Nigeria: Injunctions Pending Arbitration: A Legal Myth?

Last Updated: 3 April 2014
Article by Faruq Abbas

A court grants an order of injunction at its discretion as an equitable relief either to protect the rights of the applicant or preserve the subject matter of a dispute pending the determination of a case (Anthony v. Surveyor-General, Ogun State (2007) ALL FWLR (Pt. 354) 375 at 390. Although the Courts also have the powers to grant mandatory injunctions, our focus here is to consider the powers of the court to grant preservative orders pending the hearing and determination of an arbitration proceeding.

A comparison between the provisions of the English Arbitration Act, 1996 (the "English Arbitration Act") vis-à-vis the provisions of the Arbitration and Conciliation Act, Cap A.18, Laws of the Federation of the Federal Republic of Nigeria, 2004 ("the Arbitration and Conciliation Act") together with a review of Nigerian judicial authorities aids in establishing whether or not Nigerian Courts have and exercise the powers to grant injunctive reliefs pending arbitration.

Powers of the English Court to grant an Order of Injunction Pending Arbitration

Section 44 (3) of the English Arbitration Act expressly provides that a Court may in cases of urgency; grant an order of injunction for the preservation of an asset or evidence pending the hearing and determination of an arbitration. Section 44 (5) of the English Act goes further to provide that a Court would only have the powers to grant an order of injunction pending arbitration where the arbitral tribunal lacks the power to grant the order of injunction or where the tribunal is for any reason, unable to grant same.

The provisions of the English Arbitration Act above therefore make it crystal clear that the power of the English Courts to grant injunctive reliefs pending arbitration is not in doubt.

Does A Nigerian Court Have the Power to Grant an Order of Injunction Pending Arbitration?

Generally, the position of the law is that, where a dispute is pending before an arbitral tribunal, the arbitral tribunal shall have the powers to grant interim and injunctive reliefs in favour of any of the parties pending the determination of the arbitration. (Section 13 (a) of the Arbitration and Conciliation Act

Unlike the English Arbitration Act, the Arbitration and Conciliation Act, does not contain any provision, which expressly endows the Nigerian Courts with the power to grant an injunctive relief pending arbitration. Notwithstanding this omission in the ACA, it is our view that this lacuna is cured by the provisions of Article 26 (3) of the Arbitration Rules, contained in the First Schedule of the Arbitration and Conciliation Act1which provides that a Nigerian court can grant an order of interim or preservative injunction pending the hearing and determination of an arbitration proceeding.

Thus, since the Rules of the Arbitration and Conciliation Act presumes that a party can make an application to the Court for interim measures notwithstanding the presence of an agreement to arbitrate, it is submitted that it simply goes without saying that a party to an agreement to arbitrate, can approach the Court for an order of interim measures in rare cases where the arbitral tribunal has not been constituted due to no fault of the Applicant or where the arbitral tribunal is unable to hear and grant an application for interim measures due to a logistical conundrum.

Furthermore, the power of a Nigerian Court to grant an order of injunction pending arbitration is traceable to the provisions of Section 13 of the Federal High Court Act and Section 18 of the High Court of Lagos State Law, which endows both the Federal and State High Courts with the powers to grant an order of interim injunctions where it will be just and convenient to do so.

Judicial Attitude to Applications for Injunction Pending Arbitration

The attitude of the Nigerian judiciary to applications for injunction pending arbitration can be categorized into two schools of thoughts. The first school of thought believes that a Court can only grant an injunction in support of arbitration if the entire issues in dispute between the parties are brought before the Court. Thus, this school of thought believes that an action which is instituted for the sole purpose of obtaining an injunctive relief pending the hearing and determination of an arbitration is bound to fail because the Court's jurisdiction to entertain a suit can only be invoked when the entire issues in dispute is brought before the Court.

The judicial authority, which is usually brandished in support of this school of thought is the case of NV Scheep v. MV S. Araz (2000) 15 NWLR (Pt. 691) 622 where the Supreme Court held that a Court would only be able to grant an interim measure in support of arbitration where the issues in dispute between the parties have been submitted to the Court for its determination. In this case, the Court refused to grant an interim order for security in support of an arbitration proceeding in London because the Claimant in the suit had not submitted the issues in dispute between the parties for the determination of the Court. The Court therefore held that the admiralty jurisdiction of the Federal High Court could not be validly invoked for the sole purpose of obtaining security for an award in respect of the on-going arbitration in London. In essence, the Supreme Court simply ruled that the Claimant ought to have approached the arbitral tribunal for an order for interim relief since the arbitral tribunal was responsible for determining the issues in dispute between the parties.

The second school of thought believes that a Court has the power to grant an order of injunction pending the hearing and determination of an arbitration proceeding. This school of thought however believes that the power to grant injunctions pending arbitration should only be exercised in rare and deserving cases. In Owners of the MV Lupex v. N.O.C.S Ltd (2003) 6 S.C. (Pt. II) 62 at 73, the Supreme Court held that a party to an arbitral proceedings would be permitted to institute an action for injunctive reliefs in Court during the pendency of the arbitral proceedings, if there is a "strong, compelling and justifiable reason" for such an action. This position was re-affirmed by the Court of Appeal in Maritime Academy of Nigeria v. A.Q.S (2008) All FWLR (Pt. 406) 1872 at 1895 Para B-C.

In Lignes Aeriennes Congolaises v. Air Atlantic Nigeria Ltd (2006) 2 NWLR (Pt. 963) 49 the Court of Appeal held that the choice of arbitration does not bar resort to the Court to obtain security for any eventual award.

Also, in the recent case of Statoil Nigeria Limited v. Star Deep Water Petroleum Limited & 3 Ors (Suit No. FHC/L/CS/1452/2013) (Unreported)2, Honourable Justice Buba held that the Federal High Court has the jurisdiction and power to grant an order of injunctive reliefs pending arbitration, and that this power would only be exercised in deserving cases. His Lordship further held that the power of the Court to grant injunctive reliefs pending arbitration is derived from the provisions of Article 26 (3) of the Rules made pursuant to the Arbitration and Conciliation Act and Section 13 of the Federal High Court Act.

Lastly, in Lagos State Government v. PHCN & 2 Ors (2012) 7 CLRN 134, the Lagos State High Court held that it had the jurisdiction to grant an order of interim reliefs pending arbitration, notwithstanding the fact that an arbitration proceedings was on-going between some parties to the action. Just like the Statoil Case cited above, the Lagos State High Court relied on the provisions of Article 26 (3) of the Rules made pursuant to the Arbitration Act in arriving at this decision.

Should the Case of NV Scheep v. MV S. Araz (2000) 15 NWLR (Pt. 691) 622 Act as a Bar Against the Granting of an Order for Injunction Pending Arbitration?

It is submitted that the case of NV Scheep v. MV S. Araz (Supra) ought not to be permitted to act as a bar against the granting of an order of injunction pending arbitration because the provision Article 26 (3) of the Rules made pursuant to the Arbitration Act is quite clear that a Court has the power to grant an order of injunction pending arbitration irrespective of the fact the entire issues in dispute between the parties have not been submitted for the determination of the Court. Also, the mere fact that Article 26 (3) of the Rules was not pronounced upon by the Supreme Court in MV S. Araz's Case goes further to show that the principal issue which was considered by the Court in MV S Araz's Case is whether the admiralty jurisdiction of the Federal High Court could be activated by an action for security for damages in respect of an on-going arbitration, and not whether the Federal High Court could grant an order of injunction pending arbitration.

Furthermore, in MV S. Araz's case, the Applicant for an order for interim reliefs pending arbitration did not adduce any evidence to show why it did not bring the application before the Arbitral Tribunal before bringing it to theCourt. Thus, the mere fact that the Applicant could have brought the application for interim reliefs before the Arbitral Tribunal, but it failed to do so, is enough ground for the Court to have refused to grant the order for interim reliefs pending arbitration. This is because an application for interim reliefs pending arbitration ought only to be made to the Court in rare cases where the Arbitral Tribunal cannot consider it or where it cannot be made before the Arbitral Tribunal due to a delay in the empanelment of the Arbitral Tribunal.

Lastly, the law is well settled that judicial precedents are not of much value in cases involving the exercise of discretion. See: Dokubo-Asari v. FRN (2007) 12 NWLR (Pt. 1048) 320 at 350. Thus, since the decision of a Court to either grant or refuse an application for injunction pending appeal/interim measures pending arbitration is based on the exercise of judicial discretion, it is submitted that the Court ought not to allow the exercise of its judicial discretion to be fettered by the decision of the Supreme Court in MV S. Araz's Case.

In conclusion, it is submitted that Nigerian Courts have the power and jurisdiction to grant interim injunctions pending arbitration (of course this is in cases where the arbitration panel is unable to do so) and this power can be exercised notwithstanding the fact that the subject matter of the dispute between the parties is not before the Court. This is because since an application for an interim relief is usually made pending the hearing and determination of an arbitration proceeding, it would be illogical for the parties to submit the dispute which they have already agreed to refer to arbitration, to the Court just because either of them wants to obtain an interim relief pending arbitration.

Thus, every application for injunction pending arbitration should be considered on its own merit and the Courts should not hesitate to grant an application for injunction pending arbitration especially in cases where there is an urgent need to preserve the subject matter of an arbitration or in cases where a party has been unable to bring an application for injunction before an arbitral tribunal due to a delay or logistical conundrum in the empanelment of the arbitral tribunal.

Footnotes

1 A request for interim measures addressed by any party to court shall not be deemed incompatible with the agreement to arbitrate, or as a waiver of that agreement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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