Authors: Babajide Oladipo Ogundipe, Olamide Aleshinloye and Olayinka Ajose-Adeogun (Sofunde Osakwe Ogundipe & Belgore)
Arbitration in Nigeria is regulated by two pieces of legislation: the federally enacted Arbitration and Conciliation Act, contained in Chapter A18 of the Laws of the Federation of Nigeria 2004 (ACA), and the Arbitration Law of Lagos State (Lagos State Law). The reason there is a federal law regulating arbitration is historical: prior to the promulgation of the ACA as a federal decree by Nigeria’s federal military government in 1988, most states in the federation had their own laws regulating arbitration within their own territory. This was because, under the legislative lists in Nigeria’s Constitutions of 1960, 1963 and 1979, the power to make laws regulating contracts lay with the states (or regions pre-1967). During the period of military government, Nigeria was a federation in name only, and the federal government made laws in respect of matters that state governments were constitutionally empowered to legislate upon. After 29 May 1999, when the current constitutional provisions took effect, it became possible for state legislatures to once more enact legislation regulating arbitration within their respective territories. Thus far, only Lagos State has enacted a law regulating arbitration.
The ACA, which was based on the UNCITRAL Model Law, governs both domestic and international arbitration. Part I of the ACA applies to domestic commercial arbitration, while Part III of the ACA applies only to international commercial arbitration. The Lagos State Law 2009 makes no distinction between domestic and international arbitration, and draws heavily on the English Arbitration Act, as well as incorporating some of the 2006 amendments to the UNCITRAL Model Law. This piece of legislation regulates all arbitration references in Lagos State, except otherwise agreed by parties. Notable provisions introduced by the Lagos State Law to remedy perceived shortfalls in the ACA include Sections 21 to 30 of the Lagos State Law, which empower the court to issue interim measures, whether in the form of an award or in another form, or to maintain or restore the status quo pending the determination of a dispute. These provisions capture two scenarios: where a party approaches the court and makes an application for an interim measure before or during arbitral proceedings; and where the arbitrator grants an interim measure in the form of an interim award and such interim award needs to be enforced by the court.
The courts play a supportive and supervisory role over arbitral tribunals, and both laws limit the extent of the courts’ intervention in arbitral proceedings. Some of these are applications to court for the enforcement and setting aside of an award, applications seeking coercive orders, or applications for a stay of proceedings or the appointment of an arbitral tribunal. There are no specialist tribunals for arbitration in Nigeria: matters related to arbitration, either for the purpose of enforcement or challenge, must go to a high court in the first instance, and appeals may be made to the appellate courts. Nigeria has both federal and state high courts, and the high court to which matters related to arbitration must be referred is determined by the subject matter of the arbitration, with matters within the exclusive jurisdiction of the federal high court going to that court and all others to state high courts. Arbitration is widely accepted in Nigeria, and there is an increasing use of arbitration as a means of resolving commercial disputes.
There are also numerous local institutions that support and encourage arbitration in Nigeria. These institutions include the Lagos Court of Arbitration, the Chartered Institute of Arbitration (Nigerian Branch) and the Regional Centre for International Arbitration, Lagos.
Recent trends relating to arbitration in Nigeria have included the establishment of arbitration committees at the federal and state levels, to recommend forward-looking policies and updates to current laws to enhance the preference for arbitration. Nigerian courts have also recently deprecated the rising number of challenges made against arbitral awards, expressing concerns about the effect they may have on Nigeria’s reputation as a friendly seat for the enforcement of awards. The covid-19 pandemic resulted in the greater use of virtual hearings in arbitration. Finally, litigation in the United Kingdom and United States related to the award against the Nigerian government in 2017 in favour of a company called Process & Industrial Developments Limited (P&ID), which left a US$10 billion plus debt hanging over the Nigerian government, received a great deal of attention in Nigeria. Although these proceedings did not take place in Nigeria, they have had a significant effect on the manner on which Nigerian parties will approach international arbitration proceedings.
