Author: Uzoma Azikiwe, SAN, Festus Onyia, FCIArb, UK and Michael Ugah at Udo Udoma & Belo-Osagie
In a recent decision that was handed down on 30th March 2022, the High Court of Lagos State (“the High Court”) ruled that a party seeking to enforce an arbitral award does not need to comply with the mandatory pre- action protocol stipulated under the High Court of Lagos State (Expeditious Disposal of Civil Cases) Practice Direction No. 2 of 2019 (“the Practice Direction”) and Order 5 Rule 2 (1) (e) of the High Court of Lagos State (Civil Procedure) Rules 2019 (“the Rules”). The Court made the decision in an application1 brought by Norebo Hong Kong Limited (“Norebo” or “the Award Creditor”) to enforce a Hong Kong International Arbitral Centre (HKIAC) Award against Bharat Ventures Limited (“BVL” or “the Award Debtor”).
FACTS OF THE CASE
On 18th February 2021, Norebo brought an application for the enforcement of a HKIAC award that was obtained against BVL. Upon being served the application BVL raised a preliminary objection against Norebo’s application on the ground, among others, that Norebo failed to comply with the pre-action protocol prescribed under the Practice Direction and the Rules.
Paragraph 3 of the Preamble to the Practice Direction provides that prior to the commencement of proceedings, the Court will expect parties to have engaged in pre- trial correspondence sufficient to:
- understand each other’s position;
- make decisions about how to proceed;
- try to settle the issues;
- consider a form of Alternative Dispute Resolution (ADR) to assist with settlement;
- support the efficient management of those proceedings.
Paragraph 1 of the Practice Direction provides that:
“Where parties resort to litigation after attempts at settlement in accordance with this Practice Direction have remained unsuccessful, a Pre-Action Protocol Form 01, accompanied by all pre-action correspondence duly acknowledged and exchanged between parties and cogent evidence that ADR has been considered in accordance with this Protocol, must be made on oath (collectively referred to as the “Pre-Action Protocol Bundle” or “P-A-P-B”) and filed at the Registry with the appropriate originating process and other originating documents.”
Order 5 Rule 1 Sub Rule (2) of the Rules provides that all civil proceedings commenced by Writ of Summons shall be accompanied by, among other documents, a Pre- Action Protocol Form 01 with necessary documents attached. Sub- Rule 3 of the said Order 5 Rule 1 goes on to provide that failure to comply with Sub- Rule 2 shall nullify the action. Similarly, Order 5 Rule 5 (3) requires all actions commenced by Originating Summons to be accompanied by, among other documentation, a Pre- Action Protocol Form 01 and under Sub- Rule (4) of the same Order 5 Rule 5, failure to comply with Rule 2 i.e., failure to attach a Pre- Action Form 01 shall nullify the action.
Submission of the Parties:
BVL’s submissions:
BVL argued that Norebo ought to have complied with the Practice Direction by serving BVL with a memorandum of claim, and thereafter file a Pre-Action Protocol Bundle together with the Originating Motion seeking to enforce the Award. BVL also contended that Norebo’s failure to comply with the Pre-Action Protocol requirements rendered Norebo’s application incompetent because the Pre-action Protocol requirements are mandatory and constitute a condition precedent to the commencement of an action.
Norebo’s Response:
In response to the objection, Norebo contended that the purpose of the Practice Direction was to encourage potential litigants to genuinely attempt to settle their disputes and to consider a form of Alternative Dispute Resolution (ADR) to assist with settlement and that the Practice Direction can only apply to a fresh suit or claim but not arbitration, which is a statutorily recognised form of dispute settlement, and which results in a binding, conclusive and final determination of the rights of the parties.
Norebo also argued that although Order 5 of the Rules expressly requires that all actions commenced by a Writ of Summons or an Originating Summons shall be accompanied by a Pre- Action Protocol Form 01, it does not require an Originating Motion on Notice for the enforcement of an award, which is the originating process stipulated under Order 28 of the Rules for any ADR Application under the Rules2 to also be accompanied by a Pre- Action Protocol Form 01. Finally, Norebo argued that the non-inclusion of an Originating Motion among the originating processes that are required to be accompanied with Pre-Action Protocol Form 01 means that an Originating Motion is not required to be accompanied with Pre-Action Protocol Form 01.
Resolution of the issue by the Court:
In its consideration of this ground of BVL’s objection, the court noted that it is Order 28 of the Rules that is relevant to an application for the enforcement of an arbitral award and not Order 5 of the Rules; and that Order 28 contains a list of documents that shall be filed by a party seeking to enforce an arbitral award, namely, an Originating Motion on Notice, supporting affidavit, Written Submissions, authenticated arbitral award or a certified true copy, the original arbitration agreement or a certified true copy of same. The Court further held that the provisions of Order 28 of the Rules deal specifically with enforcement of an arbitral award and must prevail over Order 5 of the Rules which are general in nature and that Norebo did not need to comply with the Pre-Action Protocol requirements stipulated under the Practice Direction.
The court further held, agreeing with Norebo’s position, that arbitration is a statutorily recognised mode of dispute resolution and that it would be absurd to require an award creditor to comply with the provisions and requirements of the Practice Direction, which are aimed at encouraging litigants to explore ways of settling their disputes amicably and that the provisions of Order 5 of the Rules are therefore not applicable to Norebo’s application.
COMMENTS
We are of the view that the court reached the right decision, and it is reassuring that the Court re-affirmed the pro – enforcement approach of Nigerian courts. Arbitration is a dispute settlement mechanism that results in a final and binding award with preclusive effect. Consequently, an application to enforce an award is not an attempt to re-litigate the dispute between the parties and it would indeed be absurd to require an award creditor to comply with the provisions and requirements of the Practice Direction as a condition precedent to filing an application for the recognition and enforcement of an award. Not only would such a decision have the effect of compelling an award creditor to engage the award debtor in settlement negotiations even before the award has become enforceable in the same manner as a judgment of the court, such a decision would also greatly undermine the finality of an arbitral award and reduce arbitration and the resulting award to a mere preliminary skirmish prior to litigation. Also, such a decision would also be contrary to the provisions of Section 29 (1) of the ACA which provides that “an arbitral award shall be recognised and binding and shall upon an application in writing to the court, be enforced by the court. To the extent that an arbitral award is a final and binding determination of the dispute that was submitted to arbitration, it cannot at the enforcement stage be subjected to the Pre- Action Protocol under the Practice Direction and the Rules which have been enacted to encourage litigants to try and settle their disputes before turning them over to the courts.
