Facts:

The appellant and the respondent are companies incorporated in Nigeria. The appellant is engaged in food processing business while the respondent carries on insurance business. The appellant entered into a contract with one Ogunnubi Complete Technologies (third party) for the fabrication and supply of stainless steel food processing equipments. Delivery and installation were to be made at the appellant’s site not later than 120 days after the receipt of the first instalment by the third party.

On 12th of August 1991, the respondent executed a performance bond in the sum of 3785,000.00 (Seven hundred and eighty five thousand naira) in favour of the appellant for the due performance of the contract between the appellant and the third party. The performance bond was duly stamped in the Stamp Duty Office on 7th August of 1991. Upon the allegation that the third party had fallen in breach of the contract, the appellant instituted an action for the enforcement of the performance bond in the Lagos High Court. The respondent objected to the jurisdiction of the Lagos State High Court on the ground that the action ought to have been instituted in the Federal High Court pursuant to section 7(1)(0) of the Federal High Court (Amendment) Decree 1991 (Decree) which provides: