City Engineering Nigeria Ltd Vs Federal Housing Authority (1997)

LAWGLOBAL HUB Lead Judgment Report

OGUNDARE, JSC

The principal question that calls for determination in this appeal is: When does the statutory period of limitation start to run for the purpose of the enforcement of an arbitration award; is it at the date of the accrual of the original cause to action or is it at the date of the arbitral award?The parties herein entered into a written agreement dated 17th day of December, 1974 whereby the appellant was to build a number of housing units at Festac Town, Badagry Road, Lagos. The agreement contained in its Clause 30 a provision to submit all matters in dispute in connection with the execution of the contract to arbitration. Sub-clause (4) of clause 30 provided that the award of the arbitrator would be final and binding. A dispute arose between the parties in the course of the execution of the contract. The respondent rather than settle the dispute inter partes by its letter dated 5th December 1980 threatened to terminate the contract. In its reaction to this threat, the appellant by its letter dated 10th December 1980 duly notified the respondent and requested its consent to the appointment of an Arbitrator pursuant to clause 30. Rather than give its consent, the respondent by a letter dated 12th December, 1980 terminated the contract. The appellant invoked the arbitration clause in the agreement between them.

The parties eventually went to arbitration presided over by Architect Akinwande Olumide Craig. The arbitration proceedings commenced on 11th December, 1981 and ended in November 1985 when the Arbitrator made his award in the sum of N3,722,118.75 in favour of the appellant. By letter dated 17th August, 1988, the appellants solicitors demanded from the respondent the payment of the said sum. When payment was not forthcoming, the appellant applied, by way of motion on notice, to the High Court of Lagos State pursuant to section 31(3) of the Arbitration and Conciliation Act No.11 of 1988, and/or section 13 of the Arbitration Law Cap. 10 Laws of Lagos State 1973 and Order 40 rule 4 of the High Court of Lagos State Rules, 1974 praying for the following reliefs:

‘(i) That the applicant may have leave to enforce the award made in November, 1985 by Mr. Akinwande Olumide Craig, an architect appointed in the arbitration under the agreement and conditions of contract between the applicant and the respondent dated 17th day of December, 1974 in the same manner as a judgment of the honourable court to the same effect.

(ii) An order that the respondent do pay costs of the application and the arbitration proceedings.

(iii) Interest on the award from 1st December. 1985 at the rate of 13% until the entire amount is paid.

(iv) And for such further order or orders as the Court may make in the circumstances.

The application was supported by an affidavit of 20 paragraphs sworn to by the Managing Director of the Appellant Company. There was no counter-affidavit.

After hearing learned counsel for the parties, the learned trial Judge (Ayorinde J. as he then was) in a reserved ruling delivered on 21st September, 1989 in which he quoted clause 30(1) & (4) of the agreement between the parties, and following Obembe v. Wemabod Estates Ltd. (1977) 5Se. 115 at 129-130, observed:

‘It is clearly shown in the above clause that Scott v. Avery clauses were not incorporated. It follows that the case in hand is one where the applicant ought to sue immediately the breach occurred in 1980. It was left then for the respondent to stay proceeding pending the outcome of the arbitration.

The cause of arbitration arose from 12/12/80. It is also the cause of action. The time limit as agreed by both counsel is 6 years under section 6 of the Limitation Law of Lagos State. The time from 1980 to 1988 is 8 years. On this issue, I agree that time ran out 6 years after 12/12/80.’

The learned Judge next considered the issue raised before him by the respondent that the arbitrator was bound to make his award within 3 months or within any extended time but that as the arbitrator did not extend time as required by law, he was incompetent to make the award. The learned Judge, after quoting the relevant legislation, opined:

‘There is force in the submission of Mr. Ogugen that the arbitrator adjourned the sitting but did not enlarge time in writing. Schedule C is part of section 4 and it could not be ignored. The effect of non-compliance renders the subsequent proceeding null and void. Extension of time or enlargement of time are distinct from adjournment from time to time. The arbitrator was enjoined to complete within 3 months.

Within the first instance he could adjourn as freely as he felt. But after the expiration of the first 3 months, he must specially enlarge time. He could do so as many times as the circumstances arose. He did not do so. The arbitration was not taken within the time stipulated. See Ejifodomis case (supra) at 115’