NIKA FISHING CO LTD v LAVINA CORPORATION (SC 162/2002) [2008] NGSC 12 (11 July 2008)

Reported
Flynote
Injunction|Interim Interdict|Marine species and fisheries|EL

IN THE SUPREME COURT OF NIGERIA

ON FRIDAY, THE 11TH DAY OF JULY 2008

SC 162/2002

BETWEEN

NIKA FISHING CO LTD .................................................................... APPELLANT 

AND
LAVINA CORPORATION ..................................................................... RESPONDENT

 

 

Before:           

Niki Tobi; George Adesola Oguntade; Mahmud Mohammed; Francis Fedode Tabai; James Ogenyi Ogebe, JJSC

 

ISSUES

Whether the Federal High Court had jurisdiction to hear the application for an interim injunction in the case involving a claim for demurrage in Lagos harbour arising from a shipping contract.

Whether the trial judge exercised his discretion judicially and judiciously in refusing the appellant’s application for a stay of proceedings in the action for demurrage brought by the respondent, despite the existence of a foreign jurisdiction clause in the agreement between the parties.

FACTS

The respondent (Lavina Corporation) was the owner of the ship named MV Frio Carbic (the Ship) chartered by the appellant (Nika Fishing Co Ltd) to convey a consignment of frozen fish from Mar del Plata in Argentina to Apapa Lagos, Nigeria. The shipping contract contained a clause providing that any dispute arising from the contract should be heard in the Courts of Argentina. Due to a delay by the appellant to take delivery of the cargo within the time agreed by the parties in the Bill of Lading, the respondent brought an action against him at the Federal High Court Lagos claiming the sum of $119,739.40 as demurrage. The trial court ordered for pleadings and the respondent, as the plaintiff, filed its Statement of Claim and served same on the appellant as defendant. Instead of filing a Statement of Defence, the appellant filed a motion praying for two reliefs viz: an order to dismiss the suit for want of jurisdiction by the Federal High Court and an order for staying the proceedings. On being served with the appellant’s motion, the respondent did not file a counter-affidavit until the motion was heard by the trial court and the application refused. Dissatisfied with the decision of the trial court, the appellant appealed to the Court of Appeal which dismissed the appeal and affirmed the decision of the trial court. Further dissatisfied with the decision of the Court of Appeal the appellant appealed to the Supreme Court.

HELD

Leading judgment by Mahmud Mohammed, JSC; with N. Tobi, G.A. Oguntade, F.F. Tabai, James O. Ogebe, JJSC concurring

  1. Jurisdiction of trial court affirmed

The statement of claim and the affidavit filed by the appellant (as defendant) in support of its application for a stay of proceedings, showed that the subject matter of the dispute, being liability for and entitlement of the respondent to demurrage in a contract of carriage of goods by sea from Argentina to Nigeria, by section 7 of the Federal High Court Act, was within the Admiralty jurisdiction of the trial court. In fact only the trial court (Federal High Court) had jurisdiction to resolve the dispute between the parties in Nigeria. Per Mohammed, JSC at 427.

  1. Freedom of parties to determine terms of contract

Parties to an agreement retained the commercial freedom to determine their own terms. The duty of the court was to strictly interpret the terms of the agreement on its clear wording. Per Tobi, JSC at 435.

  1. Discretionary power to grant stay of proceedings

While the respondent was in breach of the provision in the agreement for any dispute arising from the contract to be referred to a foreign court in Argentina, the trial court still had a discretion whether or not to grant the application for a stay of proceedings. There was an onus on the respondent to show that a stay should not be granted. Per Mohammed, JSC at 427.

  1. Failure of respondent to file counter-affidavit crucial

The respondent failed to file a counter affidavit showing that, despite the foreign venue agreed by the parties, it would be prejudiced if the trial court had not assumed jurisdiction and ordered a stay of proceedings. The courts below had nothing to consider in favour of the respondent to support the claim that the trial court was the proper venue for hearing and determining the case against the appellant. Per Mohammed, JSC at 427.

  1. No grounds to refuse stay of proceedings

In the absence of a counter affidavit the courts below had no material to consider the application for a stay of proceedings in favour of the respondent. Per Tobi, JSC at 435.

  1. Onus on respondent to establish grounds for stay

The respondent did not discharge the onus of establishing grounds for the refusal of the application for stay of proceedings. Per Tobi, JSC at 435.

  1. Term regarding foreign jurisdiction valid and enforceable

Where a contract specifically provides for a (foreign) venue of litigation, courts are bound to enforce that term of the contract. Per Tobi, JSC at 435.

  1. Failure of respondent to establish “strong cause”

The burden of proving “strong cause” why parties should not be held to their agreement in a bill of lading as to the venue for the trial of disputes arising from the bill of lading is firmly on the respondent. The respondent did not file a counter-affidavit disclosing why the venue agreed upon in the bill of lading was inconvenient or unjust to the respondent. Per Oguntade, JSC at 443.

  1. Discretion of trial court to grant or not to grant a stay of proceedings

Where a party sues another in breach of a term of an agreement to sue in a foreign court, and the other party seeks a stay of proceedings, the Nigerian court is not bound to grant a stay, but had a discretion whether to do so or not. Per Mohammed, JSC at 427.

O.M. Sagay, Esq. for the appellant

Respondent absent and not represented but duly served

The following cases were referred to in this judgment:

Nigeria

Adeyemi v Opeyori (1976) 9–10 SC 31

African Reinsurance Corporation v Fautaye (1986) 1 NWLR (Part 14) 113

Ajuwon v Akanni (1993) 9 NWLR (Part 316) 182

Akanmu v Adigun (1993) 7 NWLR (Part 304) 218

Akilu v Fawehinmi (No. 2) (1989) 2 NWLR (Part 102) 122

Akinfosile v Ijose (1960) SCNLR 447

Amadi v Thomas Aplin and Co Ltd (1972) 7 NSCC 262

Amizu v Dr Nzeribe (1989) 4 NWLR (Part 118) 755

Aouad v Kesserawani (1956) NSCC 33

Arjay Ltd v Airline Management Support Ltd (2003) 7 NWLR (Part 820) 577

Arojoye v UBA (1986) 2 NWLR (Part 20) 101

Attorney-General Kwara State v Olawale (1993) 1 NWLR (Part 272) 645

Barclays Bank of Nigeria Ltd v Central Bank of Nigeria (1976) 1 All NLR 409

Efetiroroje v Okpalefe II (1991) 5 NWLR (Part 193) 517

Emekede v Emekede (1964) 1 All NLR 102

Evuleocha v ACB Plc (2001) 5 NWLR (Part 707) 672

Fawehinmi v Col. Akilu (1988) 4 NWLR (Part 88) 367

General Oil Ltd v Oduntan (1990) 7 NWLR (Part 163) 423

Ibrahim v Shagari (1983) 2 SCNLR 176; (1983) All NLR 507

Izenkwe v Nnadozie (1953) 14 WACA 361

Kasikwu Farms Ltd v Attorney-General of Bendel State (1986) 1 NWLR (Part 19) 695

Kigo (NigeriaLtd v Holman Bros (NigeriaLtd (1980) 5–7 SC 60

Madukolu & others v Nkemdilim & others (1962) 1 All NLR (Part 4) 587

NBN Ltd v NET (1986) 3 NWLR (Part 31) 667

Niger Dams Authority v Lajide (1973) 5 SC 207

Nigerian Shippers Council v United World Ltd Inc. (2001) 7 NWLR (Part 713) 576

Nimanteks Associates v Marco Construction Company Limited (1991) 2 NWLR (Part 174) 411

NNB Plc v Denclag Ltd (2001) 1 NWLR (Part 695) 542

Northern Assurance Co Ltd v Wuraola (1969) NSCC 22

Oduntan (1990) 7 NWLR (Part 163) 423

Oduye v Nigerian Airways Limited (1987) 2 NWLR (Part 55) 126

Ogar v James (2001) 10 NWLR (Part 722) 621

Olawunmi v Mohammed (1991) 4 NWLR (Part 186) 516

Resident Ibadan Province v Lagunju (1954) 14 WACA 552

Shodeinde v Trustees of the Ahamdiyya Movement in Islam (1980) 1–2 SC 163

Sonner (NigeriaLtd v Partenreedri M.S. Nordwind (1987) 4 NWLR (Part 66) 520; (1987) All NLR 548; (1987) 9–11 SC 121

State v Ajayi (1996) 1 NWLR (Part 423) 169

The Provost Alvan Ikoku College of Education v Amuneke (1991) 9 NWLR (Part 213) 49

United Bank for Africa v Europhina Nigeria Limited (1991) 12 NWLR (Part 176) 677

Williams v Voluntary Funds Society (1982) 1–2 SC 145

Yinka Folawiyo and Sons Ltd v Hammond Projects Ltd 3 FRCR (1977) 373

Foreign

Eleftheria v Eleftheria [1969] 1 Lloyd’s Rep 237

The Fehmarn [1958] 1 All ER 333

Unterweser Reederei GmbH v Zapata Off-Shore Co (The Chaparral) [1968] 2 Lloyd’s Rep 158

The following statutes were referred to in this judgment:

Constitution of the Federal Republic of Nigeria, 1979: Ss 6(1), 6(b)

Constitution of the Federal Republic of Nigeria, 1999: Ss 6(1) and 6(6)(b)

Federal High Court Act: S 7

The following rule was referred to in this judgment:

Federal High Court (Civil Procedure) Rules, 1976: Order 27, r 1

Mohammed, JSC (Delivered the leading judgment):–  This appeal is against the judgment of the Court of Appeal Lagos Division given on 21 June 2001, in which it dismissed the appellant’s appeal against the ruling of the trial Federal High Court, Lagos of 28 June 1989, dismissing the appellant’s application for stay of proceedings in an action for damages on liability for demurrage incurred in a contract of carriage of goods by sea filed by the respondent as plaintiff against the appellant as the defendant.

The respondent is the owner of the ship named “MV Frio Caribic,” hereinafter referred to as “the ship.” The ship was chartered to convey a consignment of frozen fish from Mar Del Plata in Argentina, to Apapa Lagos, Nigeria. The ship arrived at the Apapa port on 29 December 1987 and discharged its cargo. Following the alleged delay in the appellant taking delivery of the cargo within the time agreed by the parties in the Bill of Lading, the respondent brought an action against the appellant at the Federal High Court, Lagos on 21 December 1988, claiming the sum of $119,739.40 United States Dollars as demurrage. Following the order of pleadings by the trial court, the respondent as the plaintiff filed its Statement of Claim to pave the way for the hearing of the case. On being served with the Statement of Claim, the appellant as defendant, instead of filing its statement of defence, reacted by filing a motion on notice dated 2 May 1989 supported by an affidavit, asking for two specific prayers, namely:–

“1. An order dismissing the suit for want of jurisdiction.

 2. An order staying proceedings in this suit.”

The respondent did not file any counter affidavit to the appellant’s motion which was duly heard by the trial court. In its Ruling on 28 June 1989, the trial court refused the application. Part of this Ruling at page 31 of the record reads:–

“Having gone through all these authorities, I think justice is better served by refusing a stay than by granting one. Application is refused.”

Dissatisfied with this Ruling of the trial court, the appellant, with the leave of the trial court, appealed to the Court of Appeal which in its decision delivered on 21 June 2001, dismissed the appeal and affirmed the decision of the trial court. It is from that decision of the Court of Appeal that the appellant has now further appealed to this Court on three grounds of appeal from which two issues for determination were formulated in the appellant’s brief of argument. The two issues are:–

“1. Whether in all the circumstances of this case the Court of appeal was correct in holding that the learned trial Judge in the exercise of his discretion acted judicially and judiciously.

 2. Whether the Courts below were under a duty to ascertain the inconvenience of litigating in accordance with the jurisdiction clause.”

In the brief of argument filed on behalf of the respondent by its learned Counsel however, only one issue was distilled from the grounds of appeal filed by the appellant for the determination of the appeal. The issue is:–

“Whether or not the Court of Appeal in the exercise of its appellate jurisdiction correctly held that the learned trial Judge exercised its discretion correctly and was therefore right to have refused a stay of proceedings or to have refused to dismiss the suit in its entirety.”

The main issue for determination in this appeal as rightly identified by the parties in their respective first issue in the appellant’s and the only issue in the respondent’s Brief of Argument, is whether in all the circumstances of this case, the Court of Appeal was right in holding that the learned trial Judge exercised his discretion judicially and judiciously in refusing the appellant’s application for stay of proceedings in the action brought against it by the respondent in spite of the provision of a foreign jurisdiction clause contained in the agreement between the parties.

In his submission, learned Counsel to the appellant recognised the general attitude of Nigerian Courts to a foreign jurisdiction clause that forms part of a Bill of Lading, had been to guard their jurisdiction and maintain their discretion to grant or refuse any application for stay of proceedings in such cases. A jurisdiction clause, according to learned Counsel, declares the intention of the contracting parties in relation to the forum and law applicable in the event of any dispute arising from the contract; that in the present case, the Bill of Lading contained such a jurisdiction clause which states:–

“Any dispute arising under this Bill of Lading shall be decided in the country where the carrier has his principal place of business and the law of such country shall apply except as provided elsewhere herein.”

That since the forum and the law have already been determined by the parties in the event of any dispute, it not material to argue that where the event occasioning the dispute occurred shall be the place for the resolution of the dispute in spite of the clear wording of the jurisdiction clause. The guiding principles in Courts granting or refusing stay of proceedings in such cases, according the learned Counsel, were laid down by the Supreme Court in the case of Sonner (NigeriaLtd v Partenreedri M.S. Nordwind (1987) 9–11 SC 121 at 149–154 in which a number of English cases were cited with approval. Learned Counsel explained that the object of the Brandon Test laid down in one of the cases, Eleftheria v Eleftheria (1969) 1 Lloyd’s Rep 237 by Brandon J, was to ensure that there is, in every case, a basis upon which the discretion of the Court is founded, particularly the materials made available to the Court by the parties especially the plaintiff on whom lies the burden of establishing a strong cause for refusal of stay.

Applying these principles to the present case, learned Counsel to the appellant had argued that the Court below was in error in upholding the decision of the trial court refusing the application for stay of proceedings in spite of the fact that the respondent upon whom the burden of satisfying the trial court of the existence of evidence to support the decision, had failed to discharge that burden, in the absence of a counter-affidavit opposing the application. The cases of Sonner (NigeriaLtd v Partenreedri M.S. Nordwind (1987) 9–11 SC 121 and Ibrahim v Shagari (1983) 2 SCNLR 179, were cited in support of this submission by learned Counsel who observed that the trial court only relied on the statement of claim of the respondent which does not constitute evidence, in finding for the respondent without looking into appellant’s affidavit in support of its application for stay; that it was in reliance on the inference drawn by the trial court from the Statement of Claim that the Court below erroneously based its decision that a strong cause had been made out to justify the trial court’s refusal of the application.

For the respondent however, it was strongly argued that the Court below was right in affirming the decision of the trial court refusing the appellant’s application for stay because that decision was in line with the decision of this Court in the same case of Sonner (NigeriaLtd v Nordwind (supra) also relied upon by the appellant; that the jurisdiction clause conferring jurisdiction on a foreign Court in the present case had been constructed in the case of The Fehmarn [1958] 1 All ER 333, as not ousting the jurisdiction of the local Courts, particularly in Nigeria when section 6(1), 6(b) of the 1979 Constitution and section 6(1) and 6(b) of the 1999 Constitution are taken into consideration; that the subject matter of this suit being liability for and entitlement to demurrage in a contract of carriage of goods by sea, by section 7 of the Federal High Court Act, squarely falls within the admiralty jurisdiction of the trial court especially when the issue of the performance of the contract after delivery of the goods in Nigerian Port of Lagos, is further taken into consideration. Learned Counsel emphasised that the law on the interpretation of a jurisdiction clause as in the present case is that such clauses though not ousting the jurisdiction of the local Courts, invest them with a discretion to decide whether to proceed with the hearing of the suit or order a stay; that all the decided cases on the subject have clearly stated that the discretion, unless for strong reason to the contrary, ought to be exercised in favour of holding the contracting parties bound by the terms of their contract. The cases relied upon include, Unterweser Reederei GmbH v Zapata Off-Shore Co (The Chaparral) [1968] 2 Lloyd’s Rep 158.; The Eleftheria (1969) 1 Lloyd’s Rep 237 and the decision of this Court in Sonner (NigeriaLtd v Nordwind (1987) 4 NWLR (Part 66) 520 SC at 539. Learned respondent’s Counsel concluded by asserting that since the witnesses required to prove the case at the trial court are in Nigeria where the ship discharged the goods, the decision of the trial court as affirmed by the court below that the proper venue for the resolution of the dispute between the parties is here in Nigeria, should not be disturbed by this Court.

In the application filed on 2 May 1989 at the trial court by the appellant which was the defendant in that Court, the following reliefs were sought:–

“1. An order dismissing this suit for want of jurisdiction.

 2. An order staying proceedings in this suit.”

The first relief is clearly a challenge to the jurisdiction of the trial court to hear and determine the suit as filed by the respondent against the appellant. The law in Nigeria when such a challenge to the jurisdiction of court is being considered by a trial court is well settled. When such an application or objection is raised before a trial court challenging its jurisdiction, the court could rely simply on the Writ of Summon, the Statement of Claim and affidavit in support of the applications as was rightly done by the trial court and affirmed by the court below in the present case. See Izenkwe v Nnadozie (1953) 14 WACA 361; Adeyemi v Opeyori (1976) 9–10 SC 31; Barclays Bank of Nigeria Ltd v Central Bank of Nigeria (1976) 1 All NLR 409; Kasikwu Farms Ltd v Attorney-General of Bendel State (1986) 1 NWLR (Part 19) 695; Attorney-General Kwara State v Olawale (1993) 1 NWLR (Part 272) 645 and Arjay Ltd v Airline Management Support Ltd (2003) 7 NWLR (Part 820) 577 at 601 where Onu, JSC stated the law:–

“I agree with the appellants’ submission that there is a difference between an objection to the jurisdiction and a demurrer. I also agree with them that an objection to the jurisdiction of the Court can be raised at anytime, even when there no pleadings filed and that a party raising such an objection need not bring the application under any rule of Court and that it can be brought under the inherent jurisdiction of the Court. Thus, for this reason, once the objection to the jurisdiction of the Court is raised, the Court has inherent power to consider the application even if the only process of Court that has been filed is the Writ of Summons and affidavits in support of any interlocutory application, as in the case in hand.”

In other words in the instant case where the Writ of Summons, the plaintiff’s/respondent’s Statement of Claim and the affidavit filed by the appellant as defendant in support of its application, show quite clearly that the subject matter of suit being a liability for and entitlement of the respondent to demurrage in a contract of carriage of goods by sea from Argentina to Lagos, Nigeria, by section 7 of the Federal High Court Act, is rightly within the Admiralty jurisdiction of the trial court as found by it and affirmed by the Court below. In fact having regard to the subject of the suit of the respondent, it is only the trial Federal High Court that has jurisdiction to resolve the dispute between the parties in Nigeria. (See Madukolu & others v Nkemdilim & others (1962) 1 All NLR (Part 4) 587). On the issue of jurisdiction therefore the Courts below were quite right in their decision that the subject matter of the respondent’s suit, was within the jurisdiction of the trial court.

However, what was really in contention between the parties was whether having regard to the jurisdiction clause agreed between the parties in the Bill of Lading, the contract document binding between them which provided the venue or forum and the applicable law for the settlement of any dispute arising from the agreement in Argentina, the trial court exercised its discretion judicially and judiciously in refusing a stay of proceedings to give the parties the opportunity to be bound by their agreement executed outside Nigeria. This question relates to the second relief sought by the appellant in its application at the trial court for stay of proceedings.

The position of the law in this country regarding the enforcement or otherwise of a jurisdiction clause contained in a Bill of Lading as in the present case, was extensively discussed in the decision of this Court in Sonner (NigeriaLtd v Partenreedri M.S. Nordwind (1987) 4 NWLR (Part 66) 520 also reported in (1987) All NLR 548 at 567–568 where Eso, JSC in the lead judgment said:–

“It is true that in the ‘The Eleftheria’ (1969) 1 Lloyds LR 237, Brandon J in his powerful judgment emphasised the essentiality of giving full weight to the prima facie desirability of holding the plaintiffs to their agreement . . . The tests set out by Brandon J in ‘The Eleftheria’ are as follows:–

‘(1) Where the plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the defendants apply for stay, the English Court, assuming the claim to be otherwise within the jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not.

 (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown.

 (3) The burden of proving such strong cause is on the plaintiffs.

 (4) In the exercise of its discretion, the Court should take into account all the circumstances of the particular case.

 (5) In particular, but without prejudice to (4), the following maters, where they arise, may be properly regarded:

(a.) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts.

(b.) Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material Respect.

(c.) With what country either party is connected, and how closely.

(d.) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages.

(e.) Whether the plaintiffs would be prejudiced by having to sue in the foreign Court because they would -

(i.) be deprived of security for that claim;

(ii.) be unable to enforce any judgment obtained;

(iii.) be faced with a time-bar not applicable in England; or

(iv.) for political, racial, religious or other reasons be unlikely to get a fair trial.’

To these I would add, with all respect –

‘Where the granting of a stay would spell injustice to the plaintiff as where the action is already time-barred in the foreign Court and the grant of stay would amount to permanently denying the plaintiffs any redress.’

This is the case here. And I think justice is better served by refusing a stay than by granting one.”

It is observed that this Court in Sonner (NigeriaLtd v Nordwind case referred to above, while applying the Brandon Tests was confronted with a situation which exceeded a mere balance of convenience. It was a total loss of action by the plaintiffs, if effect were given to the principle of pacta sunt servanda, having regard to the peculiar circumstances of the case where the action filed in the Federal High Court here in Nigeria, was already time barred in the foreign German Court agreed by the parties in the Bill of Lading.

In the present case however, where the respondent brought its action at the trial Court in clear breach of the agreement to refer any dispute to a foreign Court in Argentina and the appellant had reacted by filing an application for stay of proceedings, as the respondent’s suit was within the jurisdiction of that Court, the Court has a discretion whether or not to grant the application. The law requires such discretion to be exercised by granting a stay unless strong cause for not doing so is shown. The burden of showing such strong cause for not granting the application lies on the door steps of the respondent as the plaintiff. The question is whether that burden had been discharged by the respondent. In finding that the burden had been discharged, this is what the trial court said at page 29 of the record:–

Having enumerated the statement of claim of the plaintiff to see if this is a proper case to stay or assume jurisdiction taking Brandon Test into consideration, to me this is a simple contract guided by Exhibit A. The goods were delivered in Nigeria. What the plaintiff is claiming is only demurrage. In my view the witnesses to prove the case are all in Nigeria such as the Nigeria Ports Authority whose duty it is to know when the ship arrived and when it departed.

I hold that it is in Nigeria Court that the issue of fact is situated or more readily available . . . From the statement of claim of the plaintiff which is action on a simple contract, I hold that the defendant does not genuinely desire trial in the foreign country but are only seeking a procedural advantage.”

This finding of the trial court was not based on any evidence brought by the respondent as plaintiff as no counter-affidavit was filed by it in response to the application filed by the appellant supported by an affidavit. Further more, the appellant’s affidavit in support of its application which the Court below said could be relied upon by the respondent in discharging the burden of proof of satisfying the trial court of its claim to hear the case in Nigeria rather than in Argentina, in spite of having failed to file a counter affidavit, does not contain such relevant facts relied upon by the trial court and the Court below to support the case of the respondent. The fact that all the witnesses in the case are in Nigeria or that the circumstances of the matter show that the case is more connected with Nigeria than Argentina as found by the Courts below, are not at all contained in the appellant’s affidavit in supp

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