IN THE HIGH COURT OF LAGOS STATE IN THE LAGOS JUDICIAL DIVISION

HOLDEN AT LAGOS

BETWEEN SUIT NO: M/82/2012

CELTEL NIGERIA BV APPLICANT

AND

1. ECONET WIRELESS LIMITED 2. DELTA STATE MINISTRY OF FINANCE INCORPORATED 3. O & O NETWORKS LIMITED 4. DTSG ECOSHARES LIMITED 5. BROMLEY ASSET MANAGEMENT LIMITED 6. FBC ASSETS LIMITED 7. AKWA IBOM INVESTMENT & INDUSTRIAL PROMOTION

COUNCIL 8. IBILE HOLDINGS LIMITED 9. FIRST CITY TELECOM LIMITED 10. LAC TELECOMS LIMITED 11. ALL SPEAKS NIGERIA LIMITED 12. S&D VENTURES LIMITED 13. OCEANIC SECURITIES INTERNATIONAL LIMITED 14. BOYE OLUSANYA 15. TUNDE HASSAN-ODUKALE 16. CONDOR INVESTMENTS LIMITED 17. BOLAJI BALOGUN 18. BROAD COMUNICATIONS LIMITED 19. OBA OTUDEKO 20. MS FOLUKE OTUDEKO 21. AYO ADEBOYE

WRITTEN ADDRESS OF THE 1ST RESPONDENT IN OBJECTION TO

THE MOTION ON NOTICE FOR INTERLOCUTORY INJUNCTION

FILED BY THE APPLICANT

INTRODUCTION

This address is limited only to the Application for Interlocutory Injunction filed by

the applicant in its Motion on Notice dated the 3rd of February 2012.

This is sequel to Relief 2 on the Originating Motion. It is clear from the

Originating Motion that the main claim before the court is an application to set

aside the partial award made by the arbitrators which award is annexed to the

application as Exhibit AA 3.

The circumstances leading to the award being made a partial award limited only to

the issue of liability has been partially set out in paragraph 20 of the affidavit in

support of the Motion for Interlocutory Injunction.

The 1st Respondent has also filed as Exhibit to its affidavit, procedural order No 6

made by the Arbitral tribunal in this respect. The main purpose of the application

for injunction filed by the applicant is certainly to truncate the proceedings and to

derogate from the agreement of parties, since this application if granted would

mean that the arbitrators would have to hold off on an assessment of damages

which would be a breach of its procedural order issued pursuant to agreement by

the parties.

The Applicant by its application to set aside the arbitral award is in essence

attempting to re-litigate matters, which were argued at great length by it in the

arbitration. Its arguments were dismissed in a closely reasoned award and the

Applicant now is attempting to have one more bite at the cherry by re-arguing the

same points in its application to set aside the Award.

1.

2. ISSUES FOR DETERMINATION

We respectfully submit that two issues arise for determination in the application

filed for interlocutory injunction namely-

1. Does this Honourable Court have the jurisdiction to grant an

injunction to restrain the Respondents from continuing arbitral proceedings,

which have been ongoing for several years and has resulted in a partial award

being rendered and if the answer is yes, what is the extent of that jurisdiction?

2. If issue 1 is answered in the affirmative, should this Honourable

Court grant an injunction in the instant case?

3. ARGUMENTS

3. 1. ISSUE ONE

Does this Honourable Court have the jurisdiction to grant an injunction to restrain

the Respondents from continuing arbitral proceedings, which have been ongoing

for several years and has resulted in a partial award being rendered and if the

answer is yes, what is the extent of that jurisdiction?

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A. JURISDICTIONAL ISSUE

The main question for determination is to ascertain the powers vested in the courts

in respect of arbitration matters. This has to be determined by reference to the

statutory provisions governing this matter under Nigerian law.

The Applicant‟s Motion for Interlocutory Injunction is made by reference to

Section 18 of the High Court of Lagos State Law and Order 38 Rule 1 of the High

Court of Lagos State [Civil Procedure] Rules 2004 and the inherent jurisdiction of

this Honourable court.

It is therefore necessary to consider whether or not the above provisions give the

court the jurisdiction to grant an injunction to restrain arbitral proceedings at any

stage whatsoever.

B. POWER OF COURT IN RELATION TO ARBITRATION

The judicial powers of courts in relation to arbitration proceedings are as contained

in Section 34 of the Arbitration and Conciliation Act, which states as follows:

“A court shall not intervene in any matter governed by this Act except where so

provided in this Act.”

In essence therefore, the circumstances under which the court can intervene in the

Act are only as prescribed under the Act. It is submitted, that no section in the

Arbitration Act gives the High Court power to intervene in Arbitral proceedings or

restrain parties from performing their rights and obligations under an arbitration

agreement, outside the instances above mentioned. Indeed, your lordship will find

upon a close reading of the Arbitration Act that the following are the only

instances where the Act admits of court intervention:

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(a) Section 4 - Arbitration and substantive claim before

the court

(b) Section 7 - Appointment of arbitrators

(c) Section 23 - Court assistance in taking evidence

(d) Section 29 & 30 - Application for setting aside as exclusive

recourse against arbitral award

(e) Section 31 and 32 - Recognition and enforcement

It is further submitted that the powers of the High Court in regard to arbitration

matters are ipso jure residual and not supervisory. It is worthy of note that Section

34 of the Arbitration and Conciliation Act is in pari materia with Article 5 of the

UNCITRAL Model law, which in substance is similar to the equivalent provision

in the English Arbitration Act 1996, the object of which provisions is to entrench

the party autonomy principle as an important driver of an arbitral process, and

thereby limit the intervention of courts in that regard. Commenting on the

Arbitration Act 1996 and the role of the court in arbitration matters, the English

Court in Cetelem S.A. vs. Roust Holdings Limited [2005] W. L. R. 3555 at

3571 stated that the:

...central and important purpose of the 1996 Act was to

emphasise the importance of party autonomy and to restrict

the role of the courts in the arbitral process. In particular the

Act was intended to ensure that the powers of the Court

should be limited to assisting the arbitral process and

should not usurp or interfere with it. [Emphasis added]

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It is submitted that this position applies with equal force and effect to the role of

the Nigerian courts under the Arbitration Act, and we so urge.

There is no power vested in the court under the Arbitration and Conciliation Act

to grant an injunction to restrain parties to an arbitration from proceeding with

arbitration and indeed that this is so is recognised by the Applicant‟s Counsel in

paragraph 4.4 of his written address.

Having admitted that much, the question that arises is whether Counsel can invoke

Section 18 of the High Court Law and the inherent jurisdiction of the court to

apply for an injunction to restrain the continuation of this arbitration in spite of

the obvious restrictions to the powers of the Court under Section 34 of the

Arbitration and Conciliation Act.

It is trite law that there are no inherent powers vested in the court to assume

jurisdiction over a matter in which it is statutorily exempted from jurisdiction. We

seek support for this by reference to the decision of the Supreme Court in Mabera

v Obi. 1972 N S C C 575 where it was observed as follows:

“Learned counsel for the plaintiff/respondent, in the course of his argument has also submitted

that the High Court, apart from statutory provisions, has inherent jurisdiction to hear the case. In

our view, this cannot be so because the inherent jurisdiction of the court is exercisable only as part

of the process of the administration of justice; it is part of the procedural law, both civil and

criminal, and not of substantive law. It is invoked only in relation to the process of litigation.

Therefore, if the jurisdiction of the court is ousted by statute, the inherent

jurisdiction of the court cannot be invoked to circumvent the clear

provisions of the statute.” [Emphasis added]

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Section 18 of the High Court Law also relied upon by the applicant to invoke the

jurisdiction of the court to grant an injunction is in pari materia with Section 37 of

the English Supreme Court Act 1981.

Although, s. 18 of the High Court Law vests the High Court with general powers

to grant injunctions, it is submitted that the section cannot and ought not to be

construed as conferring supervisory powers on the High Court in respect of

arbitration matters. The provision and object of s. 18 of the High Court Law is in

substance the same as Section 37 of the Supreme Court Act 1981 which empowers

the English Courts to grant injunctions in circumstances where the court thinks fit.

By s. 10 of the High Court Law of Lagos State, the practice and procedure of the

High Court of England is made applicable in Lagos State.

Commenting on the powers of the court pursuant to section 37 of the Supreme

court Act 1981, the learned author on „Injunctions in General‟, L.A Sheridan states

as follows:

The Supreme Court Act 1981, S. 37 (1), provides:

“The High Court may by Order (whether interlocutory or final) grant an injunction…

in all cases in which it appears to the Court to be just and convenient to do so.”

That (like earlier legislation applying in terms only to interlocutory Orders) has been interpreted

as confirming jurisdiction to award an injunction when the violation of a legal or equitable right

has occurred or is threatened. With two exceptions, the Court has no power to grant an injunction

when the Applicant has no cause of action against the party he asks the Court to restrain. The

exceptions are: (1) the jurisdiction of the High Court to grant an injunction to restrain the

prosecution or defence of proceedings in a lower Court or in another country, and (2) when

proceedings are in train to resolve a dispute, the jurisdiction to grant orders

to protect or further the functioning of the Court, English or foreign, or the

Arbitration. 6

In furtherance of the judicial process, the Court can issue an injunction

ancillary to some other Order, which the Court has, power to make”.

[Emphasis added]

In the instant case, rather than orders to further the functioning of the arbitration

in which proceedings are in train to resolve a dispute, the applicant herein seeks to

truncate those proceedings. We also quote with respect the observations of the

same author who relying on the decision in Bremer Vulcan v South India

Shipping [1981] AC 909 stated as follows:

„The High Court has no inherent jurisdiction to supervise Arbitrators analogous to its powers to

control inferior Courts. Restraining Arbitration proceedings is an aspect of the enforcement of

contracts, so that the Applicant for an injunction must show that going on with the Arbitration

would, in the circumstances, be a breach of contract or that the contract providing for Arbitration

has come to an end.‟

In the instant case, going on with the arbitration proceedings would not be in

breach but in furtherance of a contract willingly entered into by the parties. In

addition, the contract providing for the Arbitration has not come to an end and is

still the document governing the relationship between the parties.

It is also humbly submitted that if the Honourable Court restrains the arbitration

proceedings from continuing where the tribunal has jurisdiction, this may be a

breach of Nigeria‟s international obligations under the New York Convention

which is the second schedule to the Arbitration and Conciliation Act. See Fiona

Trust& Holding Corporation v Yuri Privalov [2007] EWCA Civ 20 where the

English court held that

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“If in a case where an arbitrator does have jurisdiction to decide a particular dispute, he is to be

restrained from so doing and no stay of court proceedings is to be granted, there is likely to be a

potential breach of the United Kingdom‟s international obligations in relation to commercial

arbitrations under the New York Convention of 1957 as enshrined in the 1996 Act.”

In relation to valid arbitration agreements, Article II (3) of the Convention forbids

courts from doing other than referring the parties to arbitration. See Gary B. Born

– Effects and Enforcement of International Arbitration Agreements – D.

Court Orders Enjoining Arbitration: Anti-Arbitration Injunctions where it is

stated, “the principle of judicial non-interference in international arbitral proceedings is vitally

important.”

It is humbly submitted therefore that the Honourable Court should have respect

for party autonomy and show restraint in intervening in arbitral proceedings. See

the unreported case of Lesotho Highlands Development Authority v

Impregillo Spa and Others

Incidentally, the relevance of the above is that the arbitration in issue is not a

domestic arbitration but an international arbitration having regard to section 57(2)

of the Arbitration and Conciliation Act.

C. THE POSITION OF THE LAW IN ENGLAND

While in England, it is established that a court may issue an injunction to prevent

the continuation of arbitral proceedings, as Section 37 of the Supreme Court Act

1981 has been considered to apply to injunctions against the continuation of

arbitral proceedings, the instances where such an injunction has been granted has

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been sparse and the conditions for the applicant to meet are quite stringent as the

general principle in English law is that the courts will not interfere with arbitration

proceedings.

In urging the court to assume jurisdiction, learned counsel for the Applicant has

relied on the following English authorities which unfortunately, we submit, do not

support the conclusions drawn by the Applicant. As a result the 1st Respondent

will discuss each of these cases and also go further to cite further English cases, all

setting down the parameters for the grant of anti-arbitration injunctions.

i) Bremer Vulkan v South India Shipping [supra]

In this case, the court stated that

“I would accept that the unperformed primary obligations of the parties under an arbitration

agreement, like other contracts, may be brought to an end by frustration, or at the election of one

party where there has been a repudiatory breach of that agreement by the other party…..I would

also accept that when, on the commission of such a breach, the party to an arbitration agreement

who is not in default has lawfully elected to bring to an end the unperformed primary obligations

of both parties to continue with the arbitration up to the issue of an award the High Court has

jurisdiction, in protection of that party‟s legal right to do so, to grant him an injunction to restrain

the other party from proceeding, further with the arbitration. The reason for such an injunction is

to prevent his being harassed by the making of a purported award against him, which on the face

of it will be enforceable against him in England and many foreign countries, thus forcing him to

incur the costs of resisting its enforcement.

This is the reason for those injunctions, which have hitherto been granted in

two types of cases. The first is where one party claims that the arbitration

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agreement relied on was void or voidable ab initio……………..The second

type of case in which injunctions have been granted is where the arbitrator

is or has become disqualified by reason of bias.” [Emphasis added]

The Applicant has fundamentally misunderstood this case. The „fundamental

breach‟ cited by the Applicant at paragraph 4.28 of its written submissions refers to

a breach of an implied term in the arbitration agreement such as failing to

participate in arbitration. An allegation that the appointing authority did not

properly constitute the Tribunal is not such a „fundamental breach‟

It is in fact the Applicant‟s challenge to the Partial Final Award, which is a

„fundamental breach‟ and an abuse of process. See Nomihold Securities Inc v

Mobile Telesystems Finance SA. [2012]EW HC 130

ii) Compagnie Nouvelle France Navigation SA v Compagnie Navale

Afrique du Nord (the ‘Oranie’ and the ‘Tunisie’) [1996] 1 Lloyds Report 477

The court stated the principles as “(1) that the stay must not cause injustice to the claimant

in the arbitration and (2) that the applicant for a stay must satisfy the court that the continuance

of the arbitration would be oppressive or vexatious to him or an abuse of the process of the court:

in short, that it would be unjust.” The court went on to state that “the learned Judge

…………..states first that it is desirable and of importance that the parties should carry out

their contracts and that if they have agreed to arbitrate, as on the face of it they had, then they

should be held to their bargain……….On the grounds of the learned Judge, which are the

grounds which have been indicated in my judgment, I think that the learned Judge was right in

arriving at the conclusion that the facts of this case would not justify an injunction.”

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iii) Elektrim SA v Vivendi Universal SA [2007]EWHC 571 (Comm)

The court stated “ I have concluded that even if Elektrim could establish that one of its legal

or equitable rights had been infringed or was threatened by the continuation of the LCIA

arbitration pending the outcome of the ICC arbitration, or even if it could establish that the

continuation of the LCIA arbitration was otherwise vexatious, oppressive or unconscionable, in

this case the court should not invoke the power to grant an injunction under section 37. This is for

the following reasons.

First, to do so would be contrary to the agreement of the parties to refer the

TIA disputes to the LCIA arbitrators and to do so under the provisions of

the 1996 Act and the LCIA Rules of procedure.” [Emphasis added]

iv) Intermet FCZO v Ansol Limited [2007] EWHC 226

The court stated “ I consider it would be unjust to deprive Intermet and Ves of their right to

arbitrate the issues subject to the arbitration agreement contained in the General Agreement as

varied. If I were to grant any such injunction, they would be deprived of the benefits of the

arbitration, and the opportunity of an award against Ansol which could be achieved far more

quickly than in the commercial court proceedings. It is clear that the grant of an injunction would

severely prejudice Intermet and Ves as it would deprive them of the opportunity of speedy

enforcement of any award that they might obtain. Moreover, Intermet and Ves have already

incurred enormous costs in the Arbitration which, in reality, would be wasted if the injunction

were to be granted.”

v) J. Jarvis & Sons Ltd v Blue Circle Dartford Estate [2007] App LR.

The court derived four propositions on the granting of injunctions to restrain the

continuation of arbitration proceedings.

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(1) The Court‟s power under section 37 of the Supreme Court Act 1981 to

grant injunctions includes a power to grant an injunction to restrain

arbitration from proceeding.

(2) That power may be exercised if two conditions are satisfied, namely: (a) the

injunction does not cause injustice to the claimant in the arbitration, and (b)

the continuance of the arbitration would be oppressive, vexatious,

unconscionable or an abuse of process.

(3) The court‟s discretion to grant such an injunction is now only exercised

very sparingly and with due regard to the principles upon which the

Arbitration Act 1996 is expressly based.

(4) Delay by the party applying for an injunction is material to the court‟s

exercise of discretion and may in some cases be fatal to the application.

Upon a consideration of all these propositions and applying the principles to the

facts of the case, the court held that “the balance comes down decisively against the grant of

an injunction. Accordingly, Jarvis‟s claim for an injunction is dismissed.”

The fact that so few cases on the point are available, and that most of these cases

rejected the application for an injunction, is evidence of English judicial restraint in

this regard.

Where such injunctions have been granted, it has been for the court to determine

the existence of a valid and binding arbitration agreement. See

I) Nigel Peter Albon v Naza Motor Trading SDN BHD [2007] EWHC 1879

(Ch) where the fundamental issue between the parties was whether the

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underlying contract between the parties is (as alleged by Mr. Albon) an oral

agreement made in England subject to English law (“the UK Agreement”) or (as

alleged by Naza Motors) is a Joint Venture Agreement (“the JVA”) signed by the

parties in Malaysia governed by Malaysian law.

II) The Republic of Kazakhstan v Istil Group Inc [2007 ]EWHC 2729

(Comm)

In this case, the Defendant first litigated in Paris and established that there was no

applicable arbitration agreement, but lost its action because it was held that the

Claimant enjoyed sovereign immunity. The French court directed the Defendant to

litigate in Kazakhstan. The Defendant then arbitrated in London in defiance of the

French court ruling. This time the Defendant won but there followed a four-day

trial on jurisdiction before Steel J at the conclusion of which he ruled that the

arbitrators had no jurisdiction, the Claimant not being party to any agreement to

arbitrate.

III) Excalibur Ventures LLC v Texas Keystone Inc [2011] EWHC 1624

(Comm)

The court stated that “in my judgment, the circumstance of this case conclusively point to this

court being the appropriate tribunal to decide whether or not the Gulf Defendants are party to the

arbitration agreement contained in the Collaboration Agreement, rather than the ICC arbitral

tribunal……..Having decided that it is appropriate for the court to determine the issue of

arbitrability, I also conclude that it is appropriate to grant an anti-suit injunction restraining

Excalibur from pursuing the arbitration proceedings.”

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IV) Claxton Engineering Services Limited v TXM Olaj-Es Gazkutato KTF

[2011] EWHC 345 (Comm)

The grounds upon which the injunction was sought is that the arbitration

proceedings were brought in breach of an English exclusive jurisdiction clause, and

despite the fact that, as the English court has already determined, there is no

arbitration agreement.

Moreover, the authors of Russell on Arbitration, one of the leading arbitration

texts, state at paragraph 7-058 that:

“Injunctions to restrain arbitration are, at least in England, few and far between and becoming

fewer still over time. This is principally because of the acceptance of the principle that the arbitratr

should usually determine his own jurisdiction and so to restrain an arbitration by way of

injunction would be inconsistent with the scheme of the Arbitration Act 1996.”

In addition the further the arbitral proceedings have gone, the less likely the court

will be to interfere, See Jarvis v Blue Circle Dartford Estate [supra], The

Elektrim case [supra] and also The Intermet case [supra], and where

injunctions have been granted, it has generally been before the tribunal had even

considered the issue of jurisdiction. See Albo v Naza Motor[supra] and Claxton

Engineering Services v TXM Olaj-Es [supra]

We humbly submit therefore, that the powers of this Honourable Court to grant

anti-arbitration injunctions are limited to instances as set out above in the cases

referred to above and there is no law in Nigeria which vests this Honourable Court

with the jurisdiction to grant an anti-arbitration injunction simply because the

Applicant herein has decided that it is no longer in its interest to meet its

contractual obligations by submitting itself to arbitration.

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3.2 ISSUE TWO

If Issue One is answered in the affirmative, should this Honourable Court grant an

injunction in the instant case?

This issue is being argued in the event that the court holds that it has jurisdiction

to entertain the Applicant‟s claim for Interlocutory Injunction.

It is a well-established principle that a claim for interlocutory injunction must

derive or be predicated on a valid claim for injunction in a substantive suit. The

claim for injunction is by itself only sustainable if it is related to a substantive claim

before the court. Such a claim must be connected with the main claim. Where any

injunction is claimed there is need for it to be on a subject matter within the ambit,

scope and effect of the substantive proceedings before the court and as such where

the prayers for injunction sought by an applicant do not come within the ambit,

scope and effect of proceedings, they cannot be entertained. This principle was

decided in the case of Adenuga v. Odumeru [2001] 2 NWLR part 696 page

184 where the court on page 196 per Karibi- Whyte held as follows:

“..........The remedy is certainly not available to parties in respect of issues not raised in the action,

or matters not directly related to the issues raised- see Akibu & Ors v. Munirat Oduntan

(1991) 2 NWLR (pt 171) 1 at 10. The application by the plaintiffs/appellants seeking for

injunctive orders is clearly not within the claim and not directly related to the claim. The

application therefore cannot be for the protection of a right before the court, which may be violated,

unless the application was granted.

Furthermore, since the reliefs sought are not in respect of or directly related to a claim before the

court, the court is without competence and jurisdiction to hear it, since it is not in respect of a claim

15

before it. See Madukolu v. Nkemdilim (1962) 2 SCNLR, 341......... It is therefore in such a

circumstance unnecessary to inquire into the existence of a legal right enabling the grant of the

relief. “

In the instant case, the main claim before the court is an application by the

Applicant to set aside the partial award made by the arbitrators, a power being

exercised by the Applicant pursuant to the Arbitration Act.

The attempt by the applicant to obtain an injunction to restrain the respondents

particularly the 1st Respondent from continuing with the Arbitration proceedings

we respectfully submit, has no bearing, not is it related to the main relief sought in

the Originating Motion to wit the setting aside of the partial award on liability. The

grant or otherwise of the application to set aside the award is in no way affected by

the continuation of arbitration proceedings.

Perhaps more important is the fact that the claim for an injunction by the

Applicant is an attempt to obtain surreptitiously an injunction for the completion

of an arbitration that has already started, when if it had brought an application for

an injunction at the commencement of the arbitration proceedings, it would have

failed.

Finally, it is against all known rules of injunction for a court to grant an injunction

to restrain the exercise of a legal right vested in the 1st Respondent.

A. FACTORS RELEVANT FOR THE GRANT OF AN INJUNCTION

Counsel from paragraph 4.13-4.43 proceeded to argue extensively on the principles

relevant to the grant of an injunction and seeking to equate this application with an

injunction pending an appeal. However, it is submitted that the correct test is that

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laid out in the Jarvis v Blue Circle case [supra] relied upon by the Applicant, i.e.

the test for an injunction sought to restrain parties from continuing with

arbitration proceedings.

i) The test as regards the granting of an interlocutory injunction to restrain

the parties from continuing with arbitration proceedings

This test is applicable because it specifically relates to injunctions sought to prevent

the continuation of arbitral proceedings. The Applicant also concedes that the test

is relevant to its application at paragraph 4.11 of its written submissions. It is also

important to note that even where the test is met, the court must still consider

whether to exercise its discretion in favour of the Applicant. The principles

regulating the grant of an injunction to restrain arbitration are:

a. The grant of the injunction does not cause injustice to the Claimant in the

arbitration.

1. The grant of the injunction restraining the continuation of the arbitration

would cause injustice to the 1st Respondent.

2. First, it would deprive the 1st Respondent of the fruits of its victory in the

liability phase of the arbitration. In particular in this regard, the forward

momentum of the agreed arbitral process would be disrupted – quite

possibly for some considerable time – in a complex dispute where such

momentum (or the deprivation thereof by an opponent) is of significant

strategic advantage. In this regard the Honourable Court should be astute

to ensure that it is not now used to deny the 1st Respondent what it has

fairly won in the arbitration (beyond simply the points of black-letter law).

In short, having lost the arbitration, allowing the Applicant now to “Kick

for touch” would hand it a clear strategic advantage which would,

conversely, cause injustice to the 1st Respondent. 17

3. Secondly, this disruption to the forward momentum of the arbitral

proceedings is likely to have concomitant practical consequences. The

longer the proceedings are disrupted the more difficult it is likely to be to

maintain or secure the availability of Tribunal members, witnesses and

others who have been engaged in the arbitral proceedings to date. Were one

of the Tribunal members to no longer be available as a result of such a

delay, this would have significant consequences for the arbitration and be

extremely prejudicial to the 1st Respondent. A replacement arbitrator would

have to be appointed (itself likely to be a challenge in view of the original

appointment process) and the replacement arbitrator would have to be

familiarised with the significant pleadings and evidence already filed in the

arbitration, with consequent additional delays and costs.

4. Thirdly, any further delay caused by the grant of an injunction may

significantly prejudice the 1st Respondent‟s case in respect of the quantum

of damages and/or compensation to which it is entitled under the Award:

relevant witnesses may no longer be available (or their memories of the

relevant events may have dimmed over time) and difficulties of enforcement

(including most particularly as regards limitation periods) may be increased.

5. Fourthly, any award of damages/compensation will itself be delayed and

there is mounting evidence that the financial position of VNL (and

therefore the Applicant, whose sole asset is believed to be its shares in

VNL) is deteriorating: see the counter-affidavit of Jerome Lombard dated

21 February 2012. If so, any further delay, particularly any prolonged delay,

may significantly prejudice the 1st Respondent if it means that it would be

unable to recover in full any award of damages in its favour against the

Applicant.

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6. In summary, all of these likely effects will, in and of themselves, cause

injustice to the 1st Respondent but particularly in the context of: (i) a valid

arbitration agreement; (ii) the parties having agreed that all disputes falling

within the scope of that agreement should be subject to arbitration; (iii) the

Tribunal having heard lengthy submissions regarding each of the grounds

now advanced by the Applicant; and (iv) the Tribunal having rejected those

submissions in a carefully reasoned Award.

b. The continuance of the arbitration would be oppressive, vexatious,

unconscionable or an abuse of process.

1. The continuance of the arbitration is plainly not oppressive, vexatious,

unconscionable or an abuse of process.

2. First, the fact that the Applicant would have to bear the legal costs of

continuing with the quantum phase of the arbitration whilst pursuing its

application to set aside does not mean that continuation of the arbitration is

oppressive or vexatious: see paragraph 4.32 of the Applicant‟s Written

Submissions. The Applicant agreed to submit its disputes relating to the

Shareholders Agreement to arbitration. It cannot now complain of the

costs of doing so after an unfavourable partial award, against which it has

chosen to challenge. The circumstances in which it may have to bear the

legal costs of two sets of proceedings is the result of its own doing.

3. Secondly, for the reasons outlined below, the Applicant‟s application to set

aside the Award is unmeritorious, or at the very least there is serious doubt

as to whether it would succeed. In these circumstances, the continuation of

the arbitration pursuant to the Award cannot be oppressive or vexatious to

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the Applicant. This is particularly so in circumstances where the Tribunal

has already made a series of clear findings in the Award to the effect that it

does not consider that the present arbitration is oppressive or vexatious in

the context of the existing Lagos High Court Suit 841 on its own, nor as

part of the wider group of proceedings commenced by the 1st Respondent

to protect its position: see paragraph 141, and also paragraphs 137 and 150,

of the Award.

4. Thirdly, in any event, it is well-established that the possible duplication of

legal costs, where one set of costs arises from the parties‟ agreement to

submit certain disputes to arbitration, is not oppressive, vexatious or

unconscionable: see Jarvis v Blue Circle (supra) at paragraphs 46 and

47.

5. Fourthly, any duplication of legal costs occasioned by the Applicant should

the injunction not be granted is something that can be compensated for in

damages or a suitable order as to costs.

6. The same reasoning above applies to the Applicant‟s costs of resisting

enforcement of any Final Award. Moreover, those costs are purely

speculative at present: at the appropriate time the Applicant could seek to

rely on Article VI of the New York Convention, which provides that the

courts of the country in which enforcement is sought may stay those

proceedings pending a decision by the competent authority (here the

Nigerian courts) to set aside the Award. Furthermore, the Applicant‟s legal

costs in applying to set aside the Award are likely to be small in proportion

to the legal costs that have already been incurred by the Applicant itself in

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defending the arbitration, as well as the legal costs of all the parties

(including Econet): see Elektrim v Vivendi Universal (supra) at

paragraph 84; and Intermet FZCO v Ansol Ltd (supra) at paragraph

30; Nomihold Securities Inc v Mobile Telesystems Finance SA [2012]

EWHC 130 (Comm) at paragraph 65.

ii) The test as regards the granting of interlocutory injunctions pending

appeal

The Applicant has sought to rely on the principles governing applications for

injunctions pending appeal in support of its application. As we will show however,

there is no way in which those principles can have any bearing on the present

application.

We start with the observations of the Supreme Court in the case of Okoya v

Santilli [1990] 2 NWLR [Part 131] 172 that an injunction pending appeal is

granted to protect the subject matter of the dispute pending the determination of

the appeal.

The pertinent question to ask therefore, is what is the res which the Applicant

seeks to protect pending an appeal (as there is no right of appeal against arbitration

awards), and as its application is for an injunction pending the determination of the

Applicant‟s application to set aside the partial award made against it.

Although the Applicant has carefully failed to identify the res in his application and

written submissions, the res as apparent from his application is his application

before this Honourable Court asking that the Partial award be set aside. However,

is an injunction the appropriate remedy for preserving the res? The answer

obviously is in the negative. 21

There are inbuilt provisions in the Arbitration Act for the protection of awards

given against a party to arbitration. In the first instance, the 1st Respondent cannot

enforce the award without filing an application pursuant to the Arbitration Act.

The Applicant has a corresponding right under the Arbitration Act to move the

court to set aside the award.

In the instant case, the only application pending before the court consequent upon

the partial award is the Applicant‟s application to have the award set aside. If the

1st Respondent had filed an application to have the award recognised and enforced,

the court would have been obliged to hear the Applicant‟s application for a setting

aside first. There is no way in which the res could have been in jeopardy.

Even if the Applicant were correct in stating that the correct test to be applied is

that with regards to applications for injunctions pending appeal, it is submitted that

the Applicant fails to satisfy the test as set out by it.

a. Special Circumstance

In the case of Vaswani Trading Co. v Savalakh & Co [1972] 12 S C 77. the

Supreme Court stated that “ When the order or judgment of a lower court is not manifestly

illegal or wrong, it is right for a court of appeal to presume that the order or judgment appealed

against is correct or rightly made until the contrary be proved or established and for this reason the

Court of Appeal, and indeed any court, will not make a practice of depriving a successful litigant

of the fruits of his success unless under very special circumstances. We take it that the word

„special‟ in this context is not used in antithesis to the words “common” or “normal” for that

would be tantamount to pre-judging the appeal on a determination of an application for a stay of

execution. When it is stated that the circumstances or conditions for granting a

stay should be special or strong we take it as involving a consideration of

some collateral circumstances and perhaps in some cases inherent matters

which may, unless the order for stay is granted, destroy

22

the subject-matter of the proceedings or foist upon the court, especially the

court of appeal, a situation of complete helplessness or render nugatory any

order or orders of the court of appeal or paralyse, in one way or the other,

the exercise by the litigant of his constitutional right of appeal or generally

provide a situation in which whatever happens to the case, and in particular

even if the appellant succeeds in the Court of Appeal, there could be no

return to status quo.” [Emphasis added]

In this case, the Applicant seeks to restrain the continuation of arbitration

proceedings in a situation where the Tribunal has issued a Partial Final Award on

liability and the hearing to determine the quantum of damages is now pending. In

the event that the quantum phase of the arbitration proceedings continue to

completion, then the Applicant still has the right to ask that the final award on

damages be set aside. There is no incidence of a destruction of the subject matter

of the proceedings and the arbitration continuing will not have a detrimental effect

on the application of the Applicant to set aside the Partial Final Award.

The Supreme Court in the case of Martins v Nicanner Foods Plc (1988) 2

NWLR (Part 74) 75 also affirmed the reasoning of the court in the Vaswani case.

The court stated, “I think it is appropriate to start from Vaswani V Savalakh (1972) 12

SC.77 which is still the locus classicus in this matter of stay of execution. There the words of

Coker JSC., which have stood the test of time, set down the applicable principles.”

The Applicant‟s challenge to the tribunal‟s jurisdiction in its setting aside

application cannot constitute special circumstances in the instant case. Under the

doctrine of competence – competence, the Tribunal has the power to consider its

own jurisdiction and the courts should be reluctant to interfere. See Fiona Trust v

Yuri Privalov [supra]

23

Indeed all the authorities cited by the Applicant start with the principles stated in

Vaswani v Savalakh [Supra]

b. Novelty of the Grounds of Appeal

It is agreed that the grounds of objection of the Applicant in its application to set

aside the Partial Final Award must be novel and recondite. We refer to the

pronouncements of the Supreme Court in Nigeria National Petroleum

Corporation v Famfa Oil Ltd [2009] 12 NWLR (Part 1156) 462 that “when a

party talks of a recondite point of law, it is not just to be stated in general terms. The party must

state the point of law that he feels is recondite. Such stance cannot and should not be left to guess

work or conjecture. And since the applicant did not propose any point of law that is complicated,

concealed or intricate; the point should be left at bay for now. Even then, it has been shown above

that where recondite point of law is established, it must co-exist with special circumstances.”

The Applicant identifies at paragraph 4.25 of its written submissions what it

characterises as recondite points of law, raised in its grounds upon which the

Partial Final Award is being challenged.

The first point according to the Applicant is whether a claimant who has

approached the court for the appointment of arbitrators pursuant to the failure of

the appointing authority previously agreed by the parties can abort the Court

proceedings and secure the appointment of the arbitrators by the previously failed

process. The second point according to the Applicant is whether an Arbitral Panel

has the power, inherent or otherwise to strike out arbitral proceedings, which it

considers to be an abuse of process.

An examination of the grounds set out in the application to set aside the Partial

Award will reveal that the points of law which the applicant sets out in his written

24

submissions are not apparent on a reading of the grounds of challenge. The

Applicant has also not tied these points to any grounds of challenge. It is

submitted that it is not the duty of this Honourable Court to try and link the points

of law stated by the Applicant in its written address with the grounds of challenge

of the Partial Award.

c. Legal Right and Serious Issue to be Tried

It is conceded that the Applicant has a legal right to challenge the Partial Final

Award made against it and apply to have it set aside. The Applicant has already

exercised that right. However, the continuation of the quantum phase of the

arbitration is in no way a threat to the Applicant‟s right to have the Partial Award

set aside. There is absolutely no prejudice to the Applicant‟s right by the hearing

and conclusion of the quantum phase of the arbitration. The Applicant has a legal

right to also apply as it is doing at present to apply to set aside the award on

quantum if it so desires. Whether the quantum phase proceeds or not, the

Honourable Court can still go ahead and determine the application to set aside the

Partial Award without let or hindrance. As a result, no legal right of the Applicant

is being threatened.

In addition, the continuation of the arbitral proceedings will take much longer to

complete than the Applicant‟s setting aside application, which will only take “a few

months” according to the applicant and will be resolved long before the quantum

phase is concluded.

There is also no serious issue to be tried in the substantive application. The

grounds of the application are essentially disagreements with the Tribunal‟s

25

reasoning. The Applicant is attempting to re-litigate matters, which it argued, at

great length in the arbitration. The parties agreed to arbitrate their dispute and

must be bound by the outcome of that process. See the case of Taylor Woodrow

of Nigeria Limited v Suddeutsche Etna-Werk GMBH [1993] 4 NWLR [Part

]127 where the Supreme Court held that “the general rule is that where the parties choose

their own arbitrator to be the judge in the dispute between them, they cannot, when the award is

good on the face object to his decision either upon the law or the facts” .

The setting aside process is not an appellate process and the law admits a very

narrow margin for the setting aside of arbitral awards by the court so that even

where the court disagrees with the reasoning of the tribunal, it will only interfere

with it as prescribed under the Act.

At this point a cursory look at the grounds of challenge is necessary

Grounds 1 and 3 on the constitution of the Tribunal and the pending action in Suit

LD/841/06 are in essence an attempt by the Applicant to re-litigate the same

points, which it had exhaustively argued at arbitration and in which a decision has

been granted against it.

Grounds 2, 4 and 5 relate to the determination of rights under the offer letter

contract, the construction of Clause 27.5 of the Shareholders Agreement and the

treatment of the switch shares. These are issues of construction of points of law

specifically referred to the Tribunal, and even if the Tribunal erred in law, which is

not admitted, they are not valid grounds for setting aside the Award.

Ground 6 is a pure pleading point. The Tribunal allowed the 1st Respondent to

amend or supplement its claims as allowed under section 19(3) of the Arbitration

Act and under UNCITRAL.

26

Ground 7 relates to inconsistent relief and double recovery according to the

Applicant. This however is not apparent from the Award. Whilst the Tribunal

granted declarations of nullity, it refused to reverse the transaction. There is as

such no inconsistency in awarding the 1st Respondent damages/equitable

compensation in respect of a transaction that should not have taken place.

It is submitted therefore that not only are no legal rights of the Applicant being

threatened by the ongoing arbitration, there are no serious issues to be tried in the

substantive motion as the Applicant merely seeks to use this Honourable Court as

an appellate court over the Tribunal‟s Award contrary to the provisions of the law.

d. Balance of Convenience

The balance of convenience in this case is on the side of the 1st Respondent. If the

injunction were granted, this would cause great prejudice to the 1st Respondent.

The 1st Respondent would be prevented from pursuing its right to a legal remedy

through arbitration as agreed by the parties.

The likelihood of the Tribunal being available to undertake the quantum phase if

the injunction is granted, considering the pace at which judicial proceedings go in

Nigeria and the right of parties to appeal unfavourable decisions to the Supreme

Court, is extremely doubtful. To have to go through the process of trying to

reconstitute a tribunal to hear the quantum phase would be extremely prejudicial to

the 1st Respondent.

There is also ample evidence from the audited annual reports of Airtel Networks

Limted that the Applicant, [whose sole asset are shares in Airtel Networks

Limited,] is not in a position to satisfy any damages that may result from a grant of

an injunction in its favour as the possibility of Airtel Networks Limited being a

going concern for much longer is doubtful. Any delay therefore to the process of

the arbitration, may prove fatal to the realisation by the 1st Respondents of the

fruits of its victory. 27

If the injunction were not granted, no prejudice would be caused to the Applicant.

According to the Applicant, its application to set aside would only take a few

months while the tribunal‟s award on damages is scheduled to take up to 12

months. In addition, the Applicant has the legal right to seek to set aside the award

on quantum of damages if it so wishes. Any unnecessary costs to the Applicant of

continuing the arbitral proceedings can be compensated

As a result, therefore, the balance of convenience clearly lies in allowing the

arbitration to continue.

e. Damages as Adequate Compensation

The focus of the Applicant as to whether it could be compensated in damages if

the injunction is not granted is set on a wrong premise. The Applicant argues that

the ultimate relief of setting aside the award is not compensable by damages.

However, the correct test is whether damages would be an adequate remedy for

the loss that the Applicant would suffer if an injunction were not granted. This in

essence would be the cost of preparation for the quantum phase of the arbitration

particularly as the Applicant foresees that the setting aside application would only

take a few months to be decided.

Such costs could definitely be compensated by damages and the Applicant has not

averred otherwise.

f. Right To Maintain The Status Quo

The status quo in this regard should be considered to be the continuation of

arbitral proceedings. Once a Final Award on the quantum of damages is made, the

Applicant is entitled to argue that it should be set aside if it so wishes.

28

g. Conduct of the Applicant

The Applicant is merely pursuing more delay tactics and re-litigating matters which

it has already lost, not only by applying to set aside the Partial Final Award but also

by applying for this injunction. The Applicant‟s real aim is “case management” and

a reluctance to fight two battles at once. See the Elektrim case [supra]

In Orojo and Ajomo on Law and Practice of Arbitration and Conciliation in

Nigeria the Learned Authors stated at pages 274 – 275 that

“It is a matter of serious concern that it has become fashionable in Nigeria in recent times for

lawyers whose clients lose out in an arbitration to rush to court to apply to set aside the award on

the specious ground of the misconduct of the arbitrator”

The Honourable Court should therefore be astute to guard against this tactic.

h. Undertaking in Damages

It is apparent from the affidavit evidence that the Applicant is in no position to

meet any undertaking as to damages it purports to furnish, as it is unable to all

intents and purposes to meet the projected damage in the range of 3.1 billion

dollars that may be caused to the 1st Respondent. In addition no substantiating

evidence has been provided to show that the Applicant would be able to satisfy

any order the Honourable Court may make to compensate the 1st Respondent for

any loss that it may suffer if it later transpires that the injunction ought not to have

been granted.

4. CONCLUSION

Based on the discussions in Issues One and Two above, we respectfully submit

that, this court ought not to grant the injunction sought for by the Applicantas

it will be outside the intendment of the provisions of Section 18 of the High

Court of Lagos Law and the authorities cited above. We have also shown that

the principles governing injunctions pending appeal are clearly inapplicable to

the instant case.

DATED THE 21ST DAY OF FEBRUARY 2012

---------------------------------

O. M. LEWIS [MISS]

PROFESSOR A. B. KASUNMU’S CHAMBERS

284, MURITALA MUHAMMED WAY, YABA, LAGOS