Total Engineering Services Team Inc V. Chevron Nigeria Limited (2010)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

CLARA BATA OGUNBIYI, J.C.A (Delivering the Leading Judgment)

This is an appeal against the ruling of Adefope – Okojie J. of the Lagos State High Court (Lagos judicial Division). The ruling was delivered on the 13th day of September, 2005 and is contained at pages 234 to 270 of the record of appeal. By the judgment, the Lagos State High Court remitted part of the arbitral award to the sole arbitrator, Mr. H. Odein Ajumogobia (SAN) for reconsideration and decision.

The Respondent and the Appellant herein were the claimant and the respondent in the arbitration proceedings respectively. In this appeal, the claimant at the lower court would be referred to as the Respondent while the Respondent is the appellant. The award of the sole Arbitrator was delivered on the 23rd day of April, 2004. A portion of the award was in favour of the Respondent but the arbitrator dismissed a significant part of the Respondents’ claim.

On the 21st day of July, 2004 the Respondent being dissatisfied with the portion of the award dismissing a head of its claim filed originating summons with supporting affidavit (at pages 1 – 162 of the Record of Appeal) at the High Court of Lagos State seeking an order setting aside that portion of the award or an order remitting that part of the award to the Arbitrator for reconsideration. The basis of the Respondent’s application was that the Arbitrator misconducted himself in taking a decision outside the scope of the issue for determination as formulated and agreed by the Arbitrator and counsel to the parties and that the award contains errors of facts or law on its face.

The brief facts of this case arose out of a contract service agreement between the Chevron Nigeria Limited (respondent herein) and Total Engineering Services Team Inc. (TEST) (appellant herein) under which TEST undertook to provide labour services to Chevron Nigeria Ltd among other Chevron entities.

Pursuant to the said agreement, one Mr. Danny Bufkin, an employee of appellant was assigned to work with the respondent at its facilities in Nigeria, where the said Mr. Bufkin was abducted and tortured for eight (8) days by a local tribe (the Ijaws), whilst he was on one of the respondent’s supply boats on an official assignment. That the respondent eventually paid a ransom in exchange for Mr. Bufkin’s freedom and upon his release, Mr. Bufkin instituted an action in the United States against the respondent on grounds of negligence.

The gravaman of Mr. Bufkin’s Claim as stated in his Amended original complaint filed in the U.S District court for the Southern District of Texas was that the respondent, being aware of the threat posed by the Ijaws (having been victims of such threats in the past), ought to have enacted safety precautions to mitigate the danger to those working for them or travelling on vessels owned or chartered by the respondent. Mr. Bufkin confounded that the respondent was negligent and as such he was entitled to damages for physical and mental pains for loss of wages loss of earning capacity and medical expenses.

The respondent demanded that the appellant take over its defence and settle the case on its behalf under the indemnity provisions in the contract.

However, the appellants’ insurers, Zurich American Inc. group turned down the request to take over the defence of Mr. Bufkin’s suit in the US District Court on the ground that the obligation imposed on the appellant under the indemnity clause of the contract, was not triggered, having regard to the respondent’s negligence.

The respondent and the appellant eventually settled Mr, Bufkin’s claim out of court. The terms and condition of the settlement are contained in a General Release Agreement dated 29 June, 2002 at pages 49 – 66 of the record.

Pursuant to the indemnity provisions in the Contract Service Agreement, the respondent sought reimbursement from the appellant of the amount it expended in the defence and settlement of Mr Bufkin’s suit. A dispute therefore arose as to whether the appellant was liable to indemnify the respondent under clauses 10 and 11 of the contract. Pursuant to clause 15.2 of the contract therefore, the dispute was referred to a sole – arbitrator for resolution in accordance with the Arbitration Agreement under the contract. The arbitrator, in an award published on the 24th day of April, 2003 (at pages 138 – 162 of the record) resolved the issue contained in the reference, He held that the respondent was entitled to be indemnified in respect of the sum of US $ 175,000 (One hundred and seventy five thousand United States Dollars) paid by the respondent to Mr. Bufkin in settlement of his claim against the respondent The arbitrator however refused the respondent’s claim for reimbursement of attorney’s fees of $232,249,66 on the ground that the head of claim was not proved.

Being dissatisfied with that part of the arbitrator’s award refusing its head of claim for reimbursement of attorney’s fees, the respondent, by an originating summons dated and filed 21st July, 2004 at the lower court, sought to either set aside that Part of the award or have it remitted to the arbitrator for reconsideration of that head of claim. The originating summons is at pages 1 – 162 of the record.

On the 13th September, 2005, the lower court delivered a ruling remitting that part of the arbitrator’s award, refusing the respondent’s claim for reimbursement of the attorney’s fees, to the arbitrator for reconsideration on that ground that the issue of who paid the attorney’s fees was one raised suo motu by the arbitrator. The lower court held that the arbitrator ought to have invited the parties to address him on the issue prior to reaching a decision. It is this part of the lower court’s decision therefore that forms the basis of this appeal.

By notice of appeal dated 14th and filed 15th November, 2005 the appellant filed four grounds of appeal at pages 271 – 274 of the record of appeal. On the 12th January, 2010 when the appeal was called up for hearing, the learned appellants counsel Mr. Adewale Afake informed the court of their intention to abandon grounds 2 and 3 of the grounds of appeal which same are accordingly struck out. The learned appellant’s counsel therefore proceeded to adopt and rely on their brief of argument dated and filed 5th May, 2008.