Stabilini Visinoni Limited V. Mallinson & Partners Limited (2014)

AMINA ADAMU AUGIE, J.C.A. (Delivering the Leading Judgment)

The Respondent deals with the importation and the sale of building materials, including iron rods of different sizes, while the Appellant is a Civil Works and Construction Company. By two Local Purchase Orders [LPOs] dated 14th and 15th of May 2009, the Appellant ordered for 210 tons of Y10MM Iron Rods (Ukraine Imported) valued at 33,600,000 and 60 tons of Y25MM Iron Rods (Ukraine Imported) valued at N9,600,000 respectively, from the Respondent. Both LPOs contain an arbitral clause that stipulates as follows-

“All disputes which may arise out of the order shall he referred to an Arbitrator nominate (sic) by the President to (sic) the time being of the Lagos State Chamber of Commerce, This clause should be deemed to be a submission to arbitration within the meaning of the law from time (sic) enforced in Nigeria”.

It was also specified in the LPOs that payment for the iron rods supplied shall be made “30 days after the last delivery”. When it failed to effect payments, the Respondent wrote several demand letters to the Appellant, and when that failed to yield results, the Respondent briefed its Lawyers – Emeka Ngige & Co., who also wrote their own demand letter dated 15/10/2009 to the Appellant.

The Appellant failed to pay, and Respondent filed Suit No. LD/134/2010 dated 21/1/2010 at the Lagos State High Court, wherein it claimed as follows –

(A) Payment of the total sum of N43,200,000.00 only being the outstanding sum owed the Claimant by the Defendant for the Iron Rods (Ukroine Imported) supplied to the Defendant vide the Defendant’s Local purchase Orders (LPOS) respectively dated 14/5/09 and 5/15/09 with Nos: HOF-05-243 and HOF-05-239 respectively.

(b) Payment of Interest at the rote of 22% on the said sum of N43,200,000.00 from 1/8/2009 until Judgment and thereafter at the rate of 10% until the entire debt is liquidated.

(c) Payment of the total sum of N15,000,000.00 only as damages for breach of contract.

(d) Cost of the action including the sum of N5,000,000.00 representing fees charged by Claimant’s Solicitor’s for the recovery of the principal claim.

Upon being served, the Appellant entered a conditional appearance on 5/2/10, and on 8/3/10, it filed an Motion on Notice praying the lower Court to grant –

1. An ORDER staying further proceedings in this Suit until the parties herein comply with Clause 5 of the Local Purchase Orders that stipulates referral to arbitration prior to commencement of Court action;
2. An ORDER extending time for the Defendant – -to file its pleadings in this suit till 7 (seven) days after the date of delivery of Ruling in respect of this Application.

The Grounds upon which the Application was brought are as follows –

i. The commencement of this suit by the Claimant is premature and there is no disclosure in the Statement of Claim that there exists a condition precedent.

ii. Both parties agreed to submit to arbitration to resolve any dispute(s) that may arise from the issuance of the Local Purchase Order(s).

iii. It is a settled in a plethora of judicial authorities that any party seeking to refer to a dispute which is already before a Court of law to an Arbitral body must not file any pleadings or take any other steps whatsoever, apart from filing its Memorandum of Conditional Appearance.

The Respondent conceded to the Application, and Emeka Ngige & Co., then wrote a letter dated 5/5/10, which they also titled NOTICE OF ARBITRATION to – “The President, Lagos Chamber of Commerce and Industry”; it reads in part –