Nigeria: Update on the bill to amend the Arbitration and Conciliation Act
Breaking the ice
2019 was a very busy year for the arbitration community in Nigeria and in different parts of the world. We witnessed several momentous developments for international arbitration in Sub-Saharan Africa and particularly, in Nigeria. As with every year, 2019 came with its high and low moments. While 2019 is gone and now history, this article, the first of two parts, considers one of the major developments for the arbitration community in Nigeria, likely to be of interests to arbitration enthusiasts, that happened or continued in the past year. In the second part, I shall consider the update on the US$9 Billion arbitral award against the Nigerian government.
Update on the Bill to amend the Arbitration and Conciliation Act
One of the major significant events for arbitration in Nigeria for 2019 is the much-anticipated Arbitration and Conciliation Act (Repeal and Enactment) Bill, 2019 (HB. 91) (the ‘Bill’) currently pending before the House of Representatives (HoR). It would be recalled that the Nigerian Senate had passed the Arbitration and Conciliation Act CAP A18 LFN 2004 (Repeal and Re-enactment) Bill, 2018 (S.B.427) into law in 2018.
The Bill pending before the HoR is sponsored by Hon. Mohammed Monguno of the All Progressives Congress and passed its First Reading on 11 July 2019. The Second Reading of the Bill was done on 18 December 2019 and the Bill has now been referred to the Committee of the Whole to be presided by the Speaker of the HoR. The “Committee of the Whole,” as used in this context, refers to the entire 360 members of the HoR sitting as a committee in a deliberative capacity (as opposed to a legislative capacity). It is expected that the Committee of the Whole will consider the Bill in great detail, while making relevant amendments to the Bill, including adding, changing or deleting words in the Bill, with a view to coming up with the final version of the Bill. Thereafter, the Bill is expected to go through the Third Reading stage before being reconsidered and passed.
Upon its passage, the Bill has the potential to make Nigeria become a force to reckon with among the comity of preferred global arbitration regimes. Quite useful to note that the Bill include provisions which give the impression that Nigeria is ready to join the bandwagon of pro-arbitration legislative regime, particularly, as it relates to third-party funding (TPF). Given some of its very innovative provisions, it is expected that the passage of the Bill, will bring about increased preference for Nigeria as a seat of arbitration by the international arbitration community and also make Nigeria become a pro-arbitration legislative regime like Hong-Kong and Singapore.
With respect to the mention of TPF in the Bill and taking into account that the Bill tacitly recognises third party funding , I have previously argued that the Bill, upon its passage, would have effectively overridden the common law position on maintenance and champerty (even though a commentator is of the opinion that the common law principle of maintenance and champerty does not apply to TPF. In the commentator’s view, the law as it stands does not prohibit the incidence of TPF in Nigeria-seated arbitrations.
The new development on TPF notwithstanding, I have recommended in some of my previous publications that the drafters and/or the lawmakers should consider including substantive provisions expressly allowing TPF, following the examples of pro-arbitration legislative regimes such as Singapore and Hong Kong. It suffices to say that I am not alone in my position as another scholar has equally alluded to the fact Nigeria would benefit from establishing a comprehensive regulatory framework for TPF. Given the ongoing discussion among scholars and arbitration enthusiasts as to whether the Bill “clearly authorizes” TPF and whether it is sufficiently clear that TPF is allowed under the Bill or that the mention of TPF in the Bill demands further clarity, it needs not be said that the lawmakers will do well to clear the confusion and clear all doubt as to the issue of TPF under the Bill.
Yet again, it remains to be seen if the HoR will pass the Bill before the end of this year and include more (substantive) provisions to address some of the concerns highlighted by the arbitration community, different stakeholders as well as arbitration enthusiasts. It is my sincere hope that the HoR will speedily pass the Bill, with a view to restoring investors’ confidence in the ability of once revered ‘giant of Africa’ and how serious as well as committed Nigeria is as a nation, to provide a more favourable business climate for foreign investment. One can only hope the lawmakers will allow good reason prevail and do the needful timeously.