N. Onuselogu Enterprises Ltd V. Afribank (Nigeria) Plc (2005)
LawGlobal-Hub Lead Judgment Report
SULEIMAN GALADIMA, J.C.A.
This is an appeal against the judgment of Agbo (J.) of the Enugu High Court, delivered on 16/11/2000, in an arbitration award in favour of plaintiff (hereinafter referred to as “the respondent”) in a claim brought against the defendant (hereinafter referred to as “the appellant”).
The case of the appellant is that he is an engineering contractor and customer of the respondent who had a fixed deposit of N18 Million which was given to the respondent as a collateral to secure an over-draft of N5 Million, which was later increased.
When disagreement arose about the state of the appellant’s account, both parties willingly submitted the dispute to arbitration by a legal practitioner. The arbitrator gave the appellant an award of N7,893,408.34 together with interest of 21% thereon from 1/9/94, till the date of judgment and 5% interest from then until the judgment sum is liquidated.
Being dissatisfied with this judgment, the appellant appealed to this court on six grounds, three with the notice of appeal and three added by leave of this court.
In the appellant’s brief dated and filed on 19/11/2003, the three issues for determination as framed therein are as follows:
“(1) Was the court below not in error in determining the suit of the plaintiff after it found that the parties submitted their dispute to an arbitrator who made an award?
(2) And as a corollary, was the court below not in error in not striking out the suit for being premature?
(3) In the alternative, if the suit was maintainable, was the court below not in error in awarding the sum of N7,893,804.34 with interest of 21% per annum to the respondent on the evidence before it, and the finding of the court thereon?”
Respondent submitted four issues for determination thus:
“1. Whether there was indeed arbitration previous to the suit between the parties within the meaning of the Arbitration & Conciliation Act, 19S5, Chapter 19, Laws of the Federation of Nigeria, 1990, which is to ask more specifically:
(a) Whether exhibit ‘E’ was in fact an arbitral award; and
(b) Whether the meetings between the parties of August 31, 1994, and September 1, 1994, constituted arbitration proceedings within the meaning of Arbitration & Conciliation Act, Cap. 19, Laws of the Federation of Nigeria, 1990.
- Whether the learned trial Judge indeed found that there was arbitration between the parties within the meaning of the Arbitration & Conciliation Act, Laws of the Federation of Nigeria, 1990;
- Whether the suit was indeed premature as a result of the clause giving defendant/appellant up to December 31, 1994, to pay up 30% of the difference in the parties respective book values of outstanding indebtedness.
- Whether the respondent is not in fact entitled to the judgment sum of N7,893,408 with interest of 21% per annum to the respondent in the light of appellant’s admission vide exhibit ‘E’ that it owed the respondent the said sum.”
I have carefully considered the issues raised by the respective parties in their brief of argument. The 3 issues formulated by the appellant are apt and these arise for determination of this appeal.
However, the first and second issues, which deal with arbitration and the jurisdiction of the lower court to determine the dispute thereunder, can be considered together. These issues arise from ground 1, 4, 5 and 6 of the grounds of appeal. It is the submission of the learned Senior Advocate that the court below had no jurisdiction to entertain the action brought before it because under the terms of the settlement the action was premature.
Learned Counsel for the respondent submitted that there was neither arbitration agreement, arbitration proceedings nor arbitral award made. That exhibit ‘E’ was an agreement reached between the parties in the presence of a legal practitioner who signed as witness and not as arbitrator.
The relevant law in this country dealing with arbitration is the Arbitration and Conciliation Act of 1988, Cap. 19, Laws of the Federation of Nigeria, 1990 (which I will hereinafter refer to simply as the “Act”).
A fairly good understanding of the term “arbitration agreement,” its proceedings and rules are essential, as far as this appeal is concerned. Arbitration agreement is where two or more persons agree that a dispute or potential dispute between them shall be resolved and decided in a legally binding way by one or more impartial persons in a judicial manner, upon evidence put before him or them. The agreement is called an arbitration agreement or a submission to an arbitral proceeding when after a dispute has arisen, it is put before such person or persons for decision. The procedure is called arbitration and the decision when made is called an award. It was Ronald Bernstein in his book titled “The Hand of Arbitration Practice”, published by Sweet and Maxwell in conjunction with the British Chartered Institute of Arbitrator, who says at page 18, thus:
“To constitute an arbitration agreement in the sense of an agreement to refer future disputes to arbitration, it is sufficient (though not desirable) to say merely “dispute to be settled by arbitration” such a provision in a written agreement governed by English Law, would be an arbitration agreement and its defects or omission would be corrected by court if necessary.”
The foregoing definitions hold weight on the basis of Ss. 1-5 of the Act. Therefore, arbitral proceedings should not be taken lightly by both counsel and the parties. They are recognized means of resolving disputes. It must be stressed, therefore, that there must be an agreement to arbitrate, which is a voluntary submission to arbitration. In my humble view, there is no arbitration agreement contained in any clause to any document between the parties or in the exchange of letters tendered as exhibits “A – G2” in the court below between the parties. These are the bundle of documents leading to the transaction which gave rise to this case now on appeal. I am yet to see any documented arbitration agreement between the parties to submit possible dispute to arbitration. If so, the absence of this agreement to my mind, robs exhibit ‘E’ of the status of an arbitral award.
Although under the common law, an oral agreement to submit present or future differences to arbitration may be valid and enforceable but Ss. 1(1) and (2) of the Act have clearly displaced this common law principle. There is neither oral nor written agreement to arbitrate between the parties. Exhibit ‘E’ therefore fails to meet the mandatory requirement of the Act.
I am inclined to hold the view that the question of arbitration being raised now is an after thought for the following reasons. The question that readily comes to mind is that if there was arbitration between the parties and that there was an award valid on the face of it, why did the appellant fail to enforce it under Section 31 of the Act, which provides for its enforcement by leave of the court? It is noted that the appellant as defendant not only did they fail to raise issue of competence of lower court to try the suit on ground of a previous arbitration between parties, they as well failed to make any attempt whatsoever to enforce the arbitral award, but rather submit to six years of litigation instituted by the respondent to recover their debt.
I do not think there was arbitration between the parties. Learned trial Judge was equally right to have so held. My attention has been drawn to the meetings of 31/8/94 and 1/9/94 between the parties. These do not constitute arbitration proceedings within the meaning of the Act. It is not unusual that such meetings are held between banker and a debtor or customer for the purpose of recovering debts. Exhibit ‘E’ spelt out the modality for repayment of appellant’s debt in the matter.
It is noteworthy too that arbitration proceedings are governed by the Arbitration Rules as provided for in the 1st Schedule of the Act which has a total of 41 Articles giving directions and procedural guidelines for artbitral proceedings.
None of the articles was followed or shown to have been complied with in the making of exhibit ‘E’. In the respondent’s brief the relevant articles and Section not duly complied with have been reproduced. The Articles offended have been listed as Article 18(1) and (2) which provides for statement of claim; Article 19(1) and (2) making provision of statement of defence, Article 3 – notice of arbitration and Articles 31 and 32 – dealing with the form and effect of the award. It is crystal clear that the real intention of the legislature in these articles where the word “shall” was used was to make those provisions mandatory.
The second issue of the appellant, which is being considered with the first, is a corollary. It is that whether the lower court was not in error in not striking out the suit for being premature. This question arises from ground 6 of the grounds of appeal. The learned trial Judge’s commentary on the “prematurity” or otherwise of this suit based on exhibit ‘E’ is misunderstood by the appellant. In his final summation learned trial Judge said thus:
“The effect of the plaintiff reneging on the terms of exhibit ‘E’ is that it cannot enforce the payment of the 30% difference but defendants book value of the indebtedness to the plaintiff remains intact.” (See page 105 lines 18-23.)”
December 31st, 1994, was the time stipulated by exhibit E for the appellant to pay up N55,910.80 or 30% difference in the book values between the parties. The end of December that year imposed by exhibit E was in respect of the 30% extra only and not in respect of the entire sum owed. If 30% was paid by the appellant it would have enabled respondent’s over-draft facility as stipulated by exhibit E.
Learned Counsel for the appellant proposed an alternative question for determination. It is that if the suit was maintainable, whether the lower court was right in awarding the sum of N7,893,408.34 with interest of 21% per annum to the respondent on the evidence before it and the finding of the court thereon. This question arises from grounds 2 and 3 of the grounds of appeal. It is note worthy that the judgment of the lower court was based on the admitted sum of N7,893,408.34 by the appellant in exhibit ‘E’. In paragraph 12(b) and (c) of appellant’s amended statement of defence appellant averred thus:
“The defendant further says that exhibit ‘E’ has determined all the issues between the parties including the defendant indebtedness to the plaintiff.”
In the same exhibit ‘E’ reproduced in the judgment of the lower court at page 101 line 26 to page 103 line 33 clearly stated that there was conflict as to the respective book values of the parties wherein the appellant claiming a book value (or admitted indebtedness) of N7,893,408.34, which became the judgment sum, and the respondent claiming a book value (what it insisted the appellant owed it) of N9,874,777.67. At page 104 lines 5-13 the learned trial Judge put it succinctly this way.
The position therefore was that while the books of the plaintiff showed the defendant’s indebtedness as N9,872,777.67, that of the defendant showed its indebtedness as N7,893,408.34. What was in dispute was the nearly N3 Million difference between the books of the said parties. This sum in the defendant’s books is made up of the N5 Million overdraft and excess of N12,893408.34…”
The learned trial Judge was thus, correct in giving judgment for the sum of N7,893,408.34 being what appellant admitted as its indebtedness. He could not have done otherwise. I find the appellant’s argument in paragraph 14 at page 4 of their brief that “it is impossible to deduce from the plaintiff’s statement of claim how the indebtedness of N9,844,609.07 claimed in the suit was arrived at… ;” incorrect because paragraph 13 of the statement of claim clearly states that overdraft facility of N5 Million was approved for the appellant which pleading was admitted by the appellant at paragraph 5 of amended statement of defence dated 8/4/2000.
On the interest rate, respondent’s application on initial mortgage sum of N5 Million brought the sum to N9,879,777.67 an addition of N4,874,777.67 per exhibit ‘E’. Appellant disputed these interested application but conceded to interest applications of additional amount of N2,893,408.34. Interests are chargeable as provided by S. 15 of the Banking Act, Cap. 28, Laws of the Federation, 1990, on advances, loans or credit facilities. However, the learned trial Judge held that the respondent had not satisfied it as to interest rate applications. He had this to say on p. 107 lines 25 of the record of proceeding:
“I am of the opinion that at least, when the interest rates were unregulated, the parties ought to have been ad idem. Even for the regulated period, the Central Bank circulars relied upon were not placed before the court to enable it determine compliance. I make bold to say that even when interest regime is regulated and S. 15 of the Banking Act is made to apply, the margin between minimum and maximum rates of interest shall be subject to negotiations between the bank and its customer.”
The learned trial Judge after this passage went on to enter judgment in favour of the respondent in the sum of N7,893,408.34, being their book value as at 31/8/94 and 21% interest rate per annum being the agreed interest rate on the overdraft transaction from 1/9/94, till the date of judgment. I agree with the respondent that the appellant got judgment on its own terms, which he still now appealed against that judgment which was fairly decided.
It is in view of the foregoing that I consider that this appeal is lacking in merit in its entirety. It is dismissed. The judgment of the lower court is hereby affirmed. I assess costs of N10,000 in favour of the respondent.
Other Citations: (2005)LCN/1790(CA)
