NICN - JUDGMENT
IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA
IN THE PORT HARCOURT JUDICIAL DIVISION
HOLDEN AT PORT HARCOURT
BEFORE HIS LORDSHIP:
HONOURABLE JUSTICE BUHARI SANI…..JUDGE
ON THURSDAY, THE 14TH DAY OF MAY, 2026
SUIT NO: NICN/PH/02/2024
BETWEEN:
MR. KENNETH ONYEBUCHI UGWU………. CLAIMANT/RESPONDENT.
AND
1. SPECIFIC TOOLS AND TECHNIQUES LIMITED.
2. MR. FEMI OWOPETU……………………..DEFENDANTS/OBJECTORS.
RULING
This Ruling is in respect of a Notice of Preliminary Objection dated and filed on the 2nd day of July 2025 by the 1st and 2nd Defendants/Objectors. The Notice of Preliminary Objection was brought pursuant to Order 17 Rule 4 of the National Industrial Court Rules, 2017, and under the inherent jurisdiction of this Honourable Court.
The Objectors prayed this Honourable Court for the following reliefs:
· 1. AN ORDER dismissing and/or striking out the Claimant/Respondent's Claim against the 1st and 2nd Defendants/Objectors in limine.
· . AND SUCH FURTHER or other Orders as the Honourable Court may deem fit to make in the circumstances.
In support of the Notice of Preliminary Objection, the Objectors filed a Written Address dated 2nd July 2025 and a 5-paragraphed Affidavit in Support deposed to by one Esther Vincent, Esq.
In opposition to the Preliminary Objection, the Claimant/Respondent filed a Reply to Notice of Preliminary Objection and Written Address dated 21st July 2025. He also filed a Counter-Affidavit deposed to by the Claimant, Mr. Kenneth Onyebuchi Ugwu, on the 21st day of July 2025.
Thereafter, the Objectors filed a 1st and 2nd Defendants' Reply on Points of Law dated 16th February 2026, to which the Respondent filed no further response. At the hearing of the Preliminary Objection on the 16th day of February 2026, both counsel adopted their respective processes and urged the court to rule in their favour.
ISSUES FOR DETERMINATION.
From a careful review of the Objectors' Notice of Preliminary Objection, the Written Address in support, the Respondent's Reply, and the Reply on Points of Law, the following sole issue is hereby formulated for determination:
"Whether this suit is competent and this Honourable Court has the jurisdiction to hear and determine the same, having regard to the grounds of objection raised by the Defendants/Objectors."
In determining this sole issue, the court shall consider the three principal grounds upon which the Objection is predicated, namely:
· (a) Whether the Respondent failed to satisfy a condition precedent (arbitration clause) contained in the Letter of Employment dated 28th May 2018 prior to the institution of this suit.
· (b) Whether the Complaint is incurably flawed for failure to comply with Order 3 Rule 12(1) of the National Industrial Court Rules, 2017 regarding monetary claims.
· (c) Whether the aggregate facts disclose no reasonable cause of action against the 2nd Defendant, and whether the 2nd Defendant is a necessary party.
SUMMARY OF PARTIES' ARGUMENTS
Learned counsel for the Objectors, argued that the suit is grossly incompetent and this court lacks jurisdiction to entertain same.
On the issue of condition precedent, counsel submitted that paragraph 18 of the Terms and Conditions of Employment contained in the Letter of Employment dated 28th May 2018 (entered between the Respondent and his former employer, BJ Bison Ventures Limited, which was inherited by the 1st Objector) provides that:
.. any dispute arising from the agreement shall first be resolved through mediation, and if not resolved, through binding arbitration under the Alternative Dispute Resolution framework, before any resort to litigation.
Counsel relied on several decided cases, including Adams v. A.-G., Lagos State (2020) 17 NWLR (Pt. 1753) 281, Mobil Producing (Nig) Unltd. v. F.I.R.S. (2021) 11 NWLR (Pt. 1788) 528, A.-G., Kwara State v. Adeyemo (2017) 1 NWLR (Pt. 1546) 253-254, and Odua Inv. Co. Ltd. v. Michael (2024) 12 NWLR (Pt. 1952) 349, to submit that the use of the word "shall" in the arbitration clause makes it mandatory, and failure to comply with this condition precedent renders the suit premature, incompetent, and robs the court of jurisdiction.
On the issue of the 2nd Defendant, counsel submitted that the Respondent failed to disclose any reasonable cause of action against the 2nd Defendant. Counsel argued that the 2nd Defendant was merely mentioned as the Chief Executive Officer of the 1st Defendant company, and that a company is a distinct legal entity from its directors and officers. Counsel relied on Ekeng v. Polaris Bank Ltd. (2021) 2 NWLR (Pt. 1761) 395 and FCMB Plc v. Slanik Engineering Ltd & Anor (2024) LPELR-73199(CA) to submit that a director cannot be held liable for the debt of a company simply by virtue of his position as a director. Counsel further submitted that there were no specific acts attributed to the 2nd Defendant in the pleadings.
On the issue of non-compliance with Order 3 Rule 12(1) of the NICN Rules, 2017, counsel argued that the Respondent failed to clearly state the source of the claim, the specific amount owed (whether for pension or PAYE), when the amount became due, and how demands were made. Counsel submitted that the claims in Reliefs 1 and 2 are speculative and that the court should not act on conjectures, relying on Romrig (Nig.) Ltd. v. F.R.N. (2018) 15 NWLR (Pt. 1642) 284 and Onuegbu v. Gov., Imo State (2024) 15 NWLR (Pt. 1962) 419.
In response, Learned counsel for the Respondent, submitted that the Preliminary Objection is frivolous and lacking in merit and ought to be dismissed with substantial costs.
On the arbitration clause, counsel submitted that an arbitration agreement does not oust the jurisdiction of the court. Counsel argued that the proper application where there is non-compliance with an arbitration clause is an application for stay of proceedings pending arbitration, not an application to strike out the suit. Counsel relied on Mainstreet Bank Capital Ltd & Anor v. Nigeria Reinsurance Corporation Plc (2018) 14 NWLR (Pt.1640) 423, where the Supreme Court held that an agreement to have recourse to arbitration does not oust the jurisdiction of the court, and that a party may commence legal proceedings before any award is made.
Counsel further submitted that the Objectors were not willing and ready to explore arbitration, as evidenced by the several emails and a demand letter sent by the Respondent which were ignored. Counsel relied on Section 5(2)(a) of the Arbitration and Conciliation Act (now the Arbitration and Mediation Act, 2023) to argue that the court may refuse a stay where the applicant is not ready and willing to proceed to arbitration.
On the joinder of the 2nd Defendant, counsel submitted that although a company is a separate legal personality, the rule is not absolute. Counsel argued that the courts have recognized exceptions where the officers of a company are the alter ego through which the company acts. Counsel relied on C.B.N v. Interstella Communications Ltd (2017) 12 NWLR (Pt. 1584) 170 and Longe v. FBN Plc (2010) 6 NWLR (Pt. 1189) 1 to argue that the 2nd Defendant, as the Chief Executive Officer and the directing mind and will of the 1st Defendant, was properly joined. Counsel further argued that even if there was a misjoinder, the proper order would be to strike out the name of the 2nd Defendant, not to dismiss the entire suit, relying on Order 13 Rule 14(1) of the NICN Rules, 2017.
On the issue of Order 3 Rule 12(1), counsel submitted that the Amended Complaint clearly complied with all the requirements of the rule. Counsel referred the court to paragraphs 4 and 11 of the Amended Statement of Facts, which set out the source of the claim (failure to remit pension and PAYE contributions) and the amount (N184,464.00). Counsel also referred to paragraph 12, which pleaded the several emails sent to the Defendants, and paragraph 14, which pleaded the Demand Notice dated 1st February 2023. Counsel submitted that any alleged irregularity is a mere procedural defect and that this court has the inherent power under Order 5 Rule 1 of the NICN Rules to waive technical irregularities in the interest of justice, relying on Dada v. Ogunsanya (1992) 3 NWLR (Pt. 232) 754 and Odutola v. Lawal (2002) 1 NWLR (Pt. 749) 633. He urged the Court to dismiss the objection with substantial cost.
COURT'S DECISION
I have carefully and considered the Objectors' Notice of Preliminary Objection, the processes filed by both parties, the arguments of counsel, the applicable laws, and authorities cited.
It is elementary and trite law that jurisdiction is the lifeblood of any adjudication. It is the foundation upon which a court's power to hear and determine a matter rests. Without jurisdiction, any proceedings conducted, no matter how well-reasoned or diligently pursued, amount to a nullity. The issue of jurisdiction can be raised at any stage of the proceedings, even for the first time on appeal. See Madukolu v. Nkemdilim (1962) 2 SCNLR 341; Petrojessica Enterprises Ltd v. Leventis Technical Ltd (1992) 5 NWLR (Pt. 244) 675; Obi v. INEC (2007) 11 NWLR (Pt. 1046) 565.
A Preliminary Objection is a potent legal tool used to challenge the competence of a suit or the jurisdiction of the court before proceeding to the merits. For a preliminary objection to be upheld, it must be founded on a point of law, the facts relied upon must be incontrovertible, and its resolution must dispose of the entire suit in limine. See Onuoha v. Okafor (1983) 14 NSCC 29; Agbapu v. I.G.P. (2023) 12 NWLR (Pt. 1902) 1.
Ground One: The Arbitration Clause as a Condition Precedent.
The principal ground of the Objectors' objection is that the Respondent failed to satisfy a condition precedent by not resorting to mediation and arbitration as stipulated in paragraph 18 of the Terms and Conditions of Employment (Exhibit to the Letter of Employment dated 28th May 2018), before instituting this action. The clause in question provides:
"Any dispute arising from this agreement shall be resolved through mediation and if the dispute cannot be resolved through mediation, then the dispute will be resolved through binding arbitration conducted in accordance with the Alternative Dispute Resolution and each party shall bear its cost for the exercise."
The Objectors contend that the use of the word "shall" makes this clause mandatory, and its non-compliance robs this court of jurisdiction. The Respondent, on the other hand, argued that arbitration clauses do not oust the jurisdiction of the court and that the proper application, if any, is for a stay of proceedings, not for dismissal.
After a thorough examination of the law, I find myself in complete agreement with the Respondent's submissions on this point. The law is well settled beyond any matter of doubt that a valid arbitration agreement does not automatically divest a court of its jurisdiction to entertain a dispute. The court's jurisdiction, especially this court's constitutional jurisdiction under Section 254C of the 1999 Constitution over labour and employment matters, is not ousted by a private agreement between parties. The Supreme Court has laid this principle to rest in a long line of authorities. In Mainstreet Bank Capital Ltd & Anor v. Nigeria Reinsurance Corporation Plc (2018) 14 NWLR (Pt.1640) 423, the apex court held unequivocally:
"An agreement to have recourse to arbitration in a dispute does not oust the jurisdiction of the court. And the trial Court was right when it so held in this case. Therefore, before a submission to arbitration or an award is made, either party to such an agreement may commence legal proceeding in respect of any claim or cause of action included in the arbitration agreement..."
This position was also reaffirmed by the Supreme Court in U.B.A. Plc v. Trident Consulting Ltd (2023) 14 NWLR (Pt. 1903) 95, where the court held that while arbitration clauses are binding, they are not a complete ouster of the court's jurisdiction. See also Obembe v. Wemabod Estates Ltd (1977) 5 SC (Reprint) 70; City Eng. (Nig.) Ltd. v. F.H.A. (1997) 9 NWLR (Pt. 520) 224; M.V. Lupex v. N.O.C. & S. Ltd (2003) 15 NWLR (Pt. 844) 469.
The correct legal response where a suit is filed despite an arbitration agreement is not an application to dismiss or strike out the suit for lack of jurisdiction, but rather an application for a stay of proceedings pending arbitration. This is expressly provided for in Section 5 of the Arbitration and Mediation Act, 2023 (which has replaced the Arbitration and Conciliation Act). Section 5(3) of the AMA, 2023 states:
"Where an action is brought before a court in a matter which is the subject of an arbitration agreement, the court, on an application by a party, shall stay the proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed."
The Objectors in this case did not apply for a stay of proceedings. They applied for dismissal of the suit in limine. This is a fatal procedural error. The court cannot grant a dismissal where a stay is the appropriate remedy. See Stabilini Visinoni Ltd v. C.B.N. (2023) 3 NWLR (Pt. 1872) 310.
Furthermore, the law is that a party who seeks a stay of proceedings in favour of arbitration must demonstrate that it is ready and willing to proceed to arbitration. In S.A. & Industry Co. Ltd v. Ministry of Incorp. (2014) 10 NWLR (Pt. 1416) 1515, the Court of Appeal held that one of the conditions for granting a stay is that the applicant was at the time the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration. The Objectors, by their conduct of ignoring the Respondent's several emails and the demand letter from his counsel, have not demonstrated this readiness. More importantly, they did not apply for a stay. They applied for dismissal. This ground of objection therefore fails fundamentally.
On ground Two, the Objectors argue that no reasonable cause of action is disclosed against the 2nd Defendant (Mr. Femi Owopetu), and that he is not a necessary party because a company is a distinct legal entity from its directors.
While it is trite law that a company is a separate legal personality from its shareholders, directors, and officers (the principle in Salomon v. Salomon & Co. Ltd (1897) AC 22), this principle is not absolute. The courts have long recognized exceptions where the veil of incorporation can be lifted including where the director is the "alter ego" or the "directing mind and will" of the company, and where the director's personal conduct is directly in issue.
In the instant case, the Respondent's pleadings, particularly the Statement of Facts and the exhibits attached (including email correspondences), show that the 2nd Defendant was directly communicated with regarding the deductions and the failure to remit the PAYE contributions. The Respondent's case is not merely that the 2nd Defendant is the CEO; it is that the 2nd Defendant was actively involved in the employment relationship and the breach complained of.
More fundamentally, the Respondent's claim is against both Defendants "jointly and severally." This is permissible in our adversarial system. Even if the court were to find eventually that the 2nd Defendant is not personally liable, that is a matter for the substantive trial, not a preliminary objection. A preliminary objection must be resolved on the incontrovertible facts as pleaded, without delving into evidence that may be led at trial. At this stage, viewing the pleadings as they are, I am satisfied that a reasonable cause of action has been disclosed against the 2nd Defendant. He is alleged to be the CEO and an active participant in the acts complained of.
In any event, even if the 2nd Defendant were improperly joined, the law is that the entire suit is not rendered incompetent for misjoinder. Order 13 Rule 14(1) of the National Industrial Court of Nigeria (Civil Procedure) Rules, 2017 provides:
"No proceedings shall be defeated by reason of misjoinder or non-joinder of parties, and a judge may deal with the matter in controversy so far as regards the rights and interest of the parties actually before the Court."
Similarly, in Green v. Green (1987) 3 NWLR (Pt. 61) 480, the court held that the proper order where there is a misjoinder is to strike out the name of the misjoined party, not to dismiss the suit. In Agbomagbe Bank Ltd v. General Manager, G.B. Ollivant Ltd. (1961) 1 All NLR 116, the court clarified that misjoinder or non-joinder does not defeat an action. This ground of objection, therefore, cannot sustain the dismissal of the entire suit.
On ground Three, the Objectors contend that the Respondent failed to comply with Order 3 Rule 12(1) of the NICN Rules, 2017, which requires that an originating process containing a monetary claim shall clearly state the source of the claim, the amount being claimed, when the amount became due, how demands were made, and the response of the defendant.
I have carefully examined the Respondent's Amended Complaint, the Amended Statement of Facts, and the Amended Summary of Facts. I find that the Respondent has substantially complied with the requirements of the rule.
· Source of claim (Rule 12(1)(a)): Paragraph 4 of the Amended Summary of Facts and paragraph 11 of the Amended Statement of Facts clearly state that the claim arises from the Defendants' failure to remit the Claimant's Pension and Tax PAYE contributions as agreed in the employment relationship.
· Amount claimed (Rule 12(1)(b)): Reliefs 1 and 2 of the Amended Complaint specifically claim the monthly sum of N3,294.00 and the total sum of N184,464.00 for the period May 2019 to December 2023.
· When amount became due (Rule 12(1)(c)): Paragraph 11 of the Amended Statement of Facts states that the failure to remit commenced from May 2019, when the Defendants inherited the previous company.
· How demands were made (Rule 12(1)(d) & (e)): Paragraph 12 of the Amended Statement of Facts states that the Claimant sent several emails to the Defendants, and copies of those emails have been pleaded and will be relied upon at trial.
· Response of Defendant (Rule 12(1)(f)): Paragraphs 13 and 14 of the Amended Statement of Facts state that the Defendants neglected the emails and failed to respond to the demand letter written by the Claimant's counsel.
The Objectors argue that the claim is speculative because it does not specify whether the amount is for pension or PAYE. A careful reading of the pleadings shows that the claim is for PAYE (Tax) contributions. The reliefs specifically refer to "Tax PAYE account." Even if there was any ambiguity, it is not a jurisdictional issue. It is a matter that can be clarified through evidence at trial.
Furthermore, the law is that procedural rules are designed to facilitate the administration of justice, not to defeat it. Order 5 Rule 1 of the NICN Rules, 2017, provides that failure to comply with any of the Rules may be treated as an irregularity, and the court may give any direction as it thinks fit. The Supreme Court has consistently held that non-compliance with rules of court is a mere irregularity that does not go to the jurisdiction of the court, unless the non-compliance is so fundamental that it renders the process a nullity. See Odutola v. Lawal (2002) 1 NWLR (Pt. 749) 633; Dada v. Ogunsanya (1992) 3 NWLR (Pt. 232) 754. I find no fundamental defect in the Respondent's Complaint.
It is important to emphasize that the Objectors have approached this court seeking to dismiss the suit entirely. However, the proper course, even where an arbitration clause exists, is to stay proceedings, not to dismiss. The Supreme Court in N.N.P.C. v. Clifco Nig. Ltd (2011) 10 NWLR (Pt. 1255) 209 held that an order striking out or dismissing a suit is a drastic step that terminates the action, whereas a stay merely suspends proceedings pending the outcome of arbitration.
In this case, even if the arbitration clause were valid and enforceable, which it is, the appropriate order would be a stay, not a dismissal. The Objectors did not even ask for a stay. This ground of objection also fails.
Having resolved all three grounds of objection against the Objectors and in favour of the Respondent, I find that the Notice of Preliminary Objection dated 2nd July 2025 is completely lacking in merit. The Respondent's suit is competent, this Honourable Court has the requisite jurisdiction to hear and determine the same, and the objection is hereby dismissed and the substantive suit shall proceed to hearing on the merit.
Parties to bear their respective costs.
Ruling is entered accordingly.
HON. JUSTICE BUHARI SANI
JUDGE
LEGAL REPRESENTATIONS:
J.I. Ogbu, Esq., with O.G. Nweke, Esq., U.M. Eze, Esq., K.C. Ugwuoke, Esq., T.K. Lawrence, Esq., for the Claimant/Respondent.
Dr. 'Kemi Pinheiro, SAN, with Thaddeus Idenyi, Esq., MCIArb., Victoria Onuoha, Esq., Ebitimi Osain, Esq., Esther Vincent, Esq., for the 1st and 2nd Defendants/Objectors.