Disputes that may not be Settled in Courts. Daily Law Tips (Tip 86)
By Onyekachi Umah,Esq., LL.M, MCIArb (UK)
Parties to an agreement that has an arbitration clause may not sue each other in a court without first exhausting arbitration. Arbitration clause is a statement that any dispute resulting from a given agreement must first be resolved through arbitration.
The Right to court is a constitutional right and right to arbitration is a personal right. Right to arbitration does not vitiate the right to court rather in the spirit of pactum sum servanda it urges courts to stay proceedings and uphold the agreement of parties to seek arbitration over disputes from their contract.
In most cases, courts will stay proceedings on the application of a defendant unless there are reasons to believe that arbitration will not serve justice to parties. Also, a defendant does not really need to show steps taken earlier in arbitration to resolve dispute, before the courts will allow stay of proceedings for parties to exhaust arbitration. The position in the Court of Appeal judgment in MV Panormos Bay v Olam Plc (2004) 5 NWLR Pt. 86 has been changed by the Court of Appeal judgment in Charles Mekunye v Lotus Capital Suit No. CA/L/1349/2016.
Conclusively, where there is an arbitration clause in an agreement the courts will most often allow arbitration.
Authorities:
1. Sections 2, 4 and 5 of the Arbitration and Conciliation Act.
2. Judgment of the Court of Appeal in the case of MV Panormos Bay v Olam Plc (2004) 5 NWLR Pt. 86.
3. Judgment of the Court of Appeal in the case of Charles Mekunye v Lotus Capital Suit No. CA/L/1349/2016.
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