Arbitration and Conciliation Act Cap A18, Laws of the Federation of Nigeria 2004, as agreed in Clause 15 of the Haulage Agreement dated 1 st December

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1 IN THE HIGH COURT OF THE FEDERAL CAPITAL TERRITORY IN THE ABUJA JUDICIAL DIVISION HOLDEN AT ABUJA BEFORE HIS LORDSHIP, HON. JUSTICE A.A.I. BANJOKO-JUDGE DATED 1 ST DAY OF NOVEMBER 2013 SUIT NO: -FCT/HC/CV/1056/2011 MOTION NO: - FCT/HC/M/7449/13 BETWEEN: - KAY BROWN NIGERIA LIMITED PLAINTIFF/RESPONDENT AND NIGERIAN BOTTLING COMPANY PLC DEFENDANT/APPLICANT THE PARTIES ARE ABSENT Y.A. YUSUF FOR THE PLAINTIFF/RESPONDENT T.O. BUSARI WITH OLATUNDE AMUWA ESQ, OLUFUNKE YUSUFU EGONDU NWOKE (MISS) FOR THE DEFENDANT/APPLICANT RULING This Ruling is on the determination of the issues raised in Motion No: M/7449/13, which was dated and filed on the 20 th of May 2013 by the defendant/applicant. In it, the defendant, hereinafter called the applicant sought the following: - 1) An Order setting aside the appointment of Mr. Isaac Opanachi Esq., and terminating his mandate as Sole Arbitrator in the Arbitration between the parties herein, which appointment was made pursuant to the Order of this Court on the 5 th of February ) An Order directing the parties to appoint an Arbitral Tribunal in accordance with the provisions of Sections 6 and 7 of the 1

2 Arbitration and Conciliation Act Cap A18, Laws of the Federation of Nigeria 2004, as agreed in Clause 15 of the Haulage Agreement dated 1 st December 2009 (Exhibit 1 attached hereto) 3) And for such Further or Other Orders as this Court may deem fit to make in the circumstances. The Grounds upon which the Application is founded are as follows: - a) The Court lacks the jurisdiction to have appointed a Sole Arbitrator for the parties when indeed the Court was not named as the appointing authority in the Haulage Agreement dated the 1 st of December 2009 executed by the Parties. b) There is no Submission Agreement made between the parties agreeing to the appointment of a Sole Arbitrator as opposed to a panel of three (3) Arbitrators in accordance with the terms of the Haulage Agreement dated the 1 st of December 2009 executed by the Parties. IN THE ALTERNATIVE: c) The Sole Arbitrator has technically misconducted himself in the proceedings. d) The Sole Arbitrator does not possess the requisite experience; knowledge and qualification anticipated by the Parties and has therefore conducted the Arbitral Proceedings in an irregular manner. e) The subject matter of the reference is intricate and will require an Arbitrator with requisite knowledge and expertise in the law, practice and procedure of Arbitration. Filed in support of this application is a nineteen (19) Paragraph Affidavit deposed to by Ego Nwoke, a legal practitioner in the law firm of the Applicant s counsel as well as three documentary Exhibits, which are the copy of the Haulage Agreement, a copy of the Letter 2

3 dated the 24 th of April 2013, written by counsel to the defence about the irregularities noted and the Reply Letter from the Sole Arbitrator dated the 25 th of April In Paragraph 13, the fact of gross technical misconduct and irregularity in the conduct of the arbitral proceedings by the sole arbitrator was deposed to and the Court was urged to revoke his appointment. Paragraph 15 referred to the competence of the sole arbitrator appointed and it was urged that a panel of arbitrators in the interest of justice resolve the dispute. Further filed in support is a Written Address of counsel dated the same date which set out the background facts of this case and raised a sole issue for determination, namely: - Whether the Court should set aside the appointment of the Sole Arbitrator in this suit on the grounds that the Court lacks the jurisdiction to have appointed a Sole Arbitrator for the Parties AND/OR on the ground that the Sole Arbitrator lacks the requisite experience, knowledge and qualifications as anticipated by the Parties. The Plaintiff, hereinafter referred to as the Respondent, filed a fiftyseven (57) Paragraph Counter-Affidavit dated and filed on the 30 th of May 2013, which was deposed to by Mr. Brown Ehinmowo, the Managing Director of the Respondent and attached in support are Exhibits and a Written Address of counsel dated the same day. In response, the Applicant filed a twenty-two (22) Paragraph Further and Better Affidavit in response to the Respondent s counsel and this was dated and filed 10 th of June 2013 and in support is a Written Address of counsel filed on the same date. All processes were duly served, adopted and argued by their respective counsel. 3

4 As regards the issue of jurisdiction, learned counsel to the Applicant referred to Clause 15 of the Haulage Agreement dated the 1 st day of December 2009, which was executed between the parties and argued that this was the governing contract between the parties for which effect must be given to the terms stated therein. The Clause had stated any dispute arising from the agreement between the parties shall be resolved by Mediation and failing which, by Arbitration under the Arbitration and Conciliation Act. The effect of this clause is that the appointment and procedure to be adopted in the event of a dispute shall be as provided for under the Arbitration and Conciliation Act, CAP A18, LAWS OF THE FEDERATION OF NIGERIA 2004, (hereinafter referred to as The Act), which has been confirmed by the Supreme Court in the case of MAGBAGBEOLA VS SANNI (2005) 11 NWLR PT. 936, 239 AT AT PARAS G-C. Learned Counsel further submitted that parties are bound by the terms of their contract and are presumed to intend what they wrote in documents and so the ordinary and natural meaning of the words should be given once they are plain and unambiguous. On this point, the cases of UNIC LTD VS FADCO IND. (NIG) LTD (2000) 4 NWLR PT 653, 406 AT 419 AT PARAS D-E AND EKEOGU VS ALIRI (1991) 3 NWLR PT 179, 258 AT 273 were cited in support. He defined what Arbitration meant and classed it as settled that a Court will respect an Arbitration Agreement, leaning towards a construction that will give effect to the intentions of the parties as expressed in the Arbitration Agreement. The Agreement usually encompasses the applicable law, the seat of arbitration, the number of arbitrators, the appointee authority or institution and he argued that since the Haulage Agreement in Clause 15 had agreed to be bound by The Act, the parties must be guided by the provisions of that Act. 4

5 Learned counsel further referred to Section 6 of the Act, which permits the parties by themselves to determine the number of arbitrators and makes provision for the appointment of three (3) arbitrators in the event that the parties do not make such determination. Section 7 of the Act sets out the procedure for appointment in the event that no procedure was agreed by the parties and counsel submitted that to the extent that Clause 15 of Exhibit 1 is silent on the number and procedure for the appointment of arbitrator (s), then the number shall be deemed as three (3) and they ought to be appointed by the parties, pursuant to S.7 and not by the Courts. On this contention the cases of OGUNWALE VS SYRIAN ARAB REPUBLIC (2002) 9 NWLR PT 771, 127 AT 144 AT PARA B- C AND BENDEX ENG. VS EFFICIENT PET NIG LTD (2001) 8 NWLR PT 715, 333 AT 358 AT PARAS C-D was cited. Learned counsel however conceded that on the authorities of OGUNWALE AND BANDEX (CITED SUPRA) there are conditions under which a Court could exercise the discretion to appoint an Arbitrator and these include if the parties name the Court as an appointing authority, where a party having received a request to appoint an arbitrator within 30 days fails to do so and where parties have executed a Submission Agreement, which is a written agreement to submit present and future differences to arbitration. Cited in support is the case of K.S.O. & ALLIED PROD. LTD VS KOFA TRAD. CO LTD (1996) 3 NWLR PT 436, 244 AT 259 AT PARA G. According to learned counsel, none of the above conditions are prevailing to necessitate the intervention of this Court. The only subsisting agreement therefore is Exhibit A1, the Haulage Agreement, which has not been varied in any way. He urged the Court to set aside the appointment of the Sole Arbitrator as null and void. 5

6 On this issue of jurisdiction, learned counsel finally referred to Section 34 of The Act which states that the Court shall not intervene in any matter governed by the Act except where so provided in the Act. To this extent, the High Court has no inherent jurisdiction to supervise arbitration. However, the aid of the High Court may be invoked to help the arbitral process only as provided for in The Act. He placed reliance on the books titled Commercial Arbitration law and International Practice in Nigeria by C.A. CANDIED-JOHNSON, SAN AND OLASUPO SASORE, SAN (LEXIS NEXIS) AT PG AND LAW AND PRACTICE OF ARBITRATION AND CONCILIATION IN NIGERIA BY OLAKUNLE OROJO AND AYODELE AJOMO AT PGS Learned counsel finally urged the Court to abide by the intention of the parties and direct them to appoint an Arbitral Tribunal. On the issue of Technical Misconduct of the Sole Arbitrator, Section 30 (2) of The Act was referred to and the case of TAYLOR WOODROW OF NIGERIA LIMITED VS SUDDEUTSCHE ETNA-WERK GMBH (1993) 4 NWLR PT 286, PG 127 AT AT PARAS A-E Learned Counsel submitted that the Arbitrator had technically misconducted himself when he conducted the arbitral proceedings with gross irregularities and the Applicant in the letter dated the 24th of April 2013 pointed out such irregularities to him. He submitted that all the procedural irregularities itemized in Paragraph 12 (i vi) of the Affidavit in Support of the Motion on Notice and also Paragraph 2.4 are weighty enough to constitute technical misconduct on the part of the Sole Arbitrator and urged the Court to revoke his appointment and mandate. On the issue of experience and qualification, Learned Counsel submitted that certain qualities are required of an Arbitrator, some are innate while others can be acquired by training and experience 6

7 and common qualities are qualification and experience, independence and impartiality and where this is missing, the Sole Arbitrator is a bad candidate to effectively steer the administration of the Arbitration. He referred the Court to Law and Practice of International Commercial Arbitration (4 th Edition) by Alan Redfern and Martin Hunter (Sweet and Maxwell) at page 197 as quoted in page 128 of the Law and Practice of Arbitration and Conciliation in Nigeria (ibid) and Commercial Arbitration Law and International Practice in Nigeria C.A. Candide-Johnson, SAN and Olasupo Sasore, SAN (LEXIS PAGE 8. He submitted that by virtue of the facts disclosed in Paragraph 2.4, the Sole Arbitrator has demonstrated his lack of knowledge in the process of Arbitration and has lost the confidence, which the Applicant may have reposed in him, and he urged the Court to set aside the appointment of the Sole Arbitrator. On the effect of an Order made without jurisdiction, Learned Counsel submitted that an Order made without jurisdiction is null and void and should be nullified. Reliance was placed on the cases of SHELL PETROLEUM DEVELOPMENT CO. OF NIG LTD VS. HELLELUJA BUKUMA FISHERMEN MULTI-PURPOSE COOPERATIVE SOCIETY LTD (2002) 4 NWLR PART 758 PAGE PAGE 516 PARAGRAPH B and CHIEF BESTMAN ANAEKWE & ORS VS. ALHAJI SULE IBRAHIM MASHASHA & ORS (2001) 12 NWLR PART 726, PAGE PAGE 89 PARAGRAPHS G H. He urged the Court to set aside the order of the appointment. In response, learned counsel to the Respondent urged the Court to take judicial notice of her record and in particular the entire content of Motions FCT/HC/M/14870/12 AND FCT/HC/M/2720/12 and the case of NWANKWO VS NWANKWO (1993) 6 SCNJ PT. 1, 84 AT 88 LINES AS WELL AS SECTION 122 (2) (m) of the Evidence Act, Cap E14 LFN 2011 and further raised two (2) issues for determination, namely: - 1. Whether the Application as constituted is competent 7

8 2. Whether the Application as argued has merit. On Issue one, Learned Counsel submitted that contrary to the depositions and arguments of the Applicant, the said application was not a Motion Ex-parte as the Applicant was duly served with the Motion on Notice FCT/HC/M/2720/12 and they voluntarily submitted themselves to the jurisdiction of the appointed Arbitrator, MR. ISAAC OKPANACHI ESQ. It is his further submission that the Arbitrator commenced on the 18 th of February 2013 and the Arbitrator thereafter sat over the Arbitral Proceedings on the 14 th day of March 2013 and the 20 th day of March At these proceedings, the Applicant was duly represented by their Counsel and by their Head of Legal Service. The Motion challenging the said Order was filed on the 20 th day of May 2013, and the period of time between the date of the Order and date of Motion is three (3) months and fifteen (15) days which is contrary to the fifteen (15) days stipulated in Section 9 (2) of the Arbitration and Conciliation Act Cap A18, LFN He argued that where the performance of an act is circumscribed within time limit, the performance of that act outside the time limit is incompetent. He relied on Article 11(1), 4, and 33 of the Arbitration and Conciliation Rules and Act, which deals with the question of waiver of right to object to non-compliance of the provisions of The Act. He submitted that the Applicant received each notices mentioned in Article 4, but they did not raise any objection within fifteen (15) days and added that the said provision is disjunctive as receipt of one of the notices is enough. He defined what waiver is, and urged the Court to find merit in this leg of objection and refuse the Motion on Notice. Reliance was placed on the case of ESTATE OF GENERAL SANNI ABACHA VS EKE-SPIFF (2009) ALL FWLR (PART 467) 36 PARAGRAPHS E H. Learned Counsel to the Respondent further contended that the Court having appointed Isaac Okpanachi Esq. as the Sole Arbitrator, he has 8

9 become vested with jurisdiction to hear and determine the dispute arising from Exhibit A1, and he referred to Section 9(2) of the Arbitration and Conciliation Act (supra) and Article 21(1) of the Arbitration and Conciliation Rules. The objection filed by the Applicant ought to have been written to the Arbitral Tribunal, setting out the reasons for the challenge and by Article 21 (1), the Arbitral Tribunal shall have the power to rule on the objection that it has no jurisdiction. Counsel submitted that the word shall imposes a mandatory obligation on the Applicant in respect of this exercise, and referred the Court to the case of REV. JOSHUA ELSON KALAMU VS NUHU BOBO GURIN & 20 ORS (2003) 16 NWLR (PART 847) 517. Learned Counsel submitted that where procedure has been laid down for doing an act, that procedure and no other must be followed, and reliance was placed on the case of RE-MBAMALU (2001) 18 NWLR (PART 144) 151, ARTICLE 30 AND 21 (3) OF THE ARBITRATION AND CONCILIATION RULES, which sets a time limit to a jurisdictional challenge of the tribunal to be not later than in the Statement of Defence. This provision envisages that the objector should incorporate his objection in his Statement of Defence. He argued that in this instant case, the Applicant filed their Statement of Defence before the Arbitral Tribunal on the 14 th of March 2013 and amended same on the 20 th of March 2013 but did not raise any challenge or objection in the defence nor amended defence. Therefore, the applicant seeks from this Court that which they are no longer entitled to before the Arbitral Tribunal. He urged the Court to find merit in this observation. On issue that the Arbitrator misconducted himself, Learned Counsel argued that this is a weighty allegation against the Arbitrator who was not joined as a party. Learned Counsel submitted that the Applicant did not serve the Arbitrator with the Motion papers, they did not file a certified true copy of the arbitral proceedings to enable the Court determine what 9

10 circumstance the Arbitrator had misconducted himself. The proceeding of this nature is akin to an application for judicial review of the proceedings before the Arbitration. Therefore, the Applicant ought to have sought the relief of quashing the proceedings if the Applicant s allegation is proved against the Arbitrator. He questioned how the applicant could seek to argue this Motion upon affidavit evidence and in the absence of the accused gentleman. By the provisions of Article 11 (2) of the Arbitration and Conciliation Rules and the principles in the case of AWONIYI VS AMORC (2006) 6 SCNJ , Notice was required to be served on the Arbitrator who is challenged and to the other members of the arbitral tribunal. Learned counsel therefore urged the Court to hold the Motion on Notice filed as incompetent. On Issue Two, Learned Counsel to the Respondent argued that the prayer in the Applicant s Motion is simply seeking the Order of the Court to set aside the appointment of Mr. Isaac Okpanachi without providing the reason within the context. Even though the Applicant listed several grounds upon which their application was brought, the issues were not joined on the grounds but on the prayers, and therefore the applicant had not provided a basis upon which the parties can canvass arguments. He contended that Motion papers constitutes pleadings and stated that parties are bound by their pleading, as issues are joined on the grounds in the Motion paper, and cited the case of F. A. T. B. VS EZEGBU (1993) 6 SCNJ (PART 1) 144. He concluded his arguments on this point by stating that the applicant having not provided a basis for this Court to set aside her Order, there is no issue upon which the parties can canvass arguments as the prayers are empty and futile, lacking in merit. Learned Counsel argued that once prayer one lacks merits, prayer two automatically collapses because it is dependent upon the success of the first prayer. In his Paragraph 3.05, Learned Counsel denied procuring the Order appointing the Sole Arbitrator via a Motion Ex parte as alleged by the 10

11 Applicant, and argued that before the Writ in this suit was issued and served, the Respondent vide Exhibit KB1 applied to the Applicant to cooperate in the initiation of mediation and arbitration process. The Applicant rejected the proposed process vide Exhibit KB2 and by this act, the Applicant did not only waive their right to arbitration but also committed a breach of the Arbitration Clause which made them proceed to Court. Counsel argued that the Court did not usurp the contractual obligations of the parties under the arbitration clause as alleged by the Applicant as the attention of the Court was first drawn to matters of Arbitration when the Applicant themselves, vide a Motion No. FCT/CV/M/8844/12 sought a stay of proceedings in this Suit to enable parties proceed to arbitration. The Respondent had opposed the Motion stating that it was an attempt to frustrate the justice of the case. However, the Court granted the application in the Motion and allowed the parties the freedom to engage in arbitration. He acknowledged the power of the Court to stay proceedings as provided for in Section 5 of the Arbitration and Conciliation Act (supra) Section 5 (2)(b). He questioned the applicant s motive in seeking a stay of proceedings for arbitration, which was granted on the 16 th of July Learned Counsel further argued that the parties agreed on the appointment of a Sole Arbitrator and referred the Court to Exhibit KB4 which is a response to the Respondent s Exhibit 3, and reproduced Paragraph 1 of the said letter which confirmed their client s nomination as the sole arbitrator in this matter and queried what basis the applicant had to contend that this Court usurped the contractual obligations of the parties to agree on the appointment of a sole arbitrator. He submitted that the parties had equally agreed to the appointment of Isaac Okpanachi as sole arbitrator and referred to the averments in the affidavit deposed to in support of Motion No. FCT/HC/M/2720/12. The Applicant did not counter these averments and the law is trite that unchallenged evidence is deemed true, as 11

12 settled in the case of ORDIA VS. PIEDMONT (1995) 2 SCNJ 182 LINES Even in the affidavit of this Motion, the Applicant did not dispute the facts as deposed to in the Respondent s affidavit in support of the Motion No. FCT/HC/CV/M/2720/12. They also failed to show how much they were ready and willing to do all things necessary to the proper conduct of the arbitration such as would establish the futility of the Court s intervention. Counsel denied the allegation that the Court imposed an Arbitrator on the parties as it merely endorsed and confirmed the intention and agreement of the parties. This power is derived from the provision of the Arbitration and Conciliation Act as conceded by the Applicant but however the authorities are distinguishable with respect to the fact that there is no dispute with respect to the choice of an Arbitrator between parties. He urged the Court to uphold the argument of the Respondent and further hold that the argument of the Applicant on the issue of its jurisdiction lacks merit. Learned Counsel submitted that even though the issues of whether the Sole Arbitrator had misconducted himself or whether he lacks the necessary qualification to conduct the arbitral proceedings is for the Arbitrator to response, he would respond as far as his office records of proceedings would permit. On the 20 th of March 2013, the Applicant s Counsel had raised the following issues before the Arbitrator: - 1. That Parties be permitted to explore mediation before the arbitration proceeds 2. That the minutes or record of the proceedings be typed and forwarded to the parties ahead of the next sitting of the arbitration. 3. That the venue of the sitting of the arbitration should be shifted to a hired Conference Centre. 12

13 4. That a Registrar be appointed to record the proceedings instead of the proceedings being recorded by the Arbitrator. 5. That the Registrar should be in custody of the processes filed and record of proceedings. 6. That provision should be made for verbatim recording of the proceedings 7. That entertainment or at least, tea should be served during the proceedings. 8. That the Parties should settle the issues for determination. 9. That the arbitration fees and administrative costs should be discussed agreed and shared between the parties. 10. That what he called bundle of documents should be settled by the parties. Learned Counsel to the Respondent stated that he opposed all those aspects which were not premised upon, or derived from the Arbitration and Conciliation Rules, as they did not offer serious and practical assistance to the fair determination of the dispute. Learned Counsel observed that the suggestion made by the Applicant were a mere prelude to frustrate the timely determination of the dispute before the Arbitrator. For instance, there is no bundle of documents to be settled as parties had already filed and exchanged pleadings. Parties had agreed on the venue of the arbitration, and had agreed to proceed to hearing after pleadings had been settled. Learned Counsel submitted that the Applicant did not state how the non-compliance with their whimsical rule gave an advantage to the Respondent over them. He relied on Article 15 (1) of the Arbitration and Conciliation Rules. He submitted that it was the parties that pleaded with the Arbitrator to use his Conference Office as the venue in order to reduce administrative cost, pursuant to Article 16 (1) of the Arbitration Rules. 13

14 The proposed mediation turned out to be a ruse as the respondent was informed during the inaugural meeting that the quest for mediation was to satisfy all righteousness. The parties then exchanged Exhibits KB8 and KB9 as evidence of the exercise. As regards the question raised on the settled issues for determination, the respondent had already filed and served theirs since the 26 th of March 2013, yet the applicant failed to respond, which questions the importance and emphasis they placed on the exercise. Further, each counsel is expected to keep his own record of proceedings, as there is no provision in The Act that obligates an Arbitrator to take over the duties of counsel to earn their fees. Learned Counsel submitted that the decision of the Arbitrator taking down proceedings in long hand cannot constitute misconduct or lack of professional expertise and there is no law that stipulates that a Registrar must be appointed who should take over the possession and custody of the entire processes of the proceedings. He argued that the Arbitrator communicating the fees he wishes to receive via text messages to both parties was not wrong and the Arbitrator never demanded for gratification or made an unwholesome demand. It is his further argument that the Applicant ought to have exhibited the full context of the message to enable the Court make proper evaluation and specific finding if he was not satisfied with the content of the message and he gave the definitions of writing and documents, referring the Court to Section 18 (1) of the Interpretation Act Cap 123 LFN 2004 and Section 258 (1) of the Evidence Act. He posited that by the combination of the provisions of Interpretation and Evidence Act, the text message qualifies as documented written message. It is his submission that the case of SADDEUTSCHE ETNA-WERK GMBH (supra) cited by the Applicant s counsel is not relevant, as the 14

15 Arbitrator did not commit a mistake as to the scope of his authority and there have not been any irregularities in the proceedings. On the issue of the experience and qualification of the Arbitrator, he canvassed the same submission that the issue is not competent before this Court without the Arbitrator being made a party to these proceedings. Learned Counsel submitted that the Applicant failed to inform the Court the qualities either innate or acquired that the Arbitrator lacked and which ought to have been substantiated by the Applicant. He contended that the Rules of International Commercial Arbitration cited by the Applicant does not apply to this situation, and he relied on the provisions of Section 57(2) of the Arbitration and Conciliation Act (supra) to argue that the facts of this case is outside the purview of this provision which deals with an international arbitration. On the question of qualification, he urged the Court to hold the applicant s argument as lacking in merit. On equitable grounds, Learned Counsel argued that parties have paid administrative charges representing a fraction of the deposit required as arbitration fee, the Arbitrator commenced proceedings and sat (3) three times meaning that he had earned his fees. Learned Counsel questioned why Clause 15.1 and Clause 15.2 should not be read together, he stated that Clause 15.2 is a requirement that once arbitration commences, the contract between the parties become revived and it is the Arbitrator that determines when Exhibit A1 terminates. Learned Counsel submitted that the contract is deemed to have been revived since 8 th of March 2011 and relied on Article 3 (2) of the Arbitration and Conciliation Rules to state that the arbitral proceedings commenced on the date the notice of arbitration was received. He finally stated that the Applicant has been living and enjoying from the continuous breaches of Clause 15.2 of Exhibit A1 and this explains 15

16 why damages had been increasing. He relied on the case of IREWOLE VS. OYEYEMI (1993) SCNJ 130 LINES 6 11 and finally urged the Court to strike out or dismiss the Motion on Notice as it constitutes an Abuse of Court Process, invoke the provisions of Article 12 (1) (a) of the Arbitration and Conciliation Rules in favour of the Respondent and award substantial cost against the Applicant. In the Written Reply Address on Points of Law, attached to the twenty-two (22) Paragraph Further and Better Affidavit, Learned Counsel to the Applicant submitted that an Arbitrator can be challenged if he does not possess the qualification agreed by parties if circumstances exist to give rise to justifiable doubts as to his impartiality, and reliance was placed on Section 8 (3) and Section 9 of the Arbitration and Conciliation Act. He argued that the law enjoins parties to adopt some steps in terminating the mandate of an Arbitrator and in appointing a substitute. He referred the Court to Sections 10 and 11 of the Arbitration and Conciliation Act. Learned Counsel argued that even though this position is conceded, this can only be applicable in situations where the Arbitrator has been properly appointed by the parties, in accordance with the terms of their dispute resolution clause and who seek termination of his mandate. He urged the Court to distinguish the position in Sections 8, 9, 10 and 11 of the Arbitration and Conciliation Act from the position in this suit as stated in Clause 15 of the Haulage Agreement dated 1 st December 2009 and at Section 6 of the Arbitration and Conciliation Act Cap A18, Laws of the Federation of Nigeria Learned Counsel submitted that the challenge of the Arbitrator goes to the root of his appointment made contrary to the terms of the agreement of the parties. He cited the case of OGUNWALE VS SYRIAN ARAB REPUBLIC (2002) 9 NWLR PART 771, 144 PARAGRAPHS B C. Counsel argued that the only instance where the appointment of three (3) Arbitrators may be jettisoned is where the parties by a submission agreement agree to waive the term off 16

17 in the submission agreement. Reliance was placed on the case of K.S.O. AND ALLIED PROD. LTD VS. KOFA TRADING CO. LTD (1996) 3 NWLR PART 436, 259, PARAGRAPH G, SECTION 2 AND 34 OF THE ARBITRATION AND CONCILIATION ACT. He submitted that the implication of the above provision is that no application to the Court may be made where there is an available process in the decree. He cited the LAW AND PRACTICE OF ARBITRATION & CONCILIATION IN NIG BY OLAKUNLE OROJO & AYODELE PAGE Counsel submitted that the Court before who the subject matter of an arbitration is referred is required to stay proceedings and refer parties to arbitration and nothing more, and the arbitral proceedings is to continue while the matter is pending before the Court. He relied on Sections 4 and 5 (1) of the Arbitration and Conciliation Act and the case of NIGER PROGRESS LTD VS. NEL CORP (1989) 3 NWLR PART It is Counsel s further submission that the challenge of the appointment of the Sole Arbitrator is an issue of jurisdiction which can be raised at anytime by the parties and relied on the cases of LAWAL VS OKE (2001) 7 NWLR PART PAGE 95, SOYANNWO VS AKINYEMI (2001) 8 NWLR PART PAGE 102, MADUKOLU VS NKEMDILIM (1962) 2 SCNLR 31. It is his further submission that the issue of waiver does not arise as contended by the Respondent and therefore, the Court had no jurisdiction in appointing the Sole Arbitrator in the first place, he argued further that the objection cannot be referred to the Sole Arbitrator as argued by the Respondent, in view of the fact that the issue of the validity of the appointment of the Sole Arbitrator ought to be made before the Court who has appointed him. Reliance was placed on CHIEF BESTIMAN ANAEKWE & ORS VS. ALHAJI SULE IBRAHIM MASHASHA & ORS (2001) 12 NWLR PART PARAGRAPHS G H and urged the Court to hold that the objection has been validly filed before it for determination. 17

18 On the issue of technical misconduct, the Applicant s Counsel submitted that there are no certified documents on the conduct of the arbitration proceedings as these are the basis of the objection filed by the Applicant. The issue of irregularities in the conduct of the arbitral proceedings was validly pointed out to the Sole Arbitrator by the Applicant s letter dated 24 th of April 2013 to the Motion on Notice dated the 20 th of March 2013, while the response of the letter was attached as Exhibit A3. He argued that the Sole Arbitrator was duly copied in the Motion on Notice dated 20 th day of March 2013 at Page 16 thereof, and the duty of service of Court Processes on parties lies with the Sheriffs and Bailiffs or other persons referred to in Order 11 Rule of the High Court of the Federal Capital Territory Abuja Civil Procedure Rules Learned Counsel urged the Court to hold that SHERIFFS & BAILIFFS of the Court should serve the Sole Arbitrator. On issue two, Learned referred the Court to its Order made on the 5 th of February 2013 at Page 2 he argued that the appointment of the Sole Arbitrator was made pursuant to an Ex parte application. He contended that the submission in regard to Exhibit KB2 attached to the Counter affidavit does not amount to a waiver of the Arbitration Clause contained in Clause 15 and referred to the case of HALLAM VS. A.G. PLATEAU STATE (1996) 9 NWLR PART 471, 242 and SECTION 2 ARBITRATION AND CONCILIATION ACT. He contended that the Respondent did not take any step in appointing a mediator for the resolution of the dispute, rather it only requested for its claim from the Applicant by Exhibit KB8 in view of which the Defendant s Counsel responded by Exhibit KB9. He contended that neither Exhibit KB8 nor Exhibit KB9 amounted to the appointment of a Mediator as provided by Clause 15.1 of Exhibit A1, which is irrevocable except as provided for in Section 2 of the Arbitration and Conciliation Act. It was the Respondent that 18

19 committed a breach by filing the present suit for the resolution of the dispute between the parties while all it needed to do was to declare a dispute and appoint the first Arbitrator and thereafter refer appointment of the second Arbitrator to the Applicant. Learned Counsel submitted that it is only in the refusal of the Applicant to appoint a second Arbitrator that the case may be rightly referred to Court, he cited the case of MAGBAGBEOLA VS. SANNI (2005) 11 NWLR PART 936, PARAGRAPHS G C where it was held that the appointment of an Arbitrator is governed by the Arbitration and Conciliation Act. He summarized conditions under which the Court can exercise the discretion to appoint an Arbitrator and relied on the case of BENDEX ENGR. VS EFFICIENT PET (NIG) LTD (2001) 8 NWLR (PART 715) 358 PARAGRAPHS C D. He contended that other than the circumstances shown in the two above cases, the Court could not intervene in an arbitration proceeding or appoint an Arbitrator(s) for the parties. Further, Learned Counsel submitted that under the Arbitration and Conciliation Act, misconduct was not defined but was referred to in Section 30 (2). He defined what misconduct is to be where there is an irregularity in the proceedings, and relied on the case of TAYLOR WOODROW OF NIG LTD VS. SUDDEUTSCHE ETNA-WERK GMBH (1993) 4 NWLR PART 286, PARAGRAPHS A E. He also stated the implied ethical duties of an Arbitrator which includes the duty to conduct the arbitral process independently, impartially and in a fair and efficient manner, reference was made to COMMERCIAL ARBITRATION ON LAW & INTERNATIONAL PRACTICE IN NIG C.A. CANDIDLE-JOHNSON, SAN & OLASUPO SASORE SAN (LEXIS PAGE 59. He submitted that the observations made by the Applicant s Head Counsel were not designed to frustrate the proceedings as contended 19

20 by the Respondent s Counsel but were made in order to point out the irregularities in the conduct of the entire proceedings. Learned Counsel contended that no notice of arbitration was served on or received by the Applicant as contended by the Respondent s Counsel. The provision of the Arbitration Rules made in pursuance of the Arbitration and Conciliation Act is sacrosanct on the content of what should be in a notice of arbitration. He set out the provisions of Article 3, Rules 3 and 4 of the Arbitration Rules. He finally submitted that the Respondent did not issue a Notice of Arbitration against the Applicant as contended in its Written Address, and Exhibit KB1 is a mere letter of demand which does not constitute or conform with the mandatory requirements of a Notice of Arbitration as stipulated in Article 3 of the Arbitration Rules. Reference was placed on the case of NLNG LTD VS AFRICA DEVELOPMENT INSURANCE CO. LTD (1995) 8 NWLR, PART 677. In conclusion, learned counsel urged the Court to discountenance the arguments of the Respondent and uphold the Applicant s arguments as contained in its Motion. After a careful consideration of the processes and the submissions made on this novel issue, the Court is satisfied with the issues as raised by the parties in the just determination of this case. It is initially important to set out the brief history of this case since a part of the submissions raised by Learned Counsel to the Applicant touched on this aspect. The Writ of Summons was dated and filed on the 2 nd day of February 2012 with a Motion brought Ex Parte to serve the Applicant out of jurisdiction and this Motion was dated the 27 th of October From the Records of Court, it is clear that the Applicant was served on the 22 nd day of February 2012 and in response filed a Motion on Notice No: M/8844/12, dated the 14 th and filed on the 16 th of March 2012 seeking for an Order of Court staying proceedings in the suit pending arbitration. The Respondent had countered the 20

21 averments in this Motion vide a Counter-Affidavit dated the 16 th of April 2012, and the case was adjourned for Ruling. Ruling of this Court was subsequently delivered granting the reliefs as sought with an Order that should the move to settle the matter out of Court failed there would be a recourse to the Court by either party. On the 16 th of August 2012, the Respondent filed a Motion on Notice No: M/14870/12 dated the same date, seeking an Order of Court to appoint S.I. Ameh S.A.N, as the Sole Arbitrator, but before the Motion was moved, learned counsel to the Respondent on the 5 th of February 2013, sought to withdraw same, submitting that pursuant to the Order for Arbitration, both parties had jointly agreed out of Court to the appointment of Mr. Ameh as the Sole Arbitrator. By this same day of the 5 th, counsel to the Respondent moved an earlier filed Motion on Notice No: M/2720/12 dated and filed on the 27 th of December From the Records of Court, it is clear through an Affidavit of due Service on the Applicant, that service was effected on the 18 th of January 2013 together with a Hearing Notice indicating that the case would be called up for the hearing of the Motion on the 5 th of February There was no response from the Applicant and since the Motion on Notice was ripe for hearing, the Respondent s Counsel was permitted to move the application, which was subsequently granted as prayed. The prayer sought had been to appoint Mr. Isaac Okpanachi as the Sole Arbitrator. The case was then adjourned to the 18 th of April 2013 and further to the 13 th of June 2013 for Report of Arbitration and Hearing Notice was ordered to be served with the requirement of an Affidavit of Service as evidence of the service. On the 20 th of May 2013, learned counsel to the Applicant filed this present Motion on Notice No: M/7449/13 under consideration and in response, learned counsel to the Respondent filed a counter-affidavit dated the 30 th of May There is a Further and Better Affidavit in Reply to the Counter Affidavit dated and filed on the 10 th of June

22 The Motion presented to this Court by the Nigerian Bottling Company Plc. requests the Court in summary to: - 1) Set aside the appointment of Mr. Isaac Okpanachi as Sole Arbitrator in the matter between the Applicant and the Respondent, this includes a challenge to the said Arbitrator for alleged misconduct 2) Direct the parties to appoint an Arbitral Tribunal, as mandated by the Arbitration and Conciliation Act Cap 18, LFN With regard to the first prayer set out above, five issues are relevant for the determination of the questions raised thereto, and they are namely: - a) Whether there was a valid Arbitration Agreement? b) Whether the Court had jurisdiction to perform as an Appointing Authority in the matter? c) Whether the conditions in the Arbitration Clause for conducting Arbitration were met? d) Whether the Court can remove the Appointed Arbitrator for alleged misconduct, if found to have occurred? e) Whether the Court can remove the Appointed Arbitrator for lack of qualifications? As regards the first issue raised, the Arbitration and Conciliation Act (hereinafter referred to as The Act) establishes in Article 1 that: 1. (1) Every Arbitration Agreement shall be in writing contained in a) In a document signed by the parties; or b) In an exchange of letters, telex, telegrams or other means of communication which provides a record of the arbitration agreement; or c) In an exchange of points of claim and of defence in which the existence of an Arbitration Agreement is alleged by one party and not denied by another. (2) Any reference in a contract to a document containing an Arbitration Clause constitutes an Arbitration Agreement if such 22

23 contract is in writing and the reference is such as to make that Clause part of the Contract. By Clause 15.1 of the Haulage Agreement signed by both parties and dated the 1 st of December 2009, which contract was to commence on the 1st of December 2009 for an initial term of twelve (12) months and which was scheduled to expire on the 30 th of November 2010, it was established that any dispute arising out of or in connection with this Agreement shall be initially subject to Mediation Process failing which same shall be referred to and resolved under The Act, Cap C20, Laws of the Federation of Nigeria, The aforementioned clause is signed in writing by the parties, complying with the minimum elements for the validity of the Clause. Furthermore, even when the language does not expressly mention that the dispute be resolved by Arbitration, the clause specifically states that the dispute be referred to and resolved under The Act. The parties have exchanged a series of communications in which they have referred the matter to arbitration, and even took steps in the appointment of a Sole Arbitrator, in accordance with Article 1 (b) of The Act. The parties so far, have consistently referred to Clause 15.1 as valid, and on no occasion did any of the parties object to its validity, nor did they agree to renounce their right to arbitration. Based on the above, it is easy to construe that the Arbitration Clause has met all the essential elements, and moreover, the parties have not challenged its validity but on the contrary, they recognized and endorsed its validity by their own actions and communications. Therefore on this first issue raised, the Court can safely conclude that the Arbitration Clause is valid and there is an unequivocal agreement to arbitrate. The next most important point to consider in view of the prevailing facts of this case is the validity of the appointment of a Sole Arbitrator as opposed to the stipulated number of three (3) set out under The 23

24 Act at section 7 (2) (a), and whether the Court was legally empowered to make the appointment. Under this issue, the Court has to determine the sub-issues of the question of Mediation, the extent of the powers and obligations of a Counsel bestowed by his Client to the Court, and the evidence of facts of the explicit and implicit agreement to appoint a Sole Arbitrator. Arbitration must be governed by the will of the parties. The differences between Arbitration and a Law Suit are the fact of the flexibility, speed in resolution of disputes and cost implications, especially when it involves commercial litigation where time and expense are of heightened importance. The principle pacta sunt servanda is at the core of alternative dispute resolution, therefore when the parties set a series of conditions to proceed to resolve their dispute in arbitration; these conditions must be met before such arbitration can begin. In the present case, the parties drafted what is known as an Escalated Clause, which is a dispute resolution clause that requires certain conditions, or stages of dispute resolution. Typically, escalated clauses include conditions such as Cooling Off Periods, Consultation Stages, Mediation or Negotiation Stages, etcetera, before proceeding to a binding method such as Arbitration. Under the Haulage Agreement in contention, which incorporated and embraced The Act, it was expected that the initial step to be taken will be Mediation and failing that, the provisions of Sections 6 and 7 of The Act be complied with. It is worth noting that the parties did in fact make attempts to mediate, initially when the Respondent invited the Applicant to mediate in his letter dated the 8 th day of March In this letter, the respondent set out the alleged various breaches committed by the applicant and in Paragraph 7 gave notice of the invocation of Clause 15.1 of the agreement, further requesting that the applicant initiate or co-operate in the initiation of the mediation process to resolve the 24

25 stated disputes. It was further demanded that arbitral proceedings be commenced within seven days of the letter and further that Sections 6 and 7 (2) (a) of The Act be adopted in the selection or appointment of the Arbitrators. By this statement, the respondent had suggested that parties comply with the provisions of Section 7 (2) (a), which provided for a requirement of three arbitrators. It is important to note that under The Act, it is not mandatory that three arbitrators be appointed. This stipulated number is the option given under the Act in the event of the parties failing to arrive at a consensus as to the number of arbitrators for the resolution of the dispute. It is clear that the Haulage Agreement executed between the parties failed to state the number of arbitrators and this failure led to an automatic reversion to The Act. Under this same Act, and at Section 7 (2) (b), the parties could still very well have agreed to a sole arbitrator and it would have been in full compliance with its provisions. There is no hard and fast rule about the numbers compulsorily being three. It could jolly well have been one, if the parties elected it to be so. In any event, the respondent in invoking Section 7 (2) (a), proposed the procedure to be adopted in the option of three arbitrators, which incidentally, was not expressly agreed to by the applicant in their reply letter dated the 11 th of May I have had a very close look at this letter, which acknowledged the receipt of the letter of the 8 th of March 2011, and which noted all the issues raised, further notifying the respondent that he entered into a spot hire contract with them and all incidental obligations on their part were fully discharged. This reply letter aside of tacitly denying any responsibilities for the alleged breaches, failed to accede to the request to be bound by subsection (2) (a) of Section 7. From the facts, the process began when the claimant filed a suit in Court No: FCT/HC/CV/1056/11. The Court seeing that the suit was based on a contract containing an Arbitration Clause, stayed the proceedings in full compliance with Article 4 (1) of The Act and referred the parties to comply with the said Clause The parties 25

26 appeared not to proceed to Mediation immediately after their visit to the Court, but rather discussed and agreed to arbitrate before a Sole Arbitrator due to the costs involved in the appointment of three arbitrators. It appears therefore that none of the parties objected to the absence of mediation as evident in the tacit waiving of this requirement when they both decided to conduct the arbitration, and appointing S.I. Ameh as a Sole Arbitrator, and when they later presented their Statements of Claim and Defence before Mr. Okpanachi, as a Sole Arbitrator. There was however another attempt at Mediation after the hearing of April 26 th 2013 when the parties met at the office of Amuwa Olatunde in pursuance of the mediation process. There was also the letter dated the 16 th of July 2013, which is Exhibit KB3 attached to the counter affidavit, and which was written by counsel to the respondent to the applicant suggesting the appointment of S.I. Ameh for the initiation of mediation/arbitration process, and Exhibit KB 8, which is a letter dated the 20 th of March 2013 and written by the respondent s counsel referring to the Order for direction issued by Mr. Okpanachi wherein it was said that the parties were directed to proceed to mediation in pursuance of the 1 st of December 2009 agreement. More telling is Exhibit KB 9, dated the 23 rd of March 2013, written by the applicant and which rejected the proposed offer for settlement written by the respondent stating in the last paragraph, that it was obvious that the mediation process had failed. The fact that no agreement was reached in the attempted mediation, is not an impediment to proceed, or as in this case to continue with arbitration. The Court can safely say that the prerequisite for arbitration, which is mediation, was satisfied for the purposes of proceeding to arbitration according to the arbitration agreement. Now as regards the question of Arbitration, specifically at Articles 6 and 7 of The Act, these provisions provides as follows: - Article 6: The parties to an arbitration agreement may determine the number of arbitrators to be appointed, but where no such 26

27 determination is made, (emphasis is mine), the number of arbitrators shall be deemed to be three. Article 7 on its own part provides thus at subsection 1 that subject to subsections 3 and 4, the parties may specify the procedure to be adopted in the appointment. Subsection 2 (a) states in the case of an arbitration with three arbitrators, each party shall appoint one arbitrator and thus the two appointed shall appoint the third, so however that (1) if one party fails to appoint the arbitrator within thirty (30) days of the receipt of a request to do so by the other party; or (2) if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointments, the appointment shall be made by the Court on the application of any party to the arbitration agreement made within thirty days of such disagreement. Under subsection three (3), where under an appointment procedure agreed upon by the parties- (a) a party fails to act as required under the procedure; or (b) the parties or two arbitrators are unable to reach an agreement as required under the procedure; or (c) a third party, including an institution, fails to perform any duty imposed on it under the procedure, any party may request the Court to take necessary measure, unless the appointment procedure agreed upon by the parties provides other means for securing the appointment. In Subsection 4 of Article 7, it stated that a decision of the Court under subsections 2 (of the Court to appoint under application by any of the parties) and 3 (for the Court to take the necessary measures) shall not be subject to appeal. Now, at the essence of arbitration lies the autonomy of the parties to determine amongst other considerations, the method of appointing arbitrators, including if necessary their own choice of the appointing authority. This Court cannot lose sight of the antecedents that occurred after the clause in the agreement to arbitrate. It is conceded that in the absence of parties expressly agreeing on a quorum, Section 6 of The Act 27