PEACEGATE OIL & GAS LTD. v. HYDRIVE NIGERIA LIMITED
COURT OF APPEAL
(LAGOS DIVISION)
(AKAAHS; OKORO; BAGE, JJ.CA)
FACTS
Peacegate Oil and Gas Limited (Appellant) entered into a charterparty agreement with Hydrive Nigeria Limited (Respondent) for the hire of the Respondent’s vessel, HD Commander. By the terms of the contract, the vessel was to be on hire for a fixed period of thirty-five (35) days, commencing on 25 August 2007. While the contract was still in force, an unfortunate incident occurred on 20 October 2007, when the vessel came under attack by armed assailants. The attack inflicted substantial damage on the vessel, rendering it incapable of fulfilling the purpose for which it had been chartered. The incident inevitably gave rise to a dispute between the parties regarding their respective rights, obligations, and liabilities under the charterparty.
In line with the arbitration clause contained in their agreement, the parties submitted the dispute to arbitration. The arbitral tribunal duly heard the matter and concluded its proceedings. The award was dated and signed on 25 July 2009, but it was not formally delivered to the parties until 21 August 2009. In its award, the tribunal dismissed the Respondent’s claims in their entirety and ordered the Respondent to bear the full cost of the arbitral proceedings. Aggrieved by this outcome, the Respondent, on 20 November 2009, approached the Federal High Court by way of originating summons, seeking an order to set aside the arbitral award. The Appellant reacted by filing a preliminary objection, contending that the Respondent’s action was statute-barred. The Appellant’s argument was premised on the Arbitration and Conciliation Act, which prescribes a period of three months within which an application to set aside an arbitral award must be made. According to the Appellant, time began to run from the date the award was signed and not from the date of its delivery to the parties. The trial court, however, overruled the objection. It held that the computation of the statutory limitation period should begin not from the date the award was signed, but from the date it was delivered to the parties. On this reasoning, the Respondent’s originating summons was held to be competent and not statute-barred.
Still dissatisfied with this ruling, the Appellant appealed to the Court of Appeal, contending that the lower court had erred in law in holding that the Respondent’s action was not statute-barred. One of the issues raised for determination was: Whether the court below rightly held that the respondent’s action at the court below is not statute-barred?
ARGUMENTS
Learned counsel for the Appellant submitted that the decisive factor in determining whether the Respondent’s application to set aside the arbitral award was competent is the date on which the award itself was made, and not the date of its delivery or communication to the parties. Relying on the Arbitration and Conciliation Act, counsel argued that the statute is explicit in prescribing that an application to set aside an award must be brought within three months “from the date of the award.” According to him, once an arbitral tribunal concludes its deliberations and signs the award, the statutory clock begins to run, irrespective of when the parties actually receive the document. It was therefore contended that the lower court fell into grave error when it computed time from the date of delivery rather than from the date of the award itself.
Counsel further submitted that the Respondent had, by its inaction, allowed time to elapse and effectively slept on its right to challenge the award. The law, he stressed, does not permit an extension of the statutory limitation period, and once the window of three months lapses, the right to question the validity of the award is extinguished. To hold otherwise, counsel reasoned, would defeat the underlying objective of arbitration, which is to ensure certainty, finality, and expeditious resolution of disputes. It was therefore submitted that the Respondent’s originating summons was incompetent, statute-barred, and ought to have been struck out by the trial court.
In response, learned counsel for the Respondent, while conceding that the arbitral award was dated and signed on 25 July 2009, emphasised that the award was not delivered to the parties, nor was it within their knowledge, until 21 August 2009. Counsel submitted that the decisive issue before the court was not simply the date appearing on the face of the award but rather the point in time when the cause of action could be said to have accrued. He argued that time does not begin to run against a litigant until a cause of action arises, and in arbitral proceedings, a cause of action only crystallises once the award is communicated to the parties bound by it.
On this reasoning, counsel contended that it would be illogical and inequitable to compute time from a date when the parties were completely unaware of the existence or content of the award. To do so, he argued, would impose an unfair burden on the parties and undermine their right of access to court. Accordingly, since the counsel submitted that the action was competent, properly before the court, and not statute-barred.
DECISION OF THE COURT
In resolving this issue, the Court of Appeal held that:
An arbitral award cannot be said to have taken legal effect until it has been disclosed or communicated to the parties to the arbitration. The Court reasoned that where an arbitral tribunal merely prepares, signs, and dates an award but retains it in its custody without informing the parties, such an award remains dormant and ineffectual in law. Until the parties are formally notified and placed on notice of the contents of the award, no cause of action arises in their favour, and they cannot reasonably be expected to take any steps to challenge or enforce it. Thus, the Court concluded that the statutory limitation period for an application to set aside an arbitral award under the Arbitration and Conciliation Act must necessarily begin to run from the date the award is delivered or communicated to the parties, and not from the date it was merely signed.
The Court further emphasised that this interpretation best reflects the legislative intention underlying the statute. It rejected the notion that an arbitral panel could, by simply dating an award and withholding it from the parties, trigger the statutory three-month limitation period while the parties remain unaware of its existence. Such a construction, in the Court’s view, would not only be unjust but would also defeat the very essence of the right to fair hearing and effective access to justice. Instead, the Court affirmed that the “date of the award,” as contemplated by law, must be construed to mean the date on which the award is communicated to the parties. It is only upon such communication that the award assumes legal effect, a cause of action accrues, and the statutory period for challenging the award begins to run.
Issue resolved in favour of the Respondent.
Seni Adio, Ijeoma Njemanze and Mosope Omisore Esq. for the Appellant.
Olumayowa Owolabi and Kehinde Sonde Esq. for the Respondent.
This summary is fully reported at (2012) 8 CLRN in association with ALP NG & Co.
See www.clrndirect.com ; www.alp.company.
