Source: http://www.inhouselawyer.co.uk/practice-areas/international-arbitration-3rd-edition/nigeria-arbitration/
Timestamp: 2019-04-19 12:52:41+00:00

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in the Nigeria.
The Arbitration and Conciliation Act (Cap. A18, Laws of the Federation of Nigeria, 2004) (the “ACA”) remains the federal law on arbitration in Nigeria. The ACA mandatorily applies to all domestic arbitrations where parties have not chosen another law to govern the arbitration.
Lagos State also enacted the Lagos State Arbitration Law (2009) (the “Lagos Law”). Unless the parties have expressly otherwise agreed, the Lagos Law applies to all arbitrations where Lagos State is the seat of arbitration. The Lagos Law is a replica of the UNCITRAL Model Law (the “Model Law”), and incorporates the 2006 amendments made to the Model Law.
There is some other legislation that applies to arbitration in Nigeria. Such legislation includes the Judgments Ordinance (Cap. 175) Laws of Federation of Nigeria, 1958 and the Foreign Judgments (Reciprocal Enforcement) Act (Cap. F 35) Laws of Federation Nigeria, 2004 in which judgment has been defined to include awards. Also, rules of procedure for the recognition and enforcement of awards and other arbitration-related proceedings exist in the various rules of courts.
The legislation on arbitration has some mandatory provisions denoted by the use of the word “shall”. See C. N. Onuselogu Ent. Ltd. v. Afribank (Nig.) Ltd. (2005) 1 NWLR (Pt. 940) 577. The failure to comply with such mandatory provisions may result in the successful challenge of an arbitral proceeding or award. For instance, an arbitration agreement must be in writing. Such writing must be contained in (a) a document signed by the parties; or (b) any means of communication which provide a record of the arbitration agreement (such as exchange of letters, telex, telegrams; or (c) in an exchange of points of claim and points of defence in which the existence of an arbitration agreement is alleged by one party and not denied by another. See section 1 of the ACA.
Also, the arbitrators/arbitral tribunal must ensure that there is fair and equal treatment of the parties. See sections 14 of the ACA and 34 of the Lagos Law. An arbitral award must be in writing and signed by the arbitrators, with reasons stated for the absence of any signature by the non-signing arbitrator. It must also state the place and date of the award (sections 26, ACA and 47, Lagos Law). The award or any decision made by a tribunal consisting of three members must be made by the majority (see Article 31 of the First Schedule to the ACA (“the Arbitration Rules”). The absence of the signature of one out of three arbitrators on an arbitral award does not render such an arbitral award invalid. See Gaslink Nigeria Ltd v. Reliance Textile Industries Ltd. (2017) 12 CLRN 1.
There are reservations in Nigeria to the Convention. Section 54 of the ACA emphasizes the provisions of Articles 1X and XI of the New York Convention. In accordance with Article I(3) of the New York Convention, the Convention is applied in Nigeria on the basis that there is a reciprocal recognition and enforcement of awards made in Nigeria in the territory of a member state whose award is to be enforced in Nigeria.
Nigeria is a party to the (i) Vienna Convention on the Law of Treaties, (ii) Convention on Settlement of Investment Disputes between States and Nationals of other States and (iii) Economic Community of West African States Energy Protocol. These treaties have provisions relating to arbitration.
Also, Nigeria has entered into several bilateral investment treaties requiring arbitration as the dispute resolution and regulating the recognition and enforcement of arbitral awards with some countries. These countries with which Nigeria has entered bilateral investment treaties include France, the United Kingdom, the Netherlands, Brazil, Finland, France, Germany, Italy, South Korea, Romania, China, Serbia, Spain, Sweden, Switzerland, and Taiwan.
Further, Nigeria has entered into Investment Promotion and Protection Agreements (IPPAs) with France, the United Kingdom, the Netherlands, Romania, Switzerland, Spain and South Africa. The aim of the IPPAs is to primarily protect investments. The IPPAs allow settlement of investment disputes through arbitration.
Additionally, Nigeria has a treaty with the Asian African Legal Consultative Organisation since April 26, 1999. This treaty guarantees the continued operation of the Regional Centre for International Commercial Arbitration, which was established in Lagos in 1989.
There are plans in Nigeria to reform the primary arbitration legislation (the ACA). Currently, there is a bill before the National Assembly (the equivalent of the UK Parliament) to amend the ACA by incorporating 2006 amendments to the Model Law and introduce a body to regulate arbitration in Nigeria.
By section 1(1) of the ACA, an arbitration agreement, to be valid, must be in writing or otherwise evidenced in writing. Further, both parties must have mutually agreed or consented to the arbitration agreement and the arbitration agreement must be in respect of a commercial relationship. The parties must have legal capacity to enter into the arbitration agreement as with every other contract, the arbitration agreement must satisfy the basic legal requirements of a valid contract of offer, acceptance, and consensus ad idem.
The ACA does not provide for any qualifications as to who can act as an arbitrator. However, before persons can be appointed as arbitrators, certain factors are usually considered such as the relationship of the intended arbitrator to the issues and parties, the nature of dispute, the technical and commercial experience and ability of the arbitrator to resolve the dispute, ability to take charge and to conduct the proceedings expeditiously, arbitral experience in relation to reasonable legal knowledge and special qualification or expertise as stipulated in the arbitration agreement. Serving judges cannot act as arbitrators but retired judges can act as arbitrators.
The appointment of an arbitrator can be challenged if circumstances exist that raise justifiable doubts as to his/her impartiality or independence; or that he/she does not possess the qualifications agreed by the parties. See section 8 of the ACA. The parties are at liberty to determine the procedure to be followed in challenging the appointment of an arbitrator. Under the ACA, where no such procedure was agreed, the party intending to challenge the arbitrator must forward a written statement of the reasons for the challenge to the arbitral tribunal within 15 days of becoming aware of the constitution of the arbitral tribunal or the circumstances for the challenge.
Unless the arbitrator whose appointment has been challenged withdraws or the other party agrees to the challenge, the arbitral tribunal will decide on the challenge. See section 9 of the ACA. Under the Lagos Law, the arbitral tribunal or the appointing authority (if there is one) will determine the challenge. There has been a rise in number of challenges to the appointments of arbitrators of late but such challenges are largely unreported. Nigeria does not have comprehensive reporting of appellate cases, and cases in the trial court are rarely reported at all. There is increasing awareness of the importance of arbitration and the need for expediency in the process.
Nigerian courts consider arbitration agreements to be binding on the parties and have been consistent in holding parties to their arbitration agreements. See M. V. Lupex v NOC & S Ltd. (2003) 15 NWLR (Pt. 844) 469. Where a party to an arbitration agreement commences an action in court with respect to any matter that is the subject of an arbitration agreement, any party to the arbitration agreement may, at any time after appearance or before delivering any pleadings or taking any other steps on the proceedings, apply to the court for an order of stay of proceedings. If the court is satisfied that there is no reason why the matter should not be referred to arbitration in accordance with the arbitration agreement and that the applicant is still willing and ready to submit to arbitration, the court may order a stay of proceedings. See sections 4 and 5, ACA. Recently, the Chief Justice of Nigeria in collaboration with the National Judicial Institute issued a policy statement and directives mandating Nigerian courts to insist on enforcing arbitration agreements.
The procedure for the commencement of arbitral proceedings is set out in Article 3 of the Rules. To commence arbitration, the claimant must serve a notice of arbitration on the respondent. The arbitral proceedings are deemed to commence on the date on which the notice of arbitration was received by the respondent, unless otherwise agreed by the parties. Arbitrations are to commence within six (6) years of the accrual of the cause of action just like the commencement of actions concerning contracts.
The limitation period within which to bring an application to enforce an arbitral award is six (6) years. This six-year rule, however, applies to an award pursuant to an arbitration agreement which is not under seal or where the arbitration is pursuant to any statute other than the ACA. An application to enforce an arbitral award in the categories referred to above must be brought within six (6) years. This provision has been interpreted to mean that the six-year limitation period starts to count from the day of the accrual of the cause of action resulting in the arbitral award and not from the day the arbitral award was delivered. See Murmansk Steamship Line v Kano Oil Millers (1974) 12 SC 1; City Engineering Nigeria Limited v. Federal Housing Authority (1997) 9 NWLR (Pt. 520) 224. This implies that the accrual of the cause action, the arbitration proceedings, the award and application for enforcement of the award must all occur within six years.
In a bid to ameliorate the hardship that may arise from the decision in Murmansk Steamship Line and City Engineering Nigeria Limited (supra), the Lagos Law provides that in computation of the time for the commencement of proceedings seeking to enforce an arbitral awards, the period between the commencement of the arbitration and the date of delivery of the award shall not be reckoned with. This means that under the Lagos Law, the six-year limitation period starts to run from the day the award is delivered.
Nigerian courts cannot compel the parties to arbitrate but may stay proceedings and direct the parties to arbitrate where a party to the arbitration agreement has commenced litigation instead of arbitration.
Except with the consent of the parties and third-party, a third party cannot be made a party to an arbitration. It is essential that a person must be a party to an arbitration agreement before he is made a party to an arbitration. The court may command third parties within Nigeria to appear as witnesses or produce evidence. See section 23 of the ACA.
Interim measures that are available include measures for the conservation of goods or preservation of properties forming the subject-matter of the dispute and for the security of costs (section 13 of the ACA). The High Courts have powers to issue interim measures pending the constitution of an arbitral tribunal. Further, Article 26 of the Rules empowers a court approached by a party to arbitral proceedings to grant interim relief and such a request will not be deemed incompatible with the agreement to arbitrate, or as a waiver of that agreement.
Nigerian lawyers conducting proceedings as counsel or arbitrators are bound by the Rules of Professional Conduct for Legal Practitioners, 2007 in carrying out their services.
Arbitral awards are recognized as binding and will be enforced by the court upon application in writing. The award to be so recognized must be in writing and signed by the arbitrators. Where the tribunal comprises of more than one arbitrator, the majority’s signatures will suffice if the reason for the absence of any signature is stated. The award must contain the reasons on which it is based, unless the parties have agreed that the reasons are not to be stated or the award is an award on agreed terms. The award must also contain the date it was made and state the place of the arbitration, as agreed by the parties or determined by the tribunal. Every award must be a decision (not, for example, suggestion or recommendation) of the arbitral tribunal and must be certain and final (not provisional). A copy of the award signed by the arbitrators must be delivered to each party.
It may take between six to twelve months for an application for recognition and enforcement of an award to be determined by a court of first instance. There is a right of appeal up to the Supreme Court of Nigeria against any decision on the application to enforce the award. When the court grants the application to enforce, arbitral awards are enforced in the same manner as court judgments.
Section 31 of the ACA simply requires a party who desires to enforce an award to apply to the court in writing without stating the procedure for making the application. Rules of the respective courts determine what manner the application to enforce an arbitral award in each court should take and it is usually on notice to the other party. The rules of courts do not permit applications for the enforcement of arbitral awards to be made ex parte. See, for instance, Order 52 Rule 15 of the Federal High Court (Civil Procedure) Rules, 2009.
The law does not provide for different standards for recognition and enforcement of foreign and domestic awards. Where the award or arbitration agreement is not made in English language, a duly certified English translation must accompany the application for enforcement. S. 51, ACA.
under the International Centre for Settlement of Investment Disputes Convention.
All of the remedies recognised under the relevant laws and made on arbitrable disputes are enforceable by the courts. Unless the parties agree otherwise, an arbitral tribunal may make an award on whichever types of remedies it sees fit, including declarations, injunctions, damages (including punitive and exemplary damages) and rectification.
The law does not allow an appeal to be lodged against an arbitral award. However, a party to a domestic arbitration may within three (3) months from the date of the award apply to a High Court to have an award set aside on grounds that the: (i) tribunal exceeded its mandate or jurisdiction; (ii) tribunal was guilty of misconduct; or (iii) award was improperly procured. See sections 29-30, the ACA. Misconduct entails a wide range of violations such as breach of fair hearing, corruption, taking of bribes, partiality of the arbitrators, failure to comply with the terms, express or implied, of the arbitration agreement. See A. Savoia Ltd. v. Sonubi (2000) 12 NWLR (Pt. 682) 539. In fact, challenges regarding the misconduct of the tribunal or an arbitrator are open to a wide range of interpretations and parties are generally able to allege several grounds of challenge. Stabilini Visinoni Ltd. v. Mallinson & Partners Ltd. (2014) LPELR-23090(CA).
In addition to the foregoing grounds, arbitral awards delivered in international arbitrations may be challenged or set aside on the following additional grounds: (i) incapacity of a party to the arbitration agreement; (ii) invalidity of the arbitration agreement under the law which the parties have indicated should apply under the laws of Nigeria; (iii) the party seeking to set aside the award is not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; (iv) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration under the laws of Nigeria; (v) the award contains decisions on matters which are beyond the scope of the submission to arbitration, (however 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 submitted to arbitration may be recognised and enforced); (vi) the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the agreement of the parties; (vii) there is no agreement between the parties that the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the law of the country where the arbitration took place; or (viii) that the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made; or (ix) that the recognition or enforcement of the award is against public policy of Nigeria. See sections 48 and 52 of the ACA.
A party that is aggrieved by an arbitral award can apply to a High Court usually by way of an originating motion seeking to set aside the award within three months of the date of the award or after the correction of the award. The High Court may set aside the award or part of the award if the party making the application proves that the award or a part of it contains decisions on matters which were beyond the scope of the submission to arbitration. Where an application to set aside an award is brought, the High Court may, at the request of a party, suspend its proceedings for a period that it deems appropriate so that the arbitral tribunal can resume the arbitral proceedings or take other actions to eliminate the grounds for the setting aside of the award.
The parties are free to insert any terms in their contract and would be bound by the terms of their agreement. The fact that the parties are empowered to waive their right to challenge an arbitral award is buttressed by the fact that the statutory provisions on challenges to arbitral awards are not mandatory. The validity of such provisions may be challenged in view of the fact that there is a right to approach courts in Nigeria. The Nigerian courts have held in other circumstances that access to the judicial system is a public right which cannot be waived or ousted by agreement.
Both the Lagos Law and the ACA make no provisions on the right or the extent to which third party can challenge the recognition of arbitral awards. However, Nigerian courts have held that a third party that is likely to be affected by the outcome or the recognition of an arbitral award has the right to challenge an arbitral award on that basis. See Statoil (Nigeria) Limited et al. v FIRS (2014) LPELR-23144(CA).
There are no rules on third-party funding in Nigeria. Third-party funding in arbitration is not prohibited in Nigeria. However, there are no known third party funders that are active in the Nigerian market.
The Lagos Court of Arbitration Rules 2013 (the “LCA Rules”) make provisions for emergency arbitrators. Under the LCA Rules, interim measures can be requested prior to the constitution of an arbitral tribunal. The idea of an emergency arbitrator was on the need to bridge the gap between the commencement of an arbitration and constitution of the arbitral tribunal. Under the LCA Rules, a party in need of urgent, preservatory or special measures prior to the constitution of the arbitral tribunal may apply to the LCA Secretariat for such measures and for the appointment of a Special Measures Arbitrator. This move will certainly contribute in widening the scope of interim measures available to parties to arbitration.
There are no measures known to us that have been taken by the arbitral institutions in Nigeria to promote transparency in arbitrations. Although arbitral institutions have been admonished to consider amending their rules to incorporate principles that will foster transparency in the arbitral process, the arbitration institutions continue to ensure the confidentiality of arbitration process.
This diversity is not promoted. Arbitrators and counsel are appointed based on their credentials, experience, credibility and availability to carry out the task.
There is a growing awareness on the need to encourage and patronize other forms of Alternative Dispute Resolution (ADR) such as mediation. Court rules have provisions empowering the judges to encourage parties to explore mediation especially before the suit can proceed to trial. Currently, in Lagos State, any suit instituted must go through the ADR screening process and any case found suitable would be referred to mediation at the Lagos Multi-door Court House.
There are no such decisions. However, arbitral awards will be set aside by courts provided there are good grounds for such setting aside as provided in the law.
Allegation of corruption is not a common issue in arbitration in Nigeria. If and when such an allegation is raised, the courts demand proof beyond reasonable doubts.

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