Nigerian Court of Appeal Limits Court Intervention in Arbitration

In a landmark ruling, the Nigerian Court of Appeal in NNPC v. Statoil (CA/L/758/12) considered the correctness or otherwise of the grant of injunctions to stop an on going arbitral proceeding. The issue became important due to the continued use and applications to use injunctions to stop arbitral proceedings in Nigeria. This is particularly popular with the NNPC.

In the case, the NNPC applied to the Nigerian Federal High Court for an injunction against an ongoing arbitration proceeding on the basis that the subject matter of the dispute dealt with tax and that the Nigerian Federal High Court has exclusive original jurisdiction for tax matters, in other words, that the matter was not arbitrable.

This decision by the Federal High Court was in spite of section 34 of the Nigerian Arbitration and Conciliation Act which limits intervention by the courts to those instances provided for in the Act. The Court of Appeal held that there are limited grounds for intervening in arbitration by courts. All of those grounds are listed in the Act (for example, stay of court proceedings, removal of an arbitrator for misconduct, enforcement of an award and setting aside an award on limited grounds) and that a court cannot grant an injunction to stop an ongoing arbitration.

The ruling will be hailed by parties to arbitration in Nigeria as helping to ensure an independent and speedier arbitration process. Statoil and Texaco were represented by Babatunde Fagbohunlu (SAN) (aka prof.), Chukwuka Ikwuazom and  Hamid Abdulkareem.