The Owners Of The M. V.lupex V. Nigerian Overseas Chartering And Shipping Limited (2003)

LAWGLOBAL HUB Lead Judgment Report

MOHAMMED, J.S.C.

This is an appeal from the decision of the Court of Appeal, Lagos Division. The plaintiff, who is respondent in this appeal, claims damages for the loss it suffered as charterer of the defendant’s ship ‘LUPEX’ under a charter-party dated, 11th April, 1991. The loss was in consequence of the defendant’s breaches of the said charter-party. The defendant is the appellant in this appeal. In an action which the respondent filed against the appellant in the Federal High Court, Lagos, the company claimed for the following reliefs:

“1. Balance due to the plaintiffs on final hire statement …… US $ 138,480.64

2. Loss of 13 days hire due to willful delays by the defendants ….. US $ 62,400
3. Loss of hire paid when defendants wrongfully withdrew the vessel from charter in Brazil without justification

for 47 days and bunkers consumed during the said period ….US $ 324,770

4. Fees paid to the defendants’ Nigerian agents at the defendants’ request on the 22nd June, 1991 …….. US $ 56,700
5. Fees paid to the defendants’ Brazilian agents, Messrs Buarque et Cia, on the 5th July, 1991….. US $ 50,034.05
6. Interest for one year at 35% per annum ….. US $221.200

US $853.585.29

Total Claim US Dollars 853,585.20 together with interest at the rate of 35% per annum until the date of judgment and costs.”

After filing the suit, the respondent applied through a motion ex parte for the arrest of the vessel (M.V. LUPEX) which at that time had berthed at the port of Warri. The trial High Court granted the order as prayed. On being aware of the order given by the court directing for the arrest of the ship the appellant went to court and filed a motion on notice and applied for the following orders:

“1. Setting aside the order of this Honourable Court dated 13th October, 1992 for the arrest of the vessel M. V. LUPEX, alternatively;

2. For the release of the vessel M. V. LUPEX from the arrest of this Honourable Court unconditionally or upon such terms as this Honourable Court may direct.
3. Stay of the proceedings in this suit sine die.”

The learned trial Judge, in his ruling, considered the submission of learned counsel for the appellant, Mr. Candide Johnson, that the court should have declined jurisdiction in view of the provisions of the Arbitration and Conciliation Act, Cap. 19, Laws of the Federation of Nigeria, 1990. The learned Judge was also referred to the charter-party agreement and the cases of K.S.U.D.B. v. Fanz Construction Limited (1990) 4 NWLR (Pt.142) page 1 at 33 and Sonnar Nigeria Ltd. v. Partenreedri M. S. Nordwind (Owners of the Ship M. V. Nordwind) and Another (1987) 3 NWLR (Pt. 66) 520. Referring to his application for setting aside the order of arrest of the vessel M. V. LUPEX, the learned counsel for the appellant submitted that when the order was given through an ex parte application not all the relevant facts were known to the court. The court was not aware of the existence of arbitral tribunal in London. Learned counsel then urged the trial court to set aside the order of arrest of the ship. The motion was opposed strongly by learned counsel for the respondent, Mr. Mbanefo, SAN.

The learned trial Judge considered all the submissions made before him and held that he had jurisdiction to entertain the action filed by the respondent, and declined to stay proceedings. On the order of arrest of the ship, the court gave a condition that the appellant should supply a bank guarantee to the tune of $735,000.00 US Dollars or its equivalent in Naira before the ship could be released.

Dissatisfied with this ruling the appellant appealed to the Court of Appeal. The Court of Appeal considered all the issues canvassed before it and dismissed the appeal. The appellant has now come before this court, armed with three grounds of appeal, challenging the decision of the court below. Learned counsel for the appellant identified the following three issues as relevant for the determination of the appeal:

“1. Whether or not the Court of Appeal is bound to stay proceedings where parties prior to the action had voluntarily submitted to arbitration in compliance with their contract or whether the evidence of the plaintiff in this case is sufficient in law to justify the exercise of the court’s discretion to refuse to order a stay of proceedings under section 5 Arbitration and Conciliation Act.

2. Whether the court, when faced with an application for stay of proceedings in favour of International Commercial Arbitration as agreed to by parties, must exercise its discretion in line with the Convention for the Recognition and Enforcement of Foreign Arbitral Awards (Second Schedule to the Arbitration and Conciliation Act), particularly Article II rule 3 thereof.
3. Whether the ratio decidendi of the Supreme Court in Sonnar (Nigeria) Limited & Anor. v. Nordwind & Anor. (1987) 4 NWLR (Pt. 66) 520 (hereinafter referred to as the Nordwind) can be applied to the facts of this case.”

Learned counsel for the respondent on his part submitted, in the respondent’s brief, that the only issue arising for the determination of the appeal is whether in the circumstances of the case the Court of Appeal rightly affirmed the decision of the learned trial Judge in exercising his discretion to refuse the appellant’s application for stay of the proceedings in the suit in consequence of arbitral proceedings pending in London between the parties. In other words, only one issue has been identified by the respondent for the determination of this appeal. I think the respondent’s counsel is right in formulating the single issue for the determination of this appeal. It is enough to cover the points of argument between the parties.

The real issue in dispute between the parties which concerns this appeal is the application filed by the appellant, requesting the trial High Court to stay proceedings of the action filed by the respondent in view of the agreement the two parties entered in clause 7 of the charter-party, which reads: