CA/A/261/2005 – Reported in (2008) All FWLR (Pt. 416) 1915
SC. 12/2008 – Reported in (2012) 18 NWLR (Pt. 1332) 209
In 2003, further to commercial initiative and policy direction of the Federal Government of Nigeria (at the time) to privatize public assets, the Bureau of Public Enterprises (BPE) in conjunction with the National Council on Privatisation (NCP) invited bids in respect of several government owed corporations. One of such corporations put up for sale was the Aluminium Smelter Company of Nigeria (ALSCON). Amongst many local and foreign companies that made bids for ALSCON were BFI Group Corporation (BFIG) of USA and Russal of Russia. In respect of the bidding process, BFIG completed a Request for Proposals (RFP) containing terms and conditions that would guide the bidding process. Of essence is clause 4.8 of the said RFP, which in the main was to the effect that proposals made by bidders were deemed binding offers, acceptable by BPE to form binding contract between parties. A pre-bid conference was held on May 30, 2004, pursuant to which BPE forwarded to BFIG a document evincing undertaking and agreements reached at the conference, and demanded that BFIG return a duplicate copy of same if the said undertakings were agreeable to it. This, BFIG did. In the said Pre-bid conference agreement it was stated that bidders should issue a bid bond and that 10% of the bid price would be paid within 15 days of signing the Share Purchase Agreement (SPA), and the outstanding 90% bid price to be paid within 90 calendar days. In compliance with the pre-bidding conditions, BFIG furnished BPE with a bid bond of US$ 1 Million. At the financial bid opening on June 14, 2004, BFIG’s bid of US $410 Million was declared as the preferred bid, while Russal’s conditional offer of US $205 Million was disqualified. Further to BFIG’s successful bid, BPE sent a letter to BFIG stating that 10% of the bid price be paid within 15 working days from the date of receipt of the letter. Expectedly, BFIG challenged what it construed as a unilateral term. On the basis of BFIG’s alleged failure to satisfy this condition, BPE unilaterally repudiated the bid won by BFIG. Aggrieved by this decision BFIG approached the Federal High Court (FHC) for a reversal of BPE’s decision. Albeit, the FHC rejected in toto BFIG’s claim; this decision was upheld by the Court of Appeal, but was set aside by the Supreme Court.
BFIG as plaintiff in its Writ of Summons before the FHC made 11 claims ranging from a declaratory relief that upon BPE’s acceptance of its bid price of US $410 Million, a binding contract subsisted between parties, to an order of perpetual injunction restraining BPE and its privies from dealing with ALSCON in any way prejudicial to the interest of BFIG. BFIG’s arguments in all the courts centred on the existence of a binding contract as at the point BPE accepted its proposal on June 14, 2004, and that the agreement was for it (BFIG) to pay 10% of the bid price after the signing of the SPA, and not after the receipt of the letter from BPE. Hence, since at the material time, the SPA had not been signed, the contract cannot be terminated for refusal and/or failure to pay 10% of the bid sum. Relying on Omega Bank Ltd. v. OBC Ltd , BPE argued at the Supreme Court that the complete web of documents constituting the complex transaction between parties should be considered in appreciating the nature of contract formed, and also relied on the objective theory of contracts espoused by Nnaemeka-Agu JSC in Ekwunife v. Wayne (W/A) Ltd , in arguing that when confronted with a complex transaction, a court should sieve out which documents are relevant and decided whether or not the documents are sufficient to reveal the nature of the terms and whether the contract is divisible or not. On its part, BPE argued that there was no binding contract between parties which is capable of being enforced by an order of specific performance. It further argued, relying on Anaeze v. Anyaso , that a party seeking to enforce a contractual obligation vide specific performance must show that it had fulfilled its own side of the contract. Therefore, having failed to pay the 10% deposit of the bid price within 15 days from the date of receipt of BPE’s letter and since it refused to submit its technical agreement with Daewoo International, the defendant reserved and did exercise their right to terminate the negotiation for sale of ALSCON to parties.
The Federal High Court and the Court of Appeal were ad idem that there was no contract between the parties, and that ‘the appellant and the respondent had not gone too far from an invitation to treat’. The Court of Appeal further held that the alleged terms of the contract giving a ‘luxury’ of 15 days to BFIG to pay 10% of the bid price and the outstanding 90% to be paid 90 days after is inexplicable. The Supreme Court however set the concurrent findings of the two lower courts aside (agreed with the representations made by BFIG’s team of counsel led by Chief Wole Olanipekun, SAN of Wole Olanipekun & Co.), holding in the main that commercial contracts should be construed holistically with attention given to all correspondence and documentation that make up the contract, particularly because courts do not write or re-write contracts between parties. The apex court further held that the pre-bid conference resolutions expressly provide for the payment of 10% of bid price within 15 days of signing of the SPA, and no party has the power to shift the goal post when the match had begun; and that ‘an enforceable contract was struck by the parties by the acceptance of the appellant’s bid of June 14, 2004.’ The Court, in resolving the issue raised by BPE that no Order of specific performance can be made given that ALSCON had already been concessioned to Russal of Russia, held that the doctrine of lis pendens forbade BPE to have done so, and that Russal bought ALSCON, a subject of litigation, at its own risks. Hence, the court granted all the reliefs sought by BFIG at the trial court.
The position of the Supreme Court in the case under review reinforces the enduring legal maxim ‘ubi jus ibi remedium ’. The sanctity of the agreement of parties and the obligation of adhering to the terms of such agreement is crucial for the growth of any economy, and goes a long way in providing an assuring atmosphere for investors. By this decision, the Supreme Court re-affirmed that contracts are sacrosanct and their terms inviolable and also that the judicial system provides a safe haven for resolution of commercial/investment disputes – which are naturally bound to occur in the course of economic interactions.