Global Gas and Refining Ltd v. SPDC: Is Lagos pro or anti arbitration? - A rejoinder

Arecent article by Mrs Funke Adekoya SAN in Businessday of 26 March 2020, entitled “Global Gas and Refining Ltd v. SPDC: is Lagos pro or anti arbitration?”, gave me pause. The essential thrust of the article is that a ruling by the High Court of Lagos State setting aside a single arbitration award, undermined the practice of arbitration and the arbitration process in Lagos; and that this is so, notwithstanding that the legal challenge to the award was premised on an alleged breach of one of the most fundamental duties of arbitrators to safeguard the integrity of the arbitration process: the duty of the arbitrator(s) to disclose any circumstances or relationships which may cause their impartiality to be questioned by a party to the proceedings.

The conclusion of the article “that for as long as this decision stands unchallenged, Lagos cannot claim to be pro-arbitration”, is an astonishing one!

I must be careful not to overstate the case, as I argue that Mrs Adekoya’s article does, and suggest that the breach of the duty of disclosure by an arbitrator must ipso facto result in the annulment of his or her award. That is certainly not the law.

But it has been my understanding, after over five years as a member of the ICC International Court of Arbitration, between 2001 and 2006, reviewing countless awards and challenges to arbitrators, and as a practitioner in this field for more than 25 years, that the setting aside of an award is sometimes necessary and almost inevitable in certain situations. One of such circumstances occurs when the losing party establishes that the arbitrator is aware of certain circumstances or relationships that existed or have come to exist and are evidently relevant to his proposed appointment as arbitrator and might affect perceptions about his or her ‘likelihood of bias’, but chooses to keep silent.

By doing so, such an arbitrator deprives the aggrieved party of the opportunity to question his or her impartiality or independence on account of the undisclosed circumstances or relationships, and thereby compromises the legitimacy of any award the arbitral tribunal renders.

Undoubtedly, the facts of each case matter. Each set of circumstances will influence the outcome of a review by the courts, whose limited supervisory jurisdiction is embedded in every system of arbitration.

Public confidence in arbitral proceedings is absolutely critical to the process of arbitration. The requirement that arbitrators ‘must not only be impartial but must be seen to be impartial’ is therefore critical to ensure that this confidence is not eroded.

The setting aside of arbitration awards by national courts is indeed envisaged in Article V of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Significantly one of the grounds provided is that a signatory state may refuse to recognise or enforce an award that has ‘been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made’.

The New York Convention however leaves the grounds on which an arbitral award may be set aside to be defined in national legislation, particular to each jurisdiction.

The award in the matter of Global Gas and Refining Ltd v. SPDC was made pursuant to the Arbitration and Conciliation Act Cap Laws of Nigeria (ACA) which expressly provides that “Any person who knows of any circumstances likely to give rise to any justifiable doubts as to his impartiality or independence shall ,,, forthwith disclose such circumstances to the parties”, and that “this duty shall continue and subsist ,,, throughout the arbitral proceedings, unless the arbitrator had previously disclosed the circumstances to the parties”.

Under its Rules of Arbitration the ICC demands a similarly stringent protocol of disclosure of arbitrators in all arbitrations it administers and in particular of the arbitrators it appoints.

Section 30(1) ACA specifically empowers the Court defined as “the High Court of a State, the High Court of a Federal Capital Territory, Abuja or the Federal High Court”, to set aside an arbitral award if an arbitrator has misconducted himself or herself. The instances of misconduct set out by the Supreme Court of Nigeria in Taylor Woodrow (Nig.) Limited v. S.E. Gmbh [1993] 4 NWLR (Pt 286) 127 by necessary inference, include a deliberate breach of the duty by an arbitrator to disclose “any circumstances likely to give rise to any justifiable doubts as to his impartiality or independence”

This is precisely what the trial Judge in the High Court of Lagos was faced with in the application to set aside the award in favor of SPDC in the case of Global Gas and Refining Ltd v. SPDC.

What matters here is whether there is a reasonable apprehension of bias. Once this has been established, the underlying proceeding ought to be set aside as void. It becomes unnecessary to embark on any further inquiries as to the merits, which in the case of Global Gas and Refining Ltd v. SPDC itself, sadly leaves much to be desired.

The curious and I dare say unprecedented phenomenon of the majority award making copious references to the dissenting arbitrator’s findings and conclusions, as if the majority award was a rebuttal of the dissenting award, rather than the other way around, is obviously beyond the scope of this article.

The recent decision of the British Columbia Court of Appeal in Canada, in Hunt v The Owners, Strata Plan 2018 BCCA 159, is instructive in reaffirming that the longstanding maxim that “justice must not only be done, it must be seen to be done” is applicable not only to courts of law, but to international arbitration also. What was of interest to the Court of Appeal was not the substantive matter in dispute in the arbitration, but rather the existence of ex parte communications between counsel for one the parties and the arbitrators in the course of the proceedings! These private interactions were not disclosed to the losing party by either the successful party or by the arbitrators.

Following their discovery, after the award had been issued, the losing party brought a petition to set aside the arbitration award, on the basis that there was a reasonable apprehension of bias. The petition was dismissed in the High Court. The Hunts appealed to the Court of Appeal.

The rest of this article continues in the online edition of Businessday @https://businessday.ng