Appeal Court overrules arbitrator over Tetrazzini head office project

An arbitral award issued against a leading fast food company, Tetrazzini Foods Limited, by a sole arbitrator appointed to hear the controversy surrounding the construction of the firm’s headquarters located at Akin Adesola Street, Victoria Island, Lagos, has no weight any longer, going by a recent judgment by a Court of Appeal

ON allegation of misconduct on the part of a sole arbitrator in a dispute involving the headquarters of a leading fast food company, Tetrazzini Foods Limited, a Court of Appeal, Lagos, has set aside the award made against Tetrazzini.

The court’s judgment has made no sense out of an arbitration award made in favour of Abbacon Investment Limited, the firm originally engaged to build the fast food complex, located at No 308, Victoria Island, Lagos.

Their lordships, Sidi Bage, Chniwe Iyizoba and Yargata Nimpar of the Appeal Court, Lagos, after setting the arbitral award aside, also directed that the file of the matter to be remitted to the Lagos State Chief Judge for the appointment of another arbitrator to look into the dispute.

The appeal borders on an arbitration award against the judgment of the Lagos State High Court delivered on the 16th of September 2011 by Justice Ayo Philips wherein the lower court refused to set aside an arbitral award made against the appellant.

Briefly, the facts of the case are that the appellant, Tetrazzini Foods Limited, awarded the first respondent, Abbacon Investment Limited, a contract to construct its headquarters at No. 308 Akin Adesola Street, Victoria Island, Lagos. The contract agreement had an arbitration clause.

In the course of executing the contract, the appellant not satisfied with the pace and quality of work, took over the site and concluded the construction.

Aggrieved, the respondent, pursuant to the arbitration clause instituted a suit wherein it applied for the appointment of a sole arbitrator, which the trial court did.

The second respondent was the arbitrator who convened a preliminary meeting wherein parties were ordered to file their statements.

The appellant defaulted, but time was extended for it to do so by 24th September 2009. Tetrazzini was to file and serve its pleadings. It only did so on the 7th October 2009 and proceedings commenced.

On 8th October 2009, the appellant was absent; it was neither represented by counsel nor advanced any reason for its absence. Notwithstanding, the second respondent, Prince Dipo Oyebadejo, conducted the hearing after which he terminated the arbitral proceeding.

However, the appellant’s solicitors wrote on the 13th October 2009 seeking time to present its defence.

The second respondent did not respond but proceeded to deliver the award on the 28th October 2009.

Aggrieved, the appellant filed an application before the lower court and asked that the award of the arbitrator of 28th October 2009 and delivered by the sole arbitrator, Prince Dipo Oyebadejo be set aside. It also urged the court to give an order appointing another arbitrator to arbitrate and look into the dispute.

Grounds for the reliefs sought are that the arbitrator misconducted himself, biased and prejudiced against Tetrazzini Foods in the arbitration proceedings, contended that it was not given a fair hearing by the arbitrator, as it was denied the opportunity to properly defend itself and present its case. The fast food firm added that, the findings and the arbitral award were not supported by any evidence.

After considering the application, the trial court not finding merit therein, refused to set aside the award, thus, this appeal.

Before the Appeal Court, Tetrazzini wanted the court to among others determine whether the trial Judge was right in refusing to set aside the arbitral award when the award was a nullity having been made after the termination of the arbitrator who had then lost jurisdiction to make any award and whether the trial Judge ought not to have set aside the award on the ground that the arbitrator misconducted himself in the conduct of the arbitral proceedings.

On its part, the first respondent formulated two including whether in the overall circumstances, the arbitral award made on the 28th October 2009 was given without jurisdiction and whether the second respondent misconducted himself during the entire arbitration proceedings, such as the Court of Appeal can make an order setting aside the award.

The first respondent in his brief raised a preliminary objection, urging the court to strike out ground two of the appellant’s notice of appeal together with the offending particulars of error in the alternative to relief one.

The grounds upon which the objection was brought were that the appeal was against the judgment of the High Court of Lagos State, Lagos Division delivered on 16th September, 2011 and that the particulars of error given by the appellant under grounds two of the notice of appeal were unrelated to the aforesaid ground of appeal.

It was summited further that the said offensive particulars did not support ground two but complained against the proceedings and award of the arbitrators and not against the judgment or proceedings of the lower court.

The first respondent, in his submissions in support of the preliminary objection, formulated two issues for determination one of which was whether all the particulars contained in ground two of the appellant’s notice of appeal supported or explained the appellant’s complaints in ground two of the notice of appeal and thereby not offensive of the provisions of Order 6 Rule 2(2) of the Court of Appeal Rules, 2011?

Also, the first respondent also wanted to the court to determine whether the argument canvassed by the appellant in issue one of its brief of argument was based on, related, or covered by the issue distilled for determination or semblance of it, as the preliminary objection was against just one ground of appeal with several others to sustain the appeal?

But their lordships held that same could not dispose of the appeal. Consequently, the preliminary objection was struck out.

And after considering the issues formulated for the resolution of the appeal, the Court of Appeal established aspects of misconduct against the second respondent, arbitrator, and therefore, the arbitral award was set aside and the ruling of the trial court of 16th September, 2011 was also set aside.

Not leaving the matter hanging, the Appeal Court ordered that the matter should revert to the Lagos State Chief Judge “to appoint another arbitrator to look into the dispute between the parties. Each party was ordered to bear its cost.”