A Review Of The Nigerian Supreme Court’s Decidedly Pro-Arbitration Stance In Emts Ltd v. Afdin Ventures Ltd & Ors

A REVIEW OF THE NIGERIAN SUPREME COURT’S DECIDEDLY PRO-ARBITRATION STANCE IN EMTS LTD v. AFDIN VENTURES LTD & ORS¹

1.        Introduction

1.1 The decision of the Supreme Court of Nigeria in EMTS Ltd v Afdin Ventures Ltd & Ors.,² signifies a further consolidation of Nigeria’s pro-arbitration jurisprudence within the global framework of international commercial arbitration. The judgment prioritized the efficacy of achieving finality in arbitration proceedings over technical procedural requirements and addressed issues relating to the enforceability of arbitral awards against non-signatories, allegations of fraud in arbitration, judicial intervention in arbitral awards and the need for expeditious determination of arbitration related

2.              Background

2.1 The dispute arose from an Offer of Terms and Custodian Agreements in which the 1^st and 2^nd Respondents sought the refund of USD 13,300,910 and USD 30,030,040, respectively, from the Appellant and the 3^rd to 6^th Respondents at the Federal High Court of Nigeria. Pursuant to an arbitration clause contained in the agreements, the matter was referred to arbitration by the Federal High Court where the matter was initially instituted. A sole arbitrator conducted the proceedings and, by a Final Award dated 26 September 2022, ordered the Appellant and some of the Respondents to refund the sums claimed by the1^st and 2^nd

2.2 The 1^st and 2^nd Respondents subsequently applied for recognition and enforcement of the award at the Federal High The Appellant, being dissatisfied with the award, filed a counter to the 1^st and 2^nd Respondents` application. On the hearing date, counsel for the Appellant sought an adjournment on the ground of unavailability of the lead counsel. The court refused the application for adjournment and indicated that parties should adopt their processes as filed. The counsel for the Appellant failed to adopt the Appellant`s counter and same was struck out. The application for recognition and enforcement of the award was consequently granted. The Appellant appealed and the Court of Appeal affirmed the judgment of the Federal High Court. Dissatisfied, the Appellant further appealed to the Supreme Court.

2.3 At the Supreme Court, the Appellant challenged the judgment of the Court of Appeal which affirmed the judgment of the trial court on jurisdictional grounds. First, it contended that the arbitral tribunal had no jurisdiction over it as it was not a signatory to the agreements. Second, it argued that since the dispute involved allegations of fraud, this rendered the dispute non-arbitrable and made the award a nullity and incapable of recognition or enforcement.

2.4 The 1^st and 2^nd Respondents raised a preliminary objection to the appeal based on the Appellant's failure to comply with the trial court’s order affirmed by the Court of Appeal requiring the deposit of the judgment sum into court as a condition for a stay of execution and its failure to comply with Order 6 Rule 3(5) of the Supreme Court Rules, 2024 regarding payment of all the costs awarded by the courts below into an escrow account in the name of the Chief Registrar as a pre-condition for pursuing an appeal.

2.5 The Supreme Court acknowledged the merit of the 1^st and 2^nd Respondents’ objection and condemned the Appellant's non-compliance with the court order directing payment of the judgment sum into court and its non-compliance with the rule directing payment of the costs awarded by the lower courts into an escrow account. Nonetheless, the court proceeded with the determination of the substantive appeal, citing the commercial significance of arbitration, the importance of safeguarding Nigeria's position in international arbitration, strengthening arbitration jurisprudence, and resetting the arbitration governance framework in Nigeria.

3.              Analysis of the Supreme Court’s Decision

3.1       Prioritizing the efficacy of arbitration over procedural

3.1.1 One of the most remarkable aspects of the Supreme Court's decision in the EMTS Ltd case was its determination to proceed with hearing the substantive appeal due to its commercial implications and the principle of finality of arbitration. Despite finding merit in the preliminary objection raised by the 1^st and 2^nd Respondents, the Court proceeded to determine the substantive appeal citing the exceptional circumstances. These included a need to protect the Nigerian economy, a need to enhance investor confidence, and the public interest in strengthening Nigeria`s position in international arbitration. This reflects a conscious judicial effort to prioritize the development of Nigeria’s arbitration posture and enhance its reputation as an arbitration friendly jurisdiction over technicalities and procedural requirements.

3.2           Non-signatories in arbitration

3.2.1 The Supreme Court recognized the concept of inferred consent in arbitration and embraced a more pragmatic approach that takes into account the realities of modern The Court recognized the exceptions to privity of contract and confirmed that a non-signatory may be bound by an arbitration agreement. The Court extended the definition of a “party”³ to those who derive benefit under, assume obligations arising from, or are otherwise intimately connected with the contract containing the arbitration clause, particularly parties in complex commercial arrangements whose rights and obligations are intertwined in contracts containing arbitration clauses. The Court held that “arbitration cannot be rendered impotent by fragmenting corporate participation while retaining unified economic benefit”.⁴

3.2.2 The Court referred to the Appellant's role in the transaction and receipt of substantial funds which made it sufficiently connected to the agreements containing the arbitration clause and emphasized that a party in an arbitration extends to persons inextricably linked to the contractual relationship from which the arbitration agreement emanates irrespective of not being signatories to the

3.2.3 The Court adopted the reasoning of the Court of Appeal in the case of Metroline Nigeria Ltd v. Dikko,⁵ and laid the jurisprudential foundation for binding non-signatories to arbitration agreements on three pillars, which are: the intention of the parties, the benefit and burden accruing or accruable to a party under the agreement,⁶ and the principle of fairness and avoidance of injustice. The Court referenced the principle of party autonomy and the “group of companies” doctrine, which are both based on intention. The principle of party autonomy which is the foundational principle of arbitration deals with the parties’ intention to submit disputes to arbitration. The “group of companies doctrine” is based on the common intention of the parties and the active participation of affiliated entities in the negotiation, performance, or termination of a This intention may be inferred when a non-signatory assumes or performs obligations under a contract.

3.2.4 Beyond invoking consent through inferred intention, the Court referred to what is applicable in other jurisdictions in resolving the issue of non-signatories in arbitration, citing the case of Dow Chemical France Isover-Saint-Gobain,⁷ where the Paris Court of Appeal confirmed an ICC award based on “group of companies doctrine”. The Court also referred to various international treatises on the subject to support its position.⁸

3.3           Allegations of fraud do not automatically render a dispute non-arbitrable

3.3.1 On the allegation of fraud and non-arbitrability raised by the Appellant, the Court held that it is not every allegation of fraud that renders a dispute non-arbitrable. The Court referred to its earlier decision in the case of B.A. Plc v. Trident Consulting Ltd.,⁹ and reaffirmed the principle that the arbitrability of a dispute is determined by the nature of the reliefs sought before the arbitral tribunal. The Court concluded that the claims sought and the reliefs granted by the tribunal in the EMTS Ltd case, being based on restitution and breach of fiduciary duty, are civil in nature and thus arbitrable.

3.3.2 The Court reinforced the doctrine of separability¹⁰ and prevented the Appellant from vitiating the arbitration agreement on the ground of fraud. In Charles  Mekwunye v. Lotus Capital Limited & Ors.,¹¹ the Court of Appeal distinguished the case of B. J. Export & Chemical Company Ltd v. Kaduna Refining & Petro-Chemical Company Ltd.,¹² where the alleged fraud went to the root of the arbitration. In B. J. Export, the appellant who had initially claimed $85,016.00 from the respondent before parties resorted to arbitration subsequently presented a claim for $400,000.00 before the arbitrator. The respondent consequently sought a declaration that the claim was fraudulent and an order revoking the arbitration agreement and the arbitrator’s authority. Whereas, in Dr. Charles D. Mekwunye’s case, the appellant alleged that the 1^st respondent's Telecoms Private Equity Fund Investment Agreement was a Ponzi Scheme used to defraud Nigerians including the appellant and that the dispute cannot be resolved by arbitration. The Court of Appeal found that the allegation of fraud does not affect the contract between the parties or the arbitration agreement and the reasoning expressed in B. J. Export cannot be adopted where the allegation of fraud is in relation to the performance of obligations under a contract rather than the existence or validity of the arbitration agreement itself.

3.3.3 The Court of Appeal laid down the test for determining when an allegation of fraud makes a dispute non-arbitrable to be when the allegation of fraud affects the validity of the arbitration Significantly, the Court`s reasoning in the EMTS Ltd case aligned with this test when the Court held that even if allegations of misrepresentation were made, they did not vitiate the arbitration agreement as a distinct agreement.

3.3.4 Generally, parties could easily evade valid arbitration agreements if mere allegations of fraud were sufficient to render disputes non-arbitrable. The Supreme Court thus provided clarity regarding Nigerian jurisprudence on the issue whether a mere allegation of fraud is sufficient to render a dispute non-arbitrable.¹³ To successfully challenge arbitrability on that basis, it must be shown that the alleged fraud goes to the root of the arbitration agreement

3.4           Limited judicial interference and finality of awards.

3.4.1 The Court refused to dismiss the award having found that the award was based on monies had and received; it recognized the equitable doctrine of restitution,¹⁴ which supports the 1^st and 2^nd Respondents’ case. The Court indicated that the role of the courts in relation to arbitral awards is not to reconsider the merits of the award but to determine whether the arbitral tribunals acted within the scope of their authority and applied the law as they understood it to the facts before them.

3.5           Recognized the expeditious nature of arbitration

3.5.1 Another remarkable aspect of the EMTS Ltd case is the expeditious manner in which the matter was It is well established that one of the expected advantages of arbitration is the promptitude with which disputes can be resolved through these means. However, in too many instances arbitration loses this advantage and loses its commercial relevance when it gets embroiled in post or pre-award litigation which involves uncertainties regarding timeframes for resolution. Indeed, the major concern of businesses regarding dispute resolution mechanisms is not only the judicial decision but the speed with which those decisions are delivered. This concern was addressed by the Court when it delved into the merit of the substantive appeal due to its commercial importance and expressly pronounced that this was done “to allay the fears of investors who always think that arbitration in Nigeria marks the beginning of long and endless journey to the Apex Court. Journey full of impediments, hick-ups, [sic] hurdles and uncertainties.”¹⁵ Consequently, the Court refused to strike out the appeal at the preliminary stage to avoid further proceedings, increased delay, and undermine the expectation of expeditious determination that undergirds arbitration law. The decision was remarkable in the fact that it took just 3 years and 2 months from the initial application to enforce the Award, filed in the Federal High Court on 18 January 2023 to the Supreme Court’s final determination of the proceedings on 6 March 2026.

3.5.2 Despite the Supreme Court’s recognition of the need for expediting arbitration related litigation and the relatively short time it took for this matter to travel from the first instance decision to the Supreme Court, the Supreme Court missed the opportunity to endorse the case management framework established under the Arbitration Proceedings Rules 2020¹⁶ ("the Rules"). The Rules provided expedited case management provisions designed to shorten the timelines for arbitration related litigation. An express application of the timelines prescribed by the Rules would have served as an endorsement of their application to court proceedings relating to arbitration¹⁷ and demonstrate judicial support for the policy direction set out in the Arbitration and Mediation Act 2023¹⁸ to achieve a “proper and expeditious” conduct of arbitration.

4.              Conclusion

4.1 The decision in the EMTS Ltd case represents a significant milestone in Nigerian arbitration jurisprudence. Firstly, the Court recognized the commercial importance of the case and refused to terminate the appeal on technical grounds despite finding merit in the preliminary objection. The Court confirmed that consent to arbitration can be express, implied, or inferred from conduct and does not require that a party be signatory to the arbitration agreement. Moreover, the Court`s extension of the definition of a party prevents parties from benefiting from a contract while denying their obligations under the contract. Furthermore, by recognizing parties’ autonomy and the “group of companies” doctrine, the Court discharged its duty of giving effect to the presumed intention of the parties when engaging in a contractual relationship.

4.2 Although the Court of Appeal seemed to have settled the issue on arbitration tainted with fraud in Charles D. Mekwunye`s case, the Supreme Court`s pronouncement on the same issue in the EMTS Ltd case promotes certainty and reaffirms the principle that an arbitration agreement cannot be vitiated based on a mere allegation of fraud. Furthermore, the decision reinforces the principle of finality and minimal judicial interference by stating the limited roles of courts in relation to arbitral awards. The Court`s reference to arbitration “as a pillar of commercial justice” establishes judicial awareness of the role of arbitration in commercial transactions. The decision establishes a firm judicial commitment to strengthening Nigeria's position in international arbitration.

Footnotes

^{1  Opeyemi Ojebode, Associate, S. P. A. Ajibade & Co., Ibadan Office, Nigeria.}

^{2  (2026) LPELR-83327(SC).}

^{3  See, Arbitration and Conciliation Act Cap A18 LFN 2004, s57 (applicable to the dispute at the material time), now re-enacted as Arbitration and Mediation Act 2023, s91.}

^{4   EMTS Ltd v Afdin Ventures Ltd & Ors. (supra) 42, B.}

^{5 (2021) 16 NWLR (Pt. 1761) 422 (SC).}

^{6   The Latin phrase is: Qui sentit commodum sentire debet et onus (he who enjoys the benefit must also bear the burden).}

^{7  ICC Award No 4131, YCA 1984, 131 et seq., (also published in Clunet 1983, 899 et seq.).}

^{8  JDM Lew, LA Mistelis and others, Comparative International Commercial Arbitration (Kluwer Law International 2003) ch 16, 377-409, paras 16-3[sic]; Gary Born, International Arbitration: Law and Practice (3rd edn, Kluwer Law International 2021) ch 5, 113–121; Stavros Brekoulakis, Parties in International Arbitration: Consent v Commercial Reality in Stavros Brekoulakis, JDM Lew and others (eds), The Evolution and Future of International Arbitration (Kluwer Law International 2016) 119-160, para 8.22.}

^{9   (2023) 14 NWLR (Pt 1903) 95, 130.}

^{10 See, Arbitration and Conciliation Act Cap A18 LFN 2004, s12(2) which provides that an arbitration clause is independent of the substantive contract, and a decision that the contract is null and void does not ipso jure invalidate the arbitration clause.}

^{11  (2018) LPELR-45546(CA).}

^{12  (2002) LPELR-12175 (CA).}

^{13      See, Emmanuel Abasiubong, 'Judicial Attitude to the Arbitrability of Contracts Tainted with Fraud' (Mondaq 2022) (https://www.mondaq.com/nigeria/arbitration-dispute-resolution/1214966/judicial-}

^{attitude-to-the-arbitrability-of-contracts-tainted-with-fraud ) accessed 21 June 2026.}

^{14      The doctrine imposes an obligation to repay, independent of strict privity where a party has received monies in circumstances that render retention unconscionable.}

^{15  EMTS Ltd v Afdin Ventures Ltd & Ors. (supra) 15, B.}

^{16 Arbitration Proceeding Rules 2020, Third Schedule to the Arbitration and Mediation Act 2023, r8, 11–14.}

^{17 There is no indication in the judgment that counsel referred to the Rules. Had the Rules been brought to the attention of the Court, the Court may have endorsed the application of the case management provisions of the Rules to arbitration related litigation.}

^{18  Arbitration and Mediation Act 2023, s1(4).}

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