A Field Not Covered: Arbitration and the Nigerian Constitution (1)

Since 1988 the Arbitration and Conciliation Act 1988 (ACA) has typically been invoked as the legislation on commercial arbitration in Nigeria – although many states continue to retain legacy arbitration legislation. Now, the enactment of the Lagos State Arbitration Law of 2009, as an alternative to the federal ACA, has ignited a constitutional debate about legislative competence concerning interstate and international commercial arbitration. Despite the ongoing debate the Court of Appeal chose recently, in particular circumstances, not to address or revisit the issue – refusing “to be dragged down into a snake pit”; Stabilini Visinoni v Mallinson [2014].

The constitutional debate centres around whether the 1999 Constitution clearly determines which, as between the federal legislature and states’ legislatures, has the competence to enact framework legislation on arbitration. This essay summarises a fresh line of argument, based on conceptual appreciation of arbitration and judicial authority, that the 1999 Constitution is consistent with the conclusion that both the federal and states’ legislatures have competence to enact arbitration legislation in respect of transactions or disputes with connections to more than one state or beyond Nigeria.

The Exclusive and Concurrent Legislative Lists, through which the Constitution primarily sets out the respective legislative competences of the legislatures do not expressly mention arbitration. This raises the question whether legislative competence over arbitration is addressed in the constitution at all or whether it is addressed as part of or incidental to another heading mentioned expressly. In the extant debate, the provisions of the 1999 Constitution which are usually invoked as capable of being treated as providing for legislative competence over arbitration are contained in items 62, 62(a) and 68 of the 1999

Opinions on whether these provisions cover legislative competence over arbitration are polarised. The prevalent interpretation holds that in light of item 68, arbitration is incidental or supplementary to trade and commerce in item 62; accordingly, the federal legislature has exclusive competence over interstate and international commercial arbitration; however, states’ have legislative competence over “intra-state arbitration” – as a residual matter falling within their exclusive competence.   

An opposing argument is that items 62 and 68 of the Exclusive List of the 1999 Constitution cannot be invoked to determine legislative competence over arbitration as they do not clearly address the matter. This argument thus contends that the federal legislature does not have legislative competence over arbitration at all and that arbitration is entirely a residual matter for the exclusive legislative competence of states’ legislatures.

It is not important to clarify that it is not contested that competence to implement Nigeria’s international obligations concerning arbitration lies with the federal legislature; nor that the federal legislature has competence over arbitration legislation for the Federal Capital Territory.

The position of the courts on the ongoing debate is not clear. In Stabilini, the Court of Appeal seemed to favour a middle course. Whilst it decided the particular case on the basis that the circumstances dictated that the ACA should be applied, the court seemed to recognise that it was open to arbitration parties (in Lagos) to choose to invoke the Lagos Law instead. Stabilini sits uneasily with the earlier decision in Compagnie Generale de Geophysique v Etuk[2004] in which the same court held that by the ACA the federal legislature has “covered the field” of arbitration and that ‘inconsistent’ provisions of state legislation on arbitration are null and void.

The “covering the field” approach invoked in Etuk has some support in academic literature. However, if the decision in Etuk and the “covering the field” approach were correct, the Stabilini court could simply have held that the Lagos Law is null and void to the extent of inconsistency with the ACA. The Stabilini court did no such thing! Rather, it commended the Lagos legislation for making it possible for parties to choose either that law itself or another law – including the ACA. The court said this “makes sense because arbitration is a subject area that can be said to be ‘without borders’”.

It has been demonstrated in a recent academic contribution that the “covering the field” approach is inappropriate in the context of legislative competence over arbitration. It was also demonstrated that the invocation of the doctrine in Etuk did not comply with the parameters laid down by the Supreme Court in cases includingAttorney-General of Ogun State v Attorney-General of the Federation (1982). The contribution demonstrated further, as summarised below, that Supreme Court authority on the interpretation of “trade and commerce” in equivalent provisions of the previous 1979 Constitution and other related provisions as well as general doctrine support the conclusion that both the federal and state legislatures have competence to enact legislation concerning interstate and international commerce arbitration.

Conceptually, arbitration is part of and encompassed within “trade and commerce” and it is surprising that debate has mostly focused on whether arbitration is “incidental” to trade and commerce. Arbitration is big business and widely so regarded; it is not merely a dispute resolution mechanism but a veritable business sector that many countries wish to encourage for revenue generation purposes. Recently, it was announced that the Bahamas planned to become an arbitration centre in “a bid to tap into a possible lucrative business sector for the country.” Also, a commentator noted recently “London … handles in any given year international arbitrations with a combined value of £40-£50 billion ….” Once arbitration is seen as the big business that it is, apart from being a dispute resolution mechanism, it is not difficult to see arbitration as within “trade and commerce” and thus within the legislative competence of the federal legislature to the extent permitted constitutionally.

• To be continued on Monday

Gbenga Bamodu