By Chief Julius A N Elukpo, Esq., PhD, FCArb
INTRODUCTION
Arbitration is a dispute settlement process without going through the formal Court system of settlement of disputes. It “means a commercial arbitration whether or not administered by a permanent arbitral institution.”
At times, parties stipulate the terms of the contract and agree on conditions to exploit the provisions stipulated in the process of arbitration, known as clauses, which are embodied in the arbitration agreement in advance before any dispute could arise. Clauses are, therefore, futuristic.
CUSTOMARY ARBITRATION
Customary Arbitration is recognized in Nigeria as a mode of settling disputes by referring same to the family head. Suchsettlements will be accepted as final and binding. No party has the liberty to resile, except such party could prove that the principle applied was wrong[1] and negates the principles of Customary Arbitration settlements.
HISTORICAL PERSPECTIVES AND PROBLEMS
The problems of Nigeria Arbitration started with the colonization of Nigeria, the Arbitration Ordinance was re-enacted in 1958, which later became the Arbitration Act[2], when Nigeria started the democratic Government in 1999.
Some conventions were adopted to meet the international standards to facilitate the ease of Arbitration practice in Nigeria which was later influenced by the International Treaties, Conventions and Rules to the detriment of the indigenous domestic arbitration practice. Consequently, many or most arbitration disputes, including those resulting in litigations, are settled outside Nigeria.
CONSTRAINTS TO ARBITRATION PROCESS IN NIGERIA
The followings are discussed as factors militating against Arbitration in Nigeria.
Political Violence and Legal Framework
The rate of kidnapping, armed robbery and the dreaded Boko Haram are potential frightening factors militating against arbitration venues in Nigeria. Nigeria has got the Legal Framework, including other requirements that can qualify her as a seat of arbitration, but the practical aspect of it is another different thing. Even Nigerians themselves prefer to handle their arbitration matters outside Nigeria, including choosing arbitrators that are not Nigerians. The reasons, among others, are that the Nigerian statute on arbitration is obsolete and needs review. The present Arbitration Act is over 30 years but in year 2022, the Arbitration and Conciliation reviewed Act, was passed by the National Assembly, and it awaits the President Assent. This development will make Nigeria a favourable venue for both National and International Arbitration.
Arbitrability and Public Policy
The question of arbitrabilityand public policy play vital roles as constraints to Nigeria being a venue for International Arbitration, because some disputes may not be capable of settlements through arbitration, which are left as an exclusive jurisdiction of the Courts. Some may be against the public policy of the country. Each party to a Contract of Arbitration might have to study the law and the policy of each country before deciding the venue of arbitration and the Applicable rules.
Unfavourable Injunctions
Injunctions unfavourable to Arbitration, are considered as attempts to avoid or frustrate the consequences of a freely signed arbitration agreement and the refusal to arbitrate.
Similarly, the Arbitration Act[3] has empowered the Courts to stay proceedings in appropriate cases such as, where there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and that the applicant was and still remains ready and willing to do all things necessary to the proper conduct of the arbitration.
Limitation Act
Another factor that militates against Nigeria as a venue of arbitration is the Limitation periodto commence enforcement of proceedings.
The Arbitration Act did not state any Limitation period within which arbitration actions could become statute-barred. The Statute of Limitation guiding other proceedings, like contract, will guide Arbitration actions. However, the Arbitration and Mediation Act, 2019 which has been passed by the National Assembly provides for ‘Effect of Default’, ‘Limitation Period’.
The Nigerian Courts are congested, especially the appellate Courts. It is equally believed that corruption and politics have filtered into the judiciary and into the highest echelon of the Courts. These have made it unattractive for commercial entrepreneurs to select Nigeria as a venue of arbitration.
Enforcement of Domestic Awards
Another serious constraint to arbitration process in Nigeria, is the challenges of enforcement of arbitration awards.
Unlike the awards generally granted in Courts, arbitration awards are not straightforward to execute. There are two ways of enforcement of arbitration awards. Which is either by application directly to enforce the award; or by application to enter judgment in terms of the award.
Also, under the Act, any party relying on an award for enforcement are to submit: Duly authenticated original award or dully certified copy and, Original arbitration agreement or a duly certified.
The Arbitration Act does not state the type of agreements applicable to arbitration. It, therefore, occasions delay when Parties are at variance on the agreements which the Court will be left to resolve by referring the matter to Court to refuse recognition. The Courts are ready to intervene on the grounds of misconduct. For that reason, the contract should equally influence the choice of venue vis-a-vis, jurisdiction.
Arbitration Act states that, any of the parties to an Arbitration Agreement may request the Court to refuse recognition or enforcement.
There are some issues to be proved before an arbitration award can be enforced such as: there is a contract which involves arbitration; that a dispute has arisen within the said contract; that an arbitrator is to be appointed; that an award is made and; that the amount and award become a subject of controversy.
Literacy in Arbitration
The level of literacy on Arbitration in Nigeria and inadequate education for settlement of Arbitration disputes are one of the limitations for making Nigeria unattractive for an Arbitration Venue. Those that are non-Lawyers need more frequent training to meet the Arbitration needs of Nigeria. The weakness of the Act that did not provide for an umpiremakes Arbitration proceedings unattractive in Nigeria.
Misconduct of Arbitrators
The Supreme Court in the case of Saoira Ltd v Sanubi[4], stated the Constraints of an award to include; Misconduct of Arbitrators as follows;
- “Where the Arbitrators fail to comply with the terms, express or implied of the arbitration agreement;
- Where, even if the arbitrator complies with the terms of the arbitration agreement, the arbitrator makes an award which on the grounds of public policy ought not to be enforced;
- Where the arbitrator has been bribed or corrupted; etc
Recognition and Enforcement of Foreign Award
There are problems of recognition and enforcement of International Award which could occasion, resulting in the intervention of Courts. The Act‑ empowers an aggrieved party to seek redress; hence, it deals with grounds for the refusal of recognition or enforcement of an international award based on the action of the aggrieved party.
Nigerian Judges
Nigerian Judges are not specifically trained for arbitrational matters. Hence, they may need to adjourn the arbitration matters several times before sizing up the matter. This is capable of causing delay, hence a constraint in the Nigeria Arbitration proceedings. However, the Nigerian Institute of Chartered Arbitration is putting up its best to eliminate such constraints.
CONCLUSION
The paper tries to navigate the constraints to the Arbitration process in Nigeria that militates against it to the extent that even Nigerians prefer to have their arbitration disputes determined outside the shores of Nigeria. The Chartered Institute of Arbitration Nigeria is equally working assiduously to make Nigeria a suitable hub of standards for international arbitration.
REFERENCES
STATUTES
1. Arbitration and conciliation Act CAP A18 Laws of the Federation of Nigeria (LFN) 2004.
2. Decree No.11, 1988
3. International Chambers of Commerce (ICC)
4. International Centre for Settlement of Investment Disputes (ICSID).
5. United Nations Commission on International Trade Law (UNCITRRAL)
- Limitation Act, CAP p. 41 (LFN)2004
BOOKS
1. Blacaby, N. and Partasides, C. Redfern and Hunter on International Arbitration, 6th Edn. (Oxford; Oxford University press, 2005).
2. Idornigie, P. O. Commercial Arbitration Law and Practice in Nigeria (Abuja Lawlords publications, 2015).
3. Nwakoby, G. C. The Law and Practice of Commercial Arbitration in Nigeria, 2nd Edn. (Enugu; Iyke Ventures press, 2004).
4. Mustill, M. J. and Body, SC Commercial Arbitration, 2nd Edn. (United Kingdom Lexis, Nexis Butter Worthd, 2009).
5. Halsburys Laws of Englang 4th Edn, vol. 2, at (p. 34, para 632).
6. Datta, C.R. Law Relating to commercial Domestic Arbitration (along with ADR), 1st Edn, (India; wadhwa and company law publishers, 2008).
7. Cato Mark, D. Arbitration Practice and Procedure, Interlocutory and hearing problems, 3rd Edn. (London LLP Ltd, 2002).
REPORTED CASES
1. Chukwudozie Anyabunsi v Emmanuel Ugwunze (1995).
2. Savoia Ltd v Sanubi (2000) 7 SC (pt. 1) 41
3. Mutual Life & Gen. Ins. Ltd v Iheme (2013) A11FWLR (pt. 695) 336.
ONLINE NEWSPAPER REPORTS/OTHERS
1. Anaba, I and Nnochiri, I. “Court voids two Arbitration awards worth #840 bn against NNPC” in Vanguard, Sunday 12th, 2014.
2. Ufots, D. “The challenges of Arbitration in Africa; the Nigeria experience International law office”. Globe Business Ltd. 1997.
3. Annual Report of National Drug Law Enforcement Agency (NDLEA) (2007).
4. Nigerian Institute of Chartered Arbitrators.
[1] The case of: Chukwudozie Anyabunsi v Emmanuel Ugwunze (1995)7 SCN 55.
[2] Arbitration and Conciliation Act, CAP A18 (Laws of the Federation of Nigeria “LFN”) 2004
[3] Section 5 of the Act.The case of BSG Energy Holdings Ltd, v Spears (2013)
[4] (2000) 7SC (pt. 1) 41. The case of: mutual Life & Gen Ins. Ltd v Iheme (2013) All FWLR (pt 695) 336 at (pp363-364, para C-L)
