SCOA (NIG) PLC v. STERLING BANK PLC

CITATION: (2016) LPELR-40566(CA)

In the Court of AppealIn the Lagos Judicial Division

Holden at Lagos

ON TUESDAY, 3RD MAY, 2016Suit No: CA/L/170/2013

Before Their Lordships:

SAMUEL CHUKWUDUMEBI OSEJI Justice, Court of AppealTIJJANI ABUBAKAR Justice, Court of AppealABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice, Court of Appeal

BetweenSCOA NIGERIA PLC - Appellant(s)

AndSTERLING BANK PLC - Respondent(s)

RATIO DECIDENDI(2

016)

LPELR

-4056

6(CA)

1. ARBITRATION AND CONCILIATION -ARBITRATION CLAUSE: Meaning of arbitrationclause"An arbitration clause is a written consensusreached by the parties to a contract and asapplicable to other written agreements it mustbe construed according to the language usedby the parties therein without externalimputation. An arbitration clause embodies theagreement of the parties that if any disputeshould arise with regard to the obligationswhich both parties have undertaken to observe,such dispute should be settled by a third partyor tribunal of their own choice and constitution.See L.S.W.C. VS SAKAMORI CONSTRUCTION(NIG) LTD (2011)12 NWLR (PT 1262) 569 andROYAL EXCHANGE ASSURANCE VS BENTWORTHFINANCE (NIG) LTD (1976)11 SC 107."Per OSEJI,J.C.A. (P. 22, Paras. B-E) - read in context

2. ARBITRATION AND CONCILIATION -ARBITRATION CLAUSE: Effect of arbitrationclause in an agreement"It is trite that where a clause in an agreementprovides that any difference or dispute arisingout of the agreement shall be referred to anarbitrator, both parties ought to honour andcomply with provisions of the clause." Per OSEJI,J.C.A. (P. 24, Paras. B-C) - read in context

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3. ARBITRATION AND CONCILIATION -ARBITRATION CLAUSE: Whether arbitrationclause ousts the jurisdiction of Court"It is also trite law that any agreement tosubmit a dispute to arbitration does not oustthe jurisdiction of the Court. See OBEMBE VSWEMABOD ESTATES LTD. (1977) 5 SC 70. Thejurisdiction of the Court can only be oustedbased on certain qualifications as provided inthe Arbitration and Conciliation Act.In the instant case Section 5 of the Arbitrationand Conciliation Act provides that:-???If any party to an arbitration commencesany action in any Court with respect to anymatter which is the subject of an arbitrationagreement, any party to the arbitrationagreement may at any time after appearanceand before delivering any pleadings or takingany other steps in the proceedings, apply to thecourt to stay proceedings."Per OSEJI, J.C.A. (Pp. 24-25, Paras. C-A) - read incontext

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4. ARBITRATION AND CONCILIATION -ARBITRATION CLAUSE: Whether arbitrationclause ousts the jurisdiction of Court"The law is settled that parties cannot bycontract oust the jurisdiction of the Court; butany person may covenant that no right shallaccrue till a third person has decided on anydifference that may arise between himself andthe other party to the covenant. Where it isexpressly, directly and unequivocally agreedupon between parties that there shall be noright of action whatever till the arbitrators havedecided, it is a bar to the action that there hadbeen no such arbitration. See A.I.D.C. v.NIGERIA L.N.G. LTD (2000) 4 NWLR (Pt.653) 494SC; CITY ENGINEERING NIGERIA LTD V.FEDERAL HOUSING AUTHORITY (1997) 9 NWLR(PT.520) 224 SC.Therefore, while parties cannot by contract oustthe jurisdiction of the Courts, they can agreethat no right of action shall accrue in respect ofany differences which may arise between themuntil such differences have been adjudicatedupon by an arbitrator. Such a provision ispopularly known in law as the Scott v. AveryClause enunciated in SCOTT v. AVERY (1856) 10ER 1121."Per OBASEKI-ADEJUMO, J.C.A. (Pp. 28-29, Paras.D-B) - read in context

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5. COURT - RAISING ISSUE(S) SUO MOTU:Whether a court can raise and resolve issuessuo motu"The Court can equally raise it suo motu butwhen it is so raised by the Court, the partiesmust be invited to address the Court on it inorder to prevent a miscarriage of justice.See OLORIODE VS OYEBI (1984) 1 SCNLR 390;ODIASE VS AGHO (1972) 1 ALL NRL (PT 1) 170,PDP VS OKOROCHA (2012) 15 NWLR (PT 1323)205 at 5 NWLR (PT 1292) 181, the Apex Courtheld at page 206 of the Report that:-??????It is the law that a Court should not raisea point suo motu, no matter how clear it mayappear to be, and proceed to resolve samewithout inviting the parties or their counsel toaddress the Court on the point. This is to avoida breach of parties right to fair hearing.??????See also KATTO VS C.B.N (1999) 6 NWLR (PT607) 390."Per OSEJI, J.C.A. (Pp. 16-17, Paras. D-A) - read in context

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6. COURT - JURISDICTION: Effect of a courthearing a matter where it has no jurisdiction"The law is trite and it has been emphasisedagain and again that jurisdiction is the verybasis on which any Court or tribunal can hear acase. It is the life line of all trials in our Courtsand as such any trial without jurisdiction is anullity. See PDP VS OKOROCHA Supra at page255."Per OSEJI, J.C.A. (P. 17, Paras. D-E) - readin context

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7. COURT - JURISDICTION: Proper order for aCourt to make where it has no jurisdiction toentertain a matter"Where an action before the Court is found tobe incompetent whether by reason of locusstandi or the parties in Court are incompetentwhich has resulted in the lack of the jurisdictionof the Court to hear the case, the proper orderfor the Court to make in the circumstance isthat of striking out and not dismissal.See ABU VS KUYABA (2002) FWLR (PT 99) 1041.ADESOKAN VS ADETUNJI (1994) 6 SCJN 123;AGBENYI VS AGBO (1994) 7 NWLR (PT 359)735, ONUMAJURU VS AKANIHU (1994) 3 NWLR(PT 334) 620.In UKOLO VS UNION BANK OF NIGERIA LTD(2004) 2 SCM 187. It was held that the properorder to make where a Court has no jurisdictionto entertain an action is that of striking out.Thus when a Court lacks jurisdiction toentertain a suit for any reason, the proper orderto make is to strike out the suit and not todismiss it. See OWNERS OF M.V ARABELLA VSNIGERIAN AGRIC. INSURANCE CORPORATION(2008) 4-5 SC (PT 11) 189; OHIAERI VSAKABEZE (1992) 2 SCNJ 76; UWAZURIKE VS A.GFEDERATION (2007) 2 SCNJ 369."Per OSEJI, J.C.A. (Pp. 17-18, Paras. F-D) - read incontext

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8. COURT - JURISDICTION: Effect of a courthearing a matter where it has no jurisdiction"If a Court has no jurisdiction to hear anddetermine a matter, the proceedings remain anullity ab initio, no matter how well conductedor decided. Given that a defect in competenceis not only intrinsic, but extrinsic to the entireprocess of adjudication. A Court that lacks thevires to entertain a suit cannot exercise judicialpowers thereon. See EGUNJOBI VS FEDERALREPUBLIC OF IGERIA (2012)12 S.C. (PT IV) 148;NIGERIAN NATIONAL SUPPLY CO. LTD VSESTABLISHMENT SIMA OF VADUZ (1990) 11-12S.C. 209."Per OSEJI, J.C.A. (Pp. 18-19, Paras. E-A) - read in context

9. COURT - JURISDICTION: Effect of a courthearing a matter where it has no jurisdiction"...This is so because, where a Court does nothavejurisdiction over a matter before it and itproceeds to hear and determine the matter, (asin this case) the entire proceedings no matterhow well conducted would amount to a nullity.See UTIH VS ONOYIVWE (1991)1 SC (PT 1) 61and GBAGBARIGHA VS TORUEMI (2012)12 SC(PT V) 54."Per OSEJI, J.C.A. (Pp. 19-20, Paras. G-B) - read incontext

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10. INTERPRETATION OF STATUTE - SECTION5 ( 1 ) O F T H E A R B I T R A T I O N A N DCONCILIATION DECREE, 1988: Interpretationof Section 5(1) of the Arbitrat ion andConciliation Decree, 1988 as regards party whocan make an appl icat ion for a stay ofproceedings"Section 5 of the Arbitration and ConciliationAct, Cap 18, Laws of the Federation of Nigeria,2004 states:If any party to an arbitration agreementcommences any action in any Court withrespect to any matter which is the subject of anarbitration agreement, any party to thearbitration agreement may, at any time afterappearance and before delivering anypleadings or taking any other steps in theproceedings, apply to the Court to stay theproceeding.It is obvious from the above provision of theapplicable Act that where, as in the instantcase, a party to an arbitration commence anaction in Court before submitting the dispute toArbitration, the other party may apply to theCourt for stay the proceeding before it.However, such other party must not have filedand exchanged pleadings or taken any othersteps in the proceedings."Per OBASEKI-ADEJUMO, J.C.A. (Pp. 31-32, Paras. C-B) - read incontext

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11. PRACTICE AND PROCEDURE - ISSUE OFJURISDICTION: Importance of the issue ofjurisdiction"It is now well established that jurisdiction is athreshold issue in adjudication by a Court oflaw. It therefore goes without saying that thedetermination of a matter by a Court willamount to a nullity if done without jurisdictionnotwithstanding how right or correct thedecision reached might be. It is the basis onwhich any Court or tribunal tries a case becauseit is the authority it has to decide a matterbefore it. The importance of jurisdiction toadjudicate on any matter by a Court cannottherefore be overemphasised.See GALADIMA VS TAMBAI (2000) 6 SCNJ 190;YUSUF VS OBASANJO (2004) 5 SCM 193; AJAOVS ALAO (1986) 5 NWLR (PT 45) 802; UGBA VSSUSWAM (NO 2) (2012) 6 SC (PT 11) 56, A.GRIVERS STATE VS A.G AKWA-IBOM STATE(2011) 8 NWLR (PT 1248) 31."Per OSEJI, J.C.A.(Pp. 11-12, Paras. E-C) - read in context

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12. PRACTICE AND PROCEDURE - WAIVER:Nature of waiver"...My stance finds support in the decision of theSupreme Court in the case of FAWEHIMICONSTRUCTION COMPANY LTD VS OBAFEMIAWOLOWO UNIVERSITY (1998) 6 NWLR (PT553)171 or (1998) 5 SC 43, where it was heldthat:-??????When a party has a right whether by wayof agreement or under a statute, he canexercise it at the earliest possible time and canequally waive it if the statutory right is notabsolute and mandatory. The waiver must beclear and unambiguous like allowing allevidence to be taken or even decision givenbefore challenging the hearing. It will then beshown that the party deliberately refused totake advantage of the right when it availed him.Furthermore in the case of FEED AND FOODFARMS (NIG) LTD VS NNPC (2009) 6-7 S C 1 theApex Court also held that matters affecting thejurisdiction of the Court should be categorizedinto two areas or compartments. These arematters affecting the public in the litigationprocess and those affecting the personalprivate or domestic rights of the party. Whilethe former cannot in law be waived, the latercan be waived in law."Per OSEJI, J.C.A. (Pp.25-26, Paras. F-F) - read in context

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SAMUEL CHUKWUDUMEBI OSEJI, J.C.A. (Delivering the

Leading Judgment): This is an appeal against the

judgment of the High Court of Lagos State delivered by

A.O. ADEFOPE-OKOJIE J. (Mrs.) on the 20th day of

November 2012 wherein Suit No LD/998/2009 was

dismissed.

Sometimes in 1996, the Appellant herein entered into a

lease agreement with the Respondent(then known as

Magnum Trust Bank Plc) in respect of its property situate

at No. 67 Marina, Lagos at a yearly rent of N3, 387, 340

(Three million, three hundred and eighty seven thousand,

three hundred and forty Naira) with effect from 1-9-1996.

By clause 4 of the Agreement, the lease was renewable at a

rent to be mutually agreed upon by the parties, but in the

event of a disagreement on the rent to be paid, the matter

shall be referred to an arbitrator. Sometimes in 2004, the

Respondent by a letter dated 1-6-2004 indicated its interest

in renewing the lease. This engendered the exchange of

series of correspondences to negotiate an agreeable rent

for the property. At a point, the Appellant offered to accept

N 25 million. Subsequently, the Respondent deposited the

sum of N45 million Naira into the

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account the Appellant operates with said Respondent and

stated in the accompanying letter that the money is for

three years� rent at the rate of N15 million per annum.

But the Appellant wrote to state that the rent was to be

N22.5 million per annum and the N45 million will be

treated as rent for two years. Disagreement over the actual

rent payable continued till the Respondent gave notice and

did vacate the property by 31-12-2008 and also issued a

cheque in the sum of N33, 333, 33 as payment for arrears

of rent for the period 1-9-2007 to 31-12-2008. This was not

acceptable to the Appellant who then after further letters

to the Respondent instituted an action in the Lower Court

against the Respondent as Defendant wherein the following

reliefs were claimed, vide a writ of summons and statement

of claim dated 22-6-2009.

1. The sum of N15,000,000 (Fifteen million Naira) being

balance of the rent due from the Defendant to the claimant

on the property situate and known as No. 67 Marina,

Lagos, Lagos State for the period 1st September 2004-30th

August 2007.

2. Interest of 21% per annum on the said sum of N15,

000,000 (Fifteen million Naira) with

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effect from 12th day of June 2009 until judgment and

thereafter at the rate of 6% per annum until final

liquidation of the judgment debt.

3. The sum of N1,500,000 (One million, five hundred

thousand Naira) being cost of prosecuting this Suit.

The Respondent reacted by filing a statement of defence on

28-8-2009 and in response to it, the Appellant filed a reply

to statement of defence on the 31-8-2009.

At the hearing of the Suit, one witness each testified for the

parties. Upon conclusion of evidence, the parties filed and

served their written addresses.

In a judgment delivered on the 20-11-2012, the suit was

dismissed for lack of jurisdiction to entertain same.

The Appellant being aggrieved by the outcome of the

judgment filed a notice of appeal dated 10-12-2012.

In compliance with the rules of this Court, the parties

subsequently filed and served their briefs of argument

which they also adopted at the hearing of this appeal on

1-3-2016.

In the Appellant’s brief of argument settled by N.O.

BALOGUN Esq and filed on 7-3-2013, the following three

issues were formulated for determination from the three

grounds of

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appeal:-

(1) Whether it is proper for the trial Court to divest

the Court of jurisdiction after parties have duly and

voluntarily submitted themselves to the jurisdiction

of the Court, inspite of an arbitration clause

contained in the agreement executed by them, and

after parties have fully participated in the trial

conducted in the matter?

(2) Whether the Court was right in dismissing the

Appellant/Claimant�s claims having purported in

the matter?

(3) Whether the failure of the trial Court to consider

and pronounce on all the issues placed before the

Court at the trial, before dismissing the Claimant�s

claims does not amount to a denial of the

Appellant/Claimant�s right to fair hearing.

The Respondent�s brief of argument settled by KENECHI

TINUADE Esq. Was filed on 25-5-2015 but deemed properly

filed on 30-9-2015. Two issues were formulated for

determination as follows:-

Whether the Lower Court was right to have held that

the Court has been divested of jurisdiction to

deliberate on the matter by virtue of the arbitration

clause contained in clause 4 of the lease agreement

between the parties.

(2) Whether

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the Court below was right to have dismissed the

Appellant�s suit for want of jurisdiction after

taking fill trial.

The issues as raised by the Respondent fits into the

Appellant�s issues 1 and 2. I will however adopt the

three issues as raised in the Appellant�s brief for the

determination of this appeal.

ISSUE ONE

Arguing on this issue, Learned Counsel for the Appellant,

contended that where the parties have duly and voluntarily

submitted themselves to the jurisdiction of the Court,

inspite of any arbitration agreement that may have been

entered into by them, the Court have full powers to assume

jurisdiction and determine issues between them. He

referred to Section 6(1) (2) and (6) of the 1999

Constitution to say that it gives the Court unfettered

powers to adjudicate among parties and this power is

jealously guarded by the Courts. He relied on the following

cases: - CHIEF ALBERT ABIODUN ADEOGUN & ORS VS

HON. JOHN OLAWOLE FASHOGBON & ORS. (2008) 5

SCNJ 363 NATIONAL UNION OF ELECTRICITY

EMPLOYEES & ANOR VS BUREAU FOR PUBLIC

ENTERPRISES (2001) 2 SCNJ 50.

While conceding that parties are bound by agreements

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freely entered into by them, including that of reference to

arbitration, as in this case, he however submitted that the

situation is different where the parties have jettisoned the

arbitration clause in the agreement voluntarily and

submitted themselves to the jurisdiction of the Court. In

this regard he contended that the decision of the Lower

Court was not only contrary to principles of law but also

resulted in the miscarriage of justice.

Learned Counsel then traced the sequence of events from

the filing of statement of defence by the Respondent, the

participation in pre-trial conferences, mediation sessions,

leading of evidence at the trial proper, cross-examination

and filing of final written addresses before judgment was

delivered in the Suit by the Lower Court.

He then submitted that no further evidence is required to

show that parties had duly and voluntarily abandoned any

claim to the right to arbitration in the matter and had

instead chosen to submit to the jurisdiction of the Lower

Court.

Learned Counsel further submitted that where a party

believes that a matter ought to be referred to arbitration in

the first place, the only

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application such party can make is for a stay of proceedings

pending arbitration and this must be done without taking

any further step in the matter by virtue of Section 5(1) of

the Arbitration and conciliation Act. He cited the case of

FRAZMEX (NIG) LTD VS DONATEE CONCERNS (NIG) LTD

(2011) ALL FWLR (PT 589) 1139 and OBI OBENBE VS

WEMABOD ESTATE LTD (1977) 5 SC 132.

It was then submitted that the decision of the trial judge

divesting the Court of the jurisdiction to entertain the suit

after the parties had gone through full trial is contrary to

law and a gross miscarriage of justice and should therefore

be set-aside.

ISSUE TWO

Herein it was submitted that, assuming without conceding

that the decision of the Learned Trial Judge to divest the

Court of the jurisdiction to hear the matter was correct, the

proper order to be made in the circumstance is that of

striking out the suit and not an order of dismissal.

He added that if the order of the Lower Court dismissing

the suit is allowed to remain, the Appellant cannot proceed

with the prosecution of the suit again. He cited the

following cases DANIEL TAYAR TRANS. ENT. (NIG) CO.

LTD VS ALHAJI

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LIADI BUSARI ANOR (2011) 1 SCNJ 1; THE YOUNG

SHALL GROW MOTORS LTD VS AMORS OKONKWO &

ANOR. (2010) 3 SCNJ 396 and MR PETER OBI VS INEC

(2007) 7 SCNJ 1 at 23.

It was therefore submitted that having held that it has no

jurisdiction to hear the matter, the Lower Court ought not

to take any further step than to make an order striking out

the suit and not to dismiss same.

ISSUE THREE

Dwelling on this issue, Learned Counsel for the Appellant

submitted that by merely dismissing the Appellant�s

claim without first considering and pronouncing on all the

issues placed before it, the Lower Court had trampled on

the Appellant�s right to a fair hearing and thereby

occasioned a miscarriage of justice.

He added that out of the two issues submitted before the

Lower Court for determination, the Learned trial judge

dealt with only the first issue and left the second one

unresolved and yet dismissed the suit in its entirety. This

he argued is a breach of the Appellant�s right to fair

hearing. This Court was then urged to set-aside the

judgment of the Lower Court.

Replying on the Appellant�s issue No 1. The Learned

Counsel for

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the Respondent emphasised on the fundamental nature of

jurisdiction in the adjudication of any matter and cited the

case of MISCELLANEOUS OFFENCES TRIBUNAL VS

OKOROAFOR (2001) 18 NWLR (PT 745) 295 AT 326

and MADUKOLU VS NKEMDILIM (1962) 2 SCNLR 341.

He referred to the lease Agreement between the parties

and particularly clause 4 therein which provides for

reference to arbitration in the event of any disagreement

over the rent payable on the subject of the lease.

He also traced the history of what transpired between the

parties starting from when the Respondent indicated

interest in the renewal of the lease in 2004 and the series

of correspondences between them over the proper amount

to be paid as annual rent and the eventual institution of the

suit at the Lower Court by the Appellant wherein the said

Court in its judgment agreed that the dispute should have

been referred to an arbitrator, who the parties agreed

should fix the rents payable in accordance with clause 4 of

the lease agreement.

Learned Counsel further submitted that by virtue of the

said clause 4 of the lease agreement, the Lower Court is

divested of the power and has no role to pay

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in the assessment of the rent payable because such power

has been exclusively reserved for the arbitrator by the

parties.

He added that until the condition precedent contained in

clause 4 is satisfied, no Court can assume jurisdiction to

adjudicate on the reliefs sought by the Appellant.

It was also argued that once the jurisdiction of the Court

has been divested by agreement of the parties, it is

immaterial that they subsequently consented and

participated in the trial because everything done therein

will be a nullity. He cited the case of OKOLO VS UNION

BANK OF NIGERIA LTD. (2004) 3 NWLR (PT 859) 87 at

108.

It was also submitted that the reasoning behind the

decision of the Lower Court is not only because of failure to

refer to an arbitrator, but also because no Court is in a

position to grant the relief sought by the Appellant without

the amount of rent payable by the Respondent being first

resolved through arbitration.

On the Respondent�s issue No 2, that is whether the

Lower Court was right to have dismissed the Appellant�s

suit of want of jurisdiction after taking a full trial.

Learned Counsel for the Appellant

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submitted that once evidence had been led in a full trial as

in the instant case, the proper order to make is that of

dismissal of the suit and not an order for striking out as

argued by the Appellant moreso that it was found that

there was no cause of action. He cited the case of AJAYI VS

ADEBIYI (2012) 11 NWLR (PT 1310) at 175-176 and

THOMAS VS OLUFOSOYE (1986) 1 NWLR (PT 18) 669

at 682-683.

He added that, where a party�s case fails to disclose a

cause of action or where the cause of action is

unsustainable, the proper order to make, irrespective of

whether evidence has been taken is one of dismissal.

This Court was then urged to dismiss the appeal.

The Appellant filed a reply brief on 14-9-2015 but deemed

properly filed on 30-9-2015. The submissions therein are

well noted and shall be addressed as the need arises in this

judgment.

I will consider the Appellant�s issues No 1 and 2

together. It is now well established that jurisdiction is a

threshold issue in adjudication by a Court of law. It

therefore goes without saying that the determination of a

matter by a Court will amount to a nullity if done without

jurisdiction

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notwithstanding how right or correct the decision reached

might be. It is the basis on which any Court or tribunal tries

a case because it is the authority it has to decide a matter

before it. The importance of jurisdiction to adjudicate on

any matter by a Court cannot therefore be overemphasised.

See GALADIMA VS TAMBAI (2000) 6 SCNJ 190; YUSUF

VS OBASANJO (2004) 5 SCM 193; AJAO VS ALAO (1986)

5 NWLR (PT 45) 802; UGBA VS SUSWAM (NO 2)

(2012) 6 SC (PT 11) 56, A.G RIVERS STATE VS A.G

AKWA-IBOM STATE (2011) 8 NWLR (PT 1248) 31.

In the instant case, the main issue in contention is whether

the Lower Court was right to have held that it has no

jurisdiction to hear the Appellant’s suit based on the

content of clause 4 of the lease agreement between the

parties which provided for reference to arbitration.

The Learned trial judge had after summarizing the

submissions of the parties in their written addresses

formulated two issues for consideration in the judgment as

follows:-

(1) Whether this Court has jurisdiction to determine

the matter.

(2) Whether the Claimant is entitled to the sum of

N15, 000, 000 (Fifteen million Naira) being

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balance of the rent due from the Defendant to theClaimant on the property situate and known as NO67, MARIA, LAGOS, LAGOS STATE for the period 1stSeptember – 31st August 2007?

The Learned trial judge added as follows:-“I shall however take both issues together.”In the said judgment at pages 234 to 235 of the Record, theLearned Trial Judge held thus:-The question thus is, whether the parties havecomplied with clause 4 and if so, what rent is theaccepted rent on the property.In interpreting clause 4, I shall give the words theirsimple and ordinary meaning. It was held by theSupreme Court in the case of DALEK NIGERIA LTD V.OIL MINERAL PRODUCING AREAS DEVELOPMENTCOMMISSION (OMPADEC) (2007) 2 SC PAGE 305that where words of a contract or agreement areclear, the operative words in it should be given theirsimple and ordinary grammatical meaning. If partiesenter into an agreement they are bound by its terms.One or the Court cannot legally or properly read intothe agreement, the terms on which the parties havenot agreed.The clear and ordinary meaning of CLAUSE 4 SUPRAis that the parties are unable to

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agree on the rent to be paid, the dispute shall be

referred to an arbitrator. In the event that they fail to

agree on an arbitrator, recourse is had to the

President of the Nigerian Institute of Estate

Surveyors and Valuers. The decision of the arbitrator

is final and binding on the parties.

It is thus correctly submitted by the Defence Counsel

that the dispute should have been set before the

arbitrator, who it is that the parties agreed should fix

the rent.

It is not clear what happened at the arbitral

proceedings, as there is no record to show what

transpired. No decision of any arbitrator has been

tendered, neither is there any record in the Court’s

file.

It is immaterial, in my opinion, which party frustrated

the arbitral proceedings, for the stipulation in the

agreement between the parties is that it is the

arbitrator who alone can determine the rent to be

paid on the premises.

This Court, I hold, has no part to play on the issue of

the determination of rent, and has by clause 4 of the

agreement above, been divested of jurisdiction to

deliberate on this issue.

I resolve both issues for determination against the

Claimant and

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I dismiss the Claimant�s suit.

From the above set out portion of the judgment of the

Lower Court, it is clear that the Learned Trial Judge dealt

with the issue of jurisdiction together with the merits of the

suit before Court and on this basis dismissed the said suit.

Firstly, from a perusal of the parties written addresses, non

of them raised the issue of jurisdiction for the consideration

of the Lower Court. This is evident in the sole issue

formulated by them and reproduced in the judgment at

pages 230 and 231 of the Record. In the Defendant (now

Respondent�s) written address, the sole issue formulated

was:-

�Whether upon a renewal under the lease

agreement (Exhibit C1) the Claimant unilaterally can

increase the rent payable without the mutual

agreement between the parties binding on the

Defendant.�

The Appellant as the Claimant raised the following sole

issue in its own written address:-

�Whether the Claimant is entitled to the sum of

N15, 000, 000 (Fifteen million Naira) being balance of

the rent due from the Defendant to the Claimant on

the property situate and known as NO 67, MARINA,

LAGOS, LAGOS

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STATE for the period 1st September � 31st August

2007?

It follows therefore, that the Learned Trial Judge adopted

the issue raised by the Appellant but on her own raised the

issue of jurisdiction as issue No 1. In other words the issue

of jurisdiction was raised suo motu by the Lower Court.

There is indeed nothing wrong with doing so given the

position of the law that the question of jurisdiction being

radically fundamental can be raised at any stage of the

proceedings. It can be raised at any stage of the case both

at the trial and on appeal by any of the parties.

The Court can equally raise it suo motu but when it is so

raised by the Court, the parties must be invited to address

the Court on it in order to prevent a miscarriage of justice.

See OLORIODE VS OYEBI (1984) 1 SCNLR 390; ODIASE

VS AGHO (1972) 1 ALL NRL (PT 1) 170, PDP VS

OKOROCHA (2012) 15 NWLR (PT 1323) 205 at 5

NWLR (PT 1292) 181, the Apex Court held at page 206 of

the Report that:-

�It is the law that a Court should not raise a point

suo motu, no matter how clear it may appear to be,

and proceed to resolve same without inviting the

parties or their counsel to

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address the Court on the point. This is to avoid a

breach of parties right to fair hearing.�

See also KATTO VS C.B.N (1999) 6 NWLR (PT 607) 390.

I will however stop this far because it is not one of the

grounds of appeal neither is it one of the issues raised for

determination in this appeal.

Nonetheless, and as earlier stated, the Learned Trial Judge

took up the issue of jurisdiction so raised together with the

issues in contention on the merit and concluded that the

Court lacks jurisdiction to entertain the suit but went

further to resolve the suit on the merit, resulting in the

dismissal of same.

The law is trite and it has been emphasised again and again

that jurisdiction is the very basis on which any Court or

tribunal can hear a case. It is the life line of all trials in our

Courts and as such any trial without jurisdiction is a nullity.

See PDP VS OKOROCHA Supra at page 255.

Where an action before the Court is found to be

incompetent whether by reason of locus standi or the

parties in Court are incompetent which has resulted in the

lack of the jurisdiction of the Court to hear the case, the

proper order for the Court to

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make in the circumstance is that of striking out and not

dismissal.

See ABU VS KUYABA (2002) FWLR (PT 99) 1041.

ADESOKAN VS ADETUNJI (1994) 6 SCJN 123; AGBENYI

VS AGBO (1994) 7 NWLR (PT 359) 735, ONUMAJURU

VS AKANIHU (1994) 3 NWLR (PT 334) 620.

In UKOLO VS UNION BANK OF NIGERIA LTD (2004) 2

SCM 187. It was held that the proper order to make where

a Court has no jurisdiction to entertain an action is that of

striking out.

Thus when a Court lacks jurisdiction to entertain a suit for

any reason, the proper order to make is to strike out the

suit and not to dismiss it. See OWNERS OF M.V ARABELLA

VS NIGERIAN AGRIC. INSURANCE CORPORATION

(2008) 4-5 SC (PT 11) 189; OHIAERI VS AKABEZE

(1992) 2 SCNJ 76; UWAZURIKE VS A.G FEDERATION

(2007) 2 SCNJ 369.

If a Court has no jurisdiction to hear and determine a

matter, the proceedings remain a nullity ab initio, no

matter how well conducted or decided. Given that a defect

in competence is not only intrinsic, but extrinsic to the

entire process of adjudication. A Court that lacks the vires

to entertain a suit cannot exercise judicial powers thereon.

See EGUNJOBI VS FEDERAL REPUBLIC OF NIGERIA

(2012)12 S.C.

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(PT IV) 148; NIGERIAN NATIONAL SUPPLY CO. LTD VS

ESTABLISHMENT SIMA OF VADUZ (1990) 11-12 S.C.

209.

In the instant case, the learned trial judge considered the

issue of jurisdiction together with the merits of the case

and proceeded to make a general order dismissing the suit

wherein it was held inter alia as follows:-

�This Court, I hold, has no part to play in the issue

of the determination of rent, and has, by clause 4 of

the Agreement above, been divested of jurisdiction to

deliberate on this issue. I resolve both issues for

determination against the claimant and I dismiss the

claimant�s suit.�

The above holding no doubt runs contrary to the

established principle of law that given the fundamental and

radical nature of the issue of jurisdiction. The declaration

of lack of jurisdiction in respect of the subject matter of a

claim is an admission of legal incompetence or impotence

to make any further or binding declaration in the cause

before the Court. Hence, the only option available to the

Court in such a situation is to strike out the suit or subject

matter of the claim. This is so because, where a Court does

not have

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jurisdiction over a matter before it and it proceeds to hear

and determine the matter, (as in this case) the entire

proceedings no matter how well conducted would amount

to a nullity. See UTIH VS ONOYIVWE (1991)1 SC (PT 1)

61 and GBAGBARIGHA VS TORUEMI (2012)12 SC (PT

V) 54.

In my humble view, the proper procedure to have been

adopted by the Lower Court was to first and foremost

resolve the issue of jurisdiction one way or the other before

delving into the merits of the suit and not to lump and

resolve them together. Furthermore, having found that it

lacks jurisdiction to entertain the suit, the only power left

for the Court to exercise is that of striking out the suit,

nothing more nothing less because any further action taken

in the proceeding such as in the instant case where the

issue of the lease Agreement vis-vis clause 4 was decided

upon is null and void ab initio. See UTIH VS ONOYIVWE

supra and LAKANMI VS ADENE (2003) 7 SCM 103.

It follows therefore that the order of the Lower Court

dismissing the Appellant�s claim on the basis of lack of

jurisdiction as well as the merits of the claim is a nullity.

See OLOWU VS NIGERIAN NAVY (2011)12 SC

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(PT II) 1.

On the issue whether it was proper for the Lower Court to

divest itself of jurisdiction on the basis of the existence of

an arbitration clause notwithstanding that the parties

voluntarily participated in the whole trial of the case till

judgment.

None of the parties disputes the fact that there is an

arbitration clause in the lease Agreement (Exhibit CI)

executed by them. The said clause 4 reads as follows:-

ARBITRATION LAWS

�There shall be a rent review of 1st September 1997

and 1st September 2000, respectively which shall be

agreed between the Landlord and Tenant or

determined as hereinafter provided and shall be the

current market value of the demised premises.

PROVIDED THAT:

(a) If the parties are unable to agree as to the rent to

be paid the matter shall be referred to an arbitrator

to be appointed by the parties and in case of

disagreement on the choice of arbitrator, the

President of the Nigerian Institute of Estate

Surveyors & Valuers and his fees shall be borne

equally by the parties. (sic)

(b) The amount at which the rent shall be fixed by the

Arbitrator appointed under this sub-clause shall be

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such as in the opinion of the Arbitrator is a

reasonable rent for the premises having regard to the

rent obtainable for similar lands of similar area and

amenities similarly situated provided that the rent

shall not be less than the rent payable before such

revision. His award shall be final and binding on both

parties.”

An arbitration clause is a written consensus reached by the

parties to a contract and as applicable to other written

agreements it must be construed according to the language

used by the parties therein without external imputation. An

arbitration clause embodies the agreement of the parties

that if any dispute should arise with regard to the

obligations which both parties have undertaken to observe,

such dispute should be settled by a third party or tribunal

of their own choice and constitution. See L.S.W.C. VS

SAKAMORI CONSTRUCTION (NIG) LTD (2011)12 NWLR

(PT 1262) 569 and ROYAL EXCHANGE ASSURANCE VS

BENTWORTH FINANCE (NIG) LTD (1976)11 SC 107.

In the instant case, non of the parties had recourse to the

provision of Clause 4 of the lease agreement. The Appellant

opted to institute an action in the Lower Court to claim for

rents

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owed to it by the defendant. The Defendant responded by

filing a statement of defence. It also participated in the

pretrial conference, the mediation session as well as the

full trial including calling of witness in defence and cross

examination of the claimant’s witness. Both parties also

filed and served their final written addresses culminating in

the judgment of the Lower Court which is the subject of

this appeal.

Given the above stated scenario, it calls for the question

whether the Lower Court should divest itself of jurisdiction

on the basis of non compliance with clause 4 of the

Agreement by first referring the dispute over the rent

payable to an arbitrator.

For the Respondent, the Appellants failure to comply with

clause 4 of the Agreement divests the Lower Court of the

jurisdiction to hear the suit and this cannot be waived by

either of the parties.

But for the Appellant, granted that ordinarily non

compliance with clause 4 will oust the jurisdiction of the

Court, but the Respondent ought to have raised the issue

timeously before taking any further steps in the

proceedings in accordance with Section 5 of the

Arbitration and

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Conciliation Act, 2004. Therefore, having fully and wholly

participated in the whole process of the trial of the suit up

to the point of filling final written addresses, the

Respondent can no longer complain because he is deemed

to have waived the right to any objection on that ground.

It is trite that where a clause in an agreement provides that

any difference or dispute arising out of the agreement shall

be referred to an arbitrator, both parties ought to honour

and comply with provisions of the clause.

It is also trite law that any agreement to submit a dispute

to arbitration does not oust the jurisdiction of the Court.

See OBEMBE VS WEMABOD ESTATES LTD. (1977) 5 SC

70. The jurisdiction of the Court can only be ousted based

on certain qualifications as provided in the Arbitration and

Conciliation Act.

In the instant case Section 5 of the Arbitration and

Conciliation Act provides that:-

“If any party to an arbitration 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

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pleadings or taking any other steps in the

proceed ings , app l y to the cour t t o s tay

proceedings.�

From the above set out provision, when parties enter into

an agreement and there is an arbitration clause, it is

natural for the defendant in a case where the other party

has instituted an action in Court to apply for stay of

proceedings pending arbitration. This must be done before

taking any further steps in the proceedings. In OBEMBE VS

WEMABOD ESTATES LTD supra, it was held by the

Supreme Court that merely an application for extension of

time amounts to taking steps in the proceedings and so is a

delivery of the statement of defence, and such a scenario

will deprive a defendant the chance or right to stop the

proceedings before the Court.

The Respondent as defendant in the Lower Court went

through the whole hog of the trial which is a violent

departure from the requirements in Section 5 of the

Arbitration and conciliation Act.

In the circumstance, l agree entirely with the Appellant that

the Respondent had totally waived the right to insist on

compliance with clause 4 of the lease Agreement. My

stance finds support in the decision of the

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Supreme Court in the case of FAWEHIMI CONSTRUCTION

COMPANY LTD VS OBAFEMI AWOLOWO UNIVERSITY

(1998) 6 NWLR (PT 553)171 or (1998) 5 SC 43, where

it was held that:-

�When a party has a right whether by way of

agreement or under a statute, he can exercise it at

the earliest possible time and can equally waive it if

the statutory right is not absolute and mandatory.

The waiver must be clear and unambiguous like

allowing all evidence to be taken or even decision

given before challenging the hearing. It will then be

shown that the party deliberately refused to take

advantage of the right when it availed him.�

Furthermore in the case of FEED AND FOOD FARMS (NIG)

LTD VS NNPC (2009) 6-7 S C 1 the Apex Court also held

that matters affecting the jurisdiction of the Court should

be categorized into two areas or compartments. These are

matters affecting the public in the litigation process and

those affecting the personal private or domestic rights of

the party. While the former cannot in law be waived, the

later can be waived in law.

In the instant case, the issue relates to the private or

domestic right of the defendant in a lease Agreement

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wherein the right to insist on reference to arbitration as

per clause 4 therein was deemed to have been waived

having fully participated in the whole proceedings of the

action filed by the Appellant up to filing of final written

addresses and adopting same.

I therefore hold that the Respondent has waived its right to

insist on compliance with the provisions of clause 4 of the

lease Agreement. The decision of the Lower Court that on

the basis of the said clause 4 it lacks jurisdiction to

entertain the claim is therefore held to be wrong.

The two issues are accordingly resolved in favour of the

Appellant.

Having resolved issues 1 and 2, issue No. 3 becomes moot

and any venture into it will amount to an unwarranted

academic exercise.

On the whole it is my finding and I so hold that this appeal

is meritorious and it is accordingly allowed.

The judgment of the High Court of Lagos State delivered by

O.A. ADEFOPE OKOJIE on the 20th day of November 2012

is hereby set aside.

It is accordingly ordered that Suit No.LD/998/2009 be

transmitted back to the Chief Judge of Lagos State for

immediate assignment to another Judge for a retrial. This

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shall be done expeditiously.

N50,000 cost is awarded against the Respondent.

TIJJANI ABUBAKAR, J.C.A.: My learned brother Samuel

Chukwudumebi Oseji, JCA granted me the privilege to read

in draft the lead judgment just rendered.

I am in agreement with the reasoning and conclusion and

therefore adopt the entire judgment as mine with nothing

useful to add.

ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.: My

learned brother, OSEJI, JCA, afforded me the opportunity of

reading in draft the leading judgment, just delivered by

him.

The law is settled that parties cannot by contract oust the

jurisdiction of the Court; but any person may covenant that

no right shall accrue till a third person has decided on any

difference that may arise between himself and the other

party to the covenant. Where it is expressly, directly and

unequivocally agreed upon between parties that there shall

be no right of action whatever till the arbitrators have

decided, it is a bar to the action that there had been no

such arbitration. See A.I.D.C. v. NIGERIA L.N.G. LTD

(2000) 4 NWLR (Pt.653) 494 SC; CITY ENGINEERING

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NIGERIA LTD V. FEDERAL HOUSING AUTHORITY(1997) 9 NWLR (PT.520) 224 SC.Therefore, while parties cannot by contract oust thejurisdiction of the Courts, they can agree that no right ofaction shall accrue in respect of any differences which mayarise between them until such differences have beenadjudicated upon by an arbitrator. Such a provision ispopularly known in law as the Scott v. Avery Clauseenunciated in SCOTT v. AVERY (1856) 10 ER 1121.

In the instant appeal, clause 4 of the lease agreement,which embodies the arbitration clause, reads:There shall be a rent review of 1st September 1997and 1st September 2000, respectively which shall beagreed between the Landlord and Tenant ordetermined as hereinafter provided and shall be thecurrent market value of the demised premise.PROVIDED THAT:(a) If the parties are unable to agree as to the rent tobe paid, the matter shall be referred to an arbitratorto be appointed by the parties and in case ofdisagreement on the choice of arbitrator, thePresident of the Nigeria Institute of Estate Surveyors& Valuers and his fees shall be borne equally by theparties.(b) The

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amount at which the rent shall of fixed by the

Arbitrator appointed under this sub-clause shall be as

in the opinion of the Arbitrator is a reasonable rent

for the rent obtainable for similar situated provided

that the rent shall not be less than the rent payable

before such revision. His award shall be final and

binding on both parties.

Apparently, wording of the clause is the key. If the

covenant is framed so there will be no cause of action until

after arbitration, then the parties must arbitrate before

seeking a remedy in the Courts of law. On the other hand, if

the wording is such that arbitration will only arise after a

cause of action has arisen, then the Courts are not

excluded.

am of the firm view that clause 4 herein is not a Scott v.

Avery Clause as it was merely an agreement to submit to

arbitration, hence an arbitration clause, but not stated to

be a condition precedent to litigation. Perhaps, I must say

that Arbitration merely seeks to complement the Court

process in resolving disputes by engaging in alternative

dispute resolution process. Arbitration is not a condition

precedent to litigation in the absence of express or implied

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terms, making arbitration a condition precedent. Therefore,

as it relates to the instant case, where parties had by an

agreement stated that dispute between them be settled by

arbitration without expressing that same will be made a

condition precedent to exercising their right to access the

Court, and subsequently, albeit, impliedly agree to submit

the matter to Court without first resorting to Court, it is

incumbent on the Court to whom the matter was submitted

to adjudicate on the dispute that was competently brought

before it.

A fortiori, Section 5 of the Arbitration and Conciliation

Act, Cap 18, Laws of the Federation of Nigeria, 2004

states:

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 proceeding.

It is obvious from the above provision of the applicable Act

that where, as in the instant case, a party to an arbitration

commence an action in Court before

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submitting the dispute to Arbitration, the other party may

apply to the Court for stay the proceeding before it.

However, such other party must not have filed and

exchanged pleadings or taken any other steps in the

proceedings. In the instant appeal, the parties had already

gone through the whole journey of calling witnesses and

even up to filing and exchanging of written addresses

before the trial Court subsequently raised the issue of

jurisdiction suo motu without hearing parties on the issues

and thereafter dismissing the Appellant’s suit. Ipso facto,

the proper order the Lower Court ought to have made,

assuming that it had rightly found that it does not have

jurisdiction, is to make an order of stay of proceedings

pending arbitration and not an order of dismissal.

For the above postulations and the well articulated

reasoning contained in the leading judgment, I also find

that this appeal is meritorious and is hereby allowed. I

abide by the consequential order made in the leading

judgment.

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