Shun Contact Suits with Arbitration Clauses. CJN Tells Judges

Alex Enumah in Abuja
The Chief Justice of Nigeria (CJN), Justice Walter Onnoghen, has urged judges in lower courts across the federation to desist from entertaining matters of breach of contract, particularly when an arbitration clause is embedded in such contracts.

Onnoghen noted that the entertainment of such suits by the court which originally should have gone to arbitration leads to unnecessary delay and impacts negatively on foreign investment in the country.

He was speaking yesterday at the 3rd Annual Judges Workshop on Petroleum, Gas and Power sectors in Abuja.
The CJN, who expressed worry over the development, advised heads of courts to therefore invoke the powers in their respective Rules of Court to make Practice Directions check the development.

“My attention has been drawn to the prevailing circumstances in which our courts have been assuming jurisdiction in matters of breach of contract arising from contracts with arbitration clauses and wish to emphasize the need for us to invoke our powers in our respective Rules of Court to make Practice Directions to check the development which has adversely been affecting international investments in our country.

“No investor, whether domestic or international, would want his investment tied down in seeming endless litigation, hence the desire to employ the alternative, being arbitration,” he said.
Onnoghen warned that if the situation is allowed to continue, then “we should say good bye to our hope for economic recovery within the shortest possible time.”

He said it is in the above circumstances that he proposed “that no court shall entertain an action instituted to enforce a contract, or claim damages arising from a breach thereof, in which the parties have, by consent, included an arbitration clause and without first ensuring that the clause is invoked and enforced.
“The courts must insist on enforcement of the arbitration clause by declining jurisdiction and award substantial costs against parties engaged in the practice.

“A party who institutes an action in court to enforce breach of contract containing an arbitration clause without first invoking the clause is himself in breach of the said contract, and ought not to be encouraged by the courts.”
While urging judges to take urgent action along the above suggested steps in order to salvage the situation, the CJN concluded that “the time saving nature of an arbitration proceeding encourages heightened commercial and economic activities and foreign investment of the country.”

Also speaking, acting President Yemi Osinbajo, who was represented by the Minister of Petroleum Resources, Ibe Kachikwu, called for measures that would speed up what he termed the “crawling” judicial processes in the country.
Kachikwu, who described the slow judicial process in the country as a nightmare for investors said: “We need to evolve measures that will speed up the judicial decisions. We also need these decisions not to be too complicated for investors to easily understand.”
The acting president further expressed the need to align decisions of various courts with some level of credibility so as to avoid complicated decisions from unnecessary forum.

“We need to ensure the sanctity of international arbitration and judges should be trained in petroleum and energy sector so that they would be fully equipped to handle the emerging trends in the sector,” he said.