Can a Party who has Participated in Arbitration Proceedings Subsequently Complain About the Mode of Service of the Notice of Arbitration?


Introduction

In a recent judgment delivered in Seabulk Offshore Operators Nigeria Ltd v Augusta Offshore S.p.a.[1], the Court of Appeal (Lagos Division) had to consider whether a party who had participated in arbitration proceedings could subsequently resist the enforcement of the arbitral award on the ground that it was not properly served with the Notice of Arbitration.

Facts

The Appellant (“Seabulk”) and the Respondent (“Augusta”) signed a charterparty that contained an arbitration clause. The arbitration clause designated London, England as the seat and specified addresses at which notices should be delivered to each party. A dispute arose and Augusta commenced arbitration proceedings in London. Seabulk exchanged several emails and letters with the sole arbitrator including one in which it admitted that it owed Augusta US$3.1million and another in which it admitted that it received the Notice of Arbitration.

Seabulk also challenged the jurisdiction of the sole arbitrator and invited him to deliver an Award on the jurisdictional challenge. The sole arbitrator delivered an Award in which he decided that he indeed had jurisdiction. He subsequently ordered the parties to file Points of Claim and Points of Defence respectively. While Augusta complied with the order, Seabulk failed to comply and voluntarily decided not to take part in the rest of the arbitral proceedings. The proceedings went on without Seabulk and the sole arbitrator eventually delivered a Final Award in favour of Augusta in the sum of US$3.1million (based on Seabulk’s earlier admission).

Augusta filed an action at the Federal High Court in Lagos seeking permission to enforce the Final Award in Nigeria pursuant to the New York Convention of 1958. The Federal High Court granted Augusta’s request and Seabulk appealed to the Court of Appeal.

Issues Before the Court of Appeal

At the Court of Appeal, Seabulk argued that because the Notice of Arbitration was delivered to an address other than the address stipulated in the charterparty, the Federal High Court should have, pursuant to Section 52(2)(a)(iii) of the Arbitration and Conciliation Act, refused to grant Augusta permission to enforce the Final Award in Nigeria.

Section 52(2)(a)(iii) of the Arbitration and Conciliation Act states that:

“(2) The court where recognition or enforcement of an award is sought or where application for refusal of recognition or enforcement thereof is brought may, irrespective of the country in which the award is made, refuse to recognise or enforce an award –

  • if the party against whom it is invoked furnishes the court proof –

(iii) that he was not given proper notice of the appointment of an arbitrator or of the proceedings or was otherwise not able to present his case.”[2]

It is important to point out that Seabulk did not deny receiving the Notice of Arbitration. Rather, it’s grouse was that the Notice of Arbitration was not delivered to the address specified in the charterparty.

Decision of the Court of Appeal

The Court of Appeal held as follows:

  1. It is the party that resists the recognition and enforcement of an arbitration award that is “…obligated to furnish proof of the matters referred to in Section 52(2)(a)(iii) of the Arbitration and Conciliation Act. The Appellant [Seabulk] is to prove that it was not given proper notice of the appointment of the arbitrator or proper notice of the proceedings or that it was otherwise unable to present its case.”
  2. “The whole essence of service is to ensure that the other party becomes aware or has knowledge of the pending matter so that he can resist, if he may, that which is sought against him…This purpose was achieved in this matter. The Appellant [Seabulk] was made aware of the pending arbitration proceedings and its counsel wrote letters to the Arbitrator expressly stating that it was served and culminating in a letter in which it admitted owing part of the amount claimed by the Respondent [Augusta].”
  3. A party that has “wilfully failed to file its points of Defence in the arbitral proceedings and voluntarily stopped participating in the proceedings” cannot claim to have been “otherwise unable to present its case”.

Orders Made by the Court of Appeal

The Court of appeal dismissed Seabulk’s appeal and affirmed the decision of the Federal High Court which had earlier granted Augusta permission to enforce the Final Award in Nigeria.

*TNP represented Augusta at the Federal High Court and at the Court of Appeal.

[1] Appeal No.CA/L/830/2016. Judgment delivered on 6th December 2019.

[2] Subsection (iii) of Section 52(2)(a) of the Arbitration and Conciliation Act is substantially the same as Article V(1)(b) of the New York Convention of 1958.