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 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 Nation)
