Contributor: Okosa Chinwendu Marycytnthia
Introduction
Arbitration has become one of the most preferred mechanisms for dispute resolution. Its popularity stems from its flexibility, confidentiality, speed, and party-driven nature.[1] Unlike litigation, which is often characterised by strict procedural formalities and protracted delays, arbitration allows parties to resolve disputes more efficiently and in a commercially convenient manner.
The principle of consent lies at the heart of arbitration. Parties express this consent through a voluntary arbitration agreement entered into between them.[2] Consequently, under the Arbitration and Mediation Act 2023, only parties who are signatories to an arbitration agreement may enforce or be bound by its terms.[3] This position reflects the doctrine of privity of contract, which holds that only parties to a contract may derive benefits from or incur obligations under it.
However, the increasing complexity of modern commercial transactions has challenged this traditional position, particularly where non-signatories play significant roles in contractual relationships. Against this backdrop, this article examines the decision of the Supreme Court in Emerging Markets Telecommunications Services Ltd v Afdin Ventures Ltd & Ors[4] and evaluates its implications for arbitration jurisprudence and commercial dispute resolution in Nigeria.
Facts of the Case
The 1st and 2nd Respondents commenced an action before the Federal High Court (FHC) seeking the recovery of the sums of US$13,300,910 and US$30,030,040 from the Appellant and the 3rd to 6th Respondents. The claim arose from an Offer of Terms and a Custodial Agreement executed by the parties, both of which contained arbitration clauses requiring disputes arising therefrom to be resolved through arbitration.
The dispute was subsequently referred to arbitration, where the arbitral tribunal delivered a Final Award in favour of the 1st and 2nd Respondents. The tribunal directed the Appellant, together with the 5th and 6th Respondents, to refund the sums claimed. Dissatisfied with the Award, the Appellant commenced proceedings before the FHC seeking an order setting it aside. At the same time, the 1st and 2nd Respondents instituted proceedings for its recognition and enforcement.
During the enforcement proceedings, the trial Court struck out the Appellant’s counter-affidavit after refusing an application for adjournment made on account of the absence of its lead counsel. The Court thereafter recognised and enforced the arbitral Award. Aggrieved by the decision, the Appellant appealed to the Court of Appeal, which affirmed the judgment of the FHC.
Still dissatisfied, the Appellant further appealed to the Supreme Court, contending that, as a non-signatory to the arbitration agreement, it could neither be bound by the arbitral proceedings nor the resulting Award. The Appellant also alleged that the transaction was tainted by fraud. In response, the Respondents challenged the competence of the appeal, arguing that the Appellant had failed to comply with an earlier order of court directing it to deposit the judgment sum as a condition for the grant of a stay pending appeal.
Decision of the Supreme Court
In resolving the preliminary objection, the Supreme Court (SC) agreed with the 1st and 2nd Respondents that the Appellant had failed to comply with the trial court’s order directing the deposit of the judgment sum and had also breached the provisions of the Supreme Court Rules relating to the payment of costs previously ordered by the Court. Although these failures could have rendered the appeal incompetent, the Court nevertheless proceeded to determine the substantive issues raised in the appeal.
On the merits, the SC held that the scope of an arbitration agreement may extend beyond its signatories to include persons who derive benefits from the contract, assume obligations under it, or are otherwise sufficiently connected to the transaction. Relying on the definition of “party” under the Arbitration and Mediation Act 2023,[5] the Court held that an arbitration agreement may also bind persons claiming through or under a contracting party. By so holding, the Court adopted a flexible approach that departs from a strict application of the doctrine of privity of contract.
The Court further recognised several doctrines capable of justifying the inclusion of non-signatories in arbitration proceedings, including agency, assignment, equitable estoppel, the alter ego doctrine, veil piercing, and the group of companies doctrine. It also affirmed its earlier decision in Metroline (Nig.) Ltd v Dikko,[6] thereby reinforcing the jurisprudential basis for binding non-signatories to arbitration agreements in appropriate circumstances.
With respect to the allegation of fraud, the SC held that a mere allegation of fraud does not, in itself, transform a civil dispute into a criminal matter. Applying the doctrine of separability, the Court reiterated that an arbitration clause is distinct from the main contract and remains valid notwithstanding allegations of fraud, misrepresentation, or other defects affecting the substantive contract. Consequently, such allegations do not, without more, invalidate an arbitration agreement or deprive an arbitral tribunal of jurisdiction.
Critical Analysis of the Decision
The Supreme Court’s decision in Emerging Markets Telecommunications Services Ltd v Afdin Ventures Ltd & Ors represents a significant development in Nigeria’s arbitration jurisprudence. The judgment moves away from a strict application of the doctrine of privity of contract in relation to arbitration agreements. It adopts a more flexible approach to determining whether non-signatories may enforce, benefit from, or be bound by such agreements. While this approach aligns with contemporary commercial realities, it also raises important concerns regarding certainty and predictability in arbitration.
A notable strength of the decision lies in the Court’s recognition of the complexities of modern commercial transactions. Contemporary business arrangements rarely involve only two clearly identifiable contracting parties. Rather, they often include parent companies, subsidiaries, agents, financiers, and other entities that may not formally execute the principal contract but play critical roles in its negotiation, performance, or benefit. By acknowledging the commercial significance of such parties, the Supreme Court demonstrated an appreciation of the realities of both domestic and international commerce. The decision also enhances the effectiveness of arbitration by preventing parties from evading arbitral obligations through technical reliance on their non-signatory status, where their conduct or relationship with the transaction warrants a different outcome.
Notwithstanding these advantages, the decision raises legitimate concerns regarding the consensual foundation of arbitration. Arbitration derives its legitimacy from the parties’ consent, and the traditional position has been that no person should be compelled to arbitrate a dispute without first agreeing to do so. By extending the reach of arbitration agreements to certain non-signatories, the Court risks diluting the principle of party autonomy, which remains the cornerstone of arbitration. Although the Court identified several doctrines capable of justifying the inclusion of non-signatories, it did not comprehensively define the circumstances in which those doctrines should apply. Consequently, the decision may create uncertainty regarding the threshold for determining when an arbitration agreement or arbitral award can validly bind a non-signatory.
Furthermore, the Court’s endorsement of doctrines such as agency, equitable estoppel, alter ego, veil piercing, and the group of companies doctrine introduces concepts that have developed differently across jurisdictions. Without clear judicial guidelines, Nigerian courts may struggle to apply these doctrines consistently. This uncertainty could affect contractual predictability and, in some cases, discourage parties who place significant value on the certainty traditionally associated with arbitration agreements.
Conclusion
The decision in Emerging Markets Telecommunications Services Ltd v Afdin Ventures Ltd & Ors reflects the Supreme Court’s commitment to commercial practicality and the efficient resolution of disputes through arbitration. By recognising circumstances in which arbitration agreements may bind non-signatories, the Court aligned Nigerian arbitration jurisprudence with evolving international commercial practices.
Nevertheless, the decision highlights the need for greater clarity regarding the limits of this principle. To preserve certainty, predictability, and party autonomy, Nigerian courts and the legislature should develop clearer guidelines defining the circumstances under which non-signatories may validly enforce, benefit from, or be bound by arbitration agreements and arbitral awards. Such guidance would strike an appropriate balance between commercial reality and the consensual nature of arbitration, thereby strengthening confidence in Nigeria’s arbitration framework.
Reference:
- Toluwani Kalaro, ‘Commercial Arbitration: Advantages, Limitations, and Recent Developments in Nigeria’, https://www.trustedadvisorslaw.com/insights/commercial-arbitration-advantages-limitations-and-recent-developments-in-nigeria> accessed 26 May, 2026. ↑
- Harrison Ogalagu & Nnamdi Ezekwem, ‘Does Extension of Arbitration Agreements to Non-Signatories Undermine the Principle of Consent as Cornerstone of Arbitration?’, (18 March, 2024), <https://share.google/tUFgV9S6c4rTmU4Ds> accessed 26 May, 2026. ↑
- AMA 2023, S 40. ↑
- Appeal No: SC/CV/1096/2024 ↑
- AMA 2023, s 91. ↑
- [2021] 16 NWLR (Pt.1761) 422 (SC). ↑
