Osaheni B. Ezomo*
With the increase and growth of commerce and trade in Nigeria, it has become expedient to utilize more convenient and efficient methods for resolving disputes. The law has made it possible to seek redress through the traditional court system via litigation. Although effective, there is a whole spectrum of other methods to approach disagreement and conflict resolution. These methods become more attractive in a jurisdiction like Nigeria, where the adversarial system is clogged with several bureaucratic hurdles, delays, technicalities, and more often than not, significant cost. These methods are generally referred to as Alternative Dispute Resolution (ADR), which conceptualizes practices and techniques aimed at permitting the resolution of legal disputes outside of court. Among some of the popular methods are; arbitration, mediation, negotiation, and conciliation. Academic scholars and professionals have admitted that these methods have several benefits, like being faster, more disputant friendly, in most situations less costly, available for high-volume disputes, flexible, and informal.[i] Bearing in mind the multifaceted dimensions of dispute resolution, the writer would only be laying emphasis on the rudiments of commercial arbitration in Nigeria.
Arbitration is the process of resolving disputes privately, in an adjudicatory and judicial manner, by a neutral third party elected by the parties themselves or through a procedure generally agreed upon by the parties.[ii] It is the voluntary submission to the decision of an impartial tribunal agreed to by the disputants. Commercial arbitration can surface in two main settings. The first and simplest is when parties to a contract (creating a business relationship) specify that in the event of a conflict, parties would resort to arbitration before an agreed arbitrator at the time of the dispute. While the second setting deals with trade associations or groups. Disputes between the members (and in some cases non-members doing business with the particular association) are settled by the arbitration mechanism set up by the group, which could be voluntary or compulsory.[iii] This could exist either on a domestic or international level. The former involves parties having their business in Nigeria. The latter involves a scenario where one (or more than one) party has their place of business in another country and a part of the agreement involves performance outside Nigeria, or where several countries are brought together by the subject matter of the agreement.[iv]
Some of the renowned arbitration organizations recognized for the resolution of commercial disputes under Nigerian law are: the International Court of Arbitration of the International Chamber of Commerce (ICC)[v], London Court of International Arbitration[vi], Regional Centre for International Arbitration – Lagos[vii], Lagos Court of Arbitration[viii], Chartered Institute of Arbitrators (Nigerian Branch)[ix], International Centre for Arbitration & Mediation – Abuja[x], and Janada International Centre for Arbitration and Mediation.[xi] It is also noteworthy that the principal legislation governing arbitration in Nigeria is the Arbitration and Conciliation Act[xii] (henceforth called ACA), which is a federal law. Some states have enacted their own arbitration law, such as the Lagos State Arbitration Law (henceforth called LSAL)[xiii]. The UNCITRAL Model Law on International Commercial Law 1985 was a model for the ACA. An amendment of the UNCITRAL Model Law was made in 2006. The amendment recognized the need for updated provisions to adapt to the modern trends in arbitration and international trade, including provisions on the forms of the arbitration agreement and interim measures.[xiv] These amendments have not been acknowledged in the ACA, leaving this federal law inexhaustive. However, efforts are being made, as a bill is currently before the Legislature to incorporate the amendments made in the UNCITRAL Model law into the federal law. Currently, Common Law and the Doctrine of Equity compliment the provisions of the ACA, where necessary.[xv] Common Law is an unwritten body of laws drawn from the decisions and judgment of old English Courts. They were rigid in nature and sometimes worked hardships on parties in dispute. It gave rise to the doctrine of equity. The doctrine of equity focused on the administration of justice guided by the principles of ‘fairness, natural justice and good conscience’. It came into being to mitigate the harshness of common law.[xvi] These principles are operative in Nigeria as persuasive authorities and fill the lacunae of the ACA, supplemented by the agreement of the parties.[xvii] It is important to note that the amendment made to the UNCITRAL Model Law has been incorporated in the LSAL, bringing it to uniform international standards in terms of substance and procedure.
On the substantive procedures for arbitration, it is imperative that while selecting an arbitrator, the process remains devoid of bias and the selected arbitrator displays a high level of professionalism. Parties to the contract can resolve to choose a named arbitrator of their choice or may resort to specialized institutions that render arbitral services coupled with their specific rules and procedures. The agreement between the parties to a dispute to arbitrate is the basis upon which a valid arbitration is built.[xviii] There are certain criteria that have to be fulfilled to amount to an effective and binding agreement, which are stipulated by the ACA. The statute makes it mandatory that the agreement must be in writing.[xix] The agreement may be a separate agreement or a clause in the main contract. The end product of the settlement, which is the decision of the arbitrator(s) is known as the award and is binding on the parties.[xx] The award can be challenged if bias is present, if appropriate procedures are not adhered to, or if the time limit for challenging the award has not expired.[xxi] The statute mandates that the arbitral award must also be in writing and signed by the arbitrator(s).[xxii] Where there is more than one arbitrator and an arbitrator fails to sign, a reason as to the non-signatory is to be specified by the non-signing arbitrator. The date and place for the award must also be specified. The need for there to be equal treatment of the parties cannot be overemphasized here.[xxiii] The ACA also contains arbitration rules that limit parties to be represented by only Nigerian legal practitioners. However, when it relates to international commercial arbitration, where parties agree to adopt a rule other than the arbitration rules in the ACA, parties can be represented by lawyers from other jurisdictions. Domestic arbitration must be conducted in accordance with the arbitration rules in the ACA.[xxiv] The ACA does not specify the type of disputes it is applicable to, but the test is if the dispute in question can be lawfully settled by way of accord and satisfaction.[xxv] Some of the popular disputes that are arbitrated in Nigeria include; breach of contractual agreement, land disputes (compensation for compulsory acquisition of land), torts, and matrimonial causes (such as division of property).[xxvi]
Arbitration and ADR as a whole are getting more recognition and usage in Nigeria. After the introduction of the multi-door courthouse system in Lagos, the concept has been adopted by the Federal Capital Territory and 14 other states.[xxvii] The multi-door courthouse system is a court house that integrates the various methods of dispute resolution with the existing judicial system, in a view to promote efficient and speedy means of dispensing justice. Spurred by the idea propounded by Harvard Professor, Frank Sanders,[xxviii] this concept was introduced in Nigeria with the main goal of promoting ‘easier access to justice in line with global trends in ADR’.[xxix] The National Industrial Court of Nigeria, responsible for hearing matters relating to employment and trade union disputes, has established ADR centers at its divisions in Abuja, Kano, Gombe, Enugu, Calabar and Ibadan.[xxx] Also, universities in Nigeria have taken the task of promoting arbitration through the various ADR societies run by students in the various law faculties. This forum has provided a platform for the enlightenment of students in tertiary institutions and secondary schools. They also partner with organizations to enlighten the common citizen. It is necessary that the federal law, which is the ACA, be amended to include the new developments incorporated into the UNCITRAL Model Law. Other states are encouraged to take up the initiative of creating state laws that would govern ADR activities; for this would promote commercial settlements via ADR methods. So much attention has been given to commercial arbitration as it is seen as a very important tool in reducing the burden on the courts to address the ever-increasing number of disputes in modern society, thus providing a way of obtaining amicable settlements speedily and effectively. Arbitration is gradually referred to as the future for resolving commercial disputes and this is steadily becoming a reality in Nigeria one step at a time.
* Osaheni B. Ezomo is the Vice President of the Alternative Dispute Resolution society, University of Benin.
[i] James F. Henry, ‘Some Reflections on ADR’ (2000) 2000(1) Journal of Dispute Resolution 63.
[ii] Collins Chijoke, ‘The Nature of Arbitration Agreement in Nigeria – An Overview <https://www.researchgate.net/publication/325225778> accessed 15th July 2020.
[iii] Soia Mentschikoff, ‘Commercial Arbitration’ (1961) 61 Columbia Law Review 864.
[iv] Gogo George Otuturu, ‘Some Aspects of the Law and Practice of Commercial Arbitration in Nigeria’ (2014) 6(4) Journal of Law and Conflict Resolution 67.
[v] <http://iccwbo.org/dispute-resolution-services/icc-international-court-arbitration/> accessed 2 July 2020.
[vi] <http://www.lcia.org> accessed 2 July 2020.
[vii] <https://rcical.org> accessed 2 July 2020.
[viii] <https://www.lca.org.ng> accessed 2 July 2020.
[ix] <https://www.ciarbnigeria.org> accessed 2 July 2020.
[x] <https://www.icama.com> accessed 2 July 2020.
[xi] <http://www.jicam.org> accessed 2 July 2020.
[xii] Arbitration and Conciliation Act 1988 (Laws of the Federation of Nigeria 2004 cap A18).
[xiii] Lagos State Arbitration Law 2009.
[xiv] Article 7 and Chapter IV A of the UNICTRAL Model Law on International Commercial Arbitration 1985 with amendments as adopted in 2006.
[xv] See Orojo JO and Ajomo MA (1999) Law and Practice of Arbitration and Conciliation in Nigeria, Lagos: Mbeyi & Associates (Nigeria) Ltd, p. 37. Common law are previous decisions of old English Courts that have the force of law in Nigerian Courts and the principle of equity comes to play to ensure fairness and justice between parties. In other words, to prevent the strict and rigid nature and adherence to common law, equity would step in to exact good conscience and fairness. Where the ACA is silent in a specific aspect of law, common law and the doctrines of equity would become operative.
[xvi] Nkolika Ijeoma Aniekwu, ‘Legal Methodology and Research in Nigeria’ (2nd Edn Mindex Publishing Co. Ltd. 2009) 36.
[xvii] Ibid 15.
[xviii] <https://resolutionlawng.com/brief-overview-of-arbitration-in-Nigeria/> accessed 13 June 2020.
[xix] Section 1 of the ACA 1988.
[xx] Section 31 of the ACA 1988.
[xxi] Ebokan v. Ebokan and Sons Trading Co [2001]2 NWLR (pt. 696) 32.
[xxii] Section 26 of the ACA 1988. These are elements that make a final arbitral award enforceable on the parties.
[xxiii] Section 16 of the ACA 1988.
[xxiv] This is contained in the First Schedule of the ACA.
[xxv] United World ltd Inc v. MTS [1998] 10 NWLR (pt. 568) 106.
[xxvi] <https://www.mondaq.com/arbitration-dispute-resolution/814570/overview-arbitration-proceedings-in-nigeria> accessed 15th July 2020.
[xxvii] These are: Kano, Akwa Ibom, Kaduna, Abia, Ondo, Cross River, Kastina, Delta, Bornu, Bayelsa, Ogun, Kwara, Edo and Enugu States.
[xxviii] Frank E.A. Sanders, Varieties of Dispute Processing, in The Pound Conference: Perspectives on Justice in the Future 64, 83-84 (A. Leo Levin and Russell Wheeler eds., 1979).
[xxix]<https://lagosmultidoor.org/about-us/> accessed 17 June 2020.
[xxx] <https://nicn.gov.ng/adr-contact> accessed 15th July 2020.