by Nwoye Ifeanyi Daniel Esq.
This article will examine the state of commercial arbitration in Nigeria. The different forms or genres of arbitration in Nigeria, (as an alternative dispute resolution method), will be explained with the emphasis on commercial arbitration. The divergent provisions of the law on domestic and international commercial arbitration are highlighted. The article examines the current state of the practice of commercial arbitration (both domestic and international) in Nigeria, highlighting the problems, examining the changes taking place and proffering further modifications and developments on the law and practice of arbitration in Nigeria.
Disputes are regular features of human relation. Commercial transactions also give rise to disputes. However, the quick and fair resolution of commercial disputes is an indispensible requirement for stability and growth in any economy. When parties are faced with a dispute, they can choose to either take it to the courts for adjudication, or to pursue any of the methods of alternative dispute resolution. However, the high cost of litigation and the antagonistic disposition it usually fosters between parties, (possibly because of the adversarial nature of most legal systems), make arbitration and other alternative dispute resolution methods better alternatives.
ALTERNATIVE DISPUTE RESOLUTION
Alternative Dispute Resolution has been referred to as the different processes designed to aid the peaceful settlement of disputes without recourse to traditional courts through litigation. They are not “substitutes” to litigation, but rather, they are viewed as “aids” to litigation. These processes try to achieve an expeditious resolution of the conflict between the parties, while at the same time, preserving the cordial relationship between the parties. The major forms of alternative dispute resolution are:
- Negotiation: Largely, this is done by the parties involved without any external interference. Here, the parties seek to arrive at an amicable settlement of the dispute through discussions. This method can only be effective where the parties are willing to make concessions and compromise their positions in order to arrive at terms of settlement that would be agreeable to all parties.
- Mediation: In mediation, a third parties acts as a go-in-between for the parties. The third party does not take sides but tries to open up the channel of communication between the parties in order to resolve the dispute. He does not suggest terms but rather conveys the terms of the parties and he lacks power make any decisive determination of the issues.
- Conciliation: Conciliation is very similar to mediation. However, the conciliator can offer and proffer solutions and terms to the parties. The parties are at liberty to accept or reject the terms.
Although arbitration is an alternative dispute resolution method, it has some features that clearly distinguish it from other; chief among them being the powers of arbitrators to make binding decisions in form of awards.
NATURE OF ARBITRATION
Arbitration is a form of alternative dispute resolution method in which disputes between parties are heard and settled by person(s) chosen by the parties. The dispute between the parties is settled by a third party or a body of third parties chosen by the parties, after hearing the cases of the parties in a judicial manner. Simply put, it is the voluntary submission of a dispute to persons of the disputing parties’ choice for a binding decision. The decision reached by the arbitrators is called an award and it is enforceable by the courts. Though the arbitration proceedings are said to be conducted in a judicial manner, the rules applicable to its proceedings are less stringent than the rules applicable in the conventional courts.
FORMS OF ARBITRATION
The term “forms of arbitration” is used to refer to the various forms of disputes and situations arbitration is employed to settle. This is also used to refer to the type of arbitration body in use (whether institutional or domestic), and also the nature of dispute and parties involved (whether domestic or international). These forms of arbitration are considered below, though international and domestic arbitration are considered in relation to commercial arbitration.
- COMMERCIAL ARBITRATION
As aptly stated by the Authors of “Law and Practice of Arbitration and Conciliation In Nigeria” Honourable Justice J. Olakunle Orojo and Professor M. Ayodele Ajomo on page vi of the book: “The resolution of commercial disputes is obviously a very crucial aspect of the operation of the national economy and of the judicial system.”
Commercial arbitration in Nigeria is governed by the Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria (2004). Arbitration is simply defined in the Act as “commercial arbitration, whether or not administered by a permanent arbitral institution”. On the other hand, “commercial” is defined as “all relationship of a commercial nature including any trade transaction for the supply of goods and services, distribution agreement, commercial representation or agency, factoring, leasing, investment, financing, banking, insurance, exploitation agreement or concession, joint venture and other forms of industrial or business co-operation, carriage of goods or passengers by air, sea, rail or road.”
From the foregoing, we can then say that commercial arbitration is the voluntary submission of disputes arising from any form of business or commercial transaction to a third party other than the courts, for a binding decision. Commercial Arbitration will be discussed in greater details later in this work.
- INVESTMENT ARBITRATION
The term “Investment Arbitration” refers to arbitration between government agencies and an investor. This is distinguished from commercial arbitration which essentially involves private parties. Investment arbitration in Nigeria can be said to be derived from the Nigerian Investment Promotion Commission Act, (NIPCA) Cap N 117 Laws of the Federation of Nigeria, 2004 which was first enacted in 1995. While the Arbitration and Conciliation Act deals with arbitration in general, the NIPCA deals extensively with the promotion of investments in Nigeria. The NIPCA contains specific provision for the resolution of disputes arising from investment transactions (transactions between an investor, whether Nigerian or foreign, and any Government of the Federation of Nigeria).
Section 26 of NIPCA provides as follows:-
(1) “Where a dispute arises between an investor and any Government of the Federation in respect of an enterprise, all efforts shall be made through mutual discussion to reach an amicable settlement.
(2) “Any dispute between an investor and any Government of the Federation in respect of an enterprise to which this Act applies is not amicably settled through mutual discussions, may be submitted at the option of the aggrieved party to arbitration as follows:-
(a) in the case of a Nigerian investor, in accordance with the rules of procedure for arbitration as specified in the Arbitration and Conciliation Act or
(b) in the case of a foreign investor, within the framework of any bilateral or multilateral agreement on investment protection to which the Federal Government and the country of which the investor is a national are parties; or
(c) in accordance with any other national or international machinery for the settlement of investment disputes agreed on by the parties.
(3) Where in respect of any dispute, there is disagreement between the investor and the Federal Government as to the method of dispute settlement to be adopted, the International Centre for the Settlement of Investment Dispute shall apply.”
- MARITIME ARBITRATION
Maritime refers to anything relating to or involving ships, shipping, navigation or seamen. The practice of Maritime arbitration has not been as common or frequent as the other forms of arbitration because most arbitration clauses in maritime contracts try to exclude the jurisdiction of the Nigerian Courts, whether the subject matter of the claim or any of the parties is within the jurisdiction of the Nigerian courts notwithstanding. However, the enactment of the Admiralty Jurisdiction Act (AJA) has tried to provide a remedy (ineffective in our opinion) to the above-mentioned situation. Equally, the emergence of the Maritime Arbitration Association of Nigeria in 2005 can be said to be bringing new fire and impetus to the promotion of maritime arbitration in Nigeria.
The question that then readily comes to mind is this, “can ouster clauses in arbitration agreement effectively disrobe the Nigerian courts of their jurisdiction in maritime matters?” The answer can be found in the Admiralty Jurisdiction Act (AJA) 1991. Such ouster clauses are clearly prohibited in the Act as the Act unequivocally preserves the jurisdiction of the Federal High Court no matter the nature, wordings or drafting of the ouster clause in any arbitration clause in the contracts.
Section 20 of the AJA states:-
“Any agreement by any person or party to any cause, matter or action which seeks to oust the jurisdiction of the Court shall be null and void, if it relates to any admiralty matter falling under this Act and if –
- the place of performance, execution, delivery, act or default is or takes place in Nigeria; or any of the parties resides or has resided in Nigeria; or
- – f.
- under any convention, for the time being in force to which Nigeria is a party, the national court of a contracting State is either mandated or has a discretion to assume jurisdiction; or
- in the opinion of the Court, the cause, matter or action should be adjudicated upon in Nigeria.
This Act has been given judicial backing in many cases. For instance, in M.V. PANORMOS Bay v. Olam (Nig.) Plc (2004) 5 N.W.L.R. Part 865, C.A.1, Clause 7 of a Bill of Lading read as follows:- “Any dispute arising under this bill of lading shall be referred to arbitration in London. The unamended centrum arbitration clause will apply.” It was held by the Court of Appeal that by virtue of Section 20 of the Admiralty Jurisdiction Decree, 1991 any such agreement which seeks to oust the jurisdiction of the court shall be null and void, if it relates to any admiralty matter falling under the Decree.
In our opinion, the tenor of the clause is mandatory, as it sought to make the international arbitration the only means settlement of any dispute. It may be that the dictum of the court would have been different if “may” was used in place of “shall” in the clause. While the Admiralty Jurisdiction Act cannot be said to have any direct provision requiring arbitration in maritime affairs to be domestic, it unarguably, can be said to have blocked any road to compulsory international arbitration provisions.
- CUSTOMARY ARBITRATION
Customary arbitration can be said to be a product of the evolution of the practice of voluntary submission of disputes, (usually traditional in nature) to traditional rulers, chiefs and elders for amicable settlement. The range of disputes settled in this manner includes chieftaincy matters, sale of land under the customary system, family matters, etc. The procedure is usually flexible as the goal is not the handing down of strict legal rules and decisions, rather, the amicable settlement of the dispute between the parties. Witness can be called and documents tendered, after which the decision of the customary arbitrators is handed down.
However, the binding effect of such decisions will depend on the acceptance of the parties. Any party that is not satisfied with the decisions reached can reject same without much ado. The matter becomes settled only when the parties accept the decision. Thus, the Supreme Court stated in Agu v. Ikewibe (1991) 3 NWLR pt 180 385 SC, that a customary arbitration award only becomes binding after parties have signified acceptance of the suggested award. Up till this time, either of the parties is entitled to reject the award. The conditions that must be present before a customary arbitration award becomes binding were set down by the Supreme Court in the case of Eke v. Okwaranyia (2001) 12 NWLR Pt 726 181 SC as follows:
- That there had been voluntary submission of the matter in dispute to an arbitration of one or more persons;
- That it was agreed by the parties either expressly or by implication, that the decision of the arbitration will be accepted as final and binding;
- That the said arbitration was in accordance with the custom of the parties or their trade or business;
- That the arbitrators reached a decision and published their award;
- That the decision or award was accepted at the time it was made.
- INDUSTRIAL ARBITRATION
The Trade Disputes Act Cap T8, Laws of the Federation of Nigeria, 2004, enjoins parties to find ways of amicable settlement of disputes apart from the Act. Industrial arbitration is the submission of industrial or trade disputes to the industrial arbitration panel in accordance with the provisions of the Trade Dispute Act.
The Act provides to the effect that if the means of amicable settlement fails or if there is no such agreed means of amicable settlement, the parties or their representatives are to meet within seven (7) days after the dispute arose. The meeting would be presided over by a mediator mutually appointed by the parties. The meeting would be with a view to finding an amicable settlement of the dispute. However, if after seven days of appointment of the mediator an amicable settlement could not be reached, within three days after the expiration of the seven days, the dispute shall be referred to the minister of labour at the instance of either of the parties. The report to the minister shall be in writing, detailing the points on which the parties disagree and the steps that have been taken towards settlement.
Within fourteen days of the receipt of the report, the minister shall refer the dispute to the Industrial Arbitration Panel in accordance with sections 5-10 of the Arbitration and Conciliation Act. This whole process negates the voluntary nature of arbitration as the dispute is referred to the arbitration panel at the instance of the minister rather than as a voluntary decision of the parties. However, apart from the seemingly involuntary nature of the commencement of industrial arbitration proceedings, all other aspect of the practice of industrial arbitration can be said to conform to the regular form and practice of arbitration.
FORMS OF COMMERCIAL ARBITRATION
- DOMESTIC COMMERCIAL ARBITRATION
This is a form of commercial arbitration where the parties have their places of business within one country. It is immaterial whether or not the parties are citizens or foreigners. The arbitration will be viewed as domestic so long as the parties have their place of business in the same country and the arbitration is done in that country.
- INTERNATIONAL COMMERCIAL ARBITRATION
International commercial arbitration is a form of arbitration where the parties have their places of business in different countries, or the subject matter of the arbitration relates to more than one country, or a substantial part of the obligation of the parties are to be performed outside the countries of their places of business. Without prejudice to the foregoing, parties can, despite the nature of their transactions, agree to the effect that any arbitration arising from the transactions shall be treated as international arbitration.
INSTITUTIONAL/ AD-HOC ARBITRATION
Whether domestic or international, commercial arbitration can further be classified into two; ad-hoc and institutional arbitration.
Ad-hoc arbitration refers to the form of arbitration where the parties appoint the arbitrators themselves. When appointed, the arbitrators conduct and control the proceedings within the limits laid down by law. On the other hand, institutional arbitration is one in which the appointment of the arbitrators, the conduct and control of the proceedings and the issue of the award are done in accordance with the rules and practices of an arbitral organization. The following arbitration institutions are active in Nigeria:
- The Chartered Institute of Arbitrators UK (Nigerian Branch)
- The Chartered Institute of Arbitrators Nigeria
- The Lagos Regional Center for International Commercial Arbitration
- The International Chamber of Commerce (Nigerian National Committee)
- The Lagos Court of Arbitration
Commercial arbitration in Nigeria is primarily governed by the Arbitration and Conciliation Act. The preamble to the Act reads,
“An Act to provide a unified legal frame work for the fair and efficient settlement of commercial disputes by arbitration and conciliation; and to make applicable the Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention) to any award made in Nigeria or in any contracting State arising out of international commercial arbitration.”
Similarly, “arbitration” is defined in Section 57 of the Act as “a commercial arbitration whether or not administered by a permanent arbitral institution”; and “commercial” is defined in the same section as
“all relationships of a commercial nature including any trade transaction for the supply or exchange of goods or services, distribution agreement, commercial representation or agency, factoring, leasing, construction of works, consulting, engineering, licensing, investment, financing, banking, insurance, exploitation agreement or concession, joint venture and other forms of industrial or business co-operation, carriage of goods or passengers by air, sea, rail or road”
However, the provisions of the Act can be said to have left some lacunae and crevices. These holes are filled by the common law and doctrines of equity, supplemented by Trade usages and agreement of parties.
The Act, section 1, provides that any arbitration agreement must be in writing. The arbitration agreement can be a separate contract between the parties or contained in a clause in the main contract between the parties. However the arbitration contract is written, it is still imperative that the matters to which the arbitration agreement relate, be matters that are arbitrable. The matters that are expressly mentioned in the wide definition of “commercial” in section 57 of the Act are obviously and now statutorily arbitrable. However, the following matters are not arbitrable: criminal matters, matrimonial matters, matters of general interest or a status matter, such as the winding-up of a company or bankruptcy.
Except a contrary intention is shown in the arbitration agreement, the arbitration agreement (even when contained as a clause within another agreement), shall be irrevocable except by the agreement of parties or by leave of court or a judge, – section 2 of the Act. Equally, where a party, in disregard of the arbitration agreement, commences a suit in the court, the proceedings can be stayed on the timeous application of the other party, section 4 and 5 of the Act. See also Bebeji Oil Allied Prod Ltd v. Pancosta Ltd (2007) 31 WRN P172.
Such an action instituted without recourse being first had to arbitration, in contravention of the arbitration agreement, can also be struck out for not fulfilling a condition precedent. This position is supported by the following cases: Oyedele v. New India Assurance Co. Ltd (1969) 3 ALR Comm. 200 HC; Kurubo v. Zack-Motison Nig. Ltd (1992) 5 NWLR (pt 239) 102 CA; Niger Progress Ltd v. North East Line Corporation (1989) 3 NWLR (pt107) 68 SC; African Insurance Dev. Co. Ltd v. Nigeria LNG Ltd (2000) 4 NWLR (pt653) 494 JSC.
APPOINTMENT OF ARBITRATORS
The appointment of arbitrators is governed by section 7 of the Act. The section provides to the effect that parties are at liberty to specify in the arbitration agreement how arbitrators are to be appointed. But where no such specification is made, in a case where there are to be three arbitrators, each party will appoint one arbitrator and the third arbitrator will be jointly appointed by the two arbitrators appointed by the parties.
If a party fails to appoint an arbitrator within 30 days of receipt of request to do same or where there is a disagreement on the appointment of the third arbitrator between the two arbitrators appointed by the parties, or where the parties fail to appoint an arbitrator in the case of single arbitrator, and an application is made to the court, the appointment shall be made by the court. The decision of the court in the matter stated above shall not be subject to any appeal.
The court has, in the case of Ogunwale v. Syrian Arab Republic (2002) 9 NWLR (pt771) 127 at p.146, stated that for the provision prohibiting appeal on the decision of the court to apply, the following conditions must be in place: (a) a binding, valid, compellable arbitration clause; (b) a dispute capable of being referred to arbitration; and (c) a party must have refused or defaulted to make an appointment.
By section 12 of the Act, an arbitral tribunal is authorized to rule on questions pertaining to its jurisdiction and on any objections with respect to the existence or validity of an arbitration agreement. The challenge of the jurisdiction of the tribunal must be raised no later than the time of submission of the points of defence, and a party will not lose his right to raise such objection by reason that he has appointed or participated in the appointment of an arbitrator.
Furthermore, where an arbitral tribunal is exceeding the scope of its authority, an objection can be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the proceedings. An arbitral tribunal shall rule on any such pleas challenging its jurisdiction or scope of authority either as a preliminary question or in an award on the merits, and such ruling is final and binding.
CONDUCT OF ARBITRATION
By section 14 of the Act, in any arbitral proceedings, the arbitral tribunal shall ensure that the parties are accorded equal treatment and that each party is given full opportunity of presenting his case. Domestic arbitrations are bound to be conducted in accordance with the procedure contained in the Arbitration Rules set out in the First Schedule to the Act. On the other hand, international arbitrations dance to a different tune. Section 53 of the Act allows parties to an international commercial transaction to agree in writing as to the rule that will be applicable in their arbitration. Parties may adopt the Arbitration Rules set out in the First Schedule to the Act, or the UNCITRAL Arbitration Rules or any other international arbitration rules acceptable to the parties.
The act provides that proceedings may be conducted in any of the following ways:
(a) by holding oral hearings for the presentation of evidence or oral arguments; or
(b) on the basis of documents or other materials; or
(c) by both holding oral hearings and on the basis of documents or other materials.
The proceedings are usually analogous to the conduct of a civil case. The claimant presents his case and calls his witnesses who are cross-examined by the respondent. The respondent, thereafter, presents his case/defence and calls his witnesses who are cross-examined by the claimant. The parties summarize their cases in form of addresses and the award is thereafter made by the tribunal.
The decision of an arbitral tribunal at the conclusion of the arbitration proceedings is referred to as an award. An award can also be based on terms of settlement by the parties if the parties are able to reach an amicable settlement on their own during the pendency of the proceedings. However, once the tribunal, on application of the parties, adopts the settlement as its award, it will have the same binding power as an award reached and made independently by the tribunal. This is the tenet of section 25 of the Act.
Section 24(1) of the Act provides that in an arbitral tribunal comprising more than one arbitrator, any decision of the tribunal shall, unless otherwise agreed by the parties, be made by a majority of all its members. Also, the award must be in writing and unless otherwise agreed by the parties or it was based on the settlement by the parties, the award must state reasons for the decisions taken.
ENFORCEMENT OF AWARDS
An award by an arbitral tribunal is binding and can be enforced, with the leave of court, in the same manner as a judgment of a court of law, –section 31 of the Act. Once there is nothing intrinsically wrong with the arbitration proceedings or the time for challenging it has expired, the award becomes final. This is because, as Galadima JCA (as he then was) stated in Ebokan v. Ekwenibe & sons Trading Co. (2001) 2 NWLR (Pt 696) 32, once parties have chosen to submit to arbitration, they are estopped from backing out of the decision of the arbitrator whether or not it favours them, so long as the award is good on its face. The party seeking the enforcement shall supply the duly authenticated original award or a duly certified copy thereof; and the original arbitration agreement or a duly certified copy thereof.
JUDICIAL REVIEW OF ARBITRATION AWARDS
By section 32 of the Act, Any of the parties to an arbitration agreement may request the court to refuse recognition or enforcement of the award. Therefore, an aggrieved party can apply to the court to set aside an award. The courts will set aside an award on any of the following grounds;
- Where the award contains decisions on matters which are beyond the scope of the arbitration
- Where an arbitrator has misconducted himself
- Where the arbitral proceedings or award has been improperly procured. (section 29(2) and 30(1) of the Act)
The term “misconduct” as seen in the above provision is a wide one, but one can say that any conduct that can be interpreted as amounting to a miscarriage of justice will be treated as misconduct under the Act. In Comptoir Commercial and Ind. S. P. R. Ltd v. Ogun State Water Corporation and Anor, the Supreme Court held that the admission of inadmissible evidence which goes to the root of the matter may be construed as misconduct.
Some actions that may amount to misconduct were listed by the Supreme Court in A. Savoia Ltd v. Sonubi (2000) 12 NWLR (Pt682) 539 SC and they include;
- Failure to comply with express or implied terms of the arbitration agreement;
- Where an award ought not to be enforced on the grounds of public policy;
- Bribery and corruption of the arbitrators;
- Mistake as to the scope of authority conferred by the arbitration agreement;
- Failure to decide on all matters referred;
- Breach of the rules of natural justice;
- Failure to act fairly towards both parties
DIVERGENCE IN INTERNATIONAL COMMERCIAL ARBITRATION PROCEDURE
The Part III of the Act applies to international commercial arbitration. Section 43 of the Act provides thus “the provision of this Part of this Act shall apply solely to cases relating to international commercial arbitration and conciliation in addition to the other provisions of this Act.” However, the procedure and conduct of international commercial arbitration are very similar to that of the domestic commercial arbitration. The divergence on some points of procedure can be seen as being designed to give efficacy to the arbitration in international commercial transactions and in compliance with laws and models on international commercial transactions.
For instance, while in domestic commercial arbitration, where the parties did not specify mode of appointment of arbitrators and there is a dispute as regards such, the arbitrators will be appointed by the court on application of either party; no reference is made to the court by the Act in this matter as regards international commercial arbitration. The Act rather refers to the “appointing authority” in place of the court. See section 44 of the Act. Where a sole arbitrator is to be appointed by the appointing authority as a result of failure of the parties to appoint, the appointing authority shall use the list-procedure unless the parties agree otherwise or the appointing authority, in its discretion, decides that the list-procedure is not appropriate in the circumstance. The list-procedure is as follows;
- at the request of one of the parties the appointing authority shall communicate to both parties an identical list containing at least three names;
- within fifteen days after the receipt of the said list, each party may return the list to the appointing authority after having deleted the name or names to which he objects and numbered the remaining names on the list in the order of his preference;
- after the expiration of the above period of time the appointing authority shall appoint the sole arbitrator from among the names approved on the lists returned to it and in accordance with the order of preference indicated by the parties.
By section 47 of the Act, the arbitral tribunal in an international commercial arbitration shall decide the dispute in accordance with the rules in force in the country whose laws the parties have chosen as applicable to the substance of the dispute. The above mentioned laws refer to the substantive laws of that country, but where the laws of the country to be applied is not determined, the tribunal will apply the laws determined by the conflict of laws rules it deems applicable. For the grounds of setting aside an award from an international commercial arbitration, see section 48 and 52 of the Act.
PROBLEMS OF ARBITRATION
Arbitration, as a medium of alternative dispute resolution, is not without its own flaws and pitfalls, the first of these being the level of ignorance of arbitration procedures. Apart from multinationals and large corporate bodies with robust legal departments, the whole process and advantages of arbitration remain shrouded in mystery to most commercial entities and directors.
Arbitration is unsuitable for complex legal matters and multiparty suits for which action in court would be more useful. Arbitration is more suitable for two party disputes with an extant arbitration agreement between them. A party that is not privy to the arbitration agreement cannot be forced to join in the arbitration unlike a civil suit where different joinder proceedings could be used.
Equally, the powers of the arbitration panel are not as wide as the powers of the court and can be limited by the parties. When eventually an award is made, recourse will be first had to the court before it can be enforced and an aggrieved party can apply to the court to have the award nullified. Thus, it is not as final as it appears to be.
ADVANTAGES OF ARBITRATION
Parties that submit their disputes to arbitration usually do so in a bid to avoid the delays, lengthy procedures and tiring adjournments that characterize the regular court proceedings. Hence, one the most important feature and advantage of arbitration is the speedy and swift determination of disputes. Arbitration allows parties considerable autonomy. Parties can choose their arbitrators, place of arbitration, and in international arbitration, parties can also determine applicable laws. Arbitration equally offers the parties confidentiality and privacy. Arbitration proceedings are not conducted in open court with people that have no interest in the matter present, unlike the regular courts. This helps preserve trade secrets and company’s reputation.
Arbitration is usually more conciliatory than litigation. Our adversarial legal system makes legal fights in the court to be “winner takes it all” arrangement. Arbitration, on the other hand, as an alternative dispute resolution method, has more likelihood of preserving the commercial and business relationship between the parties. Parties to an arbitration proceeding will have the opportunity to have their dispute settled by an expert in the field of the contract or transaction. This is, of course, because parties can choose the arbitrators. For instance, if the dispute involves technical accounting problems, it could be referred to chartered accountants. Equally, unlike other forms of alternative dispute resolution, the arbitration award has some finality and is enforceable by the court.
PROSPECTS OF COMMERCIAL ARBITRATION IN NIGERIA
Commercial arbitration in Nigeria has a lot of prospects for improvement in efficiency and wider usage. A few changes can be made in the arbitration practice in Nigeria to increase efficiency. These will be discussed shortly. There are new developments in the laws governing arbitration and other alternative dispute settlement methods, especially in Lagos.
New Developments in Law
Lagos state can be said to be at the vanguard of regulation of alternative dispute resolution framework by states. The state has passed some legislations in this regard, these include;
- The Lagos State Arbitration Law No.10 of 2009 (LSAL). This applies to all arbitrations within the state except where the parties have expressly agreed that another law should apply. Other modifications made by the law in comparison to the Federal Act relate to provisions such as appointment of arbitrators, cessation of office, place and time of arbitration, setting aside of awards and costs. New provisions included in the law cover areas such as the form of arbitration agreements to take, cognisance of electronic means of communication and other modern means of communication which are not contained in the Federal Act, provisions on the appointment of umpires in arbitration proceedings, consequences of the termination of an arbitrator’s appointment, immunity of arbitrators, consolidation, concurrent hearings and joinder of parties, interest, notification of awards/arbitrator’s lien on awards, etc.
- The Lagos Court of Arbitration Law No.8 of 2009 (LCAL) which establishes a court of arbitration in Lagos State.
- Lagos State Multi-Door Court House Law 2007 which makes settlement and awards duly signed by an ADR judge enforceable as a judgment of the High Court.
The Lagos State point of view is anchored on the fact that arbitration, conciliation and other ADR processes are not found in the exclusive nor concurrent list of the 1999 Constitution of Nigeria; hence, they are residual and fall within the legislative competence of the states. However, certain matters in respect of trade and commerce are contained within the exclusive list, thus, conferring jurisdictional competence on the federal government to legislate on arbitration and conciliation. We think that a judicial pronouncement in this regard by the Supreme Court will put the matter to rest.
- There is a bill presently before the National Assembly seeking to establish a National Alternative Dispute Resolution Regulatory Commission (the Bill). The functions of the commission, according to the Bill is to:
“regulate, through the process of accreditation, all Alternative Dispute bodies and institutions engaged in practice training, education or skills acquisition in alternative dispute resolution mechanism; advise the federal and state governments on the use of alternative dispute resolution mechanisms; develop an alternative dispute resolution policy for Nigeria; maintain a register of Alternative Dispute Resolution bodies and Institutions in Nigeria; set and maintain standards in the training curriculum of the Alternative Dispute Resolution bodies in Nigeria; undertake public enlightenment programmes on the benefits of Alternative Dispute Resolution as effective means of settlement of disputes; develop and maintain relations with international Alternative Dispute Resolution bodies and organisations with a view to attaining best international standards and practices in the field of Alternative Dispute Resolution; organize local and international seminars, workshops and conferences for users and practitioners; develop and constantly review, rules and regulations for the practice of Alternative Dispute Resolution in Nigeria; carry out such other activities as the Commission may consider necessary to raise awareness and maintain standards in the use of Alternative Dispute Resolution in Nigeria.”
The bill has received criticisms on the grounds that ADR, by its nature, does not require regulation. The attempt to regulate the practice of ADR will definitely impinge on the right of parties to choose who and how to submit their dispute for settlement through ADR. Equally, the Bill is seen as being against international best practices as arbitration is not regulated anywhere else.
Arbitration, though governed by law, is still largely crafted and piloted by the desires and agreement of the parties. To maximize the efficiency of the process, the following suggestions are offered:
Formation of the tribunal: Parties should verify the arbitrators’ availability and obtain a commitment for the issue of the award within reasonable time. Sole arbitrators should be used for smaller or simpler disputes.
Procedure: Parties are encouraged to ask the arbitral tribunal to convene an early procedural conference. Where practicable, fast track schedule with fixed deadlines should be considered. In some cases, a determination of preliminary issues may lead to a quicker and more efficient resolution.
Evidence: Limit and focus requests for the production of documents. Especially in international commercial arbitrations, the standards set in the IBA Rules of Evidence should be considered. Allow electronic filings and encourage paperless arbitrations. There should be no need to have multiple witnesses testify about the same facts.
Hearing: Videoconferencing can be used for testimony of witnesses who are located far from the hearing venue. Consider fixed time limits for hearings.
Settlement: Other routes of settlement, like mediation, can still be employed at the inception of and during the pendency of arbitration. Arbitrators can provide preliminary views that could facilitate settlement.
- Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria (2004)
- Orojo and Ajomo, Law and Practice of Arbitration and Conciliation In Nigeria
- Nigerian Investment Promotion Commission Act, (NIPCA) Cap N 117 Laws of the Federation of Nigeria, 2004
- Admiralty Jurisdiction Act (AJA) 1991
- Trade Disputes Act Cap T8, Laws of the Federation of Nigeria, 2004
- The Lagos State Arbitration Law No.10 of 2009
- The Lagos Court of Arbitration Law No.8 of 2009
- Lagos State Multi-Door Court House Law 2007
- Akin Akinbote, Arbitration in Africa – The State of Arbitration in Nigeria. A Paper Presented at the 2008 Colloquium of the Association for the Promotion of Arbitration in Africa Held at Djeuga Palace Hotel, Yaounde Yaounde From 14th – 15th January, 2008.
- ADEDOYIN RHODES – Vivour, Recent Arbitration Related Developments in Nigeria, (CIARB) Arbitration: Reprinted From (2010) 76 Arbitration 130-135:
- George Etomi, Efeomo Olotu and Ivie Omorhirhi, Internationa Journal of Commercial and Treaty Arbitration.
- Otuturu, Some Aspects of the Law and Practice of Commercial Arbitration in Nigeria, Journal of Law and Conflict Resolution, August, 2014.
- Buruma, International Commercial Arbitration, an Introduction, 2013 edition