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Non-description or joinder of a party by its specific name doesn’t affect competence of a suit

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In the Court of Appeal
In the Lagos Judicial Division
Holden at Lagos

Suit No: CA/L/1127/2017

Before Their Lordships:

2. SEA TIGER TANKERS S.A. -Appellant(s)

The 2nd Appellant and the 1st Respondent, both foreign companies, entered into a Ship Management Agreement (SMA) on the 18th February, 2012, in Hong Kong for the management of the 1st Appellant Vessel “MT Sea Tiger”. In clauses 23 and 25 of their agreement, the parties agreed that any dispute arising from or in respect of the agreement shall be referred to International Arbitration in London. However, in alleged breach of the arbitration clauses/agreement, when a dispute arose as to payment of the management fees between the parties, the 1st Respondent instituted the Suit NO. FHC/L/CS/1789/2013 for the arrest of the 1st Appellant for which it gave an indemnity as to damages in favour of the Appellants for any loss or damages that they may suffer as a result of the arrest in the event that the application for the order was found frivolous.

Eventually, the Respondents withdrew the suit by a notice of discontinuance and the vessel was ordered to be released by the Federal High Court on February 27, 2014. In consequence of the arrest of the 1st Appellant from December 31, 2013 to 27th February, 2018, the Appellants sued the Respondents for damages and losses suffered. The Federal High Court in a well considered decision found in favour of the Respondents. Dissatisfied, the Appellants appealed to the Court of Appeal.

The Court determined the appeal on these issues couched as follows:
(i) Whether the 2nd appellant not being sued as a party in suit no. FHC/L/CS/1789/2013 by virtue of the ship management agreement dated February 18, 2013 between Sea Tiger Tankers S.A. and Accord Ship Management (HK) Limited and having taking no steps in suit no. FHC/L/CS/1789/2013, the Court was right to have held that they were a party in the proceeding of suit no. FHC/L/CS/1789/2013 and they waived their right to the international arbitration clause?
(ii) Whether there is a privity of contract between MT. Sea Tiger and Owners of MT. Sea Tiger and Accord Ship Management (HK) Ltd in respect of the Ship Management Agreement dated February 18, 2012 in suit no. FHC/L/CS/1789/2013?
(iii) Whether the appellants and the respondents entered into an executed consent judgment, which was made in the judgment of the Court in suit no. FHC/L/CA/1789/2013, whereby the trial Court held that the appellants entered a consent judgment and that the respondents had a right to breach Clause 23 and 25 of the ship management agreement by arresting the appellant vessel MT. Sea Tiger, which clauses referred any dispute in respect of the said ship management agreement to arbitration in London, United Kingdom?

On issue one, the Appellant’s submissions are to the effect that the trial Court was wrong to have held that the parties in the case were parties in the earlier case before it and that the 1st Appellant was a party who submitted to its jurisdiction having participated in the action, even though it admitted that the 1st Appellant’s name was not written in that case. It was contended that the parties to the ship management agreement who are foreign registered companies had chosen and consented to an international arbitration in their agreement which was entered into outside the jurisdiction of the trial Court in Hong Kong and so are bound by it. That the 1st Respondent breached the agreement by arresting the Appellants’ ship in Suit No FHC/L/CS/1789/2013 in which the 2nd Appellant was not a party and did not take any part or step in the said action.

On issue 2, it was submitted that the Respondents had no privity of contract with the 1st Appellant and owner of MT Sea Tiger for them to have instituted any action against them in Suit No. FAHC/L/CS/1789/2013 to arrest the vessel belonging to the 2nd Appellant on the authority of Owoniboys Tech. Service Ltd v. UBN Ltd (2003) 15 NWLR (Pt. 844) 553; (2003) LPELR-2854 (SC). That on the construction of terms and conditions of a contract between parties, which are binding on them, the Court cannot re-write the contract for them.

The submissions on issue 3 are that the trial Court erred in holding that the parties to the ship management agreement had entered into a consent judgment in the earlier suit when the 2nd Appellant was not a party to suit and could not have entered into a consent judgment or taken any step in the action since it was only the owners of the cargo on board the 1st Appellant who appeared and applied for the release of their cargo.

On issue one, citing Section 20 of the Admiralty Jurisdiction Act, 1991 (AJA), the Respondents submitted that the arbitration clauses No. 23 and 25 of the ship management agreement, are null and void for not providing for a venue in London and that since the vessel was within the jurisdiction of the trial court, it properly assumed jurisdiction in the Suit No. FHC/L/CS/1789/2013. According to the Respondents, the arbitration clauses 23 and 25 amount to ousting the jurisdiction of the Court and so null and void especially as the issue relates to an admiralty matter. That the owners of the 1st Appellant at the time of the proceeding in Suit No. FHC/L/CS/1789/2013 is a Nigerian Company and the place of performance, execution, delivery or default took place in Nigeria, that the 1st Appellant was within the territorial waters of Nigeria and so caught up by the provision of Section 20 (a) of Admiralty Jurisdiction Act. It is also argued that the Respondents who were Plaintiffs in the aforenamed suit, submitted to the jurisdiction of the trial court and that Court assumed jurisdiction thereby making Section 20 (d) and (h) of Admiralty Jurisdiction Act applicable to nullify and void clauses 23 and 25.

On issue 2, Sections 4 and 5 of the Admiralty Conciliation Act were cited and submitted that a party loses the recourse to arbitration in an agreement if the party takes steps in the course of any judicial proceedings and that the Appellants appeared, submitted and settled the matter in Suit No. FHC/L/CS/1789/2013. Also, that an arbitration clause is not a bar to recourse to Court for preservation pending the constitution of an arbitral tribunal and reliance was placed on Section 26(3) of Arbitration and Conciliation Rules, 1988 (ACR, 1988).

In resolving the first issue, the Court began by stating that only parties to or in judicial proceedings of a Court of law in a case are subject to the jurisdiction of the Court and are to be legally bound by any findings, orders and decisions reached therein and this position is rooted in the constitutional provision in Section 36(1) of the Constitution of the Federal Republic of Nigeria , 1999 (as amended) on the fundamental right of a person to fair hearing in the determination of his civil rights and obligations by a Court of law or other Tribunal established by the law, which is also premised on the principle of natural justice of audi alterem partem; i.e., hear the other side. In that regard, a Court of law cannot validly make an order or give a decision which will affect the interest of a person that is not a party to a case and who was never heard in the matter in line with the fundamental right guaranteed by the Constitution. Thus, an order made or decision taken by a Court against a person who is not a party to a case is not binding on such a person and so made in vain since it cannot be enforced against him.

On issue two, the Court reproduced the statement made by Learned Counsel and stated that it has established that the 2nd Appellant are the owners of the 1st Appellant in respect of which the Ship Management Agreement was entered into by the named parties thereto especially because it was described as “the appellants’ vessel MT Sea Tiger”. According to the Court, by instituting or bringing the appeal jointly in the specific names of the Appellants shows that indeed, the 2nd Appellant are the owners of the 1st Appellant. The Court relied on Order IV, Rule 1 of the Admiralty Jurisdiction Procedure Rules, 1993 (AJPR) and Form B in the Schedule to the Rules.

According to the Court, it is easily discernable from the Form B that the parties to an action in rem, such as the 1st Respondent’s action in Suit No. FHC/L/CS/1789/2013 is to be between the owners of a ship or as may be described by name, as Plaintiff and the owners of a ship or as may described by name, as Defendant against which the action was brought. In other words, the Plaintiff in such action shall be owners of a Ship whose name may be specified and the Defendant shall be the owners of the ship, whose name may also be specified, against who/which the claims in the action are made. In addition, the Court stated that the learned counsel for the Respondents is right and the Court agrees with him that the owners of the 1st Appellant, the 2nd Appellant as beneficial owners thereof, were/was a party to the Suit No: FHC/L/CS/1789/2013 by virtue of the provisions of Section 5(4) (a) of the AJA even though not specifically described by name in the initiating processes of the action.

The Court restated the law that the non-description of the 2nd Appellant by name or non-joinder of the 2nd Appellant by its specific name did not affect the competence of the suit. See A.G. Ferrero & Co. Ltd. V. Nnamani (2006) ALL FWLR (Pt. 339) 990; (2005) LPELR-11328 (CA), amongst others. In addition, the non-description of the 2nd Appellant by its known or correct name or the description of the 2nd Appellant as the owners of the 1st Appellant is a mere misnomer since the 2nd Appellant had acknowledged and expressly admitted being, in fact, the owners of the 1st Appellant.

Furthermore, the Court held relying on Obembe v. Wemabod Estates Limited (1977) 5 SC 115; (1977) LPELR-2161 (SC) held that a party who makes any application whatsoever to the Court, even though it be merely an application for extension of time, takes a step in the proceedings. Thus, having taken an active step in the proceedings by settling the claim of the 1st Respondent against them, the 2nd Appellant cannot now be heard to seek to fall back on the arbitration clause in the Ship Management Agreement in order to question or challenge the suit. According to the Court, the principle or concept of waiver in law is that if one party in a transaction by his conduct or action/inaction leads another to believe that the strict rights arising under the transactions/contract will not be insisted upon, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him so to do.

Therefore, the Appellants, fully aware of their right to insist on arbitration and to submit to the jurisdiction of the trial Court by participating and taking a vital step in the proceedings of the Suit No: FHC/L/CS/1789/2013, chose and opted for payment and settlement of the claim by the 1st Respondent against them leading to the release of the 1st Appellant and the eventual discontinuance of the action against them and they cannot, based on the abandonment of that right, now be permitted at this stage to resile on the waiver and insist that the abandoned right was still available to them.

Finally, on the last issue, the Court held that there was no record of the terms of settlement of the said suit or that if there were terms of settlement, they were filed in Court, entered and made the consent judgment by the Trial Court as between the parties therein. The Court relied on Afegbai v. A.G. Edo State (2001) 14 NWLR (Pt. 733) 425 @ 454; (2001) LPELR-193 (SC) that the mere settlement of cause of action/claims in a case out of the Court by the parties alone, does not automatically results into or constitutes a valid consent judgment of the Court in the case. According to the Court, from the Enrolled Order of the trial Court, none of the elements of a valid consent judgment was present.

On the whole, the Court found no merit in the appeal and accordingly dismissed it.
J. I. Ajadi – For Appellant
Ebuka Ibenegbu – For Respondent
Compiled by LawPavilion

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