Introduction
In Nigeria, as in many global jurisdictions, arbitration is a preferred dispute resolution method due to its efficiency and flexibility. A significant attraction of arbitration is the ability of the successful party to enforce the arbitral Award without resorting to further litigation. Arbitration is a popular alternative to traditional court proceedings, offering a means for parties to resolve disputes through an impartial third party or panel. An arbitral Award results from an arbitral proceeding, just as a final judgment is from litigation.
With the emergence of dispute resolution mechanisms, individuals or corporate bodies do not have to immediately turn to the court when faced with breaches of contracts or commercial transactions; instead, alternative methods such as arbitration and mediation, are considered for the potential resolution of such transactions. The enforcement of Arbitral Awards and Arbitration itself is governed by the Arbitration and Mediation Act (AMA Cap A18, LFN 2023). Furthermore, the enforcement of foreign arbitral Awards is also governed by the New York Convention incorporated under the AMA. It is important to note that the multi-door courthouses in Nigeria offer various avenues for dispute settlement.
Nature of Arbitral Awards
Arbitration, a form of Alternative Dispute Resolution (ADR), allows parties to resolve their disputes outside of regular court systems. By mutual agreement, parties exclude court jurisdiction and instead submit their disputes to a neutral arbitrator or panel, whose decision is known as an “Award.” This Award is binding, and parties are obligated to comply with its terms.
Simply put, an arbitral Award is the final decision by an arbitrator or a tribunal on matters submitted to him in a particular reference. A final Award must decide all the issues involved in the dispute and what has been submitted for determination. As soon as an Award is published, the arbitral tribunal becomes functus officio. Once issued, the arbitral tribunal’s role is concluded, and the Award carries the same binding authority as a court judgment. It operates as res judicata, meaning it resolves the dispute definitively, extinguishing any further legal claims on the same subject matter.
An arbitral Award is typically issued after the parties have presented their arguments, evidence, and defenses during the arbitration proceedings. It resolves the dispute and carries the same weight as a court judgment, allowing for its enforcement by applicable laws and conventions. An arbitral Award to be valid and enforceable, must not only be in writing but also be signed with the date and place where it was made and recorded. The nature of an arbitration agreement suggests a reasonable expectation that once an arbitral Award is published by the tribunal, the decision will be performed without further ado by the unsuccessful party.
Enforcement and Recognition of Arbitral Awards
The enforcement process in Nigeria involves applying to the court for recognition and enforcement, and once granted, the Award carries the same weight as a valid and final court judgment. More often than not, a situation may arise where a party to the arbitration is unwilling to voluntarily comply with an Award. When this occurs, the successful party must seek enforcement through the Court. Arbitration unlike regular Courts does not have the machinery to enforce her Awards. It has to revert to the machinery of regular Courts to carry out the enforcement in the absence of voluntary compliance with the orders of the Award.
Section 57 of the AMA states that an Award made in Nigeria or outside of Nigeria shall be valid and enforceable in Nigeria where an application for enforcement of the Award is made to the Court provided that the original Award and the original arbitration agreement or certified copies thereof or a certified translation in the English language of the agreement where it was not made in the English Language, is attached to such application.
THE ROLE OF THE COURTS IN ENFORCING ARBITRAL AWARDS
Nigerian courts have demonstrated a supportive stance towards arbitration in resolving commercial disputes. It was held in Metroline Nigeria Limited & Ors v Dikko ((2021) 2 NWLR (Pt.1761) 422 (SC)) the importance of respecting the finality of arbitral Awards and the fact that Nigerian Courts will not be used as an instrument to annul valid arbitral Awards. The Supreme Court has stated in Mekwunye v Imoukhuede ((2019) LPELR-48996 (SC)) that Courts are enjoined to, as much as possible, uphold or affirm and enforce arbitral Awards when being approached especially because parties had voluntarily resolved or agreed to submit to the jurisdiction of the arbitrator or arbitrators to resolve their dispute.
Jurisdiction
The Courts have been helpers in the enforcement of arbitral Awards where the unsuccessful party, challenges the jurisdiction of the arbitral tribunal at the enforcement stage. The Supreme Court in the case of Nigerian National Petroleum Corporation V. Clifco Nigeria Limited ([2011] LPELR-2022(SC) held that jurisdiction to hear and determine a dispute is raised before the arbitral panel within the time stipulated in the Act, and it can only be raised after the stipulated period if the arbitral panel finds reasons for the delay justified.
Thus, this means that a party that did not address the issue of jurisdiction before the arbitral panel cannot introduce it for the first time in the High Court. Courts have been instrumental in clarifying the grounds that may undermine an unsuccessful party’s attempts to challenge the enforcement of an arbitral Award. As a result, a party cannot use a jurisdictional objection as a strategy to avoid paying the Award.
The Limitation Period
Another argument that the unsuccessful party might use is the limitation period for enforcing an Award. This tactic is often employed to delay the enforcement of the Award. However, the Court has moved away from its previous interpretation in City Engineering Nigeria Limited V. Federal Housing Authority ([1997] 9 NWLR (Pt. 520) 224) which states that an enforcement application must be filed within 6 years from the date the cause of action arose and has held in Sifax Nigeria Limited V. Migfo Nig. Ltd ([2018] 9 NWLR (PT. 1623) 138 (SC)that computation of time during the pendency of an action shall remain frozen from the filing of the action until it is determined or it abates. Also, by the provisions of section 34(4) of the AMA, in computing the time for the commencement of proceedings to enforce an arbitral Award, the period between the commencement of the arbitration and the date of the Award shall be excluded.
It should be noted however, that parties may include the Scott and Avery clause in the Arbitration Agreement which allows parties to agree that no right of action shall accrue in respect of any differences which may arise between them until such differences have been adjudicated upon by an arbitrator.
New provisions as it relates to Enforcement under the AMA 2023
The Award Review Tribunal
In addition to the established judicial precedents, the AMA aims to deter frivolous challenges to final Awards. A notable aspect of the Act is the establishment of the Award Review Tribunal (ART), which provides an initial review of arbitral Awards made in a Nigerian-seated arbitration and provides that the Award can only be set aside based on the specific, streamlined grounds outlined in Section 55(3) of the AMA. If the ART upholds the Award, it can only be set aside in court on limited grounds related to arbitrability or public policy.
Stay Of Proceedings
Stay of proceedings is the temporary suspension of the regular order of proceedings in a cause, by direction or Court order pending the determination of another suit. Section 5 of the repealed Arbitration and Conciliation Act provides for three conditions which must be satisfied by an Applicant, before the court may exercise its discretion to make an Order for stay of proceedings pending arbitration. The three conditions are that, firstly, the Applicant must have taken no step in the proceedings, secondly, there must be no sufficient reason why the matter should not be referred to arbitration and thirdly, the Applicant must have at the time when the action was commenced and remains ready and willing to do all things necessary to the proper conduct of the arbitration.
However, with the innovative provision of the AMA, Section 5 and the Supreme Court’s decision in United Bank for Africa Plc V Trident Consulting Limited, ([2023] 14 NWLR (PT 1903) 95) which states that before a stay may be granted pending arbitration, the party applying for a stay must demonstrate unequivocally by documentary evidence and/or other visible means that he is willing to arbitrate and must do this satisfactorily by notifying the other party in writing of his intention of referring the matter to arbitration and by proposing in writing an arbitrator or arbitrators for the arbitration. This means that the Court will only be moved to grant a stay if an arbitration proceeding is in existence and specific steps have been taken by the applicant.
In Conclusion, the survey conducted by Broderick Bozimo and Company indicates that Nigerian courts enforced 26 out of 33 domestic arbitral Awards and 7 out of 8 international Awards, reflecting a 79% success rate for domestic Awards and an 88% success rate for international Awards. This data highlights the effectiveness of the Nigerian judicial system in upholding arbitral Awards arising out of the terms agreed upon by the parties in the Arbitration Agreement.
Contributors:
Dolapo Ogunmoyero: Associate
Tilewa Oyefeso: Partner
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