The Supreme Court has affirmed November 22, 2024 judgment of the Court of Appeal in Abuja which upheld an arbitral award against Emerging Markets Telecommunications Services Limited (EMTSL) – doing business as 9Mobile – in favour of two aggrieved investors.
The arbitral award, made on September 26, 2022, required EMTSL to refund the $43,033,950 invested by the aggrieved investors – Afdin Ventures Limited and Dirbia Nigeria Limited – along with interests and costs, which the investors now put at about $87,448,929.45.
A five-member panel of the apex court, led by Justice Mohammed Garba, was unanimous in dismissing the appeal, marked: SC/CV/1096/2024 filed by EMTSL, on the grounds that it lacked merit.
The Supreme Court faulted EMTSL’s challenge of the arbitral tribunal’s jurisdiction on the grounds that it was not a signatory to the original contract containing the arbitration clause, and from which the dispute arose.
In the lead judgment prepared by Justice Tijani Abubakar but read on March 6 by Justice Mohammed Idris, the apex court held among others that EMTSL could not claim not to be bound by the arbitral clause in the original contract having benefited from the funds invested by Afdin Ventures and Dirbia Nigeria.
Justice Abubakar, who upheld the arguments by James Igwe (SAN) and Mahmud Magaji (SAN) – lawyers to Afdin Ventures and Dirbia Nigeria – said: “Where contractual rights and obligations are assigned, the arbitration clause, being ancillary, yet inseparable from the substantive contract, ordinarily travels with the assignment.”
He added that: “An assignee, who assumes the benefits and burdens of the main contract cannot disclaim the arbitral covenant embedded therein. Likewise, in agency relationships, a principal on whose behalf a contract is executed is bound by the arbitration clause, notwithstanding that the signature on the document is that of the agent.
“The appellant’s insistence on formal signature as the sole gateway to arbitral jurisdiction reflects a nineteenth-century rigidity, inconsistent with contemporary commerce.”
Justice Abubakar added that the doctrine of privity was developed to protect parties from being burdened by obligations they never undertook, but never intended as a shield for those who actively participated in and benefited from a contractual arrangement, but seek to evade its dispute resolution mechanism.
He said: “The principle of privity of contract, though foundational, is not impregnable. It yields where the facts reveal a composite transaction, agency, alter ego, assumption of obligations, or conduct giving rise to estoppel.
“In the instant case, the sole arbitrator found, upon concrete and cogent evidence, that the appellant was ‘inextricably intertwined’ with the investment transaction; that it received substantial sums derived from the very offer terms and custodial agreements, containing the arbitration clause; and that its role was central to the dispute.
“Those findings were affirmed by the trial court and the Court of Appeal.
“In the final analysis therefore, the appellant’s arguments amount to a belated attempt to evade the binding consequences of a process to which it was innately connected and from which it derived substantial benefit.
“Arbitration, as a pillar of commercial justice, would be rendered nugatory if parties could accept benefits yet repudiate burdens.”
Justice Abubakar said: “In the end therefore, the appeal, being totally devoid of merit, deserves to be and is hereby dismissed.
“The judgment of the lower court, the Court of Appeal, Abuja division, in appeal No. CA/ABJ/660/2023 delivered on the 22th day of November 2024 is hereby affirmed.”
He then, awarded a cost of N10million against EMTSL, and in favour of Afdin Ventures and Dirbia Nigeria.
Afdin Ventures and Dirbia Nigeria has instituted a suit before the Federal High Court in Abuja in 2018, seeking among others that
EMTSL and its agents refund the funds they invested.
Afdin Ventures claimed to have invested $13,300,910 while Dirbia Nigeria said it contributed $30,030,040 as investment.
Both firms claimed in the suit marked: FHC/ABJ/CS/288/2018, that the defendants, including Karington Telecommunication Ltd, Premium Telecommunications Holdings NV and Etisalat International Nigeria Ltd excluded them from the company’s affairs.
They stated that the defendants, as at when the case was filed, had concluded arrangements to sell Karington Telecommunications Limited, Etisalat Nigeria Limited now known as 9mobile to Smile.com and Glo Network without their knowledge, as major investors of the companies.
Before the case, then before Justice Binta Nyako, could proceed to hearing, parties agreed to activate the arbitration clause in the contract, following which the judge referred the case for arbitration.
The final arbitral award was issued on September 26, 2022 directing 9Mobile to refund the investment made by Affidin Ventures and Dirbia Nigeria, with interests and others, within 90 days.
Following the arbitral award, Affidin Ventures and Dirbia Nigeria returned to the Federal High Court with an application for the recognition and enforcement of the arbitral award, which Justice Nyako granted on April 26, 2023, a decision EMTSL appealed to the Court of Appeal and lost, prompting it to head to the Supreme Court.
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