Nigerian Courts have the power to stop ongoing International Arbitration proceedings

THE SHELL PETROLEUM DEVELOPMENT & 3 ORS. v. CRESTAR INTERGRATED NATURAL RESOURCES LIMITED

COURT OF APPEAL

(LAGOS DIVISION)

(IKYEGH; ABUBAKAR; ADEJUMO: JJ.CA)

FACTS

The Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited, and Nigeria Agip Oil Company Limited (the Applicants) filed an application before the Court of Appeal following an appeal lodged by Crestar Intergrated Natural Resources limited (the Respondent) against the ruling of the Federal High Court delivered by Idris, J. dismissing the motion challenging jurisdiction of the lower court as well as motionto stay proceedings and discharge ex parte Orders

By their application, the Applicants sought an order of injunction restraining the Respondent, whether by itself, its management, servants, agents, privies, representatives, nominees, solicitors, or any other person acting under or pursuant to its authority, from proceeding with, continuing, or taking any further steps in the arbitral proceedings before the International Court of Arbitration (ICC). The arbitral proceedings had been commenced by the Respondent through a Request for Arbitration dated 20 April 2015.

In opposition, the Respondent raised a preliminary objection challenging the jurisdiction of the Court of Appeal to entertain and grant the relief sought by the Applicants. The Respondent’s case was that the application filed by the Applicants effectively sought to restrain it from continuing with arbitral proceedings already commenced between the parties and that, by virtue of arbitration las in force here in Nigeria, the Court of Appeal lacked the jurisdiction to intervene in or grant an injunction restraining arbitral proceedings.

One of the issues for determination was: Whether the court has the jurisdiction to issue an anti-arbitration injunction as sought by the applicants

ARGUMENTS

Learned Senior Counsel for the Applicants submitted that the application sought an order of injunction restraining the Respondent from taking any further steps in respect of the foreign arbitral proceedings commenced over the same dispute that was already pending before the Federal High Court and which was also the subject of an appeal before the Court of Appeal. Counsel argued that the power of the Court to grant the relief sought was donated by law and urged the Court to exercise its jurisdiction in that regard. Counsel invited the Court to consider the practice in other common law jurisdictions where such powers are not infrequently exercised.

Learned Senior Counsel further argued that the legal framework governing arbitration in Nigeria and contended that the arbitral proceedings in question constituted an international arbitration rather than a domestic arbitration. He submitted that the principles governing judicial intervention in domestic arbitration differ from those applicable to international arbitration and that it is now a settled principle that courts may, in appropriate circumstances, grant injunctions in respect of international arbitral proceedings. He contended that the arbitration clause upon which the foreign arbitral proceedings were commenced was null, void, and unenforceable. According to him, the clause violated the provisions of the law which regulates the Nigerian Oil and Gas sector and could not therefore constitute a valid basis for the commencement or continuation of the foreign arbitration.

In response, Learned Senior Counsel for the Respondent contended that Nigerian courts, including the Court of Appeal, lack the jurisdiction to grant anti-arbitration injunctions. Counsel argued that the Arbitration and Mediation Act expressly provides that no court shall intervene in matters governed by the Act except where such intervention is specifically authorized by the Act itself. Consequently, any judicial interference with ongoing arbitral proceedings, outside the circumstances expressly permitted by law, is prohibited.

Counsel further submitted that the authorities relied upon by the Applicants are inapplicable to the present case, as they were decided under English arbitration law, which differs materially from the Nigerian legal framework. According to Counsel, while English courts may exercise jurisdiction to grant anti-arbitration injunctions in appropriate circumstances, such jurisdiction is founded upon provisions of English law that have no equivalent under Nigerian arbitration legislation. He further argued that the provisions of the United Nations Commission on International Trade Law (UNCITRAL) Model Law have been substantially incorporated into Nigeria’s arbitration regime. However, the basis upon which English courts exercise the power to grant anti-arbitration injunctions is unavailable under Nigerian law. Learned Senior Counsel therefore urged the Court to dismiss the Applicants’ application for an anti-arbitration injunction in its entirety and to uphold the Respondent’s Notice of Preliminary Objection.

DECISION OF THE COURT

In resolving the issue, the Court of Appeal held that:

Nigerian courts are vested with the power to grant anti-arbitration injunctions restraining ongoing international arbitral proceedings. The Court of Appeal explained that, in line with the position under English law, the powers conferred on Nigerian courts are sufficiently broad to enable them to grant injunctions restraining arbitral proceedings even where the seat of the arbitration is in a foreign jurisdiction, although such powers must be exercised with great caution and only in exceptional circumstances.

The Court of Appeal emphasized that anti-arbitration injunctions should only be granted in exceptional circumstances, particularly where the continuation of the arbitration would infringe a party’s legal or equitable rights or would be oppressive, vexatious, or unconscionable. In the instant case, the arbitration was commenced while proceedings concerning the same dispute were already pending before the Nigerian courts and had progressed to the appellate stage. Given that the foreign arbitration was still at a preliminary stage and would subject the applicant to parallel proceedings, the Court found that allowing both actions to continue would be oppressive and unconscionable. Consequently, it considered the case to fall within the exceptional circumstances warranting the grant of an anti-arbitration injunction.

Issue resolved in favour of the Applicant.

Tayo Oyetibo, SAN, Solomon Edoh, Paul Mgbomaand Mofesomo Tayo-Oyetibo [Miss] for the Respondent/Applicant

Babatunde Fagbohunlu, SAN, Hamid Abdulkareem and Ayodeji Atere for the Appellants/Respondents

This summary is fully reported at (2024) 5 CLRN in association with ALP NG & Co.

See www.clrndirect.com ; www.alp.company.