The utilitarian value of Arbitration has evolved and gained phenomenal momentum over the years. This accounts for the enormous interest in the dispute resolution mechanism, not just by Lawyers but from almost all facets of human endeavor. Its tentacles cut across International and Domestic Arbitration, Commercial Arbitration, etc.
The kernel of this piece is to highlight the concept of class arbitration which though is alien to our jurisprudence, but in the long run and indeed, will serve as veritable tool in the propagation and protection of rights and pursuit of redress for citizens in Nigeria.
Class Arbitration is particularly a gold mine due to its simplicity and flexibility. Disputes can be entertained and determined under established international legal framework on international platforms and such foreign arbitral awards can be enforced in Nigeria. See Section 53 of the Arbitration and Conciliation Act, Cap A18, LFN, 2004, on the ‘Application of Convention on the Recognition and Enforcement of Foreign Arbitral Award’. See also the Foreign Judgment (Reciprocal Enforcement) Act.
As was opined in a Communique by the Nigerian Institute of Advanced Legal Studies on ‘The Roundtable on Class Action Litigation In Nigeria’ dated the 12th of March 2013, a “Class action litigation is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued”. The foregoing typifies the fact that even where an action is instituted against a class, it falls within the description.
Class action represents a lawsuit in which the convenience of either of the public or of the interested parties require that the case be settled through litigation by or against only a part of the group of similarly situated persons and in which a person whose interests are or may be affected does not have an opportunity to protect his or her interests by appearing personally or through a selected representative. Principally, it allows multiple parties in a civil litigation to sue a perpetrator on common grounds of infringements. This is obviously targeted at reducing the bedevilment occasioned by multiplicity of suits that would otherwise be instituted by or against persons sharing common rights, grievance or interest.
The question which seeks answer at this stage is ‘what is a class?’ as it pertains to this discourse. The Black’s Law Dictionary, Bryan A. Garner, 7th Edition, a class is defined thus:
“A group of people who have a common legal position, so that all their claims can be efficiently adjudicated in a single proceeding.”
In exposing the history behind representative actions and noting the major difference between class action and suit brought in a representative capacity, the apex court in Nigeria, per Nweze, J.S.C., in APEH V. P.D.P (2016) 7 NWLR (PT.1510) 153 @ 171, Paras. F-H, and 172-173, Paras. H-A, held thus:
“Under the common law practice, all parties, who were interested in a suit, were required to be present in court so that “a final end might be made of the controversy“ per Lord McNaughton in Duke of Bedford v. Ellis AC, 1, 8, (H.L) (P.C.). Unarguably, the rules were adapted to meet the difficulties presented by a multiplicity of persons interested in the subject matter of litigation. Accordingly, the rules of equity allowed some of such persons to sue on behalf of themselves and all others having the same interest. Understandably, this was done to prevent a failure of justice.”
The powers that inhere on the named representative or Plaintiff as the case may be, are hedged around with limitations. For instance, he can only represent those who have given him authority to do so, and in respect of a claim in which his interest in the subject matter is common with that of those he represents. See Alafia v. Gbode Ventures (Nig.) Ltd. (2016) 9 NWLR (Pt. 1510) 116. He cannot, without their authority and order of court authorizing him to do so, defend counter claims made against him in the principal action.”
Hence, unlike in a representative action which requires authorization from parties who are themselves ascertainable, what is required in a class action is an order of court certifying the action as one, in addition to establishing that not all members of the class on whose behalf the action is instituted or against whom the action is instituted, can be ascertained. It is sufficient to show by way of an ex parte application, the legitimacy of the cause of action, the numerosity of the class affected and the fact that the redress sought on behalf of, or against the class are common and similar.
The ex parte application must seek the following; 1. Order granting the Plaintiff leave to represent the class by certifying the suit a class action; 2. Leave for notice of the order of court certifying the suit a class action to be advertised/published in at least one (1) national daily; 3. An order that unknown members of the class be given leave to opt in or opt out of the class suit, and engage legal representation, if need be, and 4. An order that the unnamed members of the class may not file similar actions to prevent multiplicity of suits.
In considering the application for certification of a suit as a class action, the courts have in practice considered the integrity, personality and financial capacity of the Plaintiff/Applicant seeking to prosecute a class action and where there is in contemplation a contingent fee, the reasonableness of such fee.
Any procedural defect in commencing a class action can deal the ultimate coup de grace to the entire proceedings, hence, so much caution and diligence must be exhibited.
One of the innovations in the Federal High Court (Civil Procedure) Rules 2009, is the inclusion of class actions in Order 9 Rule 4 the said Rules, though with limitation to matters of trademarks, copyrights, patents and designs.
“The fundamentals of two or more parties, whether in anticipation of dispute, agreeing to nominate another private person to resolve the issues between them by arriving at a decision, are still present. That private person is called an Arbitrator.” ‘Jide Olakanmi & Co., “ADR Alternative Dispute Resolution: Cases & Materials, 2013, P. 2”
Arbitration affords parties the opportunity to choose by an agreement, whoever to resolve their dispute and allows for particular reference to persons with the requisite knowledge and experience in the subject matter of a dispute. It is simple, congenial and confidential. The arbitration agreement is proof that the parties have consented to resolve their dispute by arbitration.
An Agreement to submit a reference to Arbitration is the bedrock of any Arbitration, the absence of which expels jurisdiction and renders the Arbitral proceeding a nullity and any award emanating therefrom liable to be set aside.
CONCEPT OF CLASS ARBITRATION
Class Arbitration is an alternative dispute mechanism of large scale redress. Class actions, as well as Class Arbitration, by their very nature, as previously crystallized, will only emanate when there is a dispute. For in the latter and the former, the composition of the class is mostly unascertainable and a wrong is never envisaged in order to enter into an Agreement to arbitrate in respect of future wrongs/disputes. This envisages a situation whereby a representative of a class, in the face of a wrong and in the absence of an Arbitration agreement, approaches the other party requesting submission of the class’ grievance/dispute to Arbitration, rather than by way of an action in court. Here, where parties are ad idem on such submission to Arbitration, an Arbitration Submission Agreement is executed by parties indicating the number of Arbitrators, the seat (i.e. place of Arbitration), applicable law, duration of Arbitration, etc. This type of Arbitration is termed ‘Adhoc Arbitration’
The procedural rigors manifest in prosecuting a class action are indubitably avoidable in class arbitration as Arbitral proceedings are party-sensitive and highly subject to the agreement of parties, from whom the Arbitral Tribunal derives its jurisdiction.
It is not strange that the Arbitration and Conciliation Act (ACA), Cap A18, LFN, 2004, the major statute dealing with arbitration in Nigeria and most likely the various Rules and International conventions on Arbitration, do not contemplate this aspect of Arbitration, however, the ACA gives the Arbitrators the powers to imbibe such procedure as it deems fit in the interest of justice and subject to the agreement of parties. The efficacy of class arbitration in the settlement of wrongs against a class, protection and enforcement of certain rights of a class and disputes involving a class cannot be overemphasized.
The question whether a wrong/injury/dispute which may culminate into a class action are arbitrable can be answered in the Affirmative. For example, wrongs or injuries to a class emanating from poor services from service providers, manufacturers of products, Banks and even interpretation of the limits to the statutory powers of agencies and parastatals of government can be referred to arbitration.
*An advantage innate in Class arbitration is that the restrictions in the various rules of courts, as to the subject matters in respect of which suits can be instituted by way of a class action, are absent in a class arbitration. It must also be borne in mind that a class action can transcend into a class arbitration. Interestingly, in Nigeria today, the various High Court Rules provide for forms of dispute resolution like arbitration and conciliation/ mediation, outside the regular litigation process which is popular. The reform of the court rules has led to the provision for references to either arbitration or ADR in the rules of court, which creates the possibility of class arbitration to emerge from a court action, aside the class arbitration occurring voluntarily between the plaintiffs and the defendant(s).
*Class arbitration is less common than class lawsuit but does occur in other jurisdictions and under certain situations. For instance, the California Arbitration Act gives the California courts authority to consolidate arbitrations and this enables the courts to routinely certify class wide arbitrations and send them to arbitrators for adjudication. In the United States, the Court’s decision in the case of Green Tree Financial Corp v Bazzle (539 US at 444, (2003) has led to the incorporation of class arbitration in the Arbitration Rules of the American Arbitration Association (AAA).
The procedure applicable to class actions cannot be completely distant from class arbitration except for minor peculiarities inherent in arbitration. Arbitration proceedings can be less formal. The Arbitrators are generally master of the procedure to be used subject, of course, to the Arbitration Rules, and the agreement of parties. Parties in arbitration can bestow special powers on the Arbitrator. This presupposes that strictly procedural requirements can be waived and such procedures subject to the rules of court and agreement of parties, and in the interest of the unnamed class can be adopted in class arbitration. See Section 15 of the Arbitration and Conciliation Act, Cap A18, LFN, 2004, which reads:
“15 (1) The arbitral proceedings shall be in accordance with the procedure contained in the Arbitration Rules set out in the First Schedule to this Act.
(2) Where the rules referred to in subsection (1) of this section contain no provision in respect of any matter related to or connected with a particular arbitral proceedings, the arbitral tribunal may, subject to this Act, conduct the arbitral proceedings in such a manner as it considers appropriate so as to ensure fair hearing,
(3) The power conferred on the arbitral tribunal under subsection (2) of this “section shall include the power to determine the admissibility, relevance, materiality and weight of any evidence placed before it”.
One of the basic rights of a consumer is the right to redress. It is about time Arbitration practitioners utilized this emerging area of arbitration, just like there is a growing awareness in the prosecution of class actions. It is clear beyond per adventure that this class dispute resolution mechanism will serve a great deal and downsize the rigors and procedural challenges embedded in pursuing class actions.
The future beckons that modalities are put in place not just to incorporate class arbitration in the extant Act on arbitration, but for various courts to include provisions for class actions in the various Rules of courts and expand the subject matters in respect of which class actions can be commenced. However, lawyers are advised to take advantage of the omnibus provision in the Rules of Courts to certify suits as class actions in the absence of such specific provision for class actions.
DANIEL KIP is a Solicitor in the reputable Law Firm of ATTAH OCHINKE & CO.
He is currently awaiting Associate membership of the Chartered Institute of Arbitrators, UK.