Learn about the Arbitration Tribunal’s landmark ruling ordering SANEF Creatives to pay N19.4 billion for the unlawful termination of the National Theatre contract.
Overview of the Tribunal’s Decision
An Arbitration Tribunal in Lagos State has delivered a verdict mandating SANEF Creatives Ltd, a subsidiary of the Central Bank of Nigeria’s (CBN) Bankers’ Committee, to compensate Hanson Dredging and Marine Service Ltd (HDMS) with ₦19.4 billion. The case stemmed from the unlawful termination of a contract involving dredging and reclamation work at the Lagos Creative Entertainment Centre (LCEC), commonly known as the National Theatre.
The Sole Arbitrator, Engineer Ayo Fanimokun, made this ruling on December 30, 2024, resolving a contractual dispute between HDMS and SANEF Creatives, a special-purpose vehicle created by the Bankers’ Committee.
Background to the Dispute
The conflict began in May 2022 when SANEF Creatives abruptly terminated a contract signed with HDMS on November 11, 2021. HDMS had already completed over 60% of the dredging and reclamation project before the termination.
HDMS argued that project delays were caused by unforeseen risks, including the impact of the COVID-19 pandemic and economic challenges. The company requested a contract review, but SANEF rejected the request and instead terminated the agreement, citing the 36-week project timeline as the reason.
To complicate matters, SANEF, with interference from the CBN, debited ₦4.2 billion already paid to HDMS. In response, HDMS took legal action, seeking relief for what they termed an unlawful contract termination.
HDMS’s Claims and Tribunal Findings
HDMS, represented by Senior Advocate of Nigeria (SAN) Dr. Charles Mekwunye, sought 13 reliefs, including:
- A declaration that the termination of the contract was unlawful and premature.
- Compensation for damages resulting from the termination.
- Payment for the completed work, which amounted to over 60% of the project.
In defense, SANEF, represented by Paul Usoro (SAN), argued that the contract’s termination was lawful and filed a ₦70 billion counterclaim, alleging losses due to HDMS’s refusal to remove equipment from the project site.
After eight sittings and reviewing 46 exhibits with expert witness testimonies, the Tribunal resolved most issues in HDMS’s favor.
Key Rulings by the Tribunal
- Time Waiver: The Tribunal concluded that SANEF waived its right to enforce the project’s timeline by not terminating the contract on the original due date, February 11, 2022. This rendered the subsequent termination on May 26, 2022, unlawful.
- Abuse of Power: The Tribunal criticized the CBN for unlawfully recalling ₦4.2 billion from HDMS’s account through Globus Bank. This act was deemed a gross abuse of power and a breach of the contract’s terms.
- Compensation for Completed Work: HDMS was awarded ₦5.33 billion for the over 60% of work completed before the unlawful termination.
- Damages: The Tribunal granted HDMS ₦9.1 billion in special damages and ₦5 billion in general damages.
- Interest Payment: The Tribunal ordered SANEF to pay 25% interest per annum on the awarded ₦19.4 billion from the date of the arbitral ruling.
Implications of the Verdict
This ruling highlights the importance of adhering to contractual obligations and the consequences of interference by powerful entities like the CBN. The Tribunal’s decision serves as a precedent for similar cases in Nigeria’s legal and business sectors.
Conclusion
The Arbitration Tribunal’s ₦19.4 billion award to HDMS underscores the need for fairness and accountability in contract enforcement. SANEF Creatives’ actions, deemed premature and unlawful, highlight the critical role of arbitration in resolving complex contractual disputes.
Key Takeaways:
- Contracts must honor agreed timelines unless unforeseen circumstances justify delays.
- Abuse of power, such as unilateral financial actions, undermines the rule of law.
- Arbitration remains a vital mechanism for resolving commercial disputes in Nigeria.
FAQs
What was the original project at the National Theatre?
The project involved dredging and reclamation work at the Lagos Creative Entertainment Centre, aimed at transforming the National Theatre into a hub for creative industries.
Why was the contract terminated?
SANEF Creatives terminated the contract due to delays, citing the expiration of the 36-week project timeline. However, the Tribunal ruled that this action was premature and unlawful.
What were the damages awarded?
HDMS received ₦19.4 billion in damages and interest, including payments for completed work, special damages, and general damages.
READ ALSO:
Follow the LMSINT MEDIA channel on WhatsApp:
Join Our WhatsApp Group Hear:
Kindly Share:
Discover more from LMSINT MEDIA
Subscribe to get the latest posts sent to your email.