United World Limited Inc. V. Mobile Telecommunications Services Limited (1998)

LawGlobal-Hub Lead Judgment Report

PATS-ACHOLONU

The appellant a U.S based registered company engaged in newspaper publication and advertisement entered into a contract with the respondent a mobile telecommunication services company for the appellant to place 1/8 page advertisement as advertiser in a newspaper known as USA Today for the sum of 38,250 (Thirty eight thousand two hundred and fifty dollars) to be paid by the respondent within 30 days of signing of the contract. The money became due for payment on 1/7/93.

There was a clause in the contract for reference to arbitration. The respondent of the publication failed to pay even though there was lacked a clause that failure to pay within that time would attract 1.4% flat monthly interest rate. The appellant was forced to take out summons on 22/2/95 claiming the amount under the contract. The respondent on 7/3/95 entered a conditional appearance and the appellant filed summons for judgment under Order 10 of the High Court of Lagos State (Civil Procedure) Rules 1972. On the receipt of same the respondent applied for a stay of proceedings and stared that there exists a dispute which should be referred to arbitration. The court below gave a considered ruling and made an order staying further proceedings pending arbitration. Piqued by the decision the appellant filed four grounds of appeal and framed four issues from the same grounds.

The issues are as follows:

(i) Whether the respondent as defendant/applicant satisfied the statutory requirements and conditions under the Arbitration and Conciliation Act. Cap.19, Revised Laws of the Federation, 1990 to entitle them to stay the action of the appellant as plaintiff at the trial court pending reference to arbitration?

(ii) Whether prima facie the contract between the parties, the learned trial Judge properly construed the terms of the agreement before granting the defendant’s application to stay the plaintiff’s action pending reference to arbitration?

(iii) Whether the learned trial Judge considered all the issues of law raised by the plaintiff/respondent before granting the defendant/applicant’s application to stay further proceedings pending reference to arbitration?

(iv) Whether it is the plaintiff’s claim or defendant’s affidavit in support of an interlocutory application that determines the jurisdiction in a matter. If it is the plaintiff’s claim, whether the trial Judge was right in finding that negligence is an issue for which he has to decline jurisdiction pending reference to arbitration?

Strictly speaking there is only one issue which is issue No. 1 or otherwise to be stated thus: whether on the consideration of the totality of the case the court below should have made an order of reference to the arbitration on the facts of the case.

In examining the thrust of the case it is considered neat and essential that I set out the provision of section 5 of the Arbitration and Conciliation Act Cap 19 of the 1990 Laws of the Federation.

“1. If any party to an arbitration agreement commences any action in any court with respect to any matter which is the subject of an arbitration agreement, any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings.

2. A court to which an application is made under subsection (1) of this section may, if it is satisfied –

(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and

(b) that the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, make an order staying the proceedings.” The cornerstone of the provision is that the subject matter must be the type which ought or should be referable to an arbitration. In Kano State Urban Development Board v. Fanz Construction Co. Ltd (1990) 4 NWLR (Pt.142) I the court held as follows.

“The exercise of the power to stay proceedings in the court pending the determination of arbitration proceedings can only be and must be exercised in accordance with the provisions of the law section 5 of the Arbitration Law. Failure to exercise the power in accordance with the provisions of the law, renders the decision or order a nullity.”