Author: Sofunde Osakwe Ogundipe & Belgore
- Developments affecting International Arbitration Virtual hearing protocols
During 2020, Nigerian arbitration proceedings witnessed the wider acceptance of the use of remote hearings. Before 2020, physical hearings of each stage of proceedings (i.e., from preliminary and case management meetings, pre-hearing reviews and evidentiary hearings) were the norm. The use of remote hearings resulted in the issuance of guidelines by various international and domestic arbitral bodies, such as the ICC Checklist for a Protocol on Virtual Hearings, Africa Arbitration Academy Protocol on Virtual Hearings in Africa (2020) and the Chartered Institute of Arbitration’s Guidance Note on Remote Dispute Resolution Proceedings.
It is envisaged that this trend will continue beyond the end of the pandemic and the use of technology in arbitration proceedings in Nigeria will remain.
Nigerian National Arbitration Policy Committee
In 2021, the federal Attorney General inaugurated a National Arbitration Policy Committee, whose task was stated as being to develop a transformational policy framework for addressing issues arising from arbitration process and agreements in or concerning Nigeria. Their terms of reference expects the committee to: (1) review the current laws and policies on arbitration in Nigeria; (2) proffer advice on a new national arbitration policy; (3) draft an executive order to support the application of the new arbitration policy across government agencies; (4) develop an implementation plan; and (5) advise on the required infrastructure for setting up world standard arbitration centres in the hub of arbitration in Nigeria (i.e., Lagos State and the Federal Capital Territory of the country, Abuja). Further, the objective underlying the policy is to ensure that Nigeria becomes the seat of arbitration for transactions arising from Nigeria, and for arbitration agreements in respect of contracts between the Nigerian government and its foreign counterparties. Arbitration and other bodies in Nigeria submitted a joint memorandum, in which they cautioned against seeking to use legislation to interfere with the freedom of parties to agree to arbitration and to appoint arbitrators of their choice, irrespective of the nationality and domicile of such arbitrators.
The Lagos Court of Arbitration Committee to update its Rules
On 6 January 2021, the Lagos Court of Arbitration (LCA), one of the leading local arbitration institutions in Nigeria, announced the establishment of the LCA Arbitration Committee, which is an initiative intended to promote and develop the institution into world-class international status. The LCA Arbitration Committee is composed of 26 highly experienced and reputable professionals active in the field of international arbitration, representing 18 different nationalities, of which 12 are African nationalities. The LCA tasked the committee with reviewing and, as necessary, proposing any updates to the LCA Rules (2018) to ensure that they embody best international practice and pioneer best African practice. Once that task is completed, the committee shall be the final authority for the proper application of the LCA Rules and, in particular, shall be the body performing all tasks relating to the appointment of arbitrators, the challenges to arbitrators, scrutiny of award and controlling costs.
- Arbitration developments in local Courts
On enforcement of awards, the state and appellate courts in Nigeria continued to support arbitration and to enforce valid awards, an example of which was a decision of the Supreme Court, handed down in early 2021.
Another notable decision concerned a challenge to jurisdiction of an arbitrator, in which the court set aside an award for being rendered without jurisdiction when a sole arbitrator dismissed the respondent’s contention that a notice of arbitration was not served on it and that the arbitrator failed to apply the party agreed applicable laws to the reference.
- Investor–state disputes
Generally, the domestic statute governing investment arbitration in Nigeria is the Nigerian Investment Promotion Commission Act (Cap N117, Laws of the Federation of Nigeria 2004), which deals with investment promotion in Nigeria. Section 26 of the law sets down dispute resolution procedures with preference for arbitration. Section 26(2a) specifically provides that investment disputes involving a Nigerian investor must be resolved by arbitration and in the case of a foreign investor, Section 26(2b) provide that such disputes must be resolved ‘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’.
For 2020, an award was published on 6 October 2020 in Interocean Oil Development Company and Interocean Oil Exploration Company v. Federal Republic of Nigeria (ICSID Case No. ARB/13/20)6 in favour of the Nigerian government. The dispute involved an allegation of indirect expropriation and breach of customary international law between Interocean Oil Development Company and Interocean Oil Exploration Company, two American companies, as claimants and the government of Nigeria, as respondent. The claimants claim that their investments in a shell company, Pan Ocean Oil Company, which owned 40 per cent interest in some oil assets, were unlawfully expropriated by the Nigerian government. Particularly, the claimants maintained that the agencies of the Nigerian government (the Nigerian National Petroleum Commission, the Corporate Affairs Commission) and local courts that sanctioned the dilutive corporate actions of the shell company, resulted in the reduction of the claimants’ interest in the shell company, and of course the oil assets, thereby leading to an indirect expropriation of their investments in Nigeria by the respondent. In the end, the ICSID tribunal dismissed all claims on the merits and concluded that the claimants did not exhaust domestic remedies (like appealing the federal high court decision that approved the corporate actions of the shell company) before referring the dispute to arbitration, and that the actions and inactions of the national agencies of Nigeria and the local courts, being not in breach of relevant provisions of the International Law Commission’s Articles on State Responsibility for Internationally Wrongful Acts (ILC Articles) could not tantamount to an indirect expropriation of the claimants’ investment. The tribunal further held that the claimants failed to prove that minimum standard of treatment and fair and equitable treatment standards required in international investment arbitration were breached by the respondent. The tribunal therefore awarded costs in the sum of US$660,129.87 in favour of the Nigerian government.
