Arbitration: Appeal Court set aside  $2.7m award against Indorama Eleme Petrolchemicals

 Godwin Tsa Abuja

Indorama Eleme Petrochemicals Limited (IPL) is the largest producer of olefins and polyolefin plastics in West Africa. Furthermore, it is the only producer of polyolefins in Nigeria and plays a vital role in sustaining the domestic downstream plastics industry.

The decision of the appellate court is contained in a judgment in the appeal filed by the company and argued by it’s counsel, Chief Solo Akuma (SAN).

In a unanimous judgment delivered by Justice Stephen Adah, the court set aside the award on the ground that it breached the fundamental rights of fair hearing of the appellant as no notice of arbitration was giving to it as provided for under Article 3 of the Arbitration rules.

Other members of the panel who agreed with the judgment are Justice Abubakar Yahaya and Justice Mohammed Idris.

The court agreed with the appellant counsel that The non fulfilment of the condition precedent by failure to issue notice of arbitration pursuant to Article 3 of the rules of Arbitration by the respondent before the commencement of the arbitral proceedings deprived the arbitrator the jurisdiction to entertain the arbitral proceedings between the respondent and the applicant and thus rendered the Award null and void.

“In the instant case, the parties chose the rules of the Arbitration and Conciliation Act, 2004. Under the rules, the claimant/respondent in this appeal, must give notice of arbitration. This was provided for under Article 3 of the Arbitration rules.

“From this provision, giving of a notice of arbitration is very important and it is a condition precedent to exercising any jurisdiction by the Arbitration or the tribunal.

“The fact still remains that the issue of jurisdiction is not a matter to brush aside with a wave of hand. It is certain that when one has no jurisdiction to hear a matter the issue remains what it is until sorted out after a thorough scrutiny.

“There is no gainsaying the fact that issue of jurisdiction is radical and a crucial point which when raised, is challenging the competence of the court or tribunal to hear and determine the case.

“Any proceedings conducted by a court or tribunal without jurisdiction, no matter how well or brilliantly it was conducted, is a nullity.”

“It is my considered view and conclusion that the arbitrator’s failure to defer to the court on the issue of jurisdiction and competence and failure to ensure that the appellant was served with hearing notice for the proceedings of 9th November 2016 to 20th December 2016 is a misconduct which has vitiated the arbitral award of 20th December, 2016.

“In the instant case, no notice of arbitration was served on the appellant before the respondent procured the appointment of Enewa Mrs. Rita Chris-Garuba as the sole arbitrator for the parties, meaning that the appointment of the arbitrator was in law, invalid.

“Iam therefore certain that the right of the appellant to fair hearing was breached as earlier found in this judgment.  It is certain and proven that the arbitrator with due respect, misconducted herself when she entertained the arbitral proceedings between the applicant and the respondent without fulfilment of condition precedent by the failure of the respondent in giving notice of arbitration before initiating a recourse to arbitration.

“It is also certain that the arbitral proceedings and the award rendered we’re in total disregard to the terms of the arbitral agreement of the parties, the Arbitration and Conciliation Act Cap A18 LFN 2004 and Article 3 of the rules of arbitration made pursuant to the Act and thus constituted an arbitral misconduct under section 30 of the Arbitration babd Conciliation Act aforesaid.

“The non fulfilment of the condition precedent by failure to issue notice of arbitration pursuant to Article 3 of the rules of Arbitration by the respondent before the commencement of the arbitral proceedings deprived the arbitrator the jurisdiction to entertain the arbitral proceedings between the respondent and the applicant and thus rendered the Award null and void.

From the foregoing therefore, it is my conclusion that this appeal has merit. The appeal is hereby allowed and judgment of the trial court in suit no: FCT/HC/CV/1088/2018 delivered on 5th February 2019, is hereby set aside along with the arbitral award rendered by the arbitrator on 20th day of December, 2016.  A cost of N50, 000 is awarded in favour of the appellant.”

In appeal no: CA/A/115/2019 between Indorama Eleme Petrolchemicals and Cutra International Limited.

The appellant had challenged the jurisdiction of the arbitration panel to initiate the arbitral proceedings because the respondent failed to serve him the requisite notice of arbitration as required by the Act which is the law that regulated their conduct for any arbitration in settlement of any dispute arising out of the agreement.

However, the arbitrator ruled that such hearing notice can be dispensed with by the parties under section 17 of the Arbitration Act.

Dissatisfied, the appellant filed an originating summons in suit marked CV/148/2016 against both the Arbitrator and the respondent.

In the said suit, the appellant sought a declaration that the condition precedent to invoke the arbitral proceedings had not been complied with to warrant the commencement of the arbitration between the parties.

He equally sought for an order setting aside the ruling of the arbitrator as well as removing same arbitrator, and also a motion for stay of the arbitral proceedings pending the determination of the suit.