steps to either participate in the litigation or apply for ASI. The court of Appeal regarded same as an implied waiver. According to the Court of Appeal,
“the failure or refusal by it to appear in reaction to the originating process to enable the appellant to challenge the jurisdiction of the lower court on the ground of the arbitration clauses… left no other reasonable presumption in law and option to the lower court than that the appellants had submitted to the jurisdiction of that court to adjudicate over the suit… The failure or refusal to enter an appearance and be represented in the suit constituted and amounted to a muted but clear submission to the jurisdiction of the lower court in the case”
An ASI will not be granted where an applicant has no legal or equitable interest to protect, which has been or is about to be breached by the litigation.
A party who has waived his right to arbitrate or taken steps in respect of the suit or has lost his contractual right to arbitrate, is not entitled to ASI. Also, a party who chose rather to raise a preliminary objection in the Court in which the proceeding was commenced, as against seeking for an ASI, would be deemed to have waived the right to arbitrate.
Moreover, where there is already a pending arbitration, none of the parties is allowed to again commence fresh lawsuit in respect of the same claim, as that would be tantamount to an abuse of court process. In MV Lupex v NOC & S Ltd, there was a pending arbitration between the parties in London, the Respondent counterclaimed and subsequently, commenced a suit in Nigeria on the same subject matter. The supreme court held that the Respondent was bound to participate in the arbitration already commenced in London.
In the recent Nigerian case of P. E Bitumen Resources v. Cocean Nig. Integrated Ltd., the Lagos state High Court granted an ASI in favour of arbitration so as to prevent abuse of court process.
Mbadugha opined that ASI is unconstitutional as it inhibits constitutionally guaranteed right of access to court. It is however submitted that ASI does not in anyway inhibit partys’ right of access to court, but merely holds parties bound to their agreement; to submit their disputes to arbitration.
Anti-suit injunction may be granted on the interim and subsequently, on a final basis where sufficient cause is not shown as to why it should be vacated. Being an in personam order, disobedience to ASI is tantamount to contempt of court, and the contemnor may be penalized. In the case of African Insurance Corporation v Aiteo Eastern E & P Company Ltd., an English Court while issuing an anti-suit injunction, included a penal notice in the following words: “if you, Aiteo Eastern E & P Company Limited, the within-named Defendant, disobey this Order you may be held to be in contempt of court and any of your directors or officers imprisoned, fined, and/or have your assets may be seized. Any other person (legal or natural) who knows of this Order and does anything which helps or permits the Defendant to breach the terms of this Order may also be held to be in contempt of court and may be imprisoned, fined, have their assets seized and/or face other punishment under the law”.
Conclusion
The sanctity of arbitration agreements and integrity of the arbitral process must be preserved. ASI as an equitable remedy, would ensure that parties to an arbitration agreement do not breach the arbitration agreement by resorting to litigation. Moreover, courts have a duty to preserve the principle of party autonomy which is at the root of arbitration. However, the position taken by Nigerian courts to the effect that an applicant for ASI must not have taken any steps in the proceedings, seems to differ from that of English courts, to the effect that a party who merely takes steps to challenge the commencement of litigation in violation of an arbitration agreement has not waived the right to arbitrate. This writer is more inclined to support the position taken by the English courts, and equally hope that the Nigerian courts will tow the line of the English courts as it accords more with logic and common sense.
About Author
Ekenobi ThankGod Chinonso is a final year law student at Ahmadu Bello University, Zaria, Kaduna State, Nigeria. He has written over 60 law related articles, out of which 37 has been published in various journals, magazines, blogs, and other mediums. He has also participated in, and won several national essay competitions. His areas o interests range from Commercial Arbitration, Litigation, Intellectual Property Law, Technology Law, Taxation and Capital Markets. He is an author, his book “A Review Of Recent L andmark Developments In Nigerian Law: Compedium Of Research Papers” is available on Amazon Bookstores.
