GLOBAL FORMWORK NIGERIA LTD V. E.A. GOREM LTD (2018)

Background

This appeal arose from a commercial debt-recovery action commenced by E.A. Gorem Ltd against Global Formwork Nigeria Ltd at the High Court of the Federal Capital Territory, Abuja. The respondent alleged that it supplied building materials to the appellant for use at a construction site in Apo, Abuja. According to the respondent, the supplies included sharp sand, stone dust and granite. Although the appellant made a part-payment in respect of one transaction, substantial sums remained unpaid despite repeated demands.

The respondent claimed N2,681,060 in its amended statement of claim, together with pre- and post-judgment interest and costs. The evidence and calculations ultimately established the relevant indebtedness as N2,681,051. The High Court entered judgment for the respondent, awarded 10% interest per annum and granted N200,000 as costs. Dissatisfied, the appellant appealed to the Court of Appeal.

Issues

1. Whether the High Court was entitled to proceed to judgment despite an arbitration clause in the parties’ agreement.
2. Whether the proceedings violated the appellant’s constitutional right to fair hearing or demonstrated bias on the part of the trial judge.
3. Whether the respondent established its claim on the pleadings and evidence.

Ratio Decidendi

The Court of Appeal dismissed the appeal and held that an arbitration clause does not, by itself, oust the jurisdiction of a court. Under section 5(1) of the Arbitration and Conciliation Act, a party seeking a stay of proceedings must apply after entering appearance but before delivering pleadings or taking any other step in the proceedings. The court may grant a stay where the statutory conditions are satisfied, but the stay is not automatic and the court is not invariably bound to order one.

The appellant knew of clause 21 of the agreement but failed to apply for a stay before filing its statement of defence and participating in the proceedings. Its conduct amounted to a waiver of any right to insist on arbitration at that stage. The alleged non-compliance with the arbitration clause therefore did not make the action premature or deprive the High Court of jurisdiction.

The court further reaffirmed that jurisdiction may be raised at any time and in any form, and that no rule of court can defeat a genuine jurisdictional objection. Nevertheless, the appellant’s objection failed on its merits. An appellate court is concerned primarily with the correctness of the decision, not necessarily the correctness of every reason given by the trial court, unless the stated reason materially affected the outcome.

Court Findings

On fair hearing, the Court of Appeal found that the appellant had been given adequate opportunities to participate. Although its counsel was absent on certain adjourned dates, the trial court ensured that notice was given and subsequently allowed the appellant’s counsel to cross-examine the respondent’s witness extensively. A party who is afforded an opportunity to present its case but fails to use it cannot ordinarily complain that fair hearing was denied.

The allegation of judicial bias was also rejected. Bias is a serious accusation and must be supported by specific facts and cogent grounds. The trial judge’s direction that the respondent properly close its evidence before cross-examination commenced was held to be a legitimate case-management step, not an indication that the judge had descended into the arena. The record showed that the judge was merely explaining what had occurred in court and was not directing the respondent on the substance of its evidence.

Regarding the merits, the court held that the appellant had not properly traversed the respondent’s specific averments concerning the supplies and sums owed. A general assertion that the figures were excessive, without stating the amount actually admitted or owed, was not a proper specific traverse. Consequently, the material allegations were treated as admitted. Once indebtedness is admitted, the burden of proving repayment or explaining non-payment shifts to the defendant.

The appellant also alleged fraud and falsification of figures. The court held that such allegations must be specifically pleaded with full particulars, including the facts, circumstances, persons involved, and relevant details. The appellant’s pleadings lacked the necessary particulars and the allegations were unsupported by cogent evidence. The trial court had therefore properly evaluated the pleadings and evidence before entering judgment.

Conclusion

The Court of Appeal unanimously held that the appeal lacked merit and dismissed it. The judgment of the High Court was affirmed, and costs of N75,000 were awarded to the respondent.

Significance

The decision clarifies that arbitration clauses generally regulate procedure rather than eliminate the jurisdiction of the courts. A party wishing to rely on such a clause must promptly seek a stay before taking substantive steps in the litigation. The case also illustrates the consequences of inadequate pleadings: failure to specifically traverse a material averment may amount to admission, while allegations of fraud without particulars will not displace an admitted debt. Finally, the judgment emphasizes appellate restraint in reviewing a trial court’s evaluation of evidence and confirms that fair hearing depends on the opportunity to participate, not on a party’s deliberate or unexplained failure to do so.