ZENITH GLOBAL MERCHANT LIMITED v. ZHONGFU INTERNATIONAL
INVESTMENT (NIG) FZE & 2 ORS.
HIGH COURT
(OGUN STATE)
(AKINYEMI, J)
FACTS
Zenith Global Merchant Limited (the Applicant), together with the Ogun State Government (the 2nd Respondent), entered into a Joint Venture Agreement (JVA) in September 2013 with Zhongfu International Investment (NIG) FZE (the 1st Respondent). The JVA resulted in the incorporation of Ogun Guangdong Free Trade Zone Limited (OGFTZ). Under the terms of the JVA, the 1st Respondent held sixty per cent (60%) of the shareholding in OGFTZ, while the Applicant and the 2nd Respondent each held twenty per cent (20%). The 1st Respondent was also appointed as the Manager of the company. In May 2016, the 2nd Respondent terminated the participation of the 1st Respondent in the joint venture and directed it to vacate the project site and hand over all company assets in its possession to the Applicant. Aggrieved by this action, the 1st Respondent instituted an action at the Federal High Court, Abuja, against the Attorney-General of Ogun State (the 3rd Respondent), the Applicant, and the Nigeria Export Processing Zones Authority (NEPZA), the federal agency vested with regulatory authority over Free Trade Zones in Nigeria. Notwithstanding the pendency of the suit, and since the JVA contained an arbitration clause, the 1st Respondent subsequently commenced arbitral proceedings before the Singapore International Arbitration Centre (SIAC) pursuant to the said arbitration clause.
Upon being served with the Notice of Arbitration, the Applicant commenced an action by Originating Motion before the High Court of Ogun State, seeking an order restraining the parties from participating, either directly or indirectly, in the arbitral proceedings initiated by the 1st Respondent. The Applicant’s case was that the 1st Respondent was estopped from referring the dispute to arbitration, having waived its right by first submitting the matter to the jurisdiction of the Federal High Court, Abuja. In response, the 1st Respondent filed a Motion on Notice seeking the dismissal of the Applicant’s application, because the procedure adopted by the Applicant was inappropriate and the Ogun State High Court lacked the requisite jurisdiction to grant the reliefs sought.
One of the issues for determination was: Whether the Ogun State High Court lacks jurisdiction to entertain this suit, firstly, because it is not a court in the seat of arbitration, to be able to exercise supervisory jurisdiction over the arbitration.
ARGUMENTS
The Learned Silk argued that where parties fail to expressly agree on the seat of arbitration, the territory whose law is chosen as the governing law of the contract becomes the seat of arbitration. He emphasised that the seat of arbitration is a legal concept rather than a physical location, referring to a state or territory with a recognisable and distinct legal system and the temporary conduct of arbitral proceedings in a particular location does not convert that location into the seat of arbitration. Counsel distinguished the venue of arbitration as merely the geographically convenient place where arbitral proceedings are held, which is separate and distinct from the juridical seat. He maintained that although parties to the JVA expressly agreed that Singapore should be the venue for arbitration, the parties failed to choose the seat of arbitration.
Learned Silk argued that this conclusion followed from several connecting factors relating to the close connection principle, namely that the substantive law of the JVA was Nigerian law, the contract was to be performed in Nigeria, the subject matter of the dispute as well as the parties were located in Ogun State, and the UNCITRAL Rules adopted under the Agreement were substantially identical to the Nigerian Arbitration and Conciliation Act. He argued that the relevant provision of the JVA amounted only to a choice of Singapore as the venue, and not the seat, of the arbitration, and that Nigeria, being the country with the closest and most intimate connection to the transaction, must therefore be regarded as the seat of the arbitration. He further submitted that the High Court of Ogun State had both subject-matter and territorial jurisdiction and was therefore vested with the exclusive supervisory jurisdiction with respect to all matters arising from the arbitration.
In response, learned Senior Counsel for the 1st Respondent submitted that parties have clearly agreed under the JVA that the seat of arbitration shall be Singapore and that the Singapore International Arbitration Centre shall be the venue of the arbitration. He argued that although a Nigerian court may, in appropriate circumstances, grant an injunction, the power to grant such an injunction only arises where Nigeria is the seat of arbitration, which is not the case in the present instance. He contended that a Nigerian court cannot grant an injunction to restrain an arbitration that is seated outside Nigeria and in the instant case, only a competent court in Singapore can do so. He further submitted that, assuming without conceding that the seat of arbitration is in doubt, the venue which is not in dispute would determine the seat of arbitration, as the presumption of seat is in favour of the place or venue of arbitration. Learned Senior Counsel further argued that the fact that the parties to the JVA chose Nigerian law as the applicable law does not imply that they also agreed that Nigerian law should govern the arbitration. He submitted that the Applicant was in effect seeking a forever injunction, not one pending the determination of any substantive issue, and that the relief sought would amount to a permanent dismissal of the Singapore arbitration.
DECISION OF THE COURT
In resolving this issue, the High Court held that:
The Court may intervene and determine the seat of arbitration where it becomes necessary to the collateral determination of another issue that would ordinarily fall within its supervisory jurisdiction in support of or in aid of the arbitral process. The Court added that parties to arbitration do not usually make a conscious choice of the law governing the arbitral procedure; rather, what they consciously choose is the seat of arbitration. Once the seat is chosen, the parties automatically become subject to the procedural law of that seat. Where, however, the parties fail to choose the law governing the arbitral procedure, the procedural law of the country where the arbitration is held, being the country most closely connected with the proceedings, will apply. In the instant case, the Court found that Nigeria has a closer and more intimate connection to the arbitration than Singapore and therefore held that Nigeria is the seat of the arbitration, while Singapore is merely the venue. The issue was accordingly resolved in favour of the Applicant.
Issue resolve in favour of the Applicant.
O. Shasore SAN with A. Anibaba and Miss E. Adeniyi Counsel to the Applicant.
Prof. G. Elias SAN with K. LawaI Counsel to the 1st Respondent.
Dr. O. Ayeni with Oterighabun Ebore Esq. and O. Oduniyi Esq. to the 2nd & 3rd Respondents.
This summary is fully reported at (2017) 7 CLRN in association with ALP NG & Co.
See www.clrndirect.com ; www.alp.company.
