In Nigeria, Arbitration is governed, at the Federal level, by the Arbitration and Conciliation Act which became law in 1988. Some states have also enacted their own laws on arbitration.
In view of global developments in arbitration and dispute resolution, it has become necessary for federal law to be more relevant to the times. For this reason, the Arbitration and Mediation Bill, 2022 (the Bill) was passed by the Nigerian Senate in May 2022 after years of activism by relevant stakeholders.
However, as of the date of this article, the Bill is yet to receive the assent of the President of the Federal Republic of Nigeria.
The Bill is important as it contains several new provisions aimed at improving the dispute resolution process through arbitration and mediation. Below are ten highlights:
1. Arbitrator’s Authority: The authority of an arbitrator is not revoked by the death, bankruptcy, insolvency or other change in circumstances of the party who appointed the arbitrator. This provision further validates the principle that an arbitrator is independent of his/her appointor. The Bill makes it clear that it is only if the arbitrator dies that the arbitrator’s authority is revoked.
2. The default number of arbitrators is one: If the parties have not agreed as to the number of arbitrators, the default number of arbitrators is One. In addition, no one is precluded from acting as an arbitrator because of his or her nationality, unless the parties agree for it to be so.
3. Immunity: The Bill provides that an arbitrator, appointing authority or arbitral institution is not liable for anything done or omitted in the discharge or purported discharge of their functions unless the action or omission was in bad faith.
4. Emergency Arbitrator: The Bill makes provisions for situations where urgent decision-making would be required to protect the interest of a party, pending the final determination of the dispute. Accordingly, a party who needs an urgent relief in an existing dispute can apply for the appointment of a person known as an emergency arbitrator who is empowered to grant urgent reliefs. There is however a time frame within which such an application should be brought. The parties must abide by the emergency arbitrator’s decision, which is also enforceable. It is important to note that the provisions relating to the emergency arbitrator do not impact on the powers of the court to grant such interim reliefs as may be required.
Flexibility is encouraged as any meeting with the emergency arbitrator can be conducted through video conferencing, telephone and other similar means of communication.
In view of global developments in arbitration and dispute resolution, it has become necessary for federal law to be more relevant to the times
5. Third-Party Funding: Third-Party funding occurs when a person that is not a party to an arbitration agreement or proceedings, with no prior connection to the dispute, provides funds for a party to the arbitration proceeding for some benefit or share from the potential sums that may be awarded to the funded party. The current state of Nigerian law is that funding of this sort is prohibited. However, the Bill allows for third-party funding in arbitrations seated in Nigeria and arbitration-related proceedings in any Nigerian court.
The Bill also specifically provides that an arbitral tribunal must fix the costs of arbitration in the award, and such costs include the cost of third-party funding.
These provisions on third-party funding are likely to encourage parties to enter into third-party funding arrangements and deploy their resources in greater measure with the expectation that they can recoup those expenses from the counterparty as may be directed by the Tribunal in the award.
6. Limitation Period: The limitation period for enforcement of awards will exclude the period when the arbitration or mediation was ongoing.
7. Default Appointing Authority: In international arbitration, where parties have not agreed on any procedure for the appointment of an arbitrator or an appointing authority, the Bill provides that the Director of the Regional Center for International Commercial Arbitration Lagos shall be deemed to be the appointing authority designated by the parties.
8. Challenging the Award: Very importantly, the Bill seeks to limit the grounds on which an arbitral award can be challenged. It expressly states that an “error of law” on the face of an award will no longer constitute a ground to set aside an award. In specifying the grounds upon which the Court may set aside an arbitral award, the Bill is loudly silent on misconduct as a basis for setting aside an arbitral award. Clearly, if signed into law, misconduct which currently provides a wide covering for applications challenging awards, will be excised.
9. Award Review Tribunal: By the Bill, parties can agree that an application challenging the award should be made to an Award Review Tribunal(ART). The award of the ART can however still be reviewed by the Court if any party to the arbitration applies. It is, therefore, open to debate as to whether the additional cost implication of the ART will make it unattractive for the parties.
10. Mediation: The Bill, seeks to codify guidance for the practice of mediation in Nigeria. The Bill recognizes and defines “mediation” as the process whereby parties request a third person(s) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship, whether referred to by the expression mediation, conciliation or an expression of similar import. Unlike arbitration, it must be noted that a mediator cannot impose a solution to the dispute on the parties.
The Bill, as it is, has the potential to change the dispute resolution process in Nigeria. It is likely to make arbitration cheaper and faster and reduce the bottlenecks encountered by parties in reaping the fruit of their award after it has been delivered.
The provisions on mediation are also likely to bring some measure of standardization to the practice of mediation across the country and overall facilitate cheaper dispute resolution in Nigeria.
It is however of concern that long after the 30 day period prescribed by the Nigerian constitution for the President to signify whether he assents or withholds assent to the Bill, there is no such communication from the President in the public domain.
It therefore remains to be seen what steps the National Assembly will take in view of this situation.
The Bill, nonetheless, remains a major and positive step towards improving the dispute resolution process in Nigeria.
Mobisola Odimegwu writes with Elizabeth Gabriel from Lagos, Nigeria