The decision of the Court of Appeal in Oil & Industrial Services Ltd v. Hempel Paints (South Africa) (Pty) Ltd represents a significant restatement of Nigerian arbitration jurisprudence, particularly in relation to the limits of judicial intervention in foreign-seated arbitral proceedings, the recognition and enforcement regime under the Arbitration and Conciliation Act (ACA), and the distinction between annulment (setting aside) and refusal of enforcement.The case also clarifies several ancillary but important issues touching on jurisdiction, party autonomy, and the interplay between domestic courts and international arbitration.
Facts and Background
The dispute arose from a commercial contractual relationship between Oil & Industrial Services Ltd (OISL), a Nigerian company, and Hempel Paints (South Africa) (Pty) Ltd, a foreign entity. The parties’ contract contained an arbitration clause which expressly provided for arbitration seated in London. Following a dispute, arbitral proceedings were conducted in accordance with the agreed arbitral framework, culminating in a foreign-seated arbitral award in favour of Hempel Paints.
Dissatisfied with the outcome, OISL commenced proceedings before the High Court of Rivers State, seeking, among other reliefs, an order setting aside the arbitral award, contending that where an award is tainted by lack of fairness, justice or misconduct of an arbitrator, a court can set aside the award. The High Court of Rivers State declined jurisdiction to set aside the award, holding that it lacked competence to annul an award seated outside Nigeria. OISL appealed to the Court of Appeal.
Issue(s) for Determination
The predominant issue concerned the power of a Nigerian court to set aside a foreign-seated arbitral award and whether the sole arbitrator was guilty of misconduct to warrant setting aside the arbitral award.
Arguments of Counsel
Counsel for the Appellant submitted that the lower court erred in law by grossly misinterpreting the Arbitration and Conciliation Act (“ACA”), which makes no distinction between domestic and international arbitral awards. He argued that the court wrongly relied on international conventions and foreign judicial authorities to limit or oust its jurisdiction, contrary to Nigeria’s sovereign authority to determine matters in accordance with its domestic laws. Counsel contended that the court ought to have jealously guarded its jurisdiction rather than subordinating it to international norms of reciprocity.
It was further argued that having held that it lacked jurisdiction, the lower court was wrong to proceed to make substantive findings to the effect that the Sole Arbitrator did not misconduct herself. Counsel submitted that the Sole Arbitrator misconducted herself by failing to determine the issue of frustration of contract raised by the Appellant. In support, he relied on Crickwood Property & Investment Trust Ltd v. Leighton’s Investment Trust Ltd and Obayuwa v. Governor of Bendel State. He submitted further that the Respondent’s conduct could amount to constructive fraud, even if not deliberate, and that this constituted arbitral misconduct warranting the setting aside of the award.
