The Court of Appeal (Lagos Division) in a recent judgment delivered in Gaslink Nigeria Ltd v. Reliance Textile Industries Ltd (Appeal No.CA/L/791/2013), decided the question as to whether the absence of the signature of one out of three arbitrators on an arbitral award invalidates that award.
A dispute arose between the Appellant (“Gaslink”) and the Respondent (“Reliance”) in respect of a Gas Sale and Purchase Agreement, which contained an arbitration agreement. The dispute was referred to a panel of three arbitrators. Gaslink and Reliance each appointed an arbitrator while both party-nominated arbitrators appointed Mr Mohammed Bello Adoke SAN as the presiding arbitrator. After evidence and submissions of counsel had been taken, Mr Adoke was appointed the Attorney-General of the Federation by President Goodluck Jonathan. Only the two party-nominated arbitrators signed the award. They however, relying on Section 26(2) of the Arbitration and Conciliation Act (ACA), explained in the award that Mr Adoke participated in the meetings of the arbitrators and agreed to their ultimate decisions prior to his appointment as Attorney-General of the Federation and that if because of the duties of his new office, it is not possible to expeditiously obtain his signature on the award, the award will nevertheless be released to the parties.
Reliance commenced an action at the Federal High Court to set aside the award and argued that the award was invalid because of the absence of Mr Adoke’s signature. Gaslink, in response, argued that by virtue of Section 24(1) of the ACA, the decisions of an arbitral tribunal are to be made by a majority of the arbitrators. As the majority of three is two, the absence of Mr Adoke’s signature on the award did not in any way invalidate it. The Federal High Court was of the view that the absence of Mr Adoke’s signature on the award was fatal and therefore set aside the award.
Dissatisfied with the decision of the Federal High Court, Gaslink appealed and also requested that the Court of Appeal should, in the event that it found Gaslink’s appeal to be meritorious, invoke Section 15 of the Court of Appeal Act to grant leave to Gaslink to enforce the award (rather than remitting the case to the Federal High Court for a decision on whether or not to grant Gaslink leave to enforce the award).
Decision of the Court of Appeal
The Court of Appeal held as follows:
a. The absence of the signature of one out of three arbitrators on an award “is of no consequence to the validity of the award or decision... a majority decision is all that is required in law under the ACA.”
b. “Arbitral proceedings are in a class of their own or sui generis; an application to set aside an arbitral award is not in the nature of an appeal against the award…”
c. Courts are “enjoined, as far as possible, to uphold and enforce arbitral awards, having regard to the fact that it is the mode of dispute resolution voluntarily agreed upon by the parties…”
d. Not every irregularity in procedure amounts to a misconduct on the part of the arbitrators.
e. The Court of Appeal will invoke Section 15 of the Court of Appeal Act to grant leave to enforce an arbitral award so as to save time and costs where all relevant materials for enforcement are in the records and no further evidence is required.
Orders Made by the Court of Appeal
The Court of appeal allowed the appeal and set aside the decision of the Federal High Court, which had set aside the arbitral award. The Court of Appeal went further to invoke Section 15 of the Court of Appeal Act by granting Gaslink leave to enforce the arbitral award (and thereby saving Gaslink the cost and time involved in going back to the lower court for leave to enforce the award).
Babajimi Ayorinde and Oladimeji Sarumi represented the Appellant.
Kehinde Sanni-Mutushi represented the Respondent.