• INTRODUCTION
  Commercial arbitration is now very popular around the globe. It forms an important part of Nigerian jurisprudence. It is regulated by the Arbitration and Conciliation Act (“ACA”), Cap. A18, LFN 2004.
  
  Clauses designating an arbitral tribunal to resolve disputes between the parties are now common place in international commercial transactions. Generally, Nigerian courts respect and strictly enforce the parties’ choice to resolve their dispute before an arbitral tribunal in both domestic and international cases. This right is however not absolute. The right to resolve disputes before an arbitral tribunal could be waived by submitting to the jurisdiction of the Nigerian court. Indeed, Section 5 (1) of the ACA provides that: “If any party to an arbitration agreement commences any action in any court with respect to any matter which is the subject of an arbitration agreement any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceeding.” In essence, if a party to an international arbitration clause delivers any pleadings or takes any steps in the proceedings, such a party is deemed to have waived its right to an arbitration clause by submitting to the jurisdiction of the Nigerian court,
  
  What provokes this comment is that in a recent Nigerian Court of Appeal decision in The Vessel MT. Sea Tiger & Anor v Accord Ship Management (HK) Ltd. (2020) 14 NWLR (Pt. 1745) 418 (“Tiger”), the Court of Appeal held inter alia that where a party is served with a judicial claim, in breach of an international arbitration agreement, but fails to appear before the court, such a party is deemed to have waived its right to an arbitration agreement by submitting to the jurisdiction of the Nigerian court. It also held that payment of an out of court settlement amounts to submission.
  
  This comment holds that the Court of Appeal’s decision was wrongly decided in so far as it held that where proceedings are instituted in breach of an international arbitration clause, failure to appear before judicial proceedings and payment of an out of court settlement amounts to waiver by submitting to the jurisdiction of the court.
  
  FACTS
  In Tiger (supra), the 2nd plaintiff-appellant and the 1st defendant-respondent – both foreign companies before the Nigerian Court – entered into a ship management agreement on 18th of February 2012 in Hong Kong for the management of the 1st plaintiff-appellant vessel. The parties agreed that any dispute arising from their agreement shall be referred to international arbitration in London.
  
  When a dispute arose as to the payment of the management fees between the parties, the 1st defendant-respondent instituted proceedings (suit No. FHC/L/CS/1789/2013) at the Federal High Court Nigeria for the arrest of the 1st plaintiff-appellant vessel. In that proceeding, the 1st defendant-respondent (as plaintiff) sued the plaintiff-appellants (the vessel and owners of the vessel) as the defendants in that case. The plaintiff-appellants settled the claim out of court by making payments to the 1st defendant-respondent. Subsequently, on 27th February 2014, the 1st defendant-respondent as plaintiff in suit No. FHC/L/CS/1789/2013 withdrew its suit and the vessel was ordered to be released.
  
  In consequence of the arrest of the 1st plaintiff-appellant from 31st December 2013 to 27th February 2018, the appellants sued the defendant-respondents in the Federal High Court, Lagos for huge compensation arising from what it claimed to be the wrongful arrest of the 1st plaintiff-appellant in breach of their agreement to settle their dispute by international arbitration in London.
  
  DECISION
  The Court of Appeal unanimously dismissed the claim of the plaintiff-appellants by holding that they had waived their right to the international arbitration clause by submitting to the jurisdiction of the Nigerian Court. The decision was reached on two principal grounds. The first ground was failure to appear and challenge the proceedings after being served with court processes. The second ground was the payment of an out of court settlement in order to release the vessel. In order to provide more clarity, the relevant portions of the decisions are quoted.
  
  First, Garba JCA in his leading judgment held that: “The failure or refusal by it (plaintiff-appellants) to appear in reaction to the originating processes to enable the appellant challenge the jurisdiction of the lower court on the ground of the arbitration clauses in the Ship Management Agreement…left no other reasonable presumption in law and option to the lower court than that the appellants had submitted to the jurisdiction of that court to adjudicate over the suit since the only challenge to the suit by the appellants was entirely and completely predicated and founded on the arbitration clauses in the Ship Management Agreement and not on the lack of jurisdiction on the part of the court, in any event, entertain the suit on any cognizable ground of law. The failure or refusal to enter an appearance and be represented in the suit constituted and amounted to a muted but clear submission to the jurisdiction of the lower court in the case.”
  
  Second, Garba JCA held that: “…the lower court is right that the appellants submitted to its jurisdiction in the suit no:FHC/L/CS/1789/2013 by the payment and settlement of the 1st respondent’s claim in order to secure the release of the 1st appellant from the arrest and detention it was placed under in the case thereby not only taking a step in the case, but actively and effectively so, in the circumstances of the case.”
  
  COMMENTS
  The Court of Appeal’s decision in Tiger (supra) is very important from the perspective of private international law and international commercial arbitration. The implication of Tiger (supra) is that where proceedings are instituted in a Nigerian court in breach of a foreign arbitration clause, the party requesting arbitration would be wise to appear before the court and immediately request the court to stay its proceedings in favour of a foreign arbitration clause. If this is not done, an international arbitration clause is ineffective in Nigerian law on the basis that the party requesting arbitration would be deemed to have waived its right by submitting to the jurisdiction of the court. In addition, payment of an out of court settlement would amount to waiver by submitting to the jurisdiction of the Nigerian court.
  
  Prior to Tiger (supra), waiver to an arbitration clause by submission to the jurisdiction of the Nigerian court could only be established where the defendant entered an unconditional appearance or defended the case its merits.
  
  It is submitted that Tiger (supra) is a wrong extension of the principle to the extent that it holds that failure to appear before proceedings which breach an international arbitration clause constitutes waiver by submission to the jurisdiction of a court. A defendant that did not appear before court proceedings cannot be deemed to have waived its right by submitting to the jurisdiction of the Nigerian court. In other words, failure to appear to proceedings upon being duly notified is the very antithesis of submission to the jurisdiction of a court. It is illogical to hold that such a defendant has “delivered pleadings” or “taken steps in the proceedings” in the eyes of Section 5 of the ACA. A defendant is entitled to ignore court proceedings by sticking to the arbitration clause. This should also be seen as a pro-arbitration stance that is consistent with Nigeria’s approach of upholding the sanctity of arbitration agreements. Indeed, as stated in the introduction, Nigerian courts generally enforce arbitration agreements strictly.
  
  The truth is that Tiger’s case reflects the attitude of Nigerian judges to absentee defendants. Nigerian judges regard it as impolite for a defendant not to appear to court proceedings. The preferable approach in Nigerian jurisprudence is to enter a conditional appearance and then challenge the jurisdiction of the court. Indeed, in Muhammed v Ajingi (2013) LPELR-20372 (CA), the Court of Appeal (Abiru JCA) unanimously held that a defendant who has been duly notified of proceedings but fails to appear to promptly challenge the jurisdiction of the court is deemed to have waived its right by submitting to the jurisdiction of the Nigerian court. Though, Muhammed v Ajingi was not an arbitration case, it demonstrates the attitude of Nigerian courts to absentee defendants.
  
  The Court of Appeal was also wrong to have regarded the payment of the settlement sum by the plaintiff-appellants to release the vessel as waiver by submitting to the jurisdiction of the court. Such an approach does not amount to delivering pleadings or taking steps in the proceedings in the eyes of Section 5 of the ACA. Indeed, in the earlier case of Confidence Insurance Ltd v The Trustees of the Ondo State College of Education Staff Pension (1999) 2 NWLR (Pt. 591) 373, 386, the Court of Appeal (Achike JCA as he then was) unanimously held that: “effort made out of court to settle the matter in controversy between the parties” does not amount to submission. Nigerian courts should be seen to encourage out of court settlement. If the law is that efforts made out of court to settle amounts to submission, this might discourage a potential defendant from making out of court settlements, where there is the presence of a foreign arbitration clause.
  
  Tiger (supra) properly so called was an action in damages for breach of an international arbitration clause. Since it has been argued in this case that the plaintiff-appellants did not submit to the jurisdiction of the Nigerian court, damages should have been awarded for breach of the international arbitration clause. If the Court of Appeal had adopted this approach, it would have honoured Nigerian judiciary’s approach to generally and strictly enforce the sanctity of arbitration agreements. It was obvious in this case that the plaintiff-appellants suffered loss from the arrest of its ship in breach of an international arbitration clause. It is unfortunate that the Court of Appeal did not award compensation in this case.
  
  CONCLUSION
  It remains to be seen whether Tiger (supra) will go on appeal to the Nigerian Supreme Court. If it does go on appeal, it is proposed that the Supreme Court overturns the Court of Appeal’s decision. If it does not go on appeal to the Supreme Court, it is proposed that the Nigerian Court of Appeal and Supreme Court in future holds that the failure to appear to proceedings in breach of an international arbitration clause and the payment of out of court settlement does not constitute waiver by submission to the jurisdiction of the Nigerian court.

On 11 September 2020, the European Parliament’s Committee on Legal Affairs presented a draft report with recommendations to the Commission on corporate due diligence and corporate accountability. This report has already triggered first online comments by Geert van Calster and Giesela Rühl; the present contribution aims both at joining and at broadening this debate. The draft report consists of three proposals: first, a directive containing substantive rules on corporate due diligence and corporate accountability; secondly, amendments to the Brussels Ibis Regulation that are designed to grant claimants from third states access to justice in the EU Member States; and thirdly, an amendment to the Rome II Regulation on the law applicable to non-contractual obligations. The latter measure would introduce a new Art. 6a Rome II, which codifies the so-called principle of ubiquity for business-related human rights claims, i.e. that plaintiffs are given the right to choose between various laws in force at places with which the tort in question is closely connected. While the basic conflicts rule remains the place of damage (lex loci damni) under Art. 4(1) Rome II, Art. 6a of the Rome II-draft will allow plaintiffs to opt for the law of the country in which the event giving rise to the damage occurred (the place of action or lex loci delicti commissi in the narrow sense), the law of the country in which the parent company has its domicile, or, where it does not have a domicile in a Member State, the law of the country where it operates.  Read more...