Recognition and Enforcement of Foreign Arbitral Awards:
A Review of Emerald Energy Resources Ltd. v. Signet Advisors Ltd.
Jacob Famodimu, Lazarus Kalu & Glory Ogungbamigbe
Background:
The need for parties to an arbitration agreement to respect and comply with the arbitral award cannot be overemphasised otherwise arbitration as a mode of dispute resolution would be futile. The court has now taken a stance on the conduct of parties against whom an arbitral award is granted and who seeks to ensure that the arbitral award is not recognised and enforced in Nigeria. The case under review made it clear that the twelve (12) months limitation period prescribed by section 2 of the Reciprocal Enforcement of Judgment Ordinancewithin which to apply for the enforcement of foreign judgments does not apply to the enforcement of foreign arbitral awards.
BRIEF FACTS
The parties entered into an agreement wherein Emerald Energy Resources Limited retained the services of Signet Advisors Ltd as a financial advisor. There was an arbitration clause in the agreement which provided that any dispute arising from the agreement would be settled by arbitration to be conducted at the London Court of International Arbitration (LCIA). A dispute arose between the parties and the dispute was resolved by arbitration as agreed by the parties. The Arbitral Tribunal made an arbitration award in favour of Signet Advisors Ltd. In a bid to enforce the award, Signet Advisors filed an Originating Motion for an order recognizing the award as binding and seeking the leave of Court to enforce it as a judgment of the Court.
Emerald Energy Resources Limited opposed the application for the recognition and enforcement of the arbitral award by filing a Notice of Preliminary Objection. One of the premises upon which the preliminary objection was filed was that the Originating Motion was statute-barred as it was not brought within twelve (12) months as required by section 2 of the Reciprocal Enforcement of Judgment Ordinance.[1]
The trial court however dismissed the preliminary objection and recognized the arbitral award and held that the arbitral award should be enforced in Nigeria. Dissatisfied with the decision, Emerald Energy Resources Limited appealed to the Court of Appeal. The issue presented for consideration and determination of the Court of Appeal was whether the trial court was right to have dismissed the preliminary objection challenging the competence of the Originating Motion having been filed after the expiration of twelve (12) months from the date the arbitral award was made. Emerald Energy Resources Limitedargued that the recognition and enforcement of the arbitral award can only be done under the Reciprocal Enforcement of Judgments Ordinance which stipulates a limitation of 12 months for the enforcement of arbitral award. It further contended that the proceeding at the lower court was commenced after 12 months of the delivery of the award, and as such the proceeding was incompetent.
In response, Signet Advisors Ltd argued that the the Reciprocal Enforcement of Judgments Ordinance is inapplicable to the instant case as the Originating Motion was brought under the Arbitration and Conciliation Act (ACA) and that there is no limitation period for the enforcement of foreign arbitral awards under the ACA. It further contended that only arbitral awards which have been elevated to the status of judgment of a court of law after leave has been granted to enforce same as judgment of the court is within the contemplation of the Reciprocal Enforcement of Judgments Ordinance and that only such awards are subject to the limitation period of 12 months. The Court of Appeal upheld the argument of Signet Advisors Ltd and held that the Originating Motion for recognition and enforcement of foreign arbitral awards need not be filed within 12 months from the date of delivery of the award.
BASIS OF THE COURT’S DECISION
In arriving at its decision, the Court of Appeal referred to section 2 of the Reciprocal Enforcement of Judgment Ordinanceand sections 31 (1) and 51 of the Arbitration and Conciliation Act. Section 2 of the Reciprocal Enforcement of Judgment Ordinance provides that “where a judgment has been obtained in the High Court in England or Ireland or in the court or session in Scotland, the judgment creditor may apply to a High Court at any time within twelve months after the date of the judgment or such longer period as may be allowed by the court to have the judgment registered in the court and on any such application the court may, if in all the circumstances of the case thinks it is just and convenient that the judgment should be enforced in Nigeria, and subject to the provisions of this Ordinance, order the judgment to be registered accordingly.”
Sections 31 and 51 of the Arbitration and Conciliation Act provide:
31(1): “Arbitral award shall be recognized as binding, and subject to this section and section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.”
“51(1): “An arbitral award shall, irrespective of the country in which it is made, be recognized as binding and subject to this section and section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.”
The Court of Appeal per Justice Tobi his judgment noted that section 2 of the Reciprocal Enforcement of Judgments Ordinanceapplies to foreign judgments and not foreign arbitral awards. According to the Court, “By the above provision, an application for enforcement of a judgment of English Court in Nigeria has to be filed within 12 months. The above section refers to the judgment of the court of England. … The process sought to be recognized and enforced in the instant appeal was an arbitral award from London Court of International Arbitration, London. Therefore, the above provision did not apply.” For an arbitral award to be enforced as a judgment in England, the party seeking to enforce it as a judgment must seek leave to be so enforced and it is when such an order is granted that it can be enforced as a judgment. In the absence of such an order from the court in England, the award remains an award which has a binding force but is not equated as a judgment. This distinction is important and relevant to the instant appeal. This is so because the provision of section 2 of the Reciprocal Enforcement of Judgment Ordinance only covers judgments and orders but not arbitral awards except for awards that have been elevated to the status of judgment. The implication is that the 12 months limitation period within which an application for the recognition and enforcement of the arbitral award of LCIA did not apply to the matter affected by the instant appeal as what was before the trial court was an award and not a judgment of the court of England.
The Court of Appeal observed that the parties submitted to arbitration voluntarily and participated fully in the arbitral tribunal and as such should accept the arbitral award save in deserving situations and the enforcement should not be refused for reasons that are not cogent.
In a recent decision of the Supreme Court in Metroline (Nig.) Ltd. v. Dikko, Rhodes-Vivour, JSC declared that“It is time litigants fully understand, respect and appreciate the nature of arbitration agreements they freely enter into. It is the duty of counsel to explain the nature of these agreements and not encourage their clients to disregard them when they get unfavorable awards. Arbitration agreements ought to be respected and the resultant awards complied with. We should always bear in mind the importance of respecting arbitration agreements, more so those that have international connotations. The courts should not allow itself to be used as a tool to set aside otherwise good awards or frustrate legitimate arbitration awards.”[2]
COMMENTARY
The case under review clarifies the position that an application for recognition and enforcement of an arbitral award is not affected by the 12 months period of limitation within which to apply to the court for the enforcement of foreign judgments.
[1]Cap. 175, Laws of the Federation of Nigeria, 1958.
[2]Metroline (Nig.) Ltd. v. Dikko [2021] 2 NWLR (Pt. 1761) 422 at 445
JACOB FAMODIMU jacob.famodimu@advocaat-law.com
LAZARUS KALU Lazarus.Kalu@advocaat-law.com
GLORY OGUNGBAMIGBE glory.ogungbamigbe@advocaat-law.com
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