Sonnar (Nig.) Ltd & Anor. V. Partenreedri M. S. Nordwind Owners Of The Ship M. V. Nordwind & Anor. (1987)
LawGlobal-Hub Lead Judgment Report
The facts of this case are not in dispute. Before stating the application which was brought by the Defendants before the Federal High Court Lagos, Coram S. A. Sowemimo J., which is now the subject matter of this appeal, I will state those facts, only as they are relevant to this appeal.
The Plaintiffs, Sonnar Nigeria Ltd. and Pubico Impex Traders, claimed general and special damages amounting to N417,524.00 against the Defendants for breach of contract, which they claimed had arisen out of non-delivery of 25,322 bags of parboiled long grain rice, which were shipped from Bangkok, Thailand to Lagos, on board a vessel, M. V. Nordwind, which belonged to the Defendants.
Now, the first Defendants, Partenreedri M.S. Nordwind, are ship-owners and they are based in Germany. The second Defendants, Banbridge Shipping Company, are based in Liberia. The latter were the Issuing Agents of the Bills of Lading which were relevant to this case. The third Defendants, Chaiyapon Rice Company, are based in Thailand, from where the rice in question was shipped. They were the suppliers of the rice which is the subject matter of this case.
Both the Plaintiffs and the Defendants entered into an agreement which is evidenced by the Bill of Lading. Clause 3 of the Bill is relevant to this case. It provides –
“Any dispute arising under this Bill of Lading shall be decided in the country where the “carrier” has his principal place of business and the law of such country shall apply except as provided elsewhere herein.”
This then is the agreement between the parties and the country applicable herein is Western Germany.
As I said, the goods, which were shipped from Thailand, were not delivered and the Plaintiffs claimed, jointly and severally, against the Defendants, general and special damages as I had earlier indicated. The writ was served on the Defendants in Germany, Liberia and Thailand respectively. After service, Mr. Oduba of learned counsel, was briefed to represent the three Defendants while Mr. P.N. Mbanefo, of learned counsel, has been representing the Plaintiffs all along. It was he that filed the writ of summons.
On 23rd April, 1980, Mr. Oduba filed an application on behalf of the first Respondents to stay the action against him on the grounds that the cause of action arose out of a contract of carriage of goods, which is subject to a foreign jurisdiction. Learned counsel relied upon the agreement which is evidenced by the Bill of Lading which I earlier referred to. Mr. Mbanefo’s reaction was to file a counter-affidavit, which states, inter-alia-
“4. That the allegation therein contained in paragraph 5 that there is only one Bill of Lading relevant to this Suit is incorrect and that there are in fact twenty relevant Bills of Lading.
- That the jurisdiction clause quoted in paragraph 5 aforesaid is correct, and that by Clause 17 of the said Bills of Lading the 1st defendant/applicant (a German Company carrying on business in Germany) is the Carrier.
- That I am informed by Messrs Holman Fenwick & Willan (our instructing Solicitors in London) and verily believe that under German Law the owner of the M. V. “Nordwind” cannot be considered as the Carrier.
- That there is exhibited hereto and marked Exhibit “PMM 1” a copy of letter from German lawyers Dres. Lebuhn & Puchta addressed to Messrs Holman Fenwick & Willan aforesaid and dated 30th July, 1971.
- That there is annexed hereto and marked Exhibit “PMM 1″ a copy of the Charterparty relevant to this suit.”
Then Mr. Oduba brought a further affidavit, but as the pertinent paragraphs of this further affidavit were struck out by the Court, as offending section 86 of the Evidence Act, on the application of Mr. Mbanefo, I need not set out that affidavit in this judgment for it is no longer relevant.
On 7th May, 1981, the Federal High Court took arguments on the motion. The applicants’ that is, the 1st Defendants’ main contention was that the parties entered into a contract as per the Bill of Lading, they were bound by the terms and conditions of the contract and the forum for litigation in respect of the action would be Western Germany and not Nigeria. Learned counsel, Mr. Oduba relied on the case of The Berkshire 1974 1 Lloyd’s Rep. 185 and Eleftheria v. Eleftheria (Owners) (1969-70) Law Report 94.
For his part, Mr. Mbanefo conceded that the Bill of Lading required that the principal place of business of the carrier shall have jurisdiction but contended that the mere fact of the existence of such clause does not oblige the Court to stay proceedings and order the parties to go to another jurisdiction. The Court has a discretion, notwithstanding the clause, as to whether it would try the action in this country or stay proceedings. He listed the instances where a Court in Nigeria would not stay proceedings as-
(i) when the evidence in the case is in this country;
(ii) where the court of foreign jurisdiction cannot entertain the suit on the ground of procedural difficulties such as its being time barred;
(iii) where on the balance of convenience, it is better for the Nigerian Court to exercise jurisdiction; and
(iv) where the applicant does not in all genuineness want the case to be tried in the foreign country but would only seek procedural advantage in this country.
The Federal High Court (Sowemimo J.) went painstakingly into the matter, and held-
“Since there is uncontradicted evidence that the 1st Defendant has its principal place of business in Germany, and the dispute is one which arises under the bills of Lading, it follows that, under Clause 3 the parties have agreed to refer any dispute to the Court where the 1st Defendant has its place of business which is Germany. I do not agree with the contention of Learned counsel for the Plaintiffs that the jurisdiction Clause is not sufficiently equivocal to enable the court to say that the German Law is anticipated. It is clear on the reading of Clause 3 which states that any dispute between the parties shall be decided in the country where the carrier has his principal place of business and the law of such country shall apply. And since the 1st Defendant as the carrier has its principal place of business in Germany, it follows that it is the German Court that should decide the dispute and in German Law.”
As regards whether or not the court should exercise its discretion by staying the proceedings in so far as the matter relates to the 1st Defendant, the Court set out the case made by the 1st Plaintiffs that German law will not consider the owner of the vessel as carrier. This assertion by Plaintiffs was based on an information given by their instructing solicitors in London, Messrs Holman Fenwick & Willan, after receiving a letter from some German lawyers, known as Ores. Libuhn & Puchta.
I think it is appropriate to reproduce, herein, the opinion of the German lawyers or that part of it that is relevant to the determination of this case. It reads
“Messrs Holman Fenwick & Willan,
London EC 3N 3AL.
Your Ref.: MAC/112
We wish to refer to our telex dated 23rd July, 1979 and now succeeded in getting copy of the resp. charterparty from PI Club representatives, Messrs Class W. Brons which we enclose hereto. As you will learn it is a New York Produce Form. Clause 8 provides for signature of Bill of Lading through Captain. Clause 55 of the rider provides for charterers authorization to sign full liner terms B/L on behalf of Master, but no addition allowing time charterer to include identity of carrier clause in the Bill of Lading. Following recent Hamburg court decision owner cannot be considered as carrier under German Law ..
Please revert if we can be of further assistance.
DRES. LEBUHN & FACHTA,
(Sgd.) (Dr. Breitzke)”
One important point, which was relied upon by the 1st Defendants’ counsel, was one of forum-hunting by the Plaintiffs. On this allegation, paragraph 3 of the further affidavit of Mr. Oduba reads-
“My clients the 1st Defendants/Applicants have informed me through their Protection and Indemnity Club, the West of England Association, and I verily believe the same to be true, that the instructing solicitors Messrs Holman Fenwick & Willan referred to in paragraph 6 of the counter-affidavit of P.M. Mbanefo aforesaid have been “forum hunting” on behalf of the Plaintiffs. There is now produced, shown to me and marked J04, copy of relevant part of a letter written by the said Messrs Holman Fenwick & Willan to the said West of England Association to this effect. ”
The letter which the Plaintiffs’ instructing solicitors have written in regard thereto reads –
“The West of England Ship Owners Mutual
Protection & Indemnity Association
I Popys Street,
“NORDWIND” BILLS OF LADING dd.26/8/78:
We act for Pubicon Impex Traders Limited of Hong Kong and Sonnar (Nigeria) Limited of Nigeria who were the shippers/receivers/owners of a cargo of 80,000 bags (4,000 tons) of Parboiled Long Grain Rice which was shipped in apparent good order and condition on the M.V. “NORDWIND” at Bangkok, Thailand under Bills of Lading, numbered 1 to 20, dated the 26th August, 1978.
The Bills of Lading, copies of which are enclosed were signed “for the Master”.
You will note from the reverse sides of the Bills of Lading that they provide, inter-alia, that any dispute arising thereunder should be decided in the country where the carrier has his principal place of business.
The Bills of Lading also provide, by Clause 17, that the contract evidenced by the Bill of Lading is made between the Merchant and the Owner of the Vessel. It is in this respect that a problem has arisen.
As we understand advice which has been received the German court would not enforce the Bills of Lading as a contract between our clients and the owners, but would identify the carrier as Bar- bridge Shipping Limited of Liberia. Furthermore they would not enforce Clause 17 in the absence of express provision in the relevant Charter party allowing this. On the other hand Liberian Law would identify the carrier as the Owner and would enforce Clause 17. We are however advised by our Nigerian correspondent lawyers that their Courts would enforce this contract against the Owner and would not hesitate to ignore the jurisdiction clause as being repugnant to the Hague Rules, to which the Bills of Lading are expressly subject. Our clients may also issue proceedings in Bangkok .
Before our clients take any steps in this direction it appears to us that you may be prepared to agree with English jurisdiction and English Law as being applicable in this case to save the no doubt excessive costs which would be entailed in bringing proceedings in Nigeria.”
The learned Judge, having referred to these letters containing the opinions and the “forum-hunting” by the Plaintiffs’ instructing solicitors, Messrs Holman Fenwick & Willan, concluded that if the action were to be tried in this country, either the Plaintiffs or the 1st Defendants might wish to “bring at least one German lawyer from Germany to give expert evidence on German law. He added-
“Definitely the German law cannot be ignored if the case is tried in this country”.
He then held, adopting the reasoning in the case of “The Eleftheria” supra, that there is no evidence to support the submission of learned counsel for the Plaintiffs that the whole evidence to prove the case is in Nigeria. He termed it a mere speculation. He held further that there has been no suggestion that the Plaintiffs would be prejudiced by having to sue in the foreign court. Nor is there a risk of the Plaintiffs not obtaining fair trial in the foreign court. The Plaintiffs, he concluded, had not discharged the onus which lies on them. He granted a stay of proceedings.
The Plaintiffs appealed to the Court of Appeal. In the Court of Appeal, coram Uthman Mohammed, Kutigi and Kolawole J.J.C.A., the issue of the jurisdiction in the Nigerian Court was again fully used by both learned counsel. The principal issue which was therefore dealt with by the Court was that where such a clause, as was contained in the Bill of Lading, existed, but, nevertheless, the action was filed in the Nigerian Court, the Nigerian Court is not bound to stay the proceedings but that it would have a discretion whether or not it would do so. It was that discretion which the Appellants contended should be exercised judicially after the Judge had carefully balanced the factors which favoured or militated against a stay of the action.
Having carefully examined the submission of both learned counsel, Kolawole, J.C.A., who delivered the judgment of the Court said:-
“In my view, there was a question as to foreign law raised by the appellants in their affidavit with reference to the bill of lading and the opinions of experts who were acquainted with the German law became important. No such opinion was tendered before the learned judge, consequently no strong reason was shown why he should have refused to exercise his discretion to grant the stay. I am of the view that on the authorities, the Nigerian Courts will assume the law in any foreign country including that in Germany to be the same as the law in Nigeria if no evidence is tendered before it.”
Referring to the so called “Brandon tests” in the Eleftheria, the learned Justice of the Court of
“Mr. Mbanefo had submitted in his brief on the second test that the learned judge failed to acknowledge that German law differed from Nigerian law in a very material respect, but there is no evidence of the difference. Learned counsel further submitted that German law should not interpret the jurisdiction clause in the Bill of Lading as giving jurisdiction to the German court and that a reference of the dispute to a German court would end in frustration. From the case of Ogunro v. Ogedengbe (supra) that submission is fallacious. To that extent the Adolf Warski case does not support the appellants’ case. Similarly, the case of Carvalho v. Hull, Blyth Limited (1979) 1 W.L.R. 1228 is distinguishable from the present case. There was every justification for the English courts to assume jurisdiction in that case and to refuse a stay because of the peculiar intervening circumstances of change of government, constitution and court system in Angola, the country of the parties choice for the determination of their disputes. I am of the view that it is not sufficient for the appellants to allege that the learned judge did not apply the tests laid down by Brandon J. (as he then was) in “The Eleftheria” without any attempt to adduce some evidence, no matter how slim, to show in what way the tests were not applied or were misapplied.”
Kolawole, J.CA, further argued that there was no evidence that the Respondents were not genuine and that merely seeking procedural advantages is primary in their consideration. Nor was there any shred of evidence, concluded the Judge, that the Appellants would be prejudiced if they have sued in a foreign Court or would be deprived of security for their claims, or mandate to enforce any judgment which is obtained in their favour or would be faced with a time-bar which is not applicable in Nigeria.
He concluded, dismissing the appeal –
“I think the sensible approach is that where parties have agreed to submit all their dispute under a contract to the exclusive jurisdiction of a foreign court, we should require very strong reasons to induce us to permit one of them to go back on his words…………………….
My Lords, having given this matter some serious thought, the grounds of appeal so ably canvassed before us have failed. For the various reasons which I have given, I would affirm the decision of Sowemimo J. dated July 7, 1981 which seems to me quite unassailable, and dismiss the appeal with costs assessed at N250.00 against the appellants jointly and severally.”
It was from this decision, that the Plaintiffs have appealed to this Court, relying on two simple grounds of appeal to wit-
(1) That the Court of Appeal misdirected itself in law in failing to consider adequately the implications of the unchallenged opinion of German Lawyers that the German Courts would not accept jurisdiction in this case on the grounds that under German Law the Ship-owners are not the carriers.
(2) The Court of Appeal erred in law in holding that the parties should abide by their contract when to do so would lead to a manifest absurdity not in contemplation of the parties.”
Both learned counsel filed excellent Briefs and, for this, I must commend their industry, for this has made the whole exercise of the determination of this delicate issue much easier. The issue is, put simply, what should be the attitude of the Court in this country, where there has been a foreign jurisdiction clause inserted in a contract between parties
Mr. Mbanefo opened his Brief by accepting the trite principle of law that “Pacta Sunt Servanda” Elementary and trite this must be, for upon this basis Tests the entire law of contract. If it is otherwise, that is, pacts in agreement are not to be obeyed, there would be chaos in that area of law. Law would lose its reasoning and solemn pacts would be reduced to the “law of children”. Contractual obligations presume the notion that pacts therein are meant to be obeyed.
With this, as the accepted basis for his real contention that the courts in this country are not bound, notwithstanding this doctrine of law, and a pact giving jurisdiction to a foreign court, to stay proceedings, when the action is filed here, it is easy to follow the arguments proferred by Mr.Mbanefo in his Brief and in his oral arguments before us.
Learned counsel relied heavily on The Eleftheria 1969 Vol. 1 Lloyds L.R. 237 and the famous tests laid down by Brandon J. as he then was, in that case.
I intend to come to these tests later. Meanwhile I would first state the issues placed by Mr. Mbanefo in his Brief, for our consideration. He said-
The issues which arise in this appeal are:-
Under Ground 1
(1) The effect of the plaintiffs’ unchallenged assertion regarding German law.
(2) The weight to be attached to the plaintiffs’ assertion regarding German law.
(3) The applicability of the “Brandon Tests” to the assertion.
Under Ground 2
(4) Whether the likely result of an indiscriminate reference to a foreign court ought to be taken into account. ”
Having referred to the affidavit evidence, Mr. Mbanefo argued that if Plaintiffs’ assertion therein, on foreign law, had been challenged in the Defendants’ affidavit, then the learned Judge would have been under obligation to call for oral evidence and parties would have had to bring their experts on German law, in order to comply with section 57 of the Evidence Act. There was no challenge to this assertion and the learned Judge ought to have accepted it especially as the Defendants failed in their duty to negative the assertion with regard to German law.
Learned counsel then dealt with the weight to be attached to the Plaintiffs’ assertion with regard to German law. He submitted that the Court of Appeal proceeded on the wrong basis that no evidence of German law was adduced whereas there was such evidence and adequate weight ought to have been attached to it. And with regard to the so-called Brandon tests, Mr. Mbanefo referred to a dictum of Adefarasin J., as he then was, in Adesanya v. Palm Line Ltd. 1967 Lagos L.R. 18 at p.20 where the learned Judge said that if he were to stay proceedings in the case before him, he would be depriving the plaintiff of a remedy altogether. He applied this to this case only in the sense that it was possible for both parties in this case to forget about German law and apply Nigerian law. Though I cannot say that I understand the point being put forward by learned counsel by this aspect of his submission, yet, I intend to refer to this case later, however, in another respect, in my consideration of the exercise of the discretion by the learned Judge before he decided to grant the stay as he did.
Mr. Mbanefo, before concluding his Brief, introduced two very strong elements which are, at least, of great jurisprudential interest. They are –
(1) whether the likely result of an indiscriminate reference to a foreign court ought to be taken into account; and
(2) whether or not there should be public policy considerations.
As regards the first, counsel urged that there is nothing solemn about obligations arising out of what he termed “contracts of adhesion” that is, where the parties have not been anywhere near a negotiating table. He was equating contracts arising out of Bills of Lading with obligations entered into in circumstances that may lead to questioning the contractual intent of parties. His submission on public policy is even more interesting in that he questioned the bona fides of foreigners when they insert clauses in their Bills of Lading drawing cases to their own courts. He said- “But where foreigners insert clauses in their Bills of Lading drawing cases to their own courts, the motives are usually nothing more than that they have more confidence in their own courts and that it is easier to sit at home and litigate.
By remitting cases to their courts, our courts are merely playing into their hands at the expense and frustration of the Nigerian plaintiff”
I intend to answer all the points later. Meanwhile, I would set out the submissions of the Respondents which have been ably settled in the Brief submitted by their counsel, Mr. Oduba of learned counsel.
The main contention of Mr. Oduba is around the latin maxim – Pacta Servanda Sunt. He submitted –
“The Respondents further contend that it is also beyond argument that the onus is heavily on the party in breach (here the Appellants) to satisfy the Court as to why he should not be held to his bargain by going to sue in the agreed venue, in this case, Germany. In doing this, the party in breach must establish that it is just and proper to refuse a stay. He must show more; a stronger case rather than a mere balance of convenience. See The CHAPARRAL (1968) 2 Lloyd’s Rep. 158. In other words, it is the party in breach, in this case, the Plaintiff/Appellants who should provide the Court with the materials with which the Court can exercise its discretion in their favour. The tests to be followed in exercising a discretion to grant a stay of proceedings have been well laid down by Mr. Justice Brandon (as he then was):
THE ELEFTHERIA (1970) P.94 at 99-100. The tests therein enumerated, usually now referred to as “The Brandon Tests” have acquired wide acceptability and our Court of Appeal adopted it in:
G.B.N. LINE & ORS. v. ALLIED TRADING CO. LTD (Unreported) SUIT NO. FCA/128/83 of 26/4/84 at page 9. The tests have also been adopted with approval by the learned authors of THE CONFLICT OF LAWS: DICEY & MORRIS 10TH ED. VOL. 1 page 256.”
Learned counsel examined the material placed before the trial court by the Appellants, for as he rightly pointed out, the Appellants were the persons who are legally bound so to do. Those materials, he enumerated to be-
(a) Convenience of litigating in Nigeria.
(b) The unchallenged assertion of German Law.
The letter written by the German lawyer to Plaintiffs’ Solicitors in London was neither addressed to the Plaintiffs themselves nor their Nigerian Solicitors. He submitted that the letter offended the hearsay rule. Under S.57 of the Evidence Act, counsel argued, it was not necessary for him to challenge this bold assertion and if the trial court, upon the material placed before it, expressed itself not satisfied, that is not sufficient for the trial court to permit departure from the contract.
As regards inconvenience to litigate in Germany because all the witnesses and evidence are in Nigeria, Mr. Oduba relied on the case of The Makefjele (1976) 2 Lloyds L.R. 29 where the court said –
“When a clause of this kind is introduced into a contract, it must be supposed that the parties consider that, in general, trial in the places mentioned in the clause is more convenient than trial elsewhere. It does not lie in the mouth of one party to say when a claim arises: “Although this claim differs in no way from the generality of claims that might be made by me under this Bill of Lading, I say that the specified place of trial is inconvenient. ”
Mr. Oduba’s answer to the issue of public policy was that if the claim of the Plaintiffs is proved in Germany, the judgment proceeds would be in foreign exchange which would be to the benefit and not detriment of this country. He further advocated the need for this Court to guard jealously its rule and decision in cases of this nature which have international significance and repercussions.
I will like to deal now with the submissions of Mr. Mbanefo which question the contractual intention of parties in this type of contract and which urges this court to give accord to public policy in arriving at its decision.
Since the decision in the late nineteenth century in the case of Carlill v. Carbolic Smoke Ball Co. (1893) 1 Q.B. 256, the tests applied by the Courts in order to determine the intention of parties to a contract have been objective rather than subjective. Would a reasonable man have regarded the offer made to him as one which was intended to create a legal relationship It is true that commercial activities have since advanced from its simple sense to international transactions, yet Bills of Lading have been regulated by law since 1855 (see the Bills of Lading Act 1855).
The contracts of adhesion referred to by Mr. Mbanefo are usually contracts where the parties are not equal. They are usually contained in standard forms of contract – a “take it or leave it” sort of transaction. They are indeed modern in origin as Lord Diplock observed in Instore v. A. Schroeder Music Publishing Co. Ltd. 1974 1 W.L.R. 1308. These contracts are concentrated in relatively few hands and the terms are usually not negotiated between the parties thereto. The party with the bargaining power dictates the terms. The weaker party is presented with a form and asked to “sign here”. He does of course. Nothing happens until trouble arises. The goods might get lost and the weaker party is told “Look here you have no claim, you signed here or did you not” In England, the Law Commission has looked into the matter and taken care of it. In this country, there could be a recourse to the common law for, in Gillespee Bros. and Co. Ltd. v. Roy Bowles Transport Ltd. 1973 Q.B. 400 Lord Denning suggested the reasonableness test. An objective test of reasonableness could easily be an answer to the problem posed by contracts of the nature that imports inequality in the parties. However, in so far as the law of Bills of Lading is concerned, these are contracts on international standard and I think one could hardly fault the reasoning of the Court in The Makefjell supra.
“When a clause of this kind is introduced into a contract it must be supposed that the parties consider that, in general, trial in the places mentioned in the clause is more convenient than trial elsewhere”
The parties are at arm’s length in contracts of this nature. They are arrangements, too sophisticated to import an underdog. They are arrangements about high class contracts. And that is why both parties to this case agree that subject to exceptions, Pacta Servanda Sunt.
With respect, attractive and tempting as the submission in regard to public policy is, it is dangerous for a court to base its decision mainly on public policy, which indeed would be another means of avoiding the rules, law and procedure which govern a matter. Public policy is usually equated with public good. To ask a Court to decide only as a result of public policy or public good, goes beyond the measure of liberalism in the application of the law or even viewing a matter from the socio-economic con of law. Who is to determine what constitutes public policy To rely on public policy or public good simpliciter, is to give room to uncertainty in the law. It is a way “to beg the question”. While it is for the law to find some point of reference, which is more universal than its internal question, one would still ask the question which Lord Radcliffe once asked in a paper titled, “The Lawyer and His Times” and the question is-
“Can an enlightened conception of public policy provide what we want, a scale of measurement”
He answered the question and he said-
“We cannot run the risk of finding the archetypal image of the judge confused in men’s minds with the very different image of the legislator.”
For while a judge is expected to remain objective, impartial, experienced and full of erudition, these attributes cannot be found in one who seeks total sanctuary for his decision, in public policy.
I am not saying that the question of public policy should be wholly excluded. No it should not. For even then, it is against public policy to produce uncertainty in the law: What I am saying is that public policy is not to be relied upon wholly to fathom a decision. Surely, public policy is an unruly horse and judges are not such masters of equestrial ability to take on such experience for, as was said in Um Poh Chao v. Camden and others (1979) 2 All E.R. 910 at 914. –
‘”The judge, however wise, creative, and imaginative he may be, is cabin’d, cribb’d, confin’d, bound in, not as Macbeth, to his ‘saucy doubts and fears’ but by evidence and arguments of the litigants”
And so, the important question that we are left with in this case is – Upon what facts is the Court in Nigeria to assume jurisdiction, despite a clause in the Bill of Lading, which positively adopts Germany as the place of litigation, in regard to any dispute arising under the Bill of Lading
- There is the statement before the Court which purports to emanate from some German lawyers that there exists a decision in Hamburg, Germany that German law would not consider the owner of the vessel in this case as carrier. In other words the action would not be maintainable against the Defendants if it is taken in Germany. That statement, however slim, remains uncontroverted.
- If the case is struck out now in the Nigerian Court, and the Plaintiffs’ only recourse would be to take action in Germany, the action would already be time – barred. Both counsel have admitted to us, and this is of extreme importance to my determination, that the action was filed on 22nd November, 1979, while the cause of action arose on 25th November, 1978. In other words, the action, as per the Bill of Lading, has become time-barred since 25th November, 1979.
I will start my examination herein by reference, first to the case of Unterweser Reederei G.M.B.H. v. Zapata off Shore Coy., otherwise known as
“The Chaparral” (1968) 2 Lloyd L.R. 158. There, Wilmer L.J. stated the law in cases of this nature. He said –
“The law on the subject, I think is not open to doubt and I do not think that it is really necessary to cite the authorities to which we have been referred. It is always (as they did in this case) that a particular Court shall have jurisdiction over any dispute arising out of their contract. Here the parties chose to stipulate that disputes were to be referred to the “London Court.” which I take as meaning the High Court in this country. Prima facie it is the policy of the Court to hold parties to the bargain into which they have entered. Prima facie it is to be presumed, therefore, that the plaintiffs should have leave to prosecute their proceedings in this country, and in pursuance of that to serve their first writ out of the jurisdiction. But that is not an inflexible rule, as was shown, for instance, by the case of The Fehmarm, (1957) 1 Lloyd’s Rep. 511; (C.A.) (1957) 2 Lloyd’s Rep. 551, in which I was myself concerned and which came to this Court. That was a case in which the Court in its discretion declined to give effect to a stipulation made by the parties in their contract conferring jurisdiction on a foreign Court.
I approach the matter, therefore, in this way, that the Court has a discretion, but it is a discretion which, in the ordinary way and in the absence of strong reason to the contrary, will be exercised in favour of holding parties to their bargain.”
The next question then would be whether, also as in The Chaparral”, sufficient circumstances have been shown to exist in this case to make it desirable, on the grounds of balance of convenience, that proceedings should not take place in Germany.
A Court of Appeal does not lightly interfere with the discretion of a trial court. It does, only, where it is shown that the trial court has acted, on some wrong principles of law or a misapprehension of the facts or that the exercise is patently wrong.
In The Chaparral, the Court of Appeal did consider new facts that came before that court since the exercise of the discretion by the trial court. I will do so here, for, as Atkin L.J. said in The Fehmarn 1957 2 A.E.R. 707 at 710, all the circumstances of each case are relevant.
In Adesanya v. Palm Line Ltd. 1967 Lagos L.R. 18, Adefarasin J. as he then was, declined to stay proceedings where the plaintiff in that case would be deprived of a remedy altogether.
But so would the Plaintiffs in this case. If the action is struck out or stayed in ‘the Nigerian Court, the Plaintiffs would be barred for ever from litigating their claim. If this is what Mr. Mbanefo had referred to as public policy, it could have been understandable. During the course of the argument in this case, this court felt very concerned about this aspect of the case. The following dialogue went on between the Court and Mr. Oduba learned counsel for the Respondent.
Court: “Are we to allow the litigant to lose his chance of litigating, litigating at all over half a million Naira, when, in any event, he has lost that chance in Germany
Oduba: I agree it would worry any man with conscience. But we are after justice according to the law.
Court: Ought we not to consider that though the evidence produced was insufficient, but then, you have produced no reply to that evidence But if it is not sufficient, you do not have to produce any evidence. The slight evidence so produced by the Plaintiffs has not been contradicted!
Oduba: S.57 of the Evidence Act applies. Foreign law is a matter of fact.
Court: Hearing a case, or shutting a man out, which of these two produces justice
So was the concern of this Court on the consequence upon the Appellants of having his case stayed in the Nigerian Court. The Appellants would no longer be able to bring any action in the German Court, for as I have earlier stated, it is accepted by both learned counsel that the action, if it does not lie in the Nigerian Court would be too late now to be brought in the German Court.
It is true that in “The Eleftheria (1969) 1 LloydsL.R. 237, Brandon J, in his powerful judgment, emphasised the essentiality of giving full weight to the prima facie desirability of holding the plaintiffs to their agreement. He also enjoined upon the Courts to be careful not just to pay lip service to the principle involved and then fail to give effect to it because of a mere balance of convenience. I think, with respect, what we have in this case transcends. mere balance of convenience. It is a total loss of action by the Plaintiffs, if effect is given herein to the principle of Pacta Servanda Sunt, having regard to the peculiar circumstances of this case. As it was observed in the course of the argument of this case by this Court, justice could not be served in this case by holding the Appellants to their pact of having the action taken only in the German Court.
The tests set out by Brandon J. in “The Eleftheria” are as follows-
(1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the defendants apply for a 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.
(2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown.
(3) The burden of proving such strong cause is on the plaintiffs.
(4) In exercising its discretion the Court should take into account all the circumstances of the particular case.
(5) In particular, but without prejudice to (4), the following matters, 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 respects.
(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!
For the foregoing reasons, therefore, I will allow the appeal. The judgment and order made by the Court of Appeal, on 10th July 1985, are hereby set aside. So also are the judgment and order made by the Federal High Court, which granted a stay of proceedings of the action of the Plaintiffs before that Court set aside. The Order as to costs, made by the two Courts are also set aside.
The following orders are hereby made:
(a) The appeal is allowed.
(b) The proceedings brought by the Plaintiffs against the Defendants in this case shall proceed to be heard by the Federal High Court up to determination of the action.
(c) Costs are awarded against the first Defendants in favour of the Plaintiffs as follows –
(i) N100.00 being costs in the High Court
(ii) N250.00 being costs in the Court of Appeal
(iii) N300.00 being costs in this Court.
BELLO, C.J.N.: I have had a preview of the judgment delivered by my learned brother, Eso J.S.C. I adopt it as mine.
The appeal is allowed. The judgments of the Court of Appeal and of the High Court are set aside. Instead, a judgment of dismissal of the defendant’s application for stay of proceedings should be entered.
The suit is remitted to the Federal High Court for hearing. I endorse the orders as to costs made by Eso, J.S.C.
Other Citation: (1987) LCN/2316(SC)