Facts:

The Appellant and the Respondent executed a contract under which the parties agreed that the Appellant would supply various forms of equipment to the respondent, in order that the respondents could fulfil their obligations under a contract with the Nigerian National Petroleum Corporation (NNPC) for the refurbishment of Bonny Export Terminal in Rivers State. The agreement between – the parties is governed by a contract titled “Standard Conditions of Purchase”. The contract contained an arbitration clause which provides that “in the event that any dispute between the parties cannot be settled by negotiations, such dispute shall be referred to and finally settled by arbitration’’.

The case of the Appellant was that the initial contract sum was $8,877,944.00, but same was slashed to $7,778,875.00 due to reduction in the scope of work. It was also stated that due to change of order, extension of contract time and telefax charges, as at 22nd July, 1998, the total sum owed by the respondents was $4,733,183.62, which the respondents had allegedly failed to pay despite repeated demands. Upon being served with the originating process of the Appellant, the Respondent entered appearance. But before filing further processes, the Respondent brought an application before the trial court praying that the dispute before the court be referred to arbitration as agreed by the parties in the contract and for the court to stay proceedings pending the determination of the arbitration proceedings. The trial court heard the two applications. In delivering its rulings, the court found that the Respondent admitted owing the Appellant the sum of $837,725 and ordered that the Respondent pays the sum and referred the Appellants claim for the balance sum of money to arbitration.

Dissatisfied with the trial Court’s ruling, the Respondents appealed to the Court of Appeal. They argued among other grounds that the trial court ought not to have decided the appellants application for the final judgment in respect of the sum of $837,725 until after it had considered the Respondent’s application for referral of the dispute for arbitration.

Consequently, the Court of Appeal allowed the appeal and set aside the ruling of the trial court. Further dissatisfied by the decision of the Court of Appeal, the Appellant appealed to the Supreme Court.