In Backbone Connectivity Network Nigeria Ltd v Backbone Technology Network Inc(1) the Abuja Court of Appeal considered whether a court can appoint an arbitrator on its own volition and also order parties to report the outcome of the arbitral proceedings to the court.
The respondents sued the appellants in the Federal High Court seeking various reliefs. The appellants applied to the court for an order directing a stay of proceedings in respect of disputes between the second appellant and the second respondent, and requested that the parties be referred to arbitration pursuant to the arbitration agreement between them.
After hearing the parties, the Federal High Court ordered a stay of proceedings and directed the parties to nominate one person each to form an arbitral tribunal. The trial court, on its own volition, appointed a third arbitrator and adjourned the suit pending a report on the outcome of the arbitration.
The appellants appealed the Federal High Court order directing the parties to report the outcome of the arbitration to court and the appointment of the third arbitrator without the parties' request.
In determining the case, the Abuja Court of Appeal considered Sections 6, 7 and 34 of the Arbitration and Conciliation Act.(2)
Sections 6 and 7 of the Arbitration and Conciliation Act provide that where the parties to an arbitration agreement have not specified the number of the arbitrators to be appointed in the arbitration agreement, the tribunal will be comprised of three arbitrators. Also, where the parties have not specified the procedure for the arbitrators' appointment in the arbitration agreement, each party shall appoint one arbitrator and the two arbitrators shall in turn appoint the third arbitrator.
The trial court can intervene to appoint an arbitrator only if one party fails to appoint an arbitrator within 30 days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the appointment of the third arbitrator within 30 days of their appointment.
Under Section 34 of the Arbitration and Conciliation Act, a court cannot intervene in any matter governed by the Arbitration Act, except where this is permitted under the act.
The Abuja Court of Appeal allowed the appeal and set aside the orders of the Federal High Court. It held that the Federal High Court had no business ordering the parties to appoint arbitrators without a request from the parties and, worse still, appointing a third arbitrator on its own volition.
The lower court's action amounted to intervention in a matter governed by the Arbitration and Conciliation Act, which is forbidden under Section 34 of the Arbitration and Conciliation Act.
The Federal High Court erred in adjourning the suit to await the report of the outcome of arbitration after granting a stay of proceedings.
A court is not permitted by law to order that the outcome of arbitration be reported to it. Arbitration cannot be treated the same as negotiations for out-of-court settlement.
The court can intervene only in specific instances permitted under the Arbitration and Conciliation Act, such as to grant a stay of proceedings, set aside an award, remove an arbitrator for misconduct and recognise and enforce an award. However, such intervention must always be on the application of one of the parties.The Federal High Court thus should have appointed a third arbitrator only on the application of one of the parties.
The Abuja Court of Appeal was thus right to set aside the orders of the lower court.
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(1) (2015) 14 NWLR (Part 1480) Pg 511.
(2) Cap A18, Laws of the Federation of Nigeria, 2004.
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