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City Engineering Nigeria LTD. v. Federal Housing Authority (1997)

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⦿ CASE SUMMARY OF:

City Engineering Nigeria LTD. v. Federal Housing Authority (1997) – SC

by PaulPipAr

⦿ TAG(S)

– Arbitration;
– Functus officio;

⦿ PARTIES

APPELLANT
City Engineering Nigeria Ltd.

v.

RESPONDENT
Federal Housing Authority

⦿ CITATION

(1997) 9 NWLR (Pt.520) 224;
(1997) All N.L.R 1;
(1997) LPELR-868(SC);

⦿ COURT

Supreme Court

⦿ LEAD JUDGEMENT DELIVERED BY:

M. E. OGUNDARE, J.S.C

⦿ LAWYERS WHO ADVOCATED

* FOR THE APPELLANT

– Mr. Seyi Sowemimo;

* FOR THE RESPONDENT

AAA

⦿ FACT (as relating to the issues)

The parties herein entered into a written agreement dated 17th day of December, 1974 whereby the appellant was to build a number of housing units at Festac Town, Badagry Road, Lagos. The agreement contained in its Clause 30 a provision to submit all matters in dispute in connection with the execution of the contract to arbitration. Sub-clause (4) of clause 30 provided that the award of the arbitrator would be final and binding. A dispute arose between the parties in the course of the execution of the contract. The respondent rather than settle the dispute inter partes by its letter dated 5th December, 1980 threatened to terminate the contract. In its reaction to this threat, the appellant by its letter dated 10th December, 1980 duly notified the respondent and requested its consent to the appointment of an Arbitrator pursuant to clause 30. Rather than give its consent, the respondent by a letter dated 12th December, 1980 terminated the contract. The appellant invoked the arbitration clause in the agreement between them. The parties eventually went to arbitration presided over by Architect Akinwande Olumide Craig. The arbitration proceedings commenced on 11th December, 1981 and ended in November 1985 when the Arbittator made his award in the sum of N3,722,118.75 in favour of the appellant. By letter dated 17th August, 1988 the appellant’s solicitors demanded from the respondent the payment of the said sum.

When payment was not forthcoming, the appellant applied, by way of motion on notice, to the High Court of Lagos State, pursuant to section 31(3) of the Arbitration and Conciliation Act No.11 of 1988, and/or section 13 of the Arbitration Law Cap. 10 Laws of Lagos State 1973 and Order 40 rule 4 of the High Court of Lagos State Rules, 1974 praying for the following reliefs:
“(i) That the applicant may have leave to enforce the award made in November, 1985 by Mr. Akinwande Olumide Craig, an architect appointed in the arbitration under the agreement and conditions of contract between the applicant and the respondent dated 17th day of December, 1974 in the same manner as a judgment of the honourable court to the same effect.
(ii) An order that the respondent do pay costs of the application and the arbitration proceedings.
(iii) Interest on the award from 1st December, 1985 at the rate of 13% until the entire amount is paid.
(iv) And for such further order or orders as the Court may make in the circumstances.”

Available:  Bamaiyi V. The State (SC 292/2000, Supreme Court, 6th April 2001)

The application was supported by an affidavit of 20 paragraphs sworn to by the Managing Director of the Appellant Company. There was no counter-affidavit.

In conclusion the trial court dismissed the suit and held, “Finally, I hold and find that the cause of action arose in 1980 and time has run out. Secondly, the arbitrator did not enlarge time in writing as required by law to complete within 3 months or extend or enlarge time if he could not complete. He acted outside the jurisdiction. He was functus officio from February 1982. All proceedings thereafter are null and void including the purported award.”

The Appellant being dissatisfied with the decision of the trial court appealed to the Court of Appeal. The Court of Appeal dismissed the suit and held in favour of the respondent. The court below, per Sulu-Gambari JCA, adjudged: “On the whole, I agree that the learned trial judge was perfectly right in holding that the action was statute barred on two grounds, namely, (i) that six years had elapsed before the action to enforce the arbitration award was instituted; and (ii) the arbitration proceedings exceeded beyond three months before completion when the arbitrator did not extend it in writing signed by him.”

⦿ ISSUE(S)

1. In arbitration proceedings where an award has been made when does the period of limitation begin to run for the enforcement of the award is it when the cause of action accrued or at the time of making an award?

⦿ ARGUMENTS OF PARTIES
* FOR THE APPELLANT
1. i. It is appellant’s contention both in this court and in the two Courts below, that time started to run from November 1985 when the arbitral award was made.
ii. He observes that as the respondent failed to apply to set aside the award, it cannot now challenge the validity of the award in the appellant’s proceedings to enforce the award.

Available:  Pius Nweke v. The State (2001)

*FOR THE RESPONDENT
1. The respondent, on the other hand, contends all along that time ran from 12/12/80 when it terminated the agreement giving rise to appellant’s cause of action.

⦿ HOLDING & RATIO DECIDENDI

[APPEAL: DISMISSED WITH N1,000 COST]

1. ISSUE 1 WAS RESOLVED AGAINST THE APPELLANT BUT IN FAVOUR OF THE RESPONDENT.

RATIO:
i. The only dispute is as to the date the limitation period began to run. Was it 12/12/80 when the respondent terminated the agreement and appellant’s cause of action arose or November 1985 when the arbitrator made and published his award? … In Murmansk, this Court per Elias CJN, decided that limitation period runs from the date of the accrual of the cause of action in the arbitration agreement and not from the date of the arbitral award. This decision is binding on this court unless we have any reason to depart from it. I am not convinced that any cause has been shown to inform me to depart from the decision. The decision accords with the weight of judicial opinion and textbooks writers on the subject and has statutory backing.

ii. The statutory period of limitation of six years began to run from 12/12/80 and appellant’s application to enforce the award was statute-barred when it was brought in 1988. The appellant has itself to blame for the catastrophe that has befallen it. Notwithstanding that there was some delay in the arbitration proceedings arising from various applications made by both sides, the arbitrator gave his award in November 1985, a date still within the statutory period of limitation. For unexplained reasons, the appellant waited another three years before applying to enforce the award in its favour, by which time limitation period had set in.

⦿ REFERENCED

⦿ SOME PROVISIONS

Section 8(1)(d) of the Limitation Law, Cap 70 Laws of Lagos State 1973 provided: “8(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued – (d) action to enforce an arbitration award, where the arbitration agreement is not under seal or where the arbitration is under any enactment other than the arbitration law;”

Section 63 of the Limitation Law of Lagos State which provides: “63. Notwithstanding any term in a submission to the effect that no cause of action shall accrue in respect of any matter required by the submission to be referred until an award is made under the submission, the cause of action shall, for the purposes of this law and of any other limitation enactment (whether in their application to arbitrations or to other proceedings) be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term in the submission.”

Available:  Alhaji Jimoh Ajagbe v. Layiwola Idowu (2011)

⦿ RELEVANT CASES

In Russell on Arbitration (20th edition) pages 5-6, the following passage occurs: 1. Timeous commencement of arbitration. The period of limitation [for] the commencement of an arbitration runs from the date on which, had there been no arbitration clause, the cause of action would have accrued: Just as in the case of actions the claim is not to be brought after the expiration of a specified number of years from the date when the claim accrued’ Pegler Rly Executive (1948) 1 All ER 559 at 502; (1948) AC 332 at 338. Even if the arbitration clause is in the Scott v. Avery’ form (see (1856) 5 HL, Cas.811, (1843-60) All E.R. Rep. 11, that is, there is provision that no cause of action shall accrue in respect of any matter agreed to be referred until an award is made, time still runs from the normal date when the cause of action would have accrued if there had been no arbitration clause. [That is provided by s.34(2) of the Limitation Act 1980]’

AAAA

⦿ NOTABLE DICTA

* PROCEDURAL

* SUBSTANTIVE

The common law rule that in an arbitration agreement where there is a Scott v. Avery arbitration clause, limitation period runs from the date of an arbitral award, no longer applies. For section 63 of the Limitation Law of Lagos State which provides: “63. Notwithstanding any term in a submission to the effect that no cause of action shall accrue in respect of any matter required by the submission to be referred until an award is made under the submission, the cause of action shall, for the purposes of this law and of any other limitation enactment (whether in their application to arbitrations or to other proceedings) be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term in the submission.” has swept away this rule of law. I venture to mention that this also is now the position in England. see Section 34(2) of the Limitation Act, 1980. – Ogundare, JSC. CITY v. HOUSING (1997)

End

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