Nika Fishing Co. Ltd. Vs Lavina Corporation (2008) LLJR-SC

Nika Fishing Co. Ltd. Vs Lavina Corporation (2008)

LAWGLOBAL HUB Lead Judgment Report

MAHMUD MOHAMMED, JSC

This appeal is against the judgment of the Court of Appeal Lagos Division given on 21st June, 2001, in which it dismissed the Appellant’s appeal against the Ruling of the trial Federal High Court, Lagos of 28th June, 1989, dismissing the Appellant’s application for stay of proceedings in an action for damages on liability for demurrage incurred in a contract of carriage of goods by sea filed by the Respondent as Plaintiff against the Appellant as the Defendant.

The Respondent is the owner of the ship named ‘MV Frio Caribic,’ hereinafter referred to as ‘the ship.’ The ship was chartered to convey a consignment of frozen fish from Mar Del Plata in Argentina, to Apapa Lagos, Nigeria. The ship arrived at the Apapa port on 29th December, 1987 and discharged its cargo. Following the alleged delay in the Appellant taking delivery of the cargo within the time agreed by the parties in the Bill of Lading, the Respondent brought an action against the Appellant at the Federal High Court, Lagos on 21st December 1988, claiming the sum of $119,739.40 United States Dollars as demurrage. Following the order of pleadings by the trial court, the Respondent as the Plaintiff filed its statement of claim to pave the way for the hearing of the case. On being served with the Statement of Claim, the Appellant as Defendant, instead of filing its statement of defence, reacted by filing a motion on notice dated 2nd May, 1989 supported by an affidavit, asking for two specific prayers, namely –

“1. An order dismissing the suit for want of jurisdiction.

An order staying proceedings in this suit.”

The Respondent did not file any counter affidavit to the Appellant’s motion which was duly heard by the trial court. In its Ruling on 28th June, 1989, the trial court refused the application. Part of this Ruling at page 31 of the record reads –

“Having gone through all these authorities, I think justice is better served by refusing a stay than by granting one. Application is refused.”

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Dissatisfied with this Ruling of the trial court, the Appellant, with the leave of the trial court, appealed to the Court of Appeal which in its decision delivered on 21st June, 2001, dismissed the appeal and affirmed the decision of the trial court. It is from that decision of the Court of Appeal that the Appellant has now further appealed to this Court on three grounds of appeal from which two issues for determination were formulated in the Appellant’s brief of argument. The two issues are –

“1. Whether in all the circumstances of this case the Court of appeal was correct in holding that the learned trial Judge in the exercise of his discretion acted judicially and judiciously.

Whether the Courts below were under a duty to ascertain the inconvenience of litigating in accordance with the jurisdiction clause.””

In the brief of argument filed on behalf of the Respondent by its learned Counsel however, only one issue was distilled from the grounds of appeal filed by the Appellant for the determination of the appeal. The issue is –

“Whether or not the Court of Appeal in the exercise of its appellate jurisdiction correctly held that the learned trial Judge exercised its discretion correctly and was therefore right to have refused a stay of proceedings or to have refused to dismiss the suit in its entirety.”

The main issue for determination in this appeal as rightly identified by the parties in their respective first issue in the Appellant’s and the only issue in the Respondent’s brief of argument, is whether in all the circumstances of this case, the Court of Appeal was right in holding that the learned trial Judge exercised his discretion judicially and judiciously in refusing the Appellant’s application for stay of proceedings in the action brought against it by the Respondent inspite of the provision of a foreign jurisdiction clause contained in the agreement between the parties.

In his submission, learned Counsel to the Appellant recognized the general attitude of Nigerian Courts to a foreign jurisdiction clause that forms part of a Bill of Lading, had been to guard their jurisdiction and maintain their discretion to grant or refuse any application for stay of proceedings in such cases. A jurisdiction clause, according to learned Counsel, declares the intention of the contracting parties in relation to the forum and law applicable in the event of any dispute arising from the contract; that in the present case, the Bill of Lading contained such a jurisdiction clause which states; –

“Any dispute arising under this Bill of Lading shall be decided in the country where the carrier has his principal place of busine

ss and the law of such country shall apply except as provided elsewhere herein.”

that since the forum and the law have already been determined by the parties in the event of any dispute, it not material to argue that where the event occasioning the dispute occurred, shall be the place for the resolution of the dispute inspite of the clear wording of the jurisdiction clause. The guiding principles in Courts granting or refusing stay of proceedings in such cases, according the learned Counsel, were laid down by the Supreme Court in the case of Sonner (Nig.) Ltd. v. Partenreedri M. S. Nordwind (1987) 9-11 S.C. 121 at 149 – 154 in which a number of English cases were cited with approval. Learned Counsel explained that the object of the Brandon Test laid down in one of the cases, Eleftheria v. Eleftheria (1969) 1 Lloyds L.R. 237 by Brandon J., was to ensure that there is, in every case, a basis upon which the discretion of the Court is founded, particularly the materials made available to the Court by the parties especially the Plaintiff on whom lies the burden of establishing a strong cause for refusal of stay.

Applying these principles to the present case, learned Counsel to the Appellant had argued that the Court below was in error in upholding the decision of the trial court refusing the application for stay of proceedings inspite of the fact that the Respondent upon whom the burden of satisfying the trial court of the existence of evidence to support the decision, had failed to discharge that burden, in the absence of a counter affidavit opposing the application. The cases of Sonner (Nig.) Ltd. v. Partenreedri M. S. Nordwind (1987) 9-11 S.C. 121 and Ibrahim v. Shagari (1983) 2 S.C.N.L.R. 179, were cited in support of this submission by learned Counsel who observed that the trial court only relied on the statement of claim of the Respondent which does not constitute evidence, in finding for the Respondent without looking into Appellant’s affidavit in support of its application for stay; that it was in reliance on the inference drawn by the trial court from the statement of claim that the Court below erroneously based its decision that a strong cause had been made out to justify the trial court’s refusal of the application.

For the Respondent however, it was strongly argued that the Court below was right in affirming the decision of the trial court refusing the Appellant’s application for stay because that decision was in line with the decision of this Court in the same case of Sonner (Nig.) Ltd. v. Nordwind (supra) also relied upon by the Appellant; that the jurisdiction clause conferring jurisdiction on a foreign Court in the present case had been constructed in the case of the Fehmarn (1958) 1 All E.R. 333, as not ousting the jurisdiction of the local Courts, particularly in Nigeria when Section 6(1), 6(b) of the 1979 Constitution and Section 6(1) and 6(b) of the 1999 Constitution are taken into consideration; that the subject matter of this suit being liability for and entitlement to demurrage in a contract of carriage of goods by sea, by Section 7 of the Federal High Court Act, squarely falls within the admiralty jurisdiction of the trial court especially when the issue of the performance of the contract after delivery of the goods in Nigerian Port of Lagos, is further taken into consideration. Learned Counsel emphasised that the law on the interpretation of a jurisdiction clause as in the present case is that such clauses though not ousting the jurisdiction of the local Courts, invest them with a discretion to decide whether to proceed with the hearing of the suit or order a stay; that all the

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decided cases on the subject have clearly stated that the discretion, unless for strong reason to the contrary, ought to be exercised in favour of holding the contracting parties bound by the terms of their contract. The cases relied upon include, The Chaparral (1969) 2 Lloyds Law Report 158; The Eleftheria (1969) 1 Lloyds Report 237 and the decision of this Court in Sonner (Nig.) Ltd. v. Nordwind (1987) 4 N.W.L.R, (Pt. 66) 520 S.C. at 539. Learned Respondent’s Counsel concluded by asserting that since the witnesses required to prove the case at the trial court are in Nigeria where the ship discharged the goods, the decision of the trial court as affirmed by the court below that the proper venue for the resolution of the dispute between the parties is here in Nigeria, should not be disturbed by this court.

In the application filed on 2nd May, 1989 at the trial court by the Appellant which was the Defendant in that Court, the following reliefs were sought –

“1. An order dismissing this suit for want of jurisdiction

An order staying proceedings in this suit.”

The first relief is clearly a challenge to the jurisdiction of the trial court to hear and determine the suit as filed by the Respondent against the Appellant. The law in Nigeria when such a challenge to the jurisdiction of court is being considered by a trial court is well settled. When such an application or objection is raised before a trial court challenging its jurisdiction, the court could rely simply on the Writ of Summon, the Statement of Claim and affidavit in support of the applications as was rightly done by the trial court and affirmed by the court below in the present case. See Izenkwe v. Nnadozie (1953) 14 W.A.C.A. 361; Adeyemi v. Opeyori (1976) 9-10 S.C. 31; Barclays Bank of Nigeria Ltd. v. Central Bank of Nigeria (1976) 1 All N.L.R. 409; Kasikwu Farms Ltd. v. Attorney General of Bendel State (1986) 1 N.W.L.R. (Pt. 19) 695; Attorney General Kwara State v. Olawale (1993) 1 N.W.L.R. (Pt. 272) 645 and Arjay Ltd. v. Airline Management Support Ltd. (2003) 7 N.W.L.R. (Pt. 820) 577 at 601 where Onu JSC stated the law –

“I agree with the Appellants’ submission that there is a difference between an objection to the jurisdiction and a demurrer. I also agree with them that an objection to the jurisdiction of the Court can be raised at anytime, even when there are no pleadings filed and that a party raising such an objection need not bring the application under any rule of Court and that it can be brought under the inherent jurisdiction of the Court. Thus, for this reason, once the objection to the jurisdiction of the Court is raised, the Court has inherent power to consider the application even if the only process of Court that has been filed is the Writ of Summons and affidavits in support of any interlocutory application, as in the case in hand.”

In other words in the instant case where the

Writ of Summons, the Plaintiffs/Respondent’s statement of claim and the affidavit filed by the Appellant as Defendant in support of its application, show quite clearly that the subject matter of suit being a liability for and entitlement of the Respondent to demurrage in a contract of carriage of goods by sea from Argentina to Lagos, Nigeria, by Section 7 of the Federal High Court Act, is rightly within the Admiralty jurisdiction of the trial court as found by it and affirmed by the Court below. Infact having regard to the subject of the suit of the Respondent, it is only the trial Federal High Court that has jurisdiction to resolve the dispute between the parties in Nigeria. See Madukolu & Ors. v. Nkemdelium & Ors. (1962) 1 All N.L.R. (Pt. 4) 587. On the issue of jurisdiction therefore the Courts below were quite right in their decision that the subject matter of the Respondent’s suit, was within the jurisdiction of the trial court.

However, what was really in contention between the parties was whether having regard to the jurisdiction clause agreed between the parties in the Bill of Lading, the contract document binding between them which provided the venue or forum and the applicable law for the settlement of any dispute arising from the agreement in Argentina, the trial court exercised its discretion judicially and judiciously in refusing a stay of proceedings to give the parties the opportunity to be bound by their agreement executed outside Nigeria. This question relates to the second relief sought by the Appellant in its application at the trial court for stay of proceedings.

The position of the law in this country regarding the enforcement or otherwise of a jurisdiction clause contained in a Bill of Lading as in the present case, was extensively discussed in the decision of this Court in Sonner (Nig.) Ltd. v. Partenreedri M. S. Nordwind (1987) 4 N.W.L.R. (Pt. 66) 520 also reported in (1987) All N.L.R. 548 at 567 – 568 where Eso J.S.C. in the lead judgment said

“It is true that in the ‘The Eleftheria (1969) 1 Lloyds L.R, 237, Brandon J. in his powerful judgment emphacised the essentiality of giving full weight to the prima facie desirability of holding the Plaintiffs to their agreement, xxxxx The tests set out by Brandon J. in ‘The Eleftheria’ are as follows –

‘(1) Where the Plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the Defendants apply for stay, the English Court, assuming the claim to be otherwise within the jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not.

(1) The discretion should be exercised by granting a stay unless strong cause for not doing so Is shown.

(2) The burden of proving such strong cause is on the Plaintiffs.

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(3) In the exercise of its discretion, the Court should take into account all the circumstances of the particular case.

(4) In particular, but without prejudice to (4), the following maters, where they arise, may be properly regarded:

(a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts.

(b) Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material Respect.

(c) With what country either party is connected, and how closely.

(d) Whether the Defendants Genuinely desire trial in the foreign country, or are only seeking procedural advantages.

(e) Whether the Plaintiffs would be prejudiced by having to sue in the foreign Court because they would –

(i) be deprived of security for that claim;

(ii) be unable to enforce any judgment obtained;

(iii) be faced with a time-bar not applicable in England; or

(iv) for political, racial, religious or other reasons be unlikely to get a fair trial.

To these “I would add, with all respect –

‘Where the granting of a stay would spell injustice to the Plaintiff as where the action is already time-barred in the foreign Court and the grant of stay would amount to permanently denying the Plaintiffs any redress.’

This is the case here. And I think justice is better served by refusing a stay than by granting one.”

It is observed that this Court in Sonner (Nig.) Ltd. v. Nordwind case referred to above, while applying the Brandon Tests was confronted with a situation which exceeded a mere balance of convenience. It was a total loss of action by the Plaintiffs, if effect were given to the principle of Pacta sunt servanda, having regard to the perculiar circumstances of the case where the action filed in the Federal High Court here in Nigeria, was already time barred in the foreign German Court agreed by the parties in the Bill of Lading.

In the present case however, where the Respondent brought its action at the trial Court in clear breach of the agreement to refer any dispute to a foreign Court in Argentina and the Appellant had reacted by filing an application for stay of proceedings, as the Respondent’s suit was within the jurisdiction of that Court, the Court has a discretion whether or not to grant the application. The law requires such discretion to be exercised by granting a stay unless strong cause for not doing so is shown. The burden of showing such strong cause for not granting the application lies on the door steps of the Respondent as the Plaintiff. The question is whether that burden had been discharged by the Respondent. In finding that the burden had been discharged, this is what the trial court said at page 29 of the record: –

“Having enumerated the statement of claim of the Plaintiff to see if this is a proper case to stay or assume jurisdiction taking Brandon Test into consideration, to me this is a simple contract guided by Exhibit A. The goods were delivered in Nigeria. What the Plaintiff is claiming is only demurrage. In my view the witnesses to prove the case are all In Nigeria such as the Nigeria Ports Authority whose duty It Is to know when the ship arrived and when it departed. I hold that it is in Nigeria Court that the issue of fact is situated or more readily available xxxxxxx From the statement of claim of the Plaintiff which is action on a simple contract, I hold that the Defendant does not genuinely desire trial in the foreign country but are only seeking a procedural advantage.”

This finding of the trial court was not based on any evidence brought by the Respondent as Plaintiff as no counter affidavit was filed by it in response to the application filed by the Appellant supported by an affidavit. Further more, the Appellant’s affidavit in support of its application which the Court below said could be relied upon by the Respondent in discharging the burden of proof of satisfying the trial court of its claim to hear the case in Nigeria rather than in Argentina, inspite of having failed to file a counter affidavit, does not contain such relevant facts relied upon by the trial court and the Court below to support the case of the Respondent. The fact that all the witnesses in the case are in Nigeria or that the circumstances of the matter show that the case is more connected with Nigeria than Argentina as found by the Courts below, are not at all contained in the Appellant’s affidavit in support of its application. This is where the circumstances of this case differ significantly from the case of Sonner (Nig.) Ltd. v. Nordwind (supra), relied upon by both parties in which the

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Plaintiffs promptly reacted to the Defendants’ application for stay by filing a counter affidavit exhibiting documents showing why and how the Plaintiffs would be prejudiced if their suit were to be heard in Germany in accordance with the agreement where the suit was already statute barred. The findings of fact made by the trial court in the present case that the witnesses to prove the Plaintiffs case are all in Nigeria and that the evidence on the issue of fact was situated or more readily available in Nigeria are not supported by evidence adduced by the Plaintiff/Respondent in discharge of the burden placed upon it by law. In this respect, the failure of the Plaintiff/Respondent to file a counter affidavit articulating or deposing to facts showing that inspite of the foreign venue agreed by the parties for the settlement of their dispute, it would be prejudiced if the trial court had not assumed jurisdiction to hear and determine the suit. Finding of facts cannot be made from paragraphs of the statement of claim filed by the Respondent as pleadings of which statements of claim are part, cannot take the place of evidence in a contested matter in Court. See Akinfosile v. Ijose (1960) S.C.N.L.R. 447 Akanmu v. Adigun (1993) 7 N.W.L.R. (Pt. 304) 218 and Ajuwon v. Akanni (1993) 9 N.W.L.R. (Pt. 316) 182 at 200. This is because Courts of law can only decide issues in controversy between parties on the basis of the evidence before them. See Ibrahim v. Shagari (1983) 2 S.C.N.L.R. 176, also reported in (1983) All N.L.R. 507 at 512, 524 and 534 where Nnamani JSC of blessed memory put it plainly thus –

“Although it seems fairly obvious it needs emphasis that Courts of law can only decide issues in controversy between parties on the basis of the evidence before them. It would be invidious if it were otherwise.”

Thus in the absence of strong cause shown by the Respondent for the trial court not to grant the Appellant’s application for stay, the law requires that court to exercise its discretion in favour of the Appellant by granting the application. The discretion of the trial court was therefore not exercised judicially and judiciously in the absence of any evidence placed before the trial court by the Respondent, to base its decision upon. The Court below, in my view, was in error in its judgment now on appeal when it affirmed the decision of the trial court. Taking into consideration that in the present case the trial court did not take into account the facts averred in the Appellant’s affidavit in support of its application the Court cannot by merely relying only on the statement of claim of the Respondent, be said to have exercised its discretion judicially and judiciously having acted under a misconception of law in giving weight to irrelevant and unproved facts in support of its decision thereby justifying interference by this Court. See the Resident Ibadan Province v. Lagunju (1954) 14 W.A.C.A. 552; Emekede v. Emekede (1964) 1 All N.L.R. 102; Williams v. Voluntary Funds Society (1982) 1-2 S.C. 145 and Efetiroroje v. Okpalefe II (1991) 5 N.W.L.R. (Pt. 193) 517.

Although one of the complaints of the Appellant in the lone issue for determination in this appeal is |.that apart from the failure of the trial court to adequately consider the effect of the failure of the Respondent to file a counter affidavit to respond to the facts averred by the Appellant in the affidavit in support of its application for stay stating the nature of the agreement between the parties contained in the Bill of Lading which was an exhibit as part of the evidence, the Court below indeed examined that affidavit in its judgment. It is unfortunate however that the Court below also fell into the same error as the trial court of not realising that the Respondent on whom the law placed the burden of proving the existence of strong reasons for wanting to opt out of what was originally agreed by the parties in their agreement to submit their dispute to the Nigerian Courts for resolution rather than the Courts in Argentina as specified in Clause 3 of the Bill of Lading, did not give any reason in evidence in support of its stand. In the absence of a counter affidavit by which the Respondent could have placed its evidence on the other side of the scale like the Appellant did in its own side of the scale in the affidavit in support of its application, the trial court and consequently the court below, had nothing to consider in favour of the Respondent to support their decisions now on appeal that the trial court where the Respondent filed its action contrary to the agreement between the parties, is the proper venue for the hearing and determination of its case against the Appellant.

It is for the foregoing reasons that I will allow this appeal. Accordingly the appeal is hereby allowed. The judgment of the Court below affirming the Ruling of the trial court refusing the application of the Appellant for stay of proceedings, is hereby set aside and replaced with an order granting the application.

SC 110/2006