By: Emmanuel Nwanneka Onyibor, MCArb
Introduction
An award is made at the end of every arbitral proceedings and such an award when made in an arbitration proceeding ought to be recognized and enforced by the successful party against his adversary. The readiness of Nigerian Courts to recognize and enforce an arbitral award and the ease or difficulty of doing so and the likely timescale of the process of recognition and enforcement are issues of enormous concern to any person wishing to enforce an arbitral award in Nigeria.Also of great importance to this article is the judicial position with respect to time limitation in recognition and enforcement of arbitral award, i.e. when does the statutory period of limitation starts to run for the purposes of recognition and enforcement of an arbitral award; is it from the date of the accrual from the date of the accrual of the original cause of action that is from the day the breach which necessitated the parties to submit to Arbitration proceedings occurred. Now, will a party who obtained an award after six years of the commencement of arbitral proceedings be foreclosed from his award being recognized and enforced in Nigeria for being time bared?
Meaning of Recognition and Enforcement
In Arbitration practice, after the making of an arbitral award, if the unsuccessful party complies with the terms of the award, the matter comes to an end. Nonetheless, it is not always obtainable in practice that the unsuccessful party will comply with the terms of the award for some may start from the beginning to challenge the award or refuse to perform the terms of the award and in which case when the successful party takes steps to enforce the award, the unsuccessful party may put up resistance by requesting the court to refuse recognition and enforcement of the arbitral award.The Black’s Law Dictionary defines the term “Recognition” to mean ratification, confirmation, an acknowledgement that something done by another person in once name had one’s authority. It is the declaration of the validity of the award. It is an acceptance that an award is valid and binding.
Once an award is accepted, it is automatically given the status of a judgment of court. For a court to enforce an arbitral award, it must first determine and declare the award valid. Enforcement means, the act of putting something, such as law, into effect; the execution of a law; the carrying out of a mandate or command. Often people use the terms Recognition and Enforcement interchangeably as if they mean one and the same thing. The Recognition of an award is on its own a defensive process. It usually arises where the unsuccessful party commences an action in respect of the same subject matter or behaves as if no valid arbitral award has been rendered. In such a situation the successful party in whose favour the award was made will apply to the court to recognize the arbitral award and declare it valid and binding on the unsuccessful party in the arbitration.
For an application for recognition to succeed, the applicant must annex the award to his accompanying affidavit in support of the application. Where the award covers all the issues raised by the unsuccessful party in his matter in court, the court will declare the award valid and put an end to the new proceedings on the basis of res judicata but where the arbitral award dealt with only some of the issues raised in the new action, there will be an order putting an end to the issue already dealt with in the arbitration on the basis of issue esttoppel. A court invited to recognize an award has a duty to determine only the legal force and effect of the award and not necessarily to ensure that it is carried out. A court invited to enforce an arbitral award has a duty not only to determine the legal force and effect of the award but also to ensure that it is carried out by using all the legal sanctions at its disposal. A Court enforces an award because it recognizes that it is valid and binding on the parties. Enforcement is a step further from recognition. Enforcement is a pragmatic step taken to ensure that the unsuccessful party carries out the terms of an arbitral award.
Venue for Recognition and Enforcement of an Award
The venue where an application can be made for the recognition or enforcement of an arbitral award in Nigeria is the Court. The Arbitration and Conciliation Act of Nigeria defines Court to mean the High Court of the State, the Federal High Court and the High Court of Federal Capital Territory Abuja.
The application has to be made to that very High Court which would have had the Jurisdiction to entertain the matter but for the arbitration agreement of the parties. There is some convention acceded to by Nigeria which provide for enforcement of its award in a court above the High Court. An example of such conventions is ICSID Convention. ICSID arbitral awards are enforceable at the Supreme Court of Nigeria which is the highest Court of the land.In seeking for the venue for the application for the enforcement of an arbitral award, the applicant is advised to undertake forum shopping so as to determine where the unsuccessful party has assets which will meet the demand of the arbitral award. He is also advised to consider public policy of the venue. It is not advisable that one applies for enforcement in a venue which is parochial or where the unsuccessful party against whom the award is sought to be enforced has limited assets.
Time Limitation for Recognition and Enforcement of Arbitral Award:
Time Limitation for Recognition and Enforcement of an arbitral awards in Nigeria is governed by statues. Generally, statute of Limitation is the law which sets out time within which an aggrieved person can present or file his matter for determination by the court or any other body established for that purpose. The origin of statute of limitation in Nigeria dates back to the introduction of English Law into Nigeria by Ordinance No. 3 of 1863. The English Limitation Act which is a statute of general application was the first statute of limitation in Nigeria though same was later repealed by the provisions of Section 70 of the Limitation Act 1966.
An arbitration agreement is not in any way different from any other contract entered into by the parties. The Limitation Act 1966 in Section 59 defines arbitration and arbitral award for purposes of the Act. It also declared that the provisions of the Act and any other limitation enactment apply to arbitration as they apply to action in the court. It has to be mentioned that the Arbitration and Conciliation Act of Nigeria, and the New York Convention did not specify any time for the enforcement of its award. The foreign Judgment (Reciprocal Enforcement) Act Cap F35 prescribed six years within which to enforce foreign award. It is because of the absence of time limitation provisions in the New York Convention and the Arbitration and Conciliation Act of Nigeria that emphasis will be placed on the Limitation Act of Nigeria and the Limitation Laws of the various states of Nigeria. Limitation Law or Act is very important in both arbitration and litigation. This is because any right which is statute barred is an imperfect right which cannot be enforced. The operation of time Limitation is important as long as dormant claims are more of cruelty than of justice. Where a party is allowed to bring his action at any time against the defendant, it is envisaged that an action will be filed years after the defendant must have believed that everything had ended and may have lost all the material evidence for his defence in the suit. It is expected that parties with good causes of action should pursue them diligently and without delay.
The Limitation Act has placed the time limitation period for bringing an action based on simple contracts, torts and including arbitration agreement to six years. The question which is of concern to us is, when does these six years start to run? In MSS Line v Kano Oil Millers Ltd,10 the plaintiff brought his action on the award less than six years from the date the defendant breached the charter party. On appeal, the plaintiff argued that time ran from the date of the award in 1966 but the defendant argued that time ran from the date of the breach of the charter party in 1964.
The Supreme Court decided that the period of limitation runs from the date on which the cause of arbitration occurred, that is to say, from the date when the claimants first acquired either a right of action or a right to require that arbitration takes place upon the dispute.
With respect, we seek to disagree with this decision of the Supreme Court of Nigeria as it is not right in law. This is because arbitration agreement has two main undertakings, the first being an undertaking to submit to arbitration when the dispute occurs, and the second being an undertaking to comply with the arbitral award when made. These two undertakings constitute two distinct contracts.
It follows, therefore, that the time limitation for reference to arbitration runs from the date of the breach giving rise to arbitration whereas the second limitation period for enforcement starts to run from the date the defendant refused to comply with the terms of the award. This is because the same Supreme Court had in KSUDB v Fanz Construction Co. Ltd., stated that an award once published extinguished any right of action in respect of the substantive matter in dispute and gives rise to a new cause of action based on the agreement between the parties to perform the award implied in every arbitration agreement.
In City Engineering Nig. Ltd. v Federal Housing Authority. the Supreme Court decided that the limitation period for the enforcement of an arbitral award is six years and that time starts to run from the date of the accrual of the cause of action in the arbitration agreement and not from the date of making the arbitration award except where the arbitration is one under Scott v. Avery provision in which case right of action is suspended until after the making of an award and in which case time shall run from the making of an award.
In City Engineering Nig. Ltd. v Federal Housing Authority,the parties entered into a written agreement dated 17th day of December 1974 whereby the appellant was to build a number of housing units at Festac Town Badagry Road, Lagos. The agreement contained a provision to submit all matters in dispute to arbitration. A dispute arose between the parties in the course of the execution of the contract. The Respondent rather than settle the dispute inter parties by its letter of 5th December, 1980 threatened to terminate the contract. In its reaction to this threat, the appellant by its letter of 10th December, 1980 duly notified the respondent and requested its consent to the appointment of an arbitrator. The parties eventually went before a sole arbitrator. The arbitration proceedings commenced on 11/12/81 and an award was rendered in November 1985 in the sum of N3, 722,188.75 in favour of the appellant. On the failure of the respondent to honour payment of the sum, the appellant filed a motion on notice to enforce the award by leave. The High Court dismissed the application for being statute barred. On further appeal to court of appeal and Supreme Court respectively, the matter was dismissed for the same reason. The Supreme Court of Nigeria decided among others that:
The decision of the Supreme Court in this matter is most unsatisfactory for the law does not command impossibility. Time cannot start to run before the making of award. Secondly, an arbitration agreement constitutes two distinct contracts, namely the contract to submit dispute to arbitration when one does occur, and secondly, the contract or agreement to comply with the terms of the award made. In Kano State Urban Development Board v Fanz Construction Co. Ltd.,Agbaje JSC declared that an award by arbitration constitutes an independent cause of action. In Turner v Midland Rly Co., the Courtdecided that “when an action is brought upon an award, the six-year period of time limitation runs from the date of the award and not from the moment when the claim arose, for the award itself gives rise to a new cause of action”. A similar view was expressed in the Halsburys’ Laws of England where it was stated that:
The position of England is one established in Agromet Motor Import Ltd. v Maulden Engineering Co. (Beds) Ltd. where the court decided that time begins to run from the date of the breach of the implied term to perform the award and not from the date of the accrual of the original cause of action giving rise to the submission. The Supreme Court of Nigeria in its decision in MSS Line v Kano Oil Millers relied on the express prescription by the learned authors of Russell on Arbitration wherein they stated that:
An important fact to note is the fact that the learned authors of Russell on Arbitration have in the 22nd edition of their book restated the law by bringing it to be in consonance with the decision of the Court in Agromet case. The position of the law in Nigeria is lamentably as stated in the decision of the Supreme Court in City Engineering Nigeria Ltd v Federal Housing Authority that limitation period for the recognition and enforcement of arbitral award is six years and that time starts to run from the date of the original cause of action.
Conclusion:
A close textual juxtaposition of the decisions of the Supreme Court of Nigeria in the cases of Kano State Urban Development Board v Fanz Construction Co. Ltd; MSS Line v Kano Oil Millers Ltd and City Engineering Nig. Ltd v Federal Housing Development Authority that is the position of the lawin Nigeria as to when time begins to run for the purposes of recognition and enforcement of arbitral awards will show with due respect that the Supreme Court of Nigeria in those cases has been emerged in a web of contextual confusion with respect to when time begins to run for the purposes of recognition and enforcement of both domestic and international arbitral awards in Nigeria. To put an end to this confusion,it is advised that the courts in Nigeria should reconsider their position by stating the law to be in accordance with the English position as expresses in Agromet case.
References:
N. Onyeaso, ‘Enforcement of Foreign Arbitral Awards in Nigeria,’ (February 2009), available at< www.blackfriars-law.com > accessed 29 November 2020.
Prof. GC Nwakoby and Dr. CE Aduaka,The Recognition and Enforcement of International Arbitral awards in Nigeria: The Issue of Time Limitation. Published in Journal of Law, Police and Globalization ISSN 2224 – 3240 (Paper) ISSN 2224 -3259 (Online) Vol. 37, 2015
GC Nwakoby, The Law and Practice of Commercial Arbitration in Nigeria 2nd Edt. Snaap Press Ltd. Enugu, 2014, 2015, 2016.
Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria (LFN) 2004, Section 57(2)
International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act Cap I20 Laws of the Federation of Nigeria 2004, Section 1(1)
