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IN THE HIGH COURT OF LAGOS STATE IN THE LAGOS JUDICIAL DIVISION
HOLDEN AT LAGOS
BETWEEN SUIT NO: M/82/2012
CELTEL NIGERIA BV APPLICANT
AND
1. ECONET WIRELESS LIMITED 2. DELTA STATE MINISTRY OF FINANCE INCORPORATED 3. O & O NETWORKS LIMITED 4. DTSG ECOSHARES LIMITED 5. BROMLEY ASSET MANAGEMENT LIMITED 6. FBC ASSETS LIMITED 7. AKWA IBOM INVESTMENT & INDUSTRIAL PROMOTION
COUNCIL 8. IBILE HOLDINGS LIMITED 9. FIRST CITY TELECOM LIMITED 10. LAC TELECOMS LIMITED 11. ALL SPEAKS NIGERIA LIMITED 12. S&D VENTURES LIMITED 13. OCEANIC SECURITIES INTERNATIONAL LIMITED 14. BOYE OLUSANYA 15. TUNDE HASSAN-ODUKALE 16. CONDOR INVESTMENTS LIMITED 17. BOLAJI BALOGUN 18. BROAD COMUNICATIONS LIMITED 19. OBA OTUDEKO 20. MS FOLUKE OTUDEKO 21. AYO ADEBOYE
WRITTEN ADDRESS OF THE 1ST RESPONDENT IN OBJECTION TO
THE MOTION ON NOTICE FOR INTERLOCUTORY INJUNCTION
FILED BY THE APPLICANT
INTRODUCTION
This address is limited only to the Application for Interlocutory Injunction filed by
the applicant in its Motion on Notice dated the 3rd of February 2012.
This is sequel to Relief 2 on the Originating Motion. It is clear from the
Originating Motion that the main claim before the court is an application to set
aside the partial award made by the arbitrators which award is annexed to the
application as Exhibit AA 3.
The circumstances leading to the award being made a partial award limited only to
the issue of liability has been partially set out in paragraph 20 of the affidavit in
support of the Motion for Interlocutory Injunction.
The 1st Respondent has also filed as Exhibit to its affidavit, procedural order No 6
made by the Arbitral tribunal in this respect. The main purpose of the application
for injunction filed by the applicant is certainly to truncate the proceedings and to
derogate from the agreement of parties, since this application if granted would
mean that the arbitrators would have to hold off on an assessment of damages
which would be a breach of its procedural order issued pursuant to agreement by
the parties.
The Applicant by its application to set aside the arbitral award is in essence
attempting to re-litigate matters, which were argued at great length by it in the
arbitration. Its arguments were dismissed in a closely reasoned award and the
Applicant now is attempting to have one more bite at the cherry by re-arguing the
same points in its application to set aside the Award.
1.
2. ISSUES FOR DETERMINATION
We respectfully submit that two issues arise for determination in the application
filed for interlocutory injunction namely-
1. Does this Honourable Court have the jurisdiction to grant an
injunction to restrain the Respondents from continuing arbitral proceedings,
which have been ongoing for several years and has resulted in a partial award
being rendered and if the answer is yes, what is the extent of that jurisdiction?
2. If issue 1 is answered in the affirmative, should this Honourable
Court grant an injunction in the instant case?
3. ARGUMENTS
3. 1. ISSUE ONE
Does this Honourable Court have the jurisdiction to grant an injunction to restrain
the Respondents from continuing arbitral proceedings, which have been ongoing
for several years and has resulted in a partial award being rendered and if the
answer is yes, what is the extent of that jurisdiction?
2
A. JURISDICTIONAL ISSUE
The main question for determination is to ascertain the powers vested in the courts
in respect of arbitration matters. This has to be determined by reference to the
statutory provisions governing this matter under Nigerian law.
The Applicant‟s Motion for Interlocutory Injunction is made by reference to
Section 18 of the High Court of Lagos State Law and Order 38 Rule 1 of the High
Court of Lagos State [Civil Procedure] Rules 2004 and the inherent jurisdiction of
this Honourable court.
It is therefore necessary to consider whether or not the above provisions give the
court the jurisdiction to grant an injunction to restrain arbitral proceedings at any
stage whatsoever.
B. POWER OF COURT IN RELATION TO ARBITRATION
The judicial powers of courts in relation to arbitration proceedings are as contained
in Section 34 of the Arbitration and Conciliation Act, which states as follows:
“A court shall not intervene in any matter governed by this Act except where so
provided in this Act.”
In essence therefore, the circumstances under which the court can intervene in the
Act are only as prescribed under the Act. It is submitted, that no section in the
Arbitration Act gives the High Court power to intervene in Arbitral proceedings or
restrain parties from performing their rights and obligations under an arbitration
agreement, outside the instances above mentioned. Indeed, your lordship will find
upon a close reading of the Arbitration Act that the following are the only
instances where the Act admits of court intervention:
3
(a) Section 4 - Arbitration and substantive claim before
the court
(b) Section 7 - Appointment of arbitrators
(c) Section 23 - Court assistance in taking evidence
(d) Section 29 & 30 - Application for setting aside as exclusive
recourse against arbitral award
(e) Section 31 and 32 - Recognition and enforcement
It is further submitted that the powers of the High Court in regard to arbitration
matters are ipso jure residual and not supervisory. It is worthy of note that Section
34 of the Arbitration and Conciliation Act is in pari materia with Article 5 of the
UNCITRAL Model law, which in substance is similar to the equivalent provision
in the English Arbitration Act 1996, the object of which provisions is to entrench
the party autonomy principle as an important driver of an arbitral process, and
thereby limit the intervention of courts in that regard. Commenting on the
Arbitration Act 1996 and the role of the court in arbitration matters, the English
Court in Cetelem S.A. vs. Roust Holdings Limited [2005] W. L. R. 3555 at
3571 stated that the:
...central and important purpose of the 1996 Act was to
emphasise the importance of party autonomy and to restrict
the role of the courts in the arbitral process. In particular the
Act was intended to ensure that the powers of the Court
should be limited to assisting the arbitral process and
should not usurp or interfere with it. [Emphasis added]
4
It is submitted that this position applies with equal force and effect to the role of
the Nigerian courts under the Arbitration Act, and we so urge.
There is no power vested in the court under the Arbitration and Conciliation Act
to grant an injunction to restrain parties to an arbitration from proceeding with
arbitration and indeed that this is so is recognised by the Applicant‟s Counsel in
paragraph 4.4 of his written address.
Having admitted that much, the question that arises is whether Counsel can invoke
Section 18 of the High Court Law and the inherent jurisdiction of the court to
apply for an injunction to restrain the continuation of this arbitration in spite of
the obvious restrictions to the powers of the Court under Section 34 of the
Arbitration and Conciliation Act.
It is trite law that there are no inherent powers vested in the court to assume
jurisdiction over a matter in which it is statutorily exempted from jurisdiction. We
seek support for this by reference to the decision of the Supreme Court in Mabera
v Obi. 1972 N S C C 575 where it was observed as follows:
“Learned counsel for the plaintiff/respondent, in the course of his argument has also submitted
that the High Court, apart from statutory provisions, has inherent jurisdiction to hear the case. In
our view, this cannot be so because the inherent jurisdiction of the court is exercisable only as part
of the process of the administration of justice; it is part of the procedural law, both civil and
criminal, and not of substantive law. It is invoked only in relation to the process of litigation.
Therefore, if the jurisdiction of the court is ousted by statute, the inherent
jurisdiction of the court cannot be invoked to circumvent the clear
provisions of the statute.” [Emphasis added]
5
Section 18 of the High Court Law also relied upon by the applicant to invoke the
jurisdiction of the court to grant an injunction is in pari materia with Section 37 of
the English Supreme Court Act 1981.
Although, s. 18 of the High Court Law vests the High Court with general powers
to grant injunctions, it is submitted that the section cannot and ought not to be
construed as conferring supervisory powers on the High Court in respect of
arbitration matters. The provision and object of s. 18 of the High Court Law is in
substance the same as Section 37 of the Supreme Court Act 1981 which empowers
the English Courts to grant injunctions in circumstances where the court thinks fit.
By s. 10 of the High Court Law of Lagos State, the practice and procedure of the
High Court of England is made applicable in Lagos State.
Commenting on the powers of the court pursuant to section 37 of the Supreme
court Act 1981, the learned author on „Injunctions in General‟, L.A Sheridan states
as follows:
The Supreme Court Act 1981, S. 37 (1), provides:
“The High Court may by Order (whether interlocutory or final) grant an injunction…
in all cases in which it appears to the Court to be just and convenient to do so.”
That (like earlier legislation applying in terms only to interlocutory Orders) has been interpreted
as confirming jurisdiction to award an injunction when the violation of a legal or equitable right
has occurred or is threatened. With two exceptions, the Court has no power to grant an injunction
when the Applicant has no cause of action against the party he asks the Court to restrain. The
exceptions are: (1) the jurisdiction of the High Court to grant an injunction to restrain the
prosecution or defence of proceedings in a lower Court or in another country, and (2) when
proceedings are in train to resolve a dispute, the jurisdiction to grant orders
to protect or further the functioning of the Court, English or foreign, or the
Arbitration. 6
In furtherance of the judicial process, the Court can issue an injunction
ancillary to some other Order, which the Court has, power to make”.
[Emphasis added]
In the instant case, rather than orders to further the functioning of the arbitration
in which proceedings are in train to resolve a dispute, the applicant herein seeks to
truncate those proceedings. We also quote with respect the observations of the
same author who relying on the decision in Bremer Vulcan v South India
Shipping [1981] AC 909 stated as follows:
„The High Court has no inherent jurisdiction to supervise Arbitrators analogous to its powers to
control inferior Courts. Restraining Arbitration proceedings is an aspect of the enforcement of
contracts, so that the Applicant for an injunction must show that going on with the Arbitration
would, in the circumstances, be a breach of contract or that the contract providing for Arbitration
has come to an end.‟
In the instant case, going on with the arbitration proceedings would not be in
breach but in furtherance of a contract willingly entered into by the parties. In
addition, the contract providing for the Arbitration has not come to an end and is
still the document governing the relationship between the parties.
It is also humbly submitted that if the Honourable Court restrains the arbitration
proceedings from continuing where the tribunal has jurisdiction, this may be a
breach of Nigeria‟s international obligations under the New York Convention
which is the second schedule to the Arbitration and Conciliation Act. See Fiona
Trust& Holding Corporation v Yuri Privalov [2007] EWCA Civ 20 where the
English court held that
7
“If in a case where an arbitrator does have jurisdiction to decide a particular dispute, he is to be
restrained from so doing and no stay of court proceedings is to be granted, there is likely to be a
potential breach of the United Kingdom‟s international obligations in relation to commercial
arbitrations under the New York Convention of 1957 as enshrined in the 1996 Act.”
In relation to valid arbitration agreements, Article II (3) of the Convention forbids
courts from doing other than referring the parties to arbitration. See Gary B. Born
– Effects and Enforcement of International Arbitration Agreements – D.
Court Orders Enjoining Arbitration: Anti-Arbitration Injunctions where it is
stated, “the principle of judicial non-interference in international arbitral proceedings is vitally
important.”
It is humbly submitted therefore that the Honourable Court should have respect
for party autonomy and show restraint in intervening in arbitral proceedings. See
the unreported case of Lesotho Highlands Development Authority v
Impregillo Spa and Others
Incidentally, the relevance of the above is that the arbitration in issue is not a
domestic arbitration but an international arbitration having regard to section 57(2)
of the Arbitration and Conciliation Act.
C. THE POSITION OF THE LAW IN ENGLAND
While in England, it is established that a court may issue an injunction to prevent
the continuation of arbitral proceedings, as Section 37 of the Supreme Court Act
1981 has been considered to apply to injunctions against the continuation of
arbitral proceedings, the instances where such an injunction has been granted has
8
been sparse and the conditions for the applicant to meet are quite stringent as the
general principle in English law is that the courts will not interfere with arbitration
proceedings.
In urging the court to assume jurisdiction, learned counsel for the Applicant has
relied on the following English authorities which unfortunately, we submit, do not
support the conclusions drawn by the Applicant. As a result the 1st Respondent
will discuss each of these cases and also go further to cite further English cases, all
setting down the parameters for the grant of anti-arbitration injunctions.
i) Bremer Vulkan v South India Shipping [supra]
In this case, the court stated that
“I would accept that the unperformed primary obligations of the parties under an arbitration
agreement, like other contracts, may be brought to an end by frustration, or at the election of one
party where there has been a repudiatory breach of that agreement by the other party…..I would
also accept that when, on the commission of such a breach, the party to an arbitration agreement
who is not in default has lawfully elected to bring to an end the unperformed primary obligations
of both parties to continue with the arbitration up to the issue of an award the High Court has
jurisdiction, in protection of that party‟s legal right to do so, to grant him an injunction to restrain
the other party from proceeding, further with the arbitration. The reason for such an injunction is
to prevent his being harassed by the making of a purported award against him, which on the face
of it will be enforceable against him in England and many foreign countries, thus forcing him to
incur the costs of resisting its enforcement.
This is the reason for those injunctions, which have hitherto been granted in
two types of cases. The first is where one party claims that the arbitration
9
agreement relied on was void or voidable ab initio……………..The second
type of case in which injunctions have been granted is where the arbitrator
is or has become disqualified by reason of bias.” [Emphasis added]
The Applicant has fundamentally misunderstood this case. The „fundamental
breach‟ cited by the Applicant at paragraph 4.28 of its written submissions refers to
a breach of an implied term in the arbitration agreement such as failing to
participate in arbitration. An allegation that the appointing authority did not
properly constitute the Tribunal is not such a „fundamental breach‟
It is in fact the Applicant‟s challenge to the Partial Final Award, which is a
„fundamental breach‟ and an abuse of process. See Nomihold Securities Inc v
Mobile Telesystems Finance SA. [2012]EW HC 130
ii) Compagnie Nouvelle France Navigation SA v Compagnie Navale
Afrique du Nord (the ‘Oranie’ and the ‘Tunisie’) [1996] 1 Lloyds Report 477
The court stated the principles as “(1) that the stay must not cause injustice to the claimant
in the arbitration and (2) that the applicant for a stay must satisfy the court that the continuance
of the arbitration would be oppressive or vexatious to him or an abuse of the process of the court:
in short, that it would be unjust.” The court went on to state that “the learned Judge
…………..states first that it is desirable and of importance that the parties should carry out
their contracts and that if they have agreed to arbitrate, as on the face of it they had, then they
should be held to their bargain……….On the grounds of the learned Judge, which are the
grounds which have been indicated in my judgment, I think that the learned Judge was right in
arriving at the conclusion that the facts of this case would not justify an injunction.”
10
iii) Elektrim SA v Vivendi Universal SA [2007]EWHC 571 (Comm)
The court stated “ I have concluded that even if Elektrim could establish that one of its legal
or equitable rights had been infringed or was threatened by the continuation of the LCIA
arbitration pending the outcome of the ICC arbitration, or even if it could establish that the
continuation of the LCIA arbitration was otherwise vexatious, oppressive or unconscionable, in
this case the court should not invoke the power to grant an injunction under section 37. This is for
the following reasons.
First, to do so would be contrary to the agreement of the parties to refer the
TIA disputes to the LCIA arbitrators and to do so under the provisions of
the 1996 Act and the LCIA Rules of procedure.” [Emphasis added]
iv) Intermet FCZO v Ansol Limited [2007] EWHC 226
The court stated “ I consider it would be unjust to deprive Intermet and Ves of their right to
arbitrate the issues subject to the arbitration agreement contained in the General Agreement as
varied. If I were to grant any such injunction, they would be deprived of the benefits of the
arbitration, and the opportunity of an award against Ansol which could be achieved far more
quickly than in the commercial court proceedings. It is clear that the grant of an injunction would
severely prejudice Intermet and Ves as it would deprive them of the opportunity of speedy
enforcement of any award that they might obtain. Moreover, Intermet and Ves have already
incurred enormous costs in the Arbitration which, in reality, would be wasted if the injunction
were to be granted.”
v) J. Jarvis & Sons Ltd v Blue Circle Dartford Estate [2007] App LR.
The court derived four propositions on the granting of injunctions to restrain the
continuation of arbitration proceedings.
11
(1) The Court‟s power under section 37 of the Supreme Court Act 1981 to
grant injunctions includes a power to grant an injunction to restrain
arbitration from proceeding.
(2) That power may be exercised if two conditions are satisfied, namely: (a) the
injunction does not cause injustice to the claimant in the arbitration, and (b)
the continuance of the arbitration would be oppressive, vexatious,
unconscionable or an abuse of process.
(3) The court‟s discretion to grant such an injunction is now only exercised
very sparingly and with due regard to the principles upon which the
Arbitration Act 1996 is expressly based.
(4) Delay by the party applying for an injunction is material to the court‟s
exercise of discretion and may in some cases be fatal to the application.
Upon a consideration of all these propositions and applying the principles to the
facts of the case, the court held that “the balance comes down decisively against the grant of
an injunction. Accordingly, Jarvis‟s claim for an injunction is dismissed.”
The fact that so few cases on the point are available, and that most of these cases
rejected the application for an injunction, is evidence of English judicial restraint in
this regard.
Where such injunctions have been granted, it has been for the court to determine
the existence of a valid and binding arbitration agreement. See
I) Nigel Peter Albon v Naza Motor Trading SDN BHD [2007] EWHC 1879
(Ch) where the fundamental issue between the parties was whether the
12
underlying contract between the parties is (as alleged by Mr. Albon) an oral
agreement made in England subject to English law (“the UK Agreement”) or (as
alleged by Naza Motors) is a Joint Venture Agreement (“the JVA”) signed by the
parties in Malaysia governed by Malaysian law.
II) The Republic of Kazakhstan v Istil Group Inc [2007 ]EWHC 2729
(Comm)
In this case, the Defendant first litigated in Paris and established that there was no
applicable arbitration agreement, but lost its action because it was held that the
Claimant enjoyed sovereign immunity. The French court directed the Defendant to
litigate in Kazakhstan. The Defendant then arbitrated in London in defiance of the
French court ruling. This time the Defendant won but there followed a four-day
trial on jurisdiction before Steel J at the conclusion of which he ruled that the
arbitrators had no jurisdiction, the Claimant not being party to any agreement to
arbitrate.
III) Excalibur Ventures LLC v Texas Keystone Inc [2011] EWHC 1624
(Comm)
The court stated that “in my judgment, the circumstance of this case conclusively point to this
court being the appropriate tribunal to decide whether or not the Gulf Defendants are party to the
arbitration agreement contained in the Collaboration Agreement, rather than the ICC arbitral
tribunal……..Having decided that it is appropriate for the court to determine the issue of
arbitrability, I also conclude that it is appropriate to grant an anti-suit injunction restraining
Excalibur from pursuing the arbitration proceedings.”
13
IV) Claxton Engineering Services Limited v TXM Olaj-Es Gazkutato KTF
[2011] EWHC 345 (Comm)
The grounds upon which the injunction was sought is that the arbitration
proceedings were brought in breach of an English exclusive jurisdiction clause, and
despite the fact that, as the English court has already determined, there is no
arbitration agreement.
Moreover, the authors of Russell on Arbitration, one of the leading arbitration
texts, state at paragraph 7-058 that:
“Injunctions to restrain arbitration are, at least in England, few and far between and becoming
fewer still over time. This is principally because of the acceptance of the principle that the arbitratr
should usually determine his own jurisdiction and so to restrain an arbitration by way of
injunction would be inconsistent with the scheme of the Arbitration Act 1996.”
In addition the further the arbitral proceedings have gone, the less likely the court
will be to interfere, See Jarvis v Blue Circle Dartford Estate [supra], The
Elektrim case [supra] and also The Intermet case [supra], and where
injunctions have been granted, it has generally been before the tribunal had even
considered the issue of jurisdiction. See Albo v Naza Motor[supra] and Claxton
Engineering Services v TXM Olaj-Es [supra]
We humbly submit therefore, that the powers of this Honourable Court to grant
anti-arbitration injunctions are limited to instances as set out above in the cases
referred to above and there is no law in Nigeria which vests this Honourable Court
with the jurisdiction to grant an anti-arbitration injunction simply because the
Applicant herein has decided that it is no longer in its interest to meet its
contractual obligations by submitting itself to arbitration.
14
3.2 ISSUE TWO
If Issue One is answered in the affirmative, should this Honourable Court grant an
injunction in the instant case?
This issue is being argued in the event that the court holds that it has jurisdiction
to entertain the Applicant‟s claim for Interlocutory Injunction.
It is a well-established principle that a claim for interlocutory injunction must
derive or be predicated on a valid claim for injunction in a substantive suit. The
claim for injunction is by itself only sustainable if it is related to a substantive claim
before the court. Such a claim must be connected with the main claim. Where any
injunction is claimed there is need for it to be on a subject matter within the ambit,
scope and effect of the substantive proceedings before the court and as such where
the prayers for injunction sought by an applicant do not come within the ambit,
scope and effect of proceedings, they cannot be entertained. This principle was
decided in the case of Adenuga v. Odumeru [2001] 2 NWLR part 696 page
184 where the court on page 196 per Karibi- Whyte held as follows:
“..........The remedy is certainly not available to parties in respect of issues not raised in the action,
or matters not directly related to the issues raised- see Akibu & Ors v. Munirat Oduntan
(1991) 2 NWLR (pt 171) 1 at 10. The application by the plaintiffs/appellants seeking for
injunctive orders is clearly not within the claim and not directly related to the claim. The
application therefore cannot be for the protection of a right before the court, which may be violated,
unless the application was granted.
Furthermore, since the reliefs sought are not in respect of or directly related to a claim before the
court, the court is without competence and jurisdiction to hear it, since it is not in respect of a claim
15
before it. See Madukolu v. Nkemdilim (1962) 2 SCNLR, 341......... It is therefore in such a
circumstance unnecessary to inquire into the existence of a legal right enabling the grant of the
relief. “
In the instant case, the main claim before the court is an application by the
Applicant to set aside the partial award made by the arbitrators, a power being
exercised by the Applicant pursuant to the Arbitration Act.
The attempt by the applicant to obtain an injunction to restrain the respondents
particularly the 1st Respondent from continuing with the Arbitration proceedings
we respectfully submit, has no bearing, not is it related to the main relief sought in
the Originating Motion to wit the setting aside of the partial award on liability. The
grant or otherwise of the application to set aside the award is in no way affected by
the continuation of arbitration proceedings.
Perhaps more important is the fact that the claim for an injunction by the
Applicant is an attempt to obtain surreptitiously an injunction for the completion
of an arbitration that has already started, when if it had brought an application for
an injunction at the commencement of the arbitration proceedings, it would have
failed.
Finally, it is against all known rules of injunction for a court to grant an injunction
to restrain the exercise of a legal right vested in the 1st Respondent.
A. FACTORS RELEVANT FOR THE GRANT OF AN INJUNCTION
Counsel from paragraph 4.13-4.43 proceeded to argue extensively on the principles
relevant to the grant of an injunction and seeking to equate this application with an
injunction pending an appeal. However, it is submitted that the correct test is that
16
laid out in the Jarvis v Blue Circle case [supra] relied upon by the Applicant, i.e.
the test for an injunction sought to restrain parties from continuing with
arbitration proceedings.
i) The test as regards the granting of an interlocutory injunction to restrain
the parties from continuing with arbitration proceedings
This test is applicable because it specifically relates to injunctions sought to prevent
the continuation of arbitral proceedings. The Applicant also concedes that the test
is relevant to its application at paragraph 4.11 of its written submissions. It is also
important to note that even where the test is met, the court must still consider
whether to exercise its discretion in favour of the Applicant. The principles
regulating the grant of an injunction to restrain arbitration are:
a. The grant of the injunction does not cause injustice to the Claimant in the
arbitration.
1. The grant of the injunction restraining the continuation of the arbitration
would cause injustice to the 1st Respondent.
2. First, it would deprive the 1st Respondent of the fruits of its victory in the
liability phase of the arbitration. In particular in this regard, the forward
momentum of the agreed arbitral process would be disrupted – quite
possibly for some considerable time – in a complex dispute where such
momentum (or the deprivation thereof by an opponent) is of significant
strategic advantage. In this regard the Honourable Court should be astute
to ensure that it is not now used to deny the 1st Respondent what it has
fairly won in the arbitration (beyond simply the points of black-letter law).
In short, having lost the arbitration, allowing the Applicant now to “Kick
for touch” would hand it a clear strategic advantage which would,
conversely, cause injustice to the 1st Respondent. 17
3. Secondly, this disruption to the forward momentum of the arbitral
proceedings is likely to have concomitant practical consequences. The
longer the proceedings are disrupted the more difficult it is likely to be to
maintain or secure the availability of Tribunal members, witnesses and
others who have been engaged in the arbitral proceedings to date. Were one
of the Tribunal members to no longer be available as a result of such a
delay, this would have significant consequences for the arbitration and be
extremely prejudicial to the 1st Respondent. A replacement arbitrator would
have to be appointed (itself likely to be a challenge in view of the original
appointment process) and the replacement arbitrator would have to be
familiarised with the significant pleadings and evidence already filed in the
arbitration, with consequent additional delays and costs.
4. Thirdly, any further delay caused by the grant of an injunction may
significantly prejudice the 1st Respondent‟s case in respect of the quantum
of damages and/or compensation to which it is entitled under the Award:
relevant witnesses may no longer be available (or their memories of the
relevant events may have dimmed over time) and difficulties of enforcement
(including most particularly as regards limitation periods) may be increased.
5. Fourthly, any award of damages/compensation will itself be delayed and
there is mounting evidence that the financial position of VNL (and
therefore the Applicant, whose sole asset is believed to be its shares in
VNL) is deteriorating: see the counter-affidavit of Jerome Lombard dated
21 February 2012. If so, any further delay, particularly any prolonged delay,
may significantly prejudice the 1st Respondent if it means that it would be
unable to recover in full any award of damages in its favour against the
Applicant.
18
6. In summary, all of these likely effects will, in and of themselves, cause
injustice to the 1st Respondent but particularly in the context of: (i) a valid
arbitration agreement; (ii) the parties having agreed that all disputes falling
within the scope of that agreement should be subject to arbitration; (iii) the
Tribunal having heard lengthy submissions regarding each of the grounds
now advanced by the Applicant; and (iv) the Tribunal having rejected those
submissions in a carefully reasoned Award.
b. The continuance of the arbitration would be oppressive, vexatious,
unconscionable or an abuse of process.
1. The continuance of the arbitration is plainly not oppressive, vexatious,
unconscionable or an abuse of process.
2. First, the fact that the Applicant would have to bear the legal costs of
continuing with the quantum phase of the arbitration whilst pursuing its
application to set aside does not mean that continuation of the arbitration is
oppressive or vexatious: see paragraph 4.32 of the Applicant‟s Written
Submissions. The Applicant agreed to submit its disputes relating to the
Shareholders Agreement to arbitration. It cannot now complain of the
costs of doing so after an unfavourable partial award, against which it has
chosen to challenge. The circumstances in which it may have to bear the
legal costs of two sets of proceedings is the result of its own doing.
3. Secondly, for the reasons outlined below, the Applicant‟s application to set
aside the Award is unmeritorious, or at the very least there is serious doubt
as to whether it would succeed. In these circumstances, the continuation of
the arbitration pursuant to the Award cannot be oppressive or vexatious to
19
the Applicant. This is particularly so in circumstances where the Tribunal
has already made a series of clear findings in the Award to the effect that it
does not consider that the present arbitration is oppressive or vexatious in
the context of the existing Lagos High Court Suit 841 on its own, nor as
part of the wider group of proceedings commenced by the 1st Respondent
to protect its position: see paragraph 141, and also paragraphs 137 and 150,
of the Award.
4. Thirdly, in any event, it is well-established that the possible duplication of
legal costs, where one set of costs arises from the parties‟ agreement to
submit certain disputes to arbitration, is not oppressive, vexatious or
unconscionable: see Jarvis v Blue Circle (supra) at paragraphs 46 and
47.
5. Fourthly, any duplication of legal costs occasioned by the Applicant should
the injunction not be granted is something that can be compensated for in
damages or a suitable order as to costs.
6. The same reasoning above applies to the Applicant‟s costs of resisting
enforcement of any Final Award. Moreover, those costs are purely
speculative at present: at the appropriate time the Applicant could seek to
rely on Article VI of the New York Convention, which provides that the
courts of the country in which enforcement is sought may stay those
proceedings pending a decision by the competent authority (here the
Nigerian courts) to set aside the Award. Furthermore, the Applicant‟s legal
costs in applying to set aside the Award are likely to be small in proportion
to the legal costs that have already been incurred by the Applicant itself in
20
defending the arbitration, as well as the legal costs of all the parties
(including Econet): see Elektrim v Vivendi Universal (supra) at
paragraph 84; and Intermet FZCO v Ansol Ltd (supra) at paragraph
30; Nomihold Securities Inc v Mobile Telesystems Finance SA [2012]
EWHC 130 (Comm) at paragraph 65.
ii) The test as regards the granting of interlocutory injunctions pending
appeal
The Applicant has sought to rely on the principles governing applications for
injunctions pending appeal in support of its application. As we will show however,
there is no way in which those principles can have any bearing on the present
application.
We start with the observations of the Supreme Court in the case of Okoya v
Santilli [1990] 2 NWLR [Part 131] 172 that an injunction pending appeal is
granted to protect the subject matter of the dispute pending the determination of
the appeal.
The pertinent question to ask therefore, is what is the res which the Applicant
seeks to protect pending an appeal (as there is no right of appeal against arbitration
awards), and as its application is for an injunction pending the determination of the
Applicant‟s application to set aside the partial award made against it.
Although the Applicant has carefully failed to identify the res in his application and
written submissions, the res as apparent from his application is his application
before this Honourable Court asking that the Partial award be set aside. However,
is an injunction the appropriate remedy for preserving the res? The answer
obviously is in the negative. 21
There are inbuilt provisions in the Arbitration Act for the protection of awards
given against a party to arbitration. In the first instance, the 1st Respondent cannot
enforce the award without filing an application pursuant to the Arbitration Act.
The Applicant has a corresponding right under the Arbitration Act to move the
court to set aside the award.
In the instant case, the only application pending before the court consequent upon
the partial award is the Applicant‟s application to have the award set aside. If the
1st Respondent had filed an application to have the award recognised and enforced,
the court would have been obliged to hear the Applicant‟s application for a setting
aside first. There is no way in which the res could have been in jeopardy.
Even if the Applicant were correct in stating that the correct test to be applied is
that with regards to applications for injunctions pending appeal, it is submitted that
the Applicant fails to satisfy the test as set out by it.
a. Special Circumstance
In the case of Vaswani Trading Co. v Savalakh & Co [1972] 12 S C 77. the
Supreme Court stated that “ When the order or judgment of a lower court is not manifestly
illegal or wrong, it is right for a court of appeal to presume that the order or judgment appealed
against is correct or rightly made until the contrary be proved or established and for this reason the
Court of Appeal, and indeed any court, will not make a practice of depriving a successful litigant
of the fruits of his success unless under very special circumstances. We take it that the word
„special‟ in this context is not used in antithesis to the words “common” or “normal” for that
would be tantamount to pre-judging the appeal on a determination of an application for a stay of
execution. When it is stated that the circumstances or conditions for granting a
stay should be special or strong we take it as involving a consideration of
some collateral circumstances and perhaps in some cases inherent matters
which may, unless the order for stay is granted, destroy
22
the subject-matter of the proceedings or foist upon the court, especially the
court of appeal, a situation of complete helplessness or render nugatory any
order or orders of the court of appeal or paralyse, in one way or the other,
the exercise by the litigant of his constitutional right of appeal or generally
provide a situation in which whatever happens to the case, and in particular
even if the appellant succeeds in the Court of Appeal, there could be no
return to status quo.” [Emphasis added]
In this case, the Applicant seeks to restrain the continuation of arbitration
proceedings in a situation where the Tribunal has issued a Partial Final Award on
liability and the hearing to determine the quantum of damages is now pending. In
the event that the quantum phase of the arbitration proceedings continue to
completion, then the Applicant still has the right to ask that the final award on
damages be set aside. There is no incidence of a destruction of the subject matter
of the proceedings and the arbitration continuing will not have a detrimental effect
on the application of the Applicant to set aside the Partial Final Award.
The Supreme Court in the case of Martins v Nicanner Foods Plc (1988) 2
NWLR (Part 74) 75 also affirmed the reasoning of the court in the Vaswani case.
The court stated, “I think it is appropriate to start from Vaswani V Savalakh (1972) 12
SC.77 which is still the locus classicus in this matter of stay of execution. There the words of
Coker JSC., which have stood the test of time, set down the applicable principles.”
The Applicant‟s challenge to the tribunal‟s jurisdiction in its setting aside
application cannot constitute special circumstances in the instant case. Under the
doctrine of competence – competence, the Tribunal has the power to consider its
own jurisdiction and the courts should be reluctant to interfere. See Fiona Trust v
Yuri Privalov [supra]
23
Indeed all the authorities cited by the Applicant start with the principles stated in
Vaswani v Savalakh [Supra]
b. Novelty of the Grounds of Appeal
It is agreed that the grounds of objection of the Applicant in its application to set
aside the Partial Final Award must be novel and recondite. We refer to the
pronouncements of the Supreme Court in Nigeria National Petroleum
Corporation v Famfa Oil Ltd [2009] 12 NWLR (Part 1156) 462 that “when a
party talks of a recondite point of law, it is not just to be stated in general terms. The party must
state the point of law that he feels is recondite. Such stance cannot and should not be left to guess
work or conjecture. And since the applicant did not propose any point of law that is complicated,
concealed or intricate; the point should be left at bay for now. Even then, it has been shown above
that where recondite point of law is established, it must co-exist with special circumstances.”
The Applicant identifies at paragraph 4.25 of its written submissions what it
characterises as recondite points of law, raised in its grounds upon which the
Partial Final Award is being challenged.
The first point according to the Applicant is whether a claimant who has
approached the court for the appointment of arbitrators pursuant to the failure of
the appointing authority previously agreed by the parties can abort the Court
proceedings and secure the appointment of the arbitrators by the previously failed
process. The second point according to the Applicant is whether an Arbitral Panel
has the power, inherent or otherwise to strike out arbitral proceedings, which it
considers to be an abuse of process.
An examination of the grounds set out in the application to set aside the Partial
Award will reveal that the points of law which the applicant sets out in his written
24
submissions are not apparent on a reading of the grounds of challenge. The
Applicant has also not tied these points to any grounds of challenge. It is
submitted that it is not the duty of this Honourable Court to try and link the points
of law stated by the Applicant in its written address with the grounds of challenge
of the Partial Award.
c. Legal Right and Serious Issue to be Tried
It is conceded that the Applicant has a legal right to challenge the Partial Final
Award made against it and apply to have it set aside. The Applicant has already
exercised that right. However, the continuation of the quantum phase of the
arbitration is in no way a threat to the Applicant‟s right to have the Partial Award
set aside. There is absolutely no prejudice to the Applicant‟s right by the hearing
and conclusion of the quantum phase of the arbitration. The Applicant has a legal
right to also apply as it is doing at present to apply to set aside the award on
quantum if it so desires. Whether the quantum phase proceeds or not, the
Honourable Court can still go ahead and determine the application to set aside the
Partial Award without let or hindrance. As a result, no legal right of the Applicant
is being threatened.
In addition, the continuation of the arbitral proceedings will take much longer to
complete than the Applicant‟s setting aside application, which will only take “a few
months” according to the applicant and will be resolved long before the quantum
phase is concluded.
There is also no serious issue to be tried in the substantive application. The
grounds of the application are essentially disagreements with the Tribunal‟s
25
reasoning. The Applicant is attempting to re-litigate matters, which it argued, at
great length in the arbitration. The parties agreed to arbitrate their dispute and
must be bound by the outcome of that process. See the case of Taylor Woodrow
of Nigeria Limited v Suddeutsche Etna-Werk GMBH [1993] 4 NWLR [Part
]127 where the Supreme Court held that “the general rule is that where the parties choose
their own arbitrator to be the judge in the dispute between them, they cannot, when the award is
good on the face object to his decision either upon the law or the facts” .
The setting aside process is not an appellate process and the law admits a very
narrow margin for the setting aside of arbitral awards by the court so that even
where the court disagrees with the reasoning of the tribunal, it will only interfere
with it as prescribed under the Act.
At this point a cursory look at the grounds of challenge is necessary
Grounds 1 and 3 on the constitution of the Tribunal and the pending action in Suit
LD/841/06 are in essence an attempt by the Applicant to re-litigate the same
points, which it had exhaustively argued at arbitration and in which a decision has
been granted against it.
Grounds 2, 4 and 5 relate to the determination of rights under the offer letter
contract, the construction of Clause 27.5 of the Shareholders Agreement and the
treatment of the switch shares. These are issues of construction of points of law
specifically referred to the Tribunal, and even if the Tribunal erred in law, which is
not admitted, they are not valid grounds for setting aside the Award.
Ground 6 is a pure pleading point. The Tribunal allowed the 1st Respondent to
amend or supplement its claims as allowed under section 19(3) of the Arbitration
Act and under UNCITRAL.
26
Ground 7 relates to inconsistent relief and double recovery according to the
Applicant. This however is not apparent from the Award. Whilst the Tribunal
granted declarations of nullity, it refused to reverse the transaction. There is as
such no inconsistency in awarding the 1st Respondent damages/equitable
compensation in respect of a transaction that should not have taken place.
It is submitted therefore that not only are no legal rights of the Applicant being
threatened by the ongoing arbitration, there are no serious issues to be tried in the
substantive motion as the Applicant merely seeks to use this Honourable Court as
an appellate court over the Tribunal‟s Award contrary to the provisions of the law.
d. Balance of Convenience
The balance of convenience in this case is on the side of the 1st Respondent. If the
injunction were granted, this would cause great prejudice to the 1st Respondent.
The 1st Respondent would be prevented from pursuing its right to a legal remedy
through arbitration as agreed by the parties.
The likelihood of the Tribunal being available to undertake the quantum phase if
the injunction is granted, considering the pace at which judicial proceedings go in
Nigeria and the right of parties to appeal unfavourable decisions to the Supreme
Court, is extremely doubtful. To have to go through the process of trying to
reconstitute a tribunal to hear the quantum phase would be extremely prejudicial to
the 1st Respondent.
There is also ample evidence from the audited annual reports of Airtel Networks
Limted that the Applicant, [whose sole asset are shares in Airtel Networks
Limited,] is not in a position to satisfy any damages that may result from a grant of
an injunction in its favour as the possibility of Airtel Networks Limited being a
going concern for much longer is doubtful. Any delay therefore to the process of
the arbitration, may prove fatal to the realisation by the 1st Respondents of the
fruits of its victory. 27
If the injunction were not granted, no prejudice would be caused to the Applicant.
According to the Applicant, its application to set aside would only take a few
months while the tribunal‟s award on damages is scheduled to take up to 12
months. In addition, the Applicant has the legal right to seek to set aside the award
on quantum of damages if it so wishes. Any unnecessary costs to the Applicant of
continuing the arbitral proceedings can be compensated
As a result, therefore, the balance of convenience clearly lies in allowing the
arbitration to continue.
e. Damages as Adequate Compensation
The focus of the Applicant as to whether it could be compensated in damages if
the injunction is not granted is set on a wrong premise. The Applicant argues that
the ultimate relief of setting aside the award is not compensable by damages.
However, the correct test is whether damages would be an adequate remedy for
the loss that the Applicant would suffer if an injunction were not granted. This in
essence would be the cost of preparation for the quantum phase of the arbitration
particularly as the Applicant foresees that the setting aside application would only
take a few months to be decided.
Such costs could definitely be compensated by damages and the Applicant has not
averred otherwise.
f. Right To Maintain The Status Quo
The status quo in this regard should be considered to be the continuation of
arbitral proceedings. Once a Final Award on the quantum of damages is made, the
Applicant is entitled to argue that it should be set aside if it so wishes.
28
g. Conduct of the Applicant
The Applicant is merely pursuing more delay tactics and re-litigating matters which
it has already lost, not only by applying to set aside the Partial Final Award but also
by applying for this injunction. The Applicant‟s real aim is “case management” and
a reluctance to fight two battles at once. See the Elektrim case [supra]
In Orojo and Ajomo on Law and Practice of Arbitration and Conciliation in
Nigeria the Learned Authors stated at pages 274 – 275 that
“It is a matter of serious concern that it has become fashionable in Nigeria in recent times for
lawyers whose clients lose out in an arbitration to rush to court to apply to set aside the award on
the specious ground of the misconduct of the arbitrator”
The Honourable Court should therefore be astute to guard against this tactic.
h. Undertaking in Damages
It is apparent from the affidavit evidence that the Applicant is in no position to
meet any undertaking as to damages it purports to furnish, as it is unable to all
intents and purposes to meet the projected damage in the range of 3.1 billion
dollars that may be caused to the 1st Respondent. In addition no substantiating
evidence has been provided to show that the Applicant would be able to satisfy
any order the Honourable Court may make to compensate the 1st Respondent for
any loss that it may suffer if it later transpires that the injunction ought not to have
been granted.
4. CONCLUSION
Based on the discussions in Issues One and Two above, we respectfully submit
that, this court ought not to grant the injunction sought for by the Applicantas
it will be outside the intendment of the provisions of Section 18 of the High
Court of Lagos Law and the authorities cited above. We have also shown that
the principles governing injunctions pending appeal are clearly inapplicable to
the instant case.
DATED THE 21ST DAY OF FEBRUARY 2012
---------------------------------
O. M. LEWIS [MISS]
PROFESSOR A. B. KASUNMU’S CHAMBERS
284, MURITALA MUHAMMED WAY, YABA, LAGOS