CASE TITLE: BEDDING HOLDINGS LTD V. CAREW LPELR-81647(CA)
JUDGMENT DATE: 9TH JULY, 2025
JUSTICES: FREDERICK OZIAKPONO OHO, J.C.A.
OLABODE ABIMBOLA ADEGBEHINGBE, J.C.A.
NNAMDI OKWY DIMGBA, J.C.A.
PRACTICE AREA: ARBITRATION
FACTS:
This appeal borders on the Effect of Arbitration Clause contained in an Agreement.
This appeal is against the judgment of the High Court Y.O. of Lagos State delivered by Hon. Justice Y.O Idowu on Wednesday, the 26th day of April, 2017.
The Respondent approached the trial Court with her Writ of Summons desiring that Court should, at the end of the adjudicatory process, make orders leading to the recovery of vacant possession of her property, a 16-room office accommodation, lying and situate at 55, Adeniyi Jones Avenue, Ikeja, Lagos State.
The Respondent wanted immediate possession of the property. The Appellant resisted the claim. The Respondent claimed that it had a ten-year agreement for a lease in place with the Respondent, which contained an Arbitration Clause, which excluded the jurisdiction of the trial Court to determine the dispute.
The trial Court heard the case, in full, and in its judgment, the Court upheld the claims of the Respondent, and dismissed the counter-claim of the Appellant.
Dissatisfied with the said judgment, the Appellant filed the instant appeal.
ISSUES FOR DETERMINATION:
The Court determined the appeal on these issues, thus:
1. Whether the Lower Court has the jurisdiction to entertain this action having regard to the arbitration clause contained in the Tenancy Agreement as borne out in the Respondent’s Letter dated 20th September, 2006?
2. Whether from the series of correspondence/documents exchanged between the Respondent and-the Appellant as already tendered before the Lower Court, there is an existing and binding ten (10) years’ tenancy agreement between the Respondent and the Appellant.
3. If issue 2 is answered in the affirmative, whether the Respondent can terminate the (10) years’ tenancy agreement when the Appellant has furnished consideration which has passed unto the Respondent for her benefit and enjoyment.
4. Whether from the totality of the evidence before the Lower Court by both parties, the Respondent is entitled to the reliefs sought.
COUNSEL SUBMISSIONS:
Appellant’s counsel argued the appeal by narrating its background facts and submitted that where parties freely and voluntarily enter into a contract, they are bound by the terms and conditions of such contract as spelt out by them. He pointed out, from exhibit C, which the Appellant accepted, that parties agreed that disagreement between them should be resolved by the process of arbitration, which implies that the lower Court lacked jurisdiction to entertain the complaint of the Respondent. He insisted that the Respondent should have channeled her grievances to an Arbitration Panel and not the lower Court. He stated that the Respondent cannot resile from exhibit C. He cited the case of BFI Group Corporation v. Bureau of Public Enterprises [2013] All FWLR (Pt. 676) 444 at 470. It was submitted that even if the Court would hold that it had jurisdiction, it should be after the Respondent had first exhausted all local remedy of Arbitration proceedings before coming to the law Court. Reliance was placed on the decision in Onyekwuluje & Anor. v. Benue State Government & Ors. [2015] LPELR-24780(SC) on the effect of an Arbitration Clause. Learned counsel is of the view that the lower Court was in-error when it assumed jurisdiction over the case before it, as there was an Arbitration Clause in Exhibit C, the contract of the parties.
The position of learned counsel for the Respondent is that the Appellant wallowed in misconception when she contended that the lower Court lacked jurisdiction over the suit before it. He explained that until the lower Court determined the status of the offer letter dated 20/09/2006, the Appellant cannot treat the letter as a lease agreement. He pointed out that the Appellant could not have, validly, expected the lower Court to treat the purported tenancy agreement as one, while in the same breath claim that the lower Court lacked jurisdiction to entertain the suit, because the letter contains an Arbitration Clause, which prevents the Court from hearing the suit.
In the view of learned counsel, the argument mounted by the Appellant’s counsel is flawed and unsustainable. That the Appellant only wasted the valuable time of the Court in order to continue to hold over the Respondent’s property. He submitted that there was no feature in the suit before the lower Court, which will prevent the lower Court from assuming jurisdiction. The case of Madukolu v. Nkemdilim [1962] 2 SCNLR 341, was cited in aid of the submission. He insisted that the Arbitration Clause touted by the Appellant is in a letter which has to be, first, considered before it may have effect and be treated as a lease agreement, consequent upon the determination of the suit before the lower Court.
He urged this Court to hold that the lower Court had jurisdiction to hear the suit before it.
DECISION/HELD:
In the final analysis, the appeal was dismissed.
RATIO:
ARBITRATION AND CONCILIATION- ARBITRATION CLAUSE: Whether a party who has taken further steps in a proceeding can invoke an arbitration clause to challenge the jurisdiction of the Court
“My Lords, arbitration, in the context of this appeal, is not a matter of supposition or guesswork, but statutory. If the matter to be considered is arbitration within the time frame of 2006-2007 and arising from a supposed dispute in the Lagos State geographical location and jurisdiction, the applicable statute would be the Arbitration and Conciliation Act, (Cap. 19 Laws of the Federation of Nigeria, 1990) (ACA), effective throughout the Federation, from 14/03/1988. The relevant section in the named statute is Section 5. Section 5 of the statute provides, as follows: 5. Power to stay proceedings (1) 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 proceedings. (2) A Court to which an application is made under subsection (1) of his section may, if it is satisfied- (a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and (b) that the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, make an order staying the proceedings.” Inspired by the provision above and others, the position of the Courts is that: (a) When there is an arbitration clause in an agreement, a party to the agreement will be deemed to have waived his right under the Clause, where he does not object, from the exchange of pleadings, to the trial of action in respect of the agreement, and does not apply to the trial Court for a stay of proceedings, on the ground of the plaintiff’s failure to refer the dispute to arbitration. The party cannot be heard to complain about the failure, on appeal. (b) An agreement to have recourse to arbitration in the event of a dispute does not oust the jurisdiction of the Court. It is in the Court that the jurisdiction to try the case is vested. However, in the exercise of that jurisdiction, the Court has power to stay proceedings in an action brought to it in breach of an agreement to settle the matter by arbitration. The exercise of this power is regulated by statute, which gives the Court this power. Therefore, the exercise of this power to stay proceedings is a matter within the exercise of the jurisdiction of the Court to try the case itself. (c) It follows that since the jurisdiction of the Court is not ousted by the Arbitration Clause, the provisions of the Arbitration and Conciliation Act will apply. As the party against whom the suit is brought insists that the Arbitration Clause in the agreement between the parties must be complied with, the Court, pursuant to Section 5 of the Arbitration and Conciliation Act, has the power to stay the proceedings before it, pending a reference of the dispute to arbitration. In other words, since an Arbitration Clause in an agreement does not oust the jurisdiction of the Court, an objection to the jurisdiction of the Court is in effect an application to stay proceedings, pending arbitration. (d) Where a party takes steps in the proceedings beyond applying for a stay of proceedings, he will be deemed to have waived his right to insist on recourse to arbitration. See Mainstreet Bank Capital Ltd. v. Nig. RE (2018) 14 NWLR (Pt. 1640) 423 at 444-446; Objenu v. Okeke [2006] 16 NWLR (Pt. 1005) 225 at 240-241; Osun State Govt. v. Dalami (Nig.) Ltd. [2003] 7 NWLR (Pt. 818) 72; Africa Insurance Development Corp. v. Nigeria Liquified Natural Gas Ltd. [2000] 4 NWLR (Pt. 653) 494; Ogun State Housing Corp. v. Ogunsola [2000] 14 NWLR (Pt. 687) 431; Obembe v. Wemabod Estates Ltd. (1977) 5 SC (Reprint) 70 at 79; and, City Eng. Nig. v. F. H. A. (1997) 9 NWLR (Pt. 520) 224.. In this appeal, the Appellant did not apply to the lower Court for stay of the proceedings in the suit before it. The Appellant filed pleadings and participated in several aspects of the trial and other proceedings, despite entering conditional appearance, filing pleadings, raising the issue of arbitration in the pleading and mentioning the question of lack of jurisdiction. In the eyes of the law, the Appellant comprehensively waived her right to insist on the observance of the mandate of the Arbitration Clause, apart from the obvious fact that, the jurisdiction of the lower Court was never ousted at any time and the first issue is misconceived and ill-digested by the Appellant and his counsel, with due respect. See the very relevant and applicable case of Confidence Ins. Ltd. v. Trustees of O. S. C. E. (1999) 2 NWLR (Pt. 591) 373 at 387-388, concerning the implication of Section 5 of the ACA.”Per ADEGBEHINGBE, J.C.A.
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