A NEW ARBITRATION REGIME IN NIGERIA: AN OVERVIEW OF THE ARBITRATION AND MEDIATION ACT, 2023

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Abiodun V. Ogunnubi v2

 

 

 

 

Abiodun V. Ogunnubi

Prior to May 2023, the applicable arbitral legislation in Nigeria was the Arbitration and Conciliation Act (ACA). The ACA was in force for more than three (3) decades and was enacted prior to the adoption of the UNCITRAL Model Law on International Commercial Arbitration, 2006, the UNCITRAL Model Law on International Commercial Mediation, 2018, etc. Thus, the ACA neither provided for nor reflected global best practices in arbitration in the 21st century.

The Arbitration and Mediation Act, 2023 (AMA) was signed into Law by the former President of the Federal Republic of Nigeria on 26th May 2023. The objective of the AMA as expressed in the explanatory memorandum is the same as the ACA except for the replacement of ‘Conciliation’ with ‘Mediation’. The Act is divided into three (3) Parts with a total of ninety-two (92) Sections and three (3) schedules, as follows:

  1. Part I pertains to Arbitration – it applies to both international and domestic arbitral proceedings in Nigeria,
  2. Part II provides for Mediation – the practice of commercial mediation in domestic and international dispute settlement in Nigeria, and
  3. Part III covers Miscellaneous Provisions

Some novel and interesting provisions were introduced into the AMA and below are some of the notable developments in the AMA: –

        1. Resolution of the dichotomy in Sections 4 and 5 of the ACA: The contradiction between Sections 4 and 5 of the ACA on the grant of an order for stay of proceedings pending arbitration being a mandatory or discretionary function of the court has been laid to rest. Pursuant to Section 5 of the ACA, the court could refuse an application for a stay of proceedings where an Applicant fails to provide sufficient reasonwhy the matter should not be referred to arbitration in accordance with the arbitration agreement. However, Section 5 of the AMA imposes a mandatory obligation on the court to refer parties to arbitration and stay proceedings unless the arbitration agreement is void, inoperative or incapable of being performed.
        2. Emergency Arbitrators:4Emergency arbitration is permissible where a party seeks urgent relief. The AMA provides parties with the option of a speedy and efficient procedure to obtain urgent interim reliefs on urgent issues prior to the constitution of an arbitral tribunal. The Act envisages that an application for the appointment of an emergency arbitrator would be filed either alongside or after the filing of a request for a dispute to be referred to arbitration but before the constitution of the arbitral tribunal. Such an application could be made either to the arbitral institution designated by parties or the Court where no arbitral institution is designated by parties. An arbitral institution or Court before whom an application for the appointment of an emergency arbitrator is filed is expected to appoint an emergency arbitrator within two (2) business days of receipt of the application. 5A challenge of the appointment of an emergency arbitrator must be decided within three (3) business days and an emergency arbitrator is required to render a decision within 14 days from the date of receipt of the file. The decision of the emergency arbitrator is binding on the parties, and if a party fails to comply, the other party can enforce the decision by applying to the courts. 6

      The Emergency Relief Procedure is to be conducted in accordance with Article 27 of the 1st schedule to the AMA. Also, an application under Section 16 for the appointment of an emergency arbitrator does not prevent a party from seeking urgent interim measures from a court and an application to court for an urgent interim measure is not considered tantamount to either an infringement or a waiver of the arbitration agreement. 7

        1. Consolidated and Concurrent Hearings: 8While the ACA had no provision for the consolidation of arbitral proceedings, arbitral proceedings under the AMA can be consolidated with ongoing arbitral proceedings, including proceedings that involve different parties. Also, the AMA permits concurrent hearings to be held. However, the option to explore consolidated and concurrent hearings is at the discretion of parties and arbitral tribunals are prohibited from ordering consolidated and concurrent hearings. A consolidated and concurrent hearing would save parties cost, time and resources as well as reduce a duplication of arbitral proceedings, thereby saving precious judicial time if parties decide to approach the court either for interim orders or to challenge an award.
        2. Joinder of Parties: 9The AMA vests the Arbitral Tribunal with the discretionary power to allow additional parties to be joined to an arbitral proceeding, so long as there is prima facie evidence that the additional party is bound by the arbitration agreement giving rise to the arbitration. This presupposes the establishment of a reasonable belief that the additional parties to be joined will be bound by the arbitration agreement.
        3. Grant of Interim Measures and Preliminary Orders by Arbitral Tribunals: 10The AMA imbues the arbitral tribunal with the powers to grant interim measures, such as directing parties to maintain or restore status quo pending the determination of the dispute, to preserve the subject matter of the arbitration or evidence that may be relevant and material to the resolution of the dispute, provide means of preserving assets that subsequent award may be paid from, including the grant of preliminary orders etc., unless otherwise agreed by parties. The AMA provides a clear framework for the enforcement of the interim measures ordered by the tribunal and permits an application for interim measures and preliminary orders to be made without notice to the other party. Also, the tribunal can modify, suspend, or terminate an interim measure or preliminary order it has granted upon application by the other party or in exceptional circumstances. Furthermore, the arbitral tribunal could require an applicant for an interim measure to provide security in relation to the measures sought and could also find an applicant for an interim measure or preliminary order liable for costs and damages caused to the other party. 11The tribunal’s decision on interim measures is binding upon the parties.
        4. Grant of Interim Measures by Courts: 12It is indisputable that the award of interim reliefs could be regarded as part of the inherent powers of the Court, however, such powers are usually derived from statutes. While the ACA empowers the courts to issue orders necessary to preserve the subject matter of the dispute, such as the grant of orders for stay of proceedings, subpoena duces tecum or ad testificandum, etc., Section 19 of the AMA expands the powers of courts to issue interim measures in relation to arbitration proceedings conducted in Nigeria or in another country.
        5. The Abolition of the Torts of Maintenance and Champerty and Third-Party Funding: 13Prior to the enactment of the AMA, the torts of maintenance and champerty prohibits third-party funding of litigation in Nigeria and this extended to arbitral proceedings. However, Section 61 of the AMA abolishes the torts of maintenance and champerty in relation to third-party funding of arbitrations in Nigeria and arbitration related proceedings in courts in Nigeria. Section 62 of the AMA requires a recipient of third-party funding to give written notice of the existence of the funding arrangement and the name and address of the third-party funder to the other parties, the arbitral tribunal, and the arbitral institution either on or before, at the commencement of the arbitration or immediately after the commencement of the arbitration. This no doubt is a welcome development as more people would be encouraged to explore arbitration since alternative funding arrangements could be made for attendant arbitration costs.
        6. The Award Review Tribunal: 14Parties may agree to a review of the final arbitral award by an Award Review Tribunal (ART), however, a review by an ART would only be possible if parties expressly provide in their arbitration agreement that awards can be reviewed by an ART. The ART is required to be comprised of the same number(s) of arbitrator(s) as the arbitral tribunal that delivered the award, and the ART is required to render its decision in the form of an award within sixty (60) days from the date on which it is constituted.15 If an ART sets aside an award, fully or partially, a party may apply to the court to reinstate the award and the court would reinstate the award either fully or partially where it finds that the ART’s decision is unsupportable. Also, an application to set aside an award affirmed either in whole or in part by the ART must be made on any of the nine (9) grounds set out under the Act to set aside an award.
        7. Statute of Limitation Period: 17Prior to the enactment of the AMA, enforcement of arbitral awards and the computation of time during the pendency of arbitral proceedings were caught by statutes of limitation. Despite the decision of the courts in several judicial authorities that time ceases to run during the pendency of judicial proceedings, this did not extend to arbitral proceedings. Section 34 explicitly provides that in computing the limitation period for enforcement of an arbitral award, the time between the commencement of the arbitration proceedings and the award shall be excluded. Section 71 has a similar provision in relation to mediation.
        8. Reduction in Default Number of Arbitrators:20The AMA unlike the ACA provides that the arbitral tribunal shall consist of one arbitrator where there is no agreement as to the number of arbitrators. This will reduce arbitration cost significantly unlike in the old regime.
        9. Arbitrator’s Immunity:22The AMA confers arbitrators, appointing authorities, arbitral institutions as well as their employees with immunity against acts or omissions that might arise in the discharge of their duties; unless it can be established that they acted in bad faith. This immunity as granted under the AMA does not exempt an arbitrator from any liabilities that might arise from his withdrawal. This shields arbitrators, appointing authorities, arbitral institutions from the fear of liabilities, thus promoting independence and impartial decision-making.
        10. Mediation: The AMA unlike the ACA provides for mediation and recognizes it as a dispute resolution mechanism in Nigeria. The Act adopted the UNCITRAL Model Law on International Commercial Mediation, 2018. The AMA outlines the kind of disputes that can be mediated under the Act, how mediation is to be commenced, number of mediators to be appointed, procedure at mediation, immunity and fees of mediators and mediation provider, etc. Also, the AMA recognizes the Singapore Convention on Mediation, 2018 as the applicable convention for the enforcement of international settlement agreements made outside Nigeria, provided that the State is a party to the Singapore Convention.
        11. Provision on Arbitration Proceedings Rules: The Third Schedule to the AMA provides Arbitration Proceedings Rules for applications to court. This will be applicable where there are no provisions in the High Court (Civil Procedure) Rules, in relation to the Arbitration Proceedings.

    Conclusion:

    The provisions of the Act are commendable, as it has introduced a number of novel provisions guaranteed to establish a robust legal framework for the practice of arbitration and mediation in Nigeria. Also, the AMA took cognizance of modern trends and incorporated global best practices into its provisions, for example, the provisions on third-party funding, award review tribunal, the award of interim reliefs and emergency arbitrations. However, the Arbitration and Mediation Act, 2023 is not without some foreseeable challenges, for instance, some mischievous applicants might use such remedies as award of interim reliefs, award review tribunal, to harass other parties. Nonetheless, we hope that the AMA, 2023 will position Nigeria as an arbitration hub in Africa.


    please contact Abiodun V. Ogunnubi at:
    S. P. A. Ajibade & Co., Lagos by
    Telephone (+234 1 472 9890), Fax (+234 1 4605092)
    Mobile (+234.809.790.4777, +234.818.449.2339)
    Email: aogunnubi@spaajibade.com
    www.spaajibade.com


      1. Associate in the Dispute Resolution Department at S.P.A. Ajibade & Co., Lagos, Nigeria.
      2. Cap 18 Laws of the Federation of Nigeria, 2004.
      3. President Muhammadu Buhari.
      4. Section 16 of the AMA.
      5. Section 16(4) of the AMA.
      6. Section 17(1)(a) of the AMA, Articles 27(6) & (10) of the First Schedule to the AMA.
      7. Section 16(9) & (10) of the AMA.
      8. Section 39 of the AMA.
      9. Section 40 of the AMA.
      10. Sections 20 – 29 of the AMA.
      11. Sections 25 and 27 of the AMA.
      12. Sections 23 of the AMA.
      13. Sections 61 and 62 of the AMA.
      14. Section 56 of the AMA.
      15. Section 56(4) & (6) of the AMA.
      16. Section 55(3) of the AMA which states thus:
        1. If the party making the application furnishes proof that:
          1. a party to the arbitration agreement was under some legal incapacity,
          2. 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,
          3. 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 his case,
          4. the award deals with a dispute not contemplated by or does not fall within the terms of the submission to arbitration,
          5. the award contains decisions on matters which are beyond the scope of 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,
          6. 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
          7. 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; or
        2. the court finds that the –
          1. subject matter of the dispute is otherwise not capable of settlement by arbitration under the laws of Nigeria, or
          2. award is against public policy of Nigeria.
          1. Section 34 and 71 of the AMA.
          2. Sifax (Nig.) Ltd. v Migfo (Nig.) Ltd. (2018) 9 NWLR (Pt. 1623) 138 SC., where the Supreme Court unanimously decided that time freezes from the moment an action is commenced for the purpose of computation of time in relation to Statute of Limitation.
          3. FHA v City Engineering (1977) 9 NWLR (Pt 520) 224, where the Supreme Court held that the period of limitation for the enforcement of an award runs from the date of the breach that gave rise to the arbitration.
          4. Section 6(2) of AMA
          5. Section 6(2) of the ACA states that the number of arbitrators shall be deemed to be three where there is no agreement as to the number of arbitrators.
          6. Section 13 of the AMA.
          7. Sections 67 – 87 of the AMA.
          8. See, United Nations Commission on International Trade Law, Model Law on International Commercial
          9. Mediation and International Settlement Agreements Resulting from Mediation, as adopted in 2018 (New York: United Nations, 2018) https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/22-01363_mediation_guide_e_ebook_rev.pdf accessed 21st July 2023, and
          10. United Nations Commission on International Trade Law, United Nations Convention on International Settlement Agreements Resulting from Mediation, as adopted in 2018 (New York: United Nations, 2018) available at: https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/EN/Texts/UNCITRAL/Arbitration/mediation_convention_v1900316_eng.pdf accessed 21st July 2023.
          11. Section 87 of the AMA.

     

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