Taylor Woodrow Of Nigeria Limited V. Suddeutsche Etna-werk GMBH (1993)

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OGUNDARE, J.S.C. 

This appeal raises the question when and in what circumstances, a court will disturb the award made by an arbitrator to whom the parties to a contract have voluntarily submitted a dispute arising between them for adjudication.

Taylor Woodrow of Nigeria Limited by a contract dated 23rd May, 1981 entered into by it and the Niger State Government, agreed to build a Specialist Hospital in Minna. By a sub-contract dated 21st September, 1981, supplemental to this contract (known in these proceedings as the main contract) the said company (who is now the appellant before us and shall hereinafter be so referred to) appointed Suddeutsche Etna- Werk GMBH, a company based in Germany (hereinafter shall be referred to as the respondent) to execute the supply of installation and commissioning of air-conditioning work of the Specialist Hospital for a contract sum of N885,920,00. By Appendix II of the sub-contract, part of the contract sum of N885,920.00, that is, N430,000.00 was to be paid for by the establishment of irrevocable letters of credit on stated dates to enable the respondent bring in fabricated materials and equipment needed for the air-conditioning work, into Nigeria. Appendix II reads:

“MINNA GENERAL HOSPITAL

APPENDIX II TO ETNA SUB – CONTRACT AGREEMENT

TAYLOR WOODROW OF NIGERIA WILL PROVIDE IRREVOCABLE LETTER OF CREDITS AND NECESSARY DOCUMENTS UP TO THE FOLLOWING MAXIMUM AMOUNT:

MAX.NAIRA DATE

SHIPMENT 1 165.00 NOV.1981

SHIPMENT 2 150.00 FEBR.1982

SHIPMENT 3 115.00 MAY 1982

THE IRREVOCABLE LETTER OF CREDITS MUST BE ACKNOWLEDGED BY A GERMAN BANK AND MUST BE PAYABLE AT THIS BANK BY SHOWING THE NECESSARY DOCUMENTS. THE MONTHS STATED ARE THOSE IN WHICH THE LETTER IS TO BE RAISED.

T.W.N. WILL HAVE ACCESS TO ALL QUOTATIONS AND L.P.O. MATERIALS TO BE IN ACCORDANCE WITH SPEC.AND APPROVED BY THE ENGINEER. ETNA TO HAVE FREE CHOICE BY SELECTING THE MANUFACTURER.

ETNA AGREES TO PAY THE 4 HANDLING CHARGE REQUIRED BY THE L.O.C DUE TO ETNA’S NON REGISTRATION IN NIGERIA, ETNA WILL OPERATE AS A DIRECT SUB-CONTRACTOR TO TAYLOR WOODROW. THEY WILL OPERATE UNDER THE COMPANY NAME OF T.W. THIS RELATIONSHIP IS PURELY FOR CONVENIENCE AND DOES NOT IN ANYWAY NEGATE ETNA’S RESPONSIBILITIES UNDER THE SIGNED SUBCONTRACT (NON – NOMINATED) AGREEMENT.”

By exchange of letters between the parties, the appellant requested the respondent to commence fabrication of the materials for shipment. The respondent performed its part of the bargain and had the materials fabricated to specifications and packaged ready for shipment. The appellant, despite efforts made, failed, however, to obtain the necessary import licence and Form M and to establish irrevocable letters of credit thereby making it impossible for the equipment to be brought into Nigeria. The respondent was thus unable to continue performance of the sub-contract and claimed there was a breach of contract on the part of the appellant. The main contract was subsequently suspended by the Niger State Government.