The Efficacy Of The Practice Of Commercial Arbitration In Nigeria

By Oyetola Muyiwa Atoyebi, SAN, FCIArb. (UK).

INTRODUCTION:

It is common knowledge that conflicts can occur in business and commercial settings, particularly where there have been violations of contractual obligations. Alternative dispute resolution techniques such as arbitration are employed to settle conflicts outside of the Courtroom. Arbitration refers to the actual issues in question, even though an arbitration agreement may address present or future disputes[1]. It has been claimed that arbitration refers to any commercial arbitration, whether or not it is conducted by a permanent arbitral tribunal[2]. Therefore, whether or not there is a contract, commercial arbitration is concerned with all connections and business-related activities[3].

The growth of commercial arbitration in Nigeria has appropriately led to the establishment of institutions and the adoption of regulations that control its use.

This illustrates how changes in various commercial transactions and regulatory laws evolve. The roots of Nigerian arbitration law include statutes, trade usages and customs, equity, and common law. The majority of Nigerian arbitration law is derived from both international and domestic statutes. The UNCITRAL Model Law, the UNCITRAL Arbitration Rules, and the New York Convention are examples of foreign statutes. The United Nations Commission on International Trade Law is referred to as UNCITRAL. The desire to democratize international business arbitration by reducing the influence of national Courts and giving the parties the opportunity to decide how their disputes should be resolved led to the approval of this[4].

This article will examine the development of business practice in Nigeria and the necessity of commercial arbitration in this article, as a way to enhance Nigeria’s dispute settlement process.

EVOLUTION OF THE PRACTICE OF ARBITRATION IN NIGERIA.

In Nigeria, the practice of dispute settlement through the process of arbitration is not a recent development[5]. The Nigerian legislative basis for arbitration was established on December 31, 1914, when the Arbitration Ordinance of 1914 was passed. The 1914 Ordinance was based on the English Arbitration Act of 1889, and Northern, Western, Eastern Nigeria, Lagos, and Southern Cameroons were included in its applicability under section 1 (2) of the 1958 Laws. The Act was formally enacted into law by each of the regions. There was therefore no federal law on arbitration until the promulgation of the Arbitration and Conciliation Act[6]. When the Arbitration Ordinance of 1958 went into effect, this Ordinance was once again implemented. The 1958 law, which extended to the entire nation, was incorporated into the local laws of every region. The 1958 Ordinance was later passed in Lagos State as the Arbitration Law, Chapter 10, Laws of Lagos State 1973, and in the western area as the Arbitration Law, Chapter 18, Laws of the Western Region of Nigeria 1959.

The Federal Military Government’s Decree No. 11 of 1988 on Arbitration and Conciliation was adopted on March 14th, 1988. This order, which was effective throughout the whole federation, removed the rules controlling state arbitration. In May 1999, Nigeria’s government was given democratic power and a new constitution was adopted. The 1999 Constitution provided state governments responsibility over matters covered by the concurrent legislative list and those not covered by the exclusive list, while the federal government was given jurisdiction to pass legislation on matters covered by the exclusive legislative list. The Arbitration and Conciliation Act, Cap. A18, LFN 2004 is the current arbitration law in Nigeria because Section 315 of the 1999 Constitution upheld the 1988 Decree.

The Arbitration and Conciliation Act establishes a uniform legal framework for the efficient and fair resolution of commercial disputes through arbitration and conciliation. It also makes the Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention) applicable to any award made in Nigeria, or in any other contracting state arising from international commercial arbitration[7]. A unique feature of arbitral awards is that they can be applied internationally. Arbitral awards can be enforced in many countries throughout the world because of the New York Convention. People from countries that have ratified the New York Convention, such as Nigeria, may also use it to make awards more effective.

The Arbitration and Conciliation Act also supersedes all other arbitration laws in Nigeria. Thus, where there is any disagreement with another law (State law), that other law (State law) is null and void and has no force or effect[8].

THE EFFICACY OF COMMERCIAL ARBITRATION IN NIGERIA

In Nigeria, the issue of unjustified delays in case resolution frequently affects the Court system. The ultimate goal of justice cannot be achieved quickly and effectively through judicial proceedings. The collection and formal management of the filed documents by the clerk, the documentation at the time of collection, the filing of the event on a Court register, and the delivery of a receipt are just a few of the acts connected to procedures. These all take resources and time. The Nigerian Courts also experience concerns with people, procedure, and the constitution. All of these factors go into making legal procedures often drawn-out and complicated. For instance, In Ariori v. Elemo[9], it took about 23 years before a final determination of the case at the Supreme Court. In Union Bank Nigeria Plc v. Ayodare and Sons (Nig.) Limited,[10] the matter was instituted at the State High Court in 1989 but was not finally disposed of by the Supreme Court until 2007 – a period of 18 years. The trial Court gave judgment in Adisa v. Oyinwola[11] in 1985, while the appeal was not determined by the Supreme Court until the year 2000; the appeal lasted for 15 years from the Court of Appeal to the Supreme Court.

The Nigerian judicial system is characterized by a number of procedural flaws that make it highly challenging to achieve justice and hasten the settlement of legal issues. There is a need to prevent such delays in conflict resolutions in commercial transactions, which demand specific degrees of speed and effective delivery. By submitting disagreements to an arbitrator who has been chosen by the parties and who will base his or her decision on the evidence presented to the arbitration tribunal, commercial arbitration is a type of alternative dispute resolution method. It reduces time spent and offers a better setting for settling conflicts in the corporate world, which mostly involves interacting with people. All these reveal the need for the practice of commercial arbitration in Nigeria, which seeks to solve the problem posited by the regular Courts and litigation practice in general.

Commercial arbitration has the significant benefit of allowing parties to sidestep the complexities of national Court systems. Arbitrators who are independent of any State or party arbitrate disputes in a fair and impartial manner. Additionally, commercial arbitration assures that the proceedings are handled promptly. It is a fluid process that is not constrained by strict laws and regulations.

Additionally, it allows for the element of decision. Arbitrators may be chosen by the disputing parties. The State’s legal system does not have the sole authority over the selection of Arbitrators. Experts in the area of the issue may also be chosen by the parties. By doing this, the possibility of bias that a foreign party would experience is eliminated if the matter is settled by a national Court. It gives parties the option to select the applicable law to resolve their disagreement. This enables them to avoid falling prey to antiquated or ineffective laws.

CONCLUSION

The Alternative Dispute Resolution method of commercial arbitration is more practical and efficient for settling disputes in a business setting. It may cost more, but it avoids the demanding lawsuit procedure. The current legislative framework for commercial arbitration in Nigeria must therefore be modified to conform to global best practices.

SNIPPET:

Without a doubt, disputes arise in the majority of human interactions and relationships. Conflicts can arise in professional and commercial environments, particularly where there have been breaches of contractual commitments, as well as knowledge. Conflicts are resolved outside of the Courts via Alternative Dispute resolution methods like arbitration. Even if an arbitration agreement may cover current or future disputes, arbitration refers to the real issues at hand.

Key terms: Arbitration, International Conflicts, Arbitration and commerce, commercial arbitration.

Author

Mr. Oyetola Muyiwa Atoyebi, SAN is the Managing Partner of O. M. Atoyebi, S.A.N & Partners (OMAPLEX Law Firm).

Mr. Atoyebi has expertise in and vast knowledge of Corporate Practice and this has seen him advise and represent his vast clientele in a myriad of high-level transactions.  He holds the honour of being the youngest lawyer in Nigeria’s history to be conferred with the rank of Senior Advocate of Nigeria.

He can be reached at atoyebi@omaplex.com.ng

Contributor: Joannah Titus

Joannah is a member of the Dispute Resolution Team at OMAPLEX Law Firm. She also holds commendable legal expertise in Arbitration Practice

She can be reached at joannah.titus@omaplex.com.ng

[1] Halsbury’s Laws of England, 4th Edition, para 501 p. 225, and K.S.U.D.B. v Fanz Construction Ltd (1990) 4 NWLR (pt 142) 1 at 32; MISR (Nig) Ltd v. Oyedele (1966) 2 ALR (Comm.) 157; NNPC v. Lutin Investments Ltd & Anor (2006) 2 NWLR(Pt. 965) 566

[2] Section 57(1) of the Arbitration and Conciliation Act.

[3] Bamigboye, Mike, Does National Court Involvement Undermine the Arbitration Processes? (February 29, 2015). Available at SSRN: https://ssrn.com/abstract=2858812 or http://dx.doi.org/10.2139/ssrn.2858812.

[4] Ann Ezeanya, ‘Legal Framework of Arbitration in Nigeria’, Academia.edu.2022. <https://www.academia.edu/29683673/LEGAL_FRAMEWORK_OF_ARBITRATION_IN_NIGERIA > Accessed 2/11/22.

[5] Candide Johnson C.A and Shashore O 2011. Commercial Arbitration Law and International Practice in Nigeria, LexisNexis, Durban, South Africa pp.05-07.

[6] Tinuade Oyekunle and Bayo Ojo, ‘Handbook of Arbitration and ADR Practice in Nigeria’ (2018), Pinetown printers, pp. 21.

[7] Ibid, n. 2.

[8] C.G de Geophysique v. Etuk (2004) 1 NWLR (Pt. 853) 20 CA; sections 4(5) and 315(3) of the 1999 Constitution.

[9] (1983) 1 SC 13

[10] (2007) 13 NWLR (Pt. 1052) 567

[11] (2000) 10 NWLR (Pt. 674) 116