By Usman Sodiq Esq,

INTRODUCTION

Arbitration, as a dispute resolution mechanism, is pivotal in maintaining harmony and equity in a world often fraught with conflicts. On May 26, 2023, Nigeria took a significant step by enacting the Arbitration and Mediation Act, 2023 (AMA), replacing the previous Arbitration and Conciliation Act. This new legislation governs arbitration proceedings, arbitral tribunals, arbitral awards, and mediation within the country. This article delves into the changes introduced by the new AMA with regard to the grounds for challenging an arbitral award.

GROUNDS FOR CHALLENGING ARBITRAL AWARDS

The AMA narrows the grounds on which parties can challenge arbitral awards before the court. Unlike the ACA, which allowed challenges based on errors on the face of the award and misconduct of an Arbitrator, the AMA restricts such challenges to specific grounds listed in Section 55(3) of the Arbitration and Mediation Act, 2023.

Section 55 (2) AMA 2023 provides:

 An application for setting aside an arbitral award shall not be made on the ground of an error on the face of the award, or any other ground except those expressly stated in subsection (3).

These grounds include:

  • LEGAL INCAPACITY: If a party to the arbitration agreement was under legal incapacity.

Section 55(3) of AMA provides:

(3) The Court may set aside an arbitral award, where-

(a) the party who makes the application furnishes proof that –

(i) a party to the arbitration agreement was under some legal incapacity

  • VALIDITY OF THE ARBITRATION AGREEMENT: When the arbitration agreement is not valid under the agreed law or Nigerian laws. See. Section 55(3) (a) (ii) of AMA which provides:

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it, or failing such indication, under the laws of Nigeria,

  • LACK OF PROPER NOTICE: If the party making the application was not properly notified of the arbitrator’s appointment or the arbitral proceedings. See. Section 55(3) (a) (iii) of AMA which provides:

(iii) the party who makes the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise not able to present its case,

  • SCOPE OF THE AWARD: When the award deals with a dispute beyond the terms of the submission to arbitration. See. Section 55(3) (a) (iv) of AMA which provides:

(iv) the award deals with a dispute not contemplated by or does not fall within the terms of the submission to arbitration,

  • DECISIONS BEYOND SCOPE: If the award contains decisions on matters not submitted to arbitration, only that part of the award may be set aside. See. Section 55(3) (a) (v) of AMA which provides:

(v) the award contains decisions on matters which are beyond the scope of the submission to arbitration, provided 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 to arbitration may be set aside,

  • COMPOSITION AND PROCEDURE: Challenges related to the composition of the arbitral tribunal or procedural irregularities, subject to the parties’ agreement or the Act itself. See. Section 55(3) (a) (vi) & (vii) of AMA which provides:

(vi) the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the agreement of the parties, unless the agreement was in conflict with a provision of this Act from which the parties cannot derogate, or

(vi) where there is no agreement between the parties under subparagraph (vi), that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with this Act;

For a party making an application seeking to set aside an award on the above grounds to succeed, such party who makes the application must furnish proofs to that effect in his application. See Section 55(2) of AMA

Where such an application succeeds, the court may either remit the award to the tribunal, in whole or in part, for reconsideration; or set it aside in whole or in part. See Section 55(5) of AMA

CONCLUSION

By streamlining the grounds for challenging arbitral awards, the AMA aims to enhance the efficiency, fairness, and enforceability of arbitral awards. Going forward, it’s now impracticable for a party to challenge an arbitral award on the grounds of errors on the face of the award and misconduct of an arbitrator.   As parties navigate commercial disputes, the AMA provides a unified legal framework that aligns with international standards, reinforcing Nigeria’s commitment to effective dispute resolution.

Extracted by: Usman Sodiq Esq, Usmansodiq@nigerianbar.ng, 07067789883

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