UNITS ENVIRONMENTAL SCIENCES LIMITED v. REVENUE MOBILIZATION, ALLOCATION AND FISCAL COMMISSION.
SUPREME COURT OF NIGERIA
(ARIWOOLA; OKORO; AUGIE; ABOKI; AGIM, JJ.SC)
FACTS
Models Environmental Sciences Restricted (the Appellant) entered right into a Consultancy Settlement with the Income Mobilization, Allocation and Fiscal Fee (the Respondent) in respect of the Respondent’s Workers Housing Growth Challenge located in Mabushi, Abuja. Clause 15 of the Consultancy Settlement expressly stipulated that any dispute arising from or in reference to the settlement could be resolved by way of arbitration. A dispute subsequently arose concerning the Appellant’s declare for the fee of excellent service charges and accrued curiosity, allegedly due below the phrases of the Consultancy Settlement. Pursuant to the arbitration clause, the events appointed a sole arbitrator to adjudicate the matter.
Upon conclusion of the arbitral proceedings, the only real arbitrator rendered an award in favour of the Appellant. Dissatisfied with the award, the Respondent approached the Federal Excessive Court docket, Abuja, in search of to have the award put aside on the bottom of misconduct. The Respondent contended that the arbitrator failed to stick to the specific or implied phrases of the arbitration settlement and acted improperly by granting aid on the idea of public coverage, thereby exceeding the scope of the problems submitted for arbitration. In response, the Appellant filed an software earlier than the identical court docket in search of recognition and enforcement of the arbitral award. The Federal Excessive Court docket (trial court docket) dismissed the Respondent’s software and granted the Appellant’s software for enforcement.
Nonetheless, on enchantment, the Abuja Division of the Court docket of Enchantment (decrease court docket) reversed the choice of the Federal Excessive Court docket. It allowed the Respondent’s enchantment, put aside the enforcement order, and nullified the arbitral award.
Dissatisfied with this end result, the Appellant has now additional appealed to the Supreme Court docket. One of many key points submitted for willpower is: whether or not the Court docket of Enchantment erred in regulation when it put aside each the judgment of the Federal Excessive Court docket and the arbitral award, on the idea that pre-award curiosity was neither claimable nor awardable within the circumstances of the case.
ARGUMENTS
In submitting earlier than the Supreme Court docket, the discovered Senior Advocate showing for the Appellant contended that the Court docket of Enchantment erred each in reality and in regulation when it held that the Federal Excessive Court docket’s affirmation of the arbitral award, notably with respect to the pre-award curiosity, was with out factual or authorized basis. He argued that the Appellant’s declare for pre-award curiosity was not solely expressly pleaded however was additionally substantiated by uncontroverted proof introduced earlier than the only real arbitrator. Based on the discovered Senior Advocate, the Appellant had fulfilled all its obligations below the Consultancy Settlement to the Respondent’s satisfaction. Regardless of deriving full worth from the Appellant’s providers, the Respondent made solely a token fee of ₦4 million and didn’t settle the stability due. The discovered Senior Advocate submitted that this amounted to an unjust deprivation of the Appellant’s funds, entitling it to compensation within the type of curiosity for the interval it was denied entry to cash rightfully owed. He additional emphasised that the declare for pre-award curiosity was a direct and foreseeable consequence of the Respondent’s breach and fell squarely throughout the cheap contemplation of the events on the time they entered into the settlement.
He famous that the arbitrator made particular and reasoned findings that the Appellant had utterly carried out its contractual obligations and that the Respondent’s justification for non-payment, particularly, a purported frustration of the contract attributable to modifications in authorities coverage, was legally untenable and unsupported by the proof. The try to evade legal responsibility by invoking frustration, counsel argued, was a misapplication of the doctrine and an afterthought designed to avoid fee obligations. The discovered Senior Advocate additional argued that even when, hypothetically, the Court docket of Enchantment discovered advantage in its objection to the award of pre-award curiosity, it grossly erred in regulation by setting apart your complete arbitral award. He maintained that the curiosity part of the award was severable and shouldn’t have tainted the arbitrator’s findings on the substantive claims. The correct and even handed course, he submitted, would have been for the Court docket of Enchantment to remit the difficulty of curiosity again to the arbitrator for reconsideration, quite than nullifying your complete award.
He concluded by asserting that the appellate court docket acted past its jurisdiction by setting apart the award merely on the idea that it was allegedly inaccurate, notably within the absence of any patent error on the face of the award. In doing so, the Court docket of Enchantment didn’t accord due regard to the precept of finality that underpins arbitral proceedings, thereby undermining the integrity of the arbitral course of agreed upon by the events.
In response, discovered counsel for the Respondent contended that the only real arbitrator acted past the scope of his jurisdiction by awarding pre-award curiosity within the sum of ₦33,934,139.53 in favour of the Appellant. He argued that this award of pre-award curiosity constituted the central grievance upon which the Respondent sought to have the arbitral award put aside earlier than each the Federal Excessive Court docket and the Court docket of Enchantment. Counsel maintained that the Consultancy Providers Settlement, which ruled the connection between the events, didn’t comprise any specific or implied provision authorising the award of pre-award curiosity. Within the absence of such a provision, he submitted that the arbitrator lacked the authorized competence or jurisdiction to entertain or grant such a declare. He additional argued that there was no credible or cogent proof adduced earlier than the arbitral tribunal to assist the declare for pre-award curiosity. Quite the opposite, the declare was, in his view, speculative, unsubstantiated, and basically inconsistent with the contractual phrases binding the events.
In additional buttressing his place, counsel submitted that the Court docket of Enchantment acted accurately in holding that the arbitrator exceeded the scope of his reference and thereby dedicated misconduct. He posited that the right consequence of such misconduct was the setting apart of the arbitral award in its entirety, as was rightly completed by the Court docket of Enchantment. Moreover, counsel submitted that the Appellant couldn’t now be heard to approbate and reprobate. Having beforehand sought the enforcement of the arbitral award in its entirety earlier than the decrease courts, the Appellant couldn’t, at this stage, try to sever the award by in search of to implement solely the components deemed beneficial. Based on him, this shift in place was not solely procedurally improper but in addition inequitable.
Lastly, he urged the Honourable Court docket to affirm the choice of the Court docket of Enchantment in its entirety, together with its order that every get together bear its personal prices, as this was in step with the Consultancy Providers Settlement, which expressly offered that events ought to bear their respective prices within the occasion of a dispute.
DECISION OF THE COURT
In resolving this concern, the Supreme Court docket held that:
Sure issues, though not expressly said in a contract, might nonetheless be implied by regulation to fall throughout the cheap contemplation or expectations of the events, thereby giving rise to enforceable rights and obligations. The Court docket emphasised that contracts are to not be interpreted in strict literal phrases alone, but in addition in gentle of the presumed intentions and expectations of cheap individuals coming into into such agreements. The place a contract is silent on a selected matter, the regulation can provide implied phrases the place mandatory to offer enterprise efficacy to the settlement and be sure that it operates in a fashion in step with the extraordinary understanding of cheap events.
The Court docket additional held that in assessing the scope of implied phrases or obligations, the regulation presumes that contracting events are conscious of the same old and foreseeable penalties that comply with from the breach of contractual phrases. As rational and knowledgeable events, they’re deemed to know the forms of losses or disruptions that might ordinarily come up in the midst of industrial transactions. Due to this fact, even within the absence of specific provisions coping with sure penalties, the regulation will attribute to the events a shared understanding of these penalties, offered they’re resembling would naturally stream from a breach of the settlement.
Furthermore, the Court docket underscored that the absence of an specific assertion concerning the aim of a time period, such because the time of fee, or the implications of its breach, doesn’t render such issues irrelevant or incapable of authorized enforcement. The regulation might, by way of mandatory implication, deal with such phrases as basic to the industrial objective of the contract, notably the place timeliness of efficiency is materials to the transaction. As such, the Court docket affirmed that the implications of a breach as to time of fee, although not expressly set out, could be presumed to have been contemplated by the events on the time of coming into the contract, and should accordingly give rise to authorized treatments. This reasoning ensures that contractual obligations usually are not defeated merely by omissions in drafting, and that the regulation steps in to uphold equity and industrial efficacy.
Challenge resolved in favour of the Appellant.
Dr. Olumide Ayeni, SAN with Olutunde Abegun, Esq.; Olawale Oyebode Esq.;
Favour Leonard Goin, Esq.; (Mrs.) and Adeniyi Olominu, Esq., for the Appellant.
P.Y. Garuba, Esq., with Austin Mwana Esq., for the Respondent.
This abstract is totally reported at (2022) 4 CLRN in affiliation with ALP NG & Co.
See www.clrndirect.com ; www.alp.firm.
