By: ADELEKE AGBOLA, SAN, FCArb
Arbitration was defined in the celebrated case of KANO STATE URBAN DEVELOPMENT BOARD V. FANZ CONSTRUCTION LTD (1990) NWLR (PT. 142)1, (1990) LPELR – 16959 (SC) as “… the reference of a dispute between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction…. The decision of the arbitrator or umpire is called the award”.
From the definition given in the Fanz’s case. It is obvious that the end product of all arbitration is usually “The Award”.
Arbitration in Nigeria is governed generally by the Arbitration and Conciliation Act, Cap. A18, Laws of the Federation of Nigeria, 2004 2004 (“ACA”). Some States, including Lagos State, have their individual Arbitration Laws but in general, the Laws are usually an almost exact replica of the ACA.
Once an Award has been made by an Arbitrator, there is, as common with any judicial process, usually a winner and a loser.
In effect, the winner will press for the recognition and enforcement of the award whilst the loser may apply for the setting aside of the Award under Section 29 and/or 30 of ACA or for refusal to recognize the Award or its enforcement under Section 32 of ACA.
APPLICABLE PROCEDURAL LAW FOR ENFORCEMENT OF DOMESTIC ARBITRAL AWARD
The applicable procedural law for the recognition and enforcement of a domestic arbitral award is the Arbitration and Conciliation Act 2004. Section 51 provides that:
- (1) An arbitral award shall, irrespective of the country in which it is made, be recognized as binding and subject to this section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.
(2) The party relying on an award or applying for its enforcement shall supply:
(a) the duly authenticated original award or a duly certified copy thereof;
(b) the original arbitration agreement or a duly certified copy thereof; and
(c) where the award or arbitration agreement is not made in the English language, a duly certified translation thereof into the English language.
The Lagos State Arbitration Law 2009 (Lagos Law) will apply to arbitrations within the jurisdiction of Lagos state. Section 2 of Lagos State Arbitration Law 2009 provides that:
- Application.
From the commencement of this Law, all arbitration within the State shall be governed by the provisions of this Law except where the parties have expressly agreed that another Arbitration Law shall apply.
Section 56 of Lagos State Arbitration Law 2009 also provides that:
- Recognition and enforcement of Awards.
(l) An arbitral award shall, irrespective of the jurisdiction or territory in which it is made, be recognized as binding, and subject to this Section and Section 58 of this Law, shall upon application in writing to the Court by a party, be enforced by the Court.
(2) The party relying on an award or applying for its enforcement shall supply:
(a) the duly authenticated original award or a duly certified copy;
(b) the original Arbitration Agreement or a duly certified copy; and
(c) where the award or Arbitration Agreement is not made in the English language, a duly certified translation into the English language.
(3) An award may, by leave of the Court or a Judge, be enforced in the same manner as a judgment or order with the same effect.
COURT WITH JURISDICTION OVER AN APPLICATION FOR ENFORCEMENT OF AN ARBITRAL AWARD
The Courts that have jurisdiction over an application for enforcement of arbitral awards are the Federal High Courts and the High Courts of the States. Sections 29 and 30 of the Arbitration and Conciliation Act 2004 provides that:
- (1)A party who is aggrieved by an arbitral award may within three months-
(a) from the date of the award; or
(b) in a case falling within section 28 of this Act, from the date of the request for additional award is disposed of by the arbitral tribunal,
by way of an application for setting aside, request the court to set aside the award in accordance with subsection (2) of this section.
(2) The court may set aside an arbitral award if the party making the application furnishes proof that the award contains decisions on maters which are beyond the scope of submission to arbitration so however that if the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the award which contains decisions on matters not submitted may be set aside.
(3) the court before which an application is brought under subsection (1) of this section may, at the request of a party where appropriate, suspend proceedings for such period as it may determine to afford the arbitral tribunal an opportunity to resume the arbitral proceedings or take such other action to eliminate the grounds for setting aside of the award.
- (1) Where an arbitrator has misconduct himself, or where the arbitral proceedings, or award, has been improperly procured, the court may on application of a party set aside the award.
(2) An arbitrator who has misconducted himself may on the application of any party be removed by the court. Recognition and Enforcement of Awards
Section 57 of the Arbitration and Conciliation Act (Interpretation part) further provides as follows:
- In this Act, unless the context otherwise requires-
“Court” means the High Court of a State, the High Court of a Federal Capital Territory, Abuja or the Federal High Court;
“Judge” means a Judge of the High Court of a State, the High Court of the Federal Capital Territory, Abuja or the Federal High Court;
In MAGBAGBEOLA V SANNI (2000) LPELR-10817 (CA), the Court held that the Lagos State High Court has jurisdiction to appoint an arbitrator in respect of the sharing formula of shares in an incorporated company despite the fact that the Court that is vested with exclusive jurisdiction in respect of companies and allied matters is the Federal High Court. The court went further to hold that the quarrel was between the 2 partners inter se and does not invoke the jurisdiction of the Federal High Court.
Compare, however, this decision with the decision of the court in KABO AIR LIMITED V THE O’ CORPORATION LTD (2014) LPELR-23616 where it was suggested that a foreign judgment arising from the High Court of Gambia in respect of an aviation dispute is registrable at the Federal High Court because “Also, the transaction that led to the foreign judgments in the litigation at the High Court ofJustice of The Gambia involved an aircraft which is within the exclusive jurisdiction of the Court below (The Federal High Court) by virtue of Section 251
(1) (k) of the 1999 Constitution”
To avoid unnecessary waste of time that may be caused by frivolous preliminary objections, it is recommended that applications for recognition and enforcement of Arbitral Awards should be brought in the court that has subject matter jurisdiction in the matter leading to the Award.
CHALLENGES FACED IN ENFORCEMENT OF DOMESTIC ARBITRAL AWARD
- JURISDICTION
One of the challenges encountered in enforcement of domestic arbitral awards is the issue of jurisdiction: the proper Court to approach when enforcing an arbitral award. The Arbitration and Conciliation Act has made provision for either the Federal High Court or the High courts of the state.
Issues may arise as to whether the subject matter of the arbitral award sought to be enforced is a matter within the jurisdiction of the Federal High Courts or the State High Courts.
Often times, parties who were not successful at the arbitration will use every possible means to frustrate enforcement of the arbitral award, so they resort to raising issues of jurisdiction to stall the enforcement processes. As we have advised above, it is better to err on the side of caution and bring the action at the court with the subject matter jurisdiction.
- LONG PERIOD OF TIME INVOLVED TO HAVE AN AWARD ENFORCED OR RECOGNISED
Another challenge faced by parties is the amount of time it takes to have a domestic arbitral award enforced and recognized. We have a limited number of specialized judges in the field of arbitration in the country. Arbitration is a very peculiar judicial system of adjudication and if the enforcement of the award is not handled by competent and specialized Judges, it may lead to erroneous decisions by some courts, and the handing out of judgments is perceived to be an intrusion on the finality of awards issued in arbitrations.
Also, parties also tend to apply for awards to be set aside without a proper legal basis as a delaying tactic. The unwillingness to accept the result of an arbitral process is also due to the failure of many litigants and their lawyers to accept the result of a process voluntarily entered into. For example, the Notice of Arbitration in the case of OKEKE v NITEL (supra) was issued on 16/12/1996 and the matter was finally disposed of by the Supreme Court on the 27th of January 2017 i.e. a period of more than 20 years!
It is ridiculous that a commercial dispute resolved through arbitration should take such a long time. We hope that in the ongoing process for constitutional amendment, the right to challenge an arbitral award should have its terminal point at the Court of Appeal and even in that case, costs for unsuccessful appeal should take into cognizance the actual costs incurred by parties including solicitors’ costs.
- CAPABILITY OF SETTLEMENT OF THE SUBJECT MATTER IN DISPUTE BY ARBITRATION
One of the issues in the enforcement of arbitral awards in Nigeria is the capability of settlement of the subject matter in dispute by arbitration and the public policy. Section 48(b) of the Arbitration and Conciliation Act provides that the court may set aside an award if it finds that: the subject matter of the dispute is not capable of settlement by arbitration under the laws of Nigeria; or the award is against the public policy of Nigeria. Thus, arbitration have been halted on the grounds that the dispute could not be settled by arbitration under Nigerian law or was against the public policy of Nigeria.
- LIMITATION PERIOD FOR COMMENCEMENT OF ENFORCEMENT PROCEEDINGS
Another issue is the limitation period for commencement of enforcement proceedings. Section 8(1) (d) of the Limitation Law of Lagos State (with similar provisions in the Limitation Laws of other states of the Federation) provides that every application to enforce an arbitral award must be brought within 6 years from the date the cause of action accrued. The questions that arise are: when will the six-year period start to run? Is it from the date of the accrual of the original cause of action, or from the date of the arbitral award? The implication is that a party cannot successfully bring an action for the enforcement of an arbitral award outside the statutory six years limit. The “Scott v. Avery” Clause is expected to be inserted in every arbitration agreement to postpone time from running until when an arbitral award is made.
- Another issue is the length of time it takes for arbitration cases to reach the Supreme Court. Arbitration cases take between 6 to 12 years to get to the Supreme Court before a final decision is issued in favour of enforcement of the award by which time the ‘res’ may have been destroyed.
STEPS COUNSEL SHOULD UNDERTAKE IN ENFORCING DOMESTIC ARBITRAL AWARD
Section 51 of the Arbitration and Conciliation Act, CAP A18, LFN, 2004 provides a unified legal framework for recognition and enforcement of arbitral awards of both local and foreign arbitral awards thus:
(1) “An arbitral award shall, irrespective of the country in which it is made, be recognized as binding and subject to section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.
(2) The party relying on an award or applying for its enforcement shall supply
(a) the duly authenticated original award or a duly certified copy thereof;
(b) the original arbitration agreement or a duly certified copy thereof; and
(c) where the award or arbitration agreement is not made in the English language, a duly certified translation thereof into the English language”
In the case of IMANI & SONS LTD. V. BIL CONSTRUCTION CO. LTD (1999) NWLR 12 (Pt. 630), 253 at 263, the Court of Appeal held that in addition to the motion on notice filed by the party seeking enforcement, the party also needs to provide the following simple requirements:
“(1) The Arbitration Agreement;
(2) The Original Award;
(3) The name and last place of business of the person against whom it is intended to be enforced;
(4) Statement that the award has not been complied with, or complied with only in part”
In EBOKAM V. EKWENIBE & SONS TRADING COMPANY, (2001) NWLR 2 (Pt. 696),32, the Nigerian Court of Appeal listed additional requirements needed for a party seeking recognition and enforcement under the New York Convention. The requirements are as follows:
- The arbitration agreement;
- That the dispute arose within the terms of the submission;
- That arbitrators were appointed in accordance with the clause which contains the submission;
- The making of the award; and
- That the amount awarded has not been paid.
Once the Court recognizes the award by granting leave to the creditor to register same, it shall be enforced as a judgment of that Court.
It is important that section 31 of ACA which provides the method for enforcing a judgment has not specified whether the other party should be put on notice. However, with the decision reached by the court of Appeal in ALLIED ENERGY LTD V. NIGERIA AGIP EXPLORATION LTD, (2018) LPELR – 4502 (CA), it has become expedient for a successful party seeking to register and enforce an Award to put the other party on notice.
The impression created by many is that Nigeria is not an arbitration friendly environment but a dispassionate review of the cases that goes to the superior courts will reveal that most arbitral awards are upheld by our courts. Indeed, as stated by Kekere -Ekun J.S.C in Nitel V. Okeke (Supra) at page 47, “to underscore the fact that the Court does not sit on appeal over an arbitral award, it is to be noted that even where the Court finds merit in an application to set aside an award, the jurisdiction is limited to setting aside the award and remitting it to the arbitrator for reconsideration. The Court has no jurisdiction to determine the merits of the matter which is the subject of an arbitration proceeding.”
In OKEKE V. NNAMDI AZIKIWE UNIVERSITY TEACHING HOSPITAL (2018) LPELR – 43781 (CA) the Court refused to invalidate an Award simply because of an error in the name of the Respondent. However, in KANO URBAN DEVELOPMENT BOARD V. FANZ, (Supra) the Court set aside an award on the ground that the parties have taken further steps in the litigation before the matter was stayed and subsequently referred to arbitration.
CONCLUSION.
From the practical viewpoint, enforcement of arbitral award in Nigeria is, on paper, a seamless exercise if a lawyer follows diligently the procedure as stipulated in the Arbitration and Conciliation Act or any other State Law that may be applicable.
In our opinion the delay witnessed in enforcing arbitral awards is due more to the systemic congestion in our court system than due to inherent failure in the enabling statutes. Also, it is high time our Judges follows the dictates of the law and not treat application for recognition and enforcement of awards as if they are sitting as a court of appeal over the Arbitral Tribunals as this will enable them to expeditiously determine any challenge to an Award in accordance with the limited grounds stipulated in the Law.
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