1 . Key considerations in deciding whether to arbitrate in this jurisdiction
Arbitration is increasingly favoured as a dispute resolution mechanism in Nigerian commercial transactions, particularly in the energy, maritime, and construction sectors.
Relative to litigation and other dispute resolution mechanisms, arbitration in Nigeria has the following advantages:
- Speed. Arbitration helps parties to avoid the longer litigation procedures in Nigeria. Conservatively, arbitration proceedings may be concluded within 18 months of commencement while proceedings at first instance in court may take as long as 24-36 months to conclude.
- Privacy and Confidentiality. Pleadings and other documentation submitted to the court during proceedings become public documents upon submission. On the other hand, documents submitted in arbitration are only exchanged between the parties and are not accessible by persons external to the arbitration.
- Subject Matter Expertise. Parties can select suitably qualified arbitrators in complex disputes. This is unlike the court system where parties cannot ordinarily choose the judge that will preside over their matters.
- Procedural flexibility. In arbitral proceedings, parties can agree on procedures that will govern the process, including timings for submissions, venue of the hearing, extensions on timelines, arbitration costs, etc. The arbitrator has the discretion to fashion a process that best meets the needs of the parties and the case. Conversely, parties in court proceedings are bound by the procedural rules of the applicable court and non-compliance of those rules may have negative financial consequences.
- Finality of arbitral awards. Awards resulting from an arbitral process are final and not open to appeal. Subject to a successful application to set aside the award by the courts on limited grounds, parties are bound by the rulings of the arbitral tribunal.
- Access to more enforcement options. Arbitration awards can be enforced through the Nigerian court system the same way a court judgment is enforced. In addition, Nigeria is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention).
1.2. Disadvantages and common pitfalls
Delayed enforcement of award. An aggrieved party in the arbitration may resist enforcement of an award by instituting procedural and set-aside applications up to the Supreme Court. This practice is prevalent because the current Nigerian legal system has no checks or consequences in place where such actions are found to be frivolous or an abuse of the court process.
Lack of coercive powers. There is a limitation to the powers of the arbitral tribunals concerning interim measures. Hence, parties often resort to the courts, which are subject to the procedural hassles and inordinate delays associated with the judicial system.
Arbitration may also become expensive, particularly for low-value claims.
The legislative framework for arbitration in Nigeria allows for judicial intervention in the arbitral process.
1.3. Other distinctive features
2 . Principal laws and institutions relating to international arbitration in this jurisdiction
2.1. Legal framework
The primary legislation that governs arbitration in Nigeria is the Arbitration and Conciliation Act, 1988 (Laws of the Federation of Nigeria 2004 Cap A18) (ACA). The ACA is a federal statute modelled on the UNCITRAL Model Law of International Commercial Arbitration and applies to domestic arbitrations and international arbitrations seated in Nigeria, except where the parties have chosen a separate governing law for their dispute. The ACA allows parties to an international commercial agreement to agree in writing for their disputes to be referred to arbitration in accordance with the Arbitration Rules set out in the First Schedule to the ACA, the UNCITRAL Arbitration Rules, or any other international arbitration rules acceptable to the parties (Section 53 ACA). Nigeria is also a signatory to the New York Convention, which has been incorporated into the ACA. This provides a framework for the recognition and enforcement of foreign arbitral awards in Nigeria. Some states in Nigeria also have their own arbitration laws e.g., the Lagos State Arbitration Law 2009 (LSAL), which applies to all arbitrations seated in Lagos State, except where the parties have agreed to another applicable law.
On 10 May 2022, Nigeria’s Senate passed the Arbitration and Mediation Bill, 2022 (2022 Bill), which had earlier been passed by the House of Representatives. Once approved by the President, the 2022 Bill will replace the current ACA as the applicable federal legislation for arbitration in Nigeria.
2.2. What qualifies as international arbitration?
Under the ACA, an arbitration is international if any of the following applies:
- the parties to an arbitration agreement have their places of business in different countries;
- one of the following is situated outside the country in which the parties have their places of business:
- the place of the arbitration;
- any place where a substantial part of the obligation of the commercial relationship is to be performed; or
- the place with which the subject matter of the dispute is most closely connected;
- the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country; or
- the parties, despite the nature of the contract, expressly agree that any dispute arising from the commercial transaction shall be treated as international arbitration.
2.3. Main local international arbitration institutions
- Chartered Institute of Arbitrators (CIArb) UK (Nigeria Branch).
- The Lagos Court of Arbitration (LCA).
- Lagos Chamber of Commerce International Arbitration Centre (LACIAC).
- Nigerian Institute of Chartered Arbitrators NICArb.
- The Regional Centre for International Commercial Arbitration (RCICAL).
3 . Arbitration agreements
3.1. Requirements as to content and form
An arbitration agreement must be in writing or otherwise evidenced in writing. This requirement may be established either by the signature of the parties or evidenced in an exchange of letters, telex, telegrams or other means of communication which sustain a record of the agreement. It may also be evidenced in writing by the exchange of points of claim and of defence in which the existence of an arbitration agreement is alleged by one party and not denied by another (Section 1 ACA).
A reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if such contact is in writing and the reference incorporates that clause as part of the contract.
The 2022 Bill expressly recognises email correspondence and other electronically generated communication which acknowledges the parties’ agreement to submit to arbitration, as a fulfilment of the writing or evidenced-in-writing requirement.
3.2. Validity of arbitration agreements
The arbitration agreement must be in respect of a commercial relationship. Parties must consent and possess the legal capacity to agree. A valid arbitration agreement must also relate to an arbitrable dispute (see Section 4.1 below). The substantive validity of an agreement will also be impaired by vitiating factors such as fraud.
3.3. Special formalities
Currently, there are no special formalities for State entities’ arbitration agreements.
Stakeholders in the Nigerian arbitration community recently published a draft National Arbitration Policy which proposed, in relation to public/state contracts, that arbitration agreements to be contained in such contracts must require the appointment of Nigerian arbitrators and the choice of Nigeria as the default seat of the arbitration. The draft Policy has however not been formalised by the Nigerian government either as a policy or as legislation.
3.4. Governing law
In accordance with the principle of party autonomy, the ACA (Section 47) recognises the liberty of the parties to determine the laws of the country to be applied to the different aspects of the arbitral process, i.e., the law applicable to the substance of the parties’ dispute; the law of the seat or the law of the place in which the arbitration is legally domiciled and to whose courts any judicial intervention will be carried out; and the law which governs the arbitration agreement in relation to the validity, scope and interpretation of the arbitration agreement. The Act further provides that where the applicable law is not chosen by the parties, the arbitral tribunal shall apply the law which it considers most closely applicable, having regard to the conflict of law rules in force.
The body of Nigerian case law is still limited on the issue of how to ascertain the governing law of the arbitration agreement in cases where the agreement is silent, and reference in such instances may be made to decisions of English courts on the point (for persuasive effect). In this regard, the extant English law position as laid down by the UK Supreme Court in Enka v. Chubb (2020) UKSC 38 is to the effect that where parties have selected the law applicable to the substance of their dispute, such stipulation shall extend to the arbitration agreement. Otherwise, the arbitral tribunal shall apply the law which has the closest connection to the arbitration agreement. In this regard, the parties’ selection of the seat of the arbitration shall be the predominant factor for the tribunal to consider in adopting the law of such seat as the governing law of the arbitration agreement.
4 . Arbitrability
4.1. Applicable restrictions
Certain types of disputes are not arbitrable in Nigeria. Under the ACA, where other laws – apart from the ACA – prohibit the submission of certain matters to arbitration, disputes concerning those matters are inarbitrable. In Kano State Urban Development Board v. Fanz Construction Limited (supra) and United World Ltd Inc v. MTS (1998) 10 NWLR (Pt 568)106 the courts laid down the test to determine arbitrability as whether or not the dispute is a civil matter and can be compromised lawfully by way of accord and satisfaction. Disputes that cannot be resolved by arbitration include:
- indictment for an offence of a public nature;
- dispute arising out of an illegal contract;
- disputes arising under agreements void as being by way of gaming or wagering;
- disputes leading to a change of status such as a divorce petition;
- disputes which relate to the computation and payment of tax; and
- any agreement purporting to give an arbitrator the right to give judgment in rem.
5 . Enforcing arbitration agreements
Generally, Nigerian legislation and the attitude of Nigerian courts support the enforcement of arbitration agreements between parties. In most cases where the courts refuse to stay proceedings in favour of arbitration, the reason is that the applicants may have taken steps in the proceedings towards the filing of a substantive defence of a suit, rather than the unwillingness of the courts to respect the parties’ arbitration agreements.
5.1. Stay of proceedings
Where there is an arbitration agreement in a contract which is the subject matter of a dispute in a court action and a party promptly raises the right to arbitration, the courts are empowered to stay proceedings and refer the parties to the arbitration (see sections 4 and 5 of the ACA). While some courts treat an arbitration agreement as a compelling ground for a stay of Court proceedings, others treat it as discretionary. This point is illustrated by the case of M.V. Lupex v. N.O.C. (2003) 15 NWLR (Part 844) 469 and Kano State Urban Development Board v. Fanz Construction Limited (supra). In 2017, the Chief Justice of Nigeria issued a directive requiring judges of high courts to “resist the temptation of assuming jurisdiction in commercial disputes where the parties have an arbitration clause” stating that it is a “breach of contract” for parties to an arbitration agreement to seek the intervention of courts when a dispute arises.
5.2. Anti-suit injunctions
Nigerian courts are known to issue anti-suit injunctions to restrain a party from commencing or continuing legal proceedings in a foreign or local jurisdiction in breach of an arbitration agreement.
Although there appears to be no known case where a Nigerian court granted an anti-suit injunction in the context of upholding the provisions of an arbitration agreement, there are instances where Nigerian courts appear to have leaned towards granting anti-arbitration injunctions in arbitrations commenced internationally. In SPDC Ltd v. Crestar (2016) 9 NWLR Pt. 1517 300, the Court of Appeal granted an anti-arbitration injunction restraining the continuation of arbitral proceedings commenced in London further to an arbitration agreement between the parties. Additionally, in Zenith v. Zhongfu International FZE (Unreported – delivered by Ogun State High Court on 29 March 2017), the Court granted an anti-arbitration injunction restraining the parties from continuing an arbitration commenced in Singapore.
6 . Arbitral Tribunal
6.1. Restrictions on the parties’ freedom to choose arbitrators
The ACA recognises the principle of party autonomy and does not place any limitations on parties’ freedom to choose arbitrators (Sections 6 & 7 of the ACA).
6.2. Requirement of arbitrator independence and impartiality
The ACA requires an arbitrator, once chosen or appointed, to disclose any circumstances likely to give rise to justifiable doubt as to their impartiality or independence to the parties, unless the parties have already been informed of those circumstances by the arbitrator (Section 45 of the ACA).
6.3. Mandatory rules applicable to the appointment process
There are no mandatory rules applicable to the appointment process.
6.4. Appointment mechanism in the absence of party agreement or applicable institutional rules
In the absence of the parties’ agreement as to the number of arbitrators, the default number of arbitrators is three (Section 6 ACA). Where there is no specified appointing procedure, each party shall within 30 days appoint one arbitrator, and the two party-appointed arbitrators shall also appoint the third arbitrator within 30 days. If a party or the arbitrators fail to appoint an arbitrator or third arbitrator respectively, the court will appoint such arbitrator on the application of any party to the arbitration agreement (Section 7 of the ACA). In an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator, the appointment shall be made by the court on the application of any party to the arbitration agreement made within thirty days of such disagreement (7(2)(b) ACA).
Under the 2022 Bill, the default number of arbitrators where there is no party agreement is a sole arbitrator (Section 6(2) of the 2022 Bill). In addition, where no procedure is agreed upon for the appointment of an arbitrator, and no appointing authority is designated or agreed to be designated by the parties in international arbitration, the default appointing authority is the Director of the Regional Centre for International Commercial Arbitration, Lagos.
6.5. Mandatory rules applicable to the replacement process
The ACA provides for the replacement of an arbitrator where the mandate/appointment of an arbitrator terminates, or the arbitrator dies or resigns during proceedings or fails to act or is unable to perform his/her functions. The substitute arbitrator is to be appointed in accordance with the same rules and procedure for the appointment of the replaced arbitrator (Section 11 ACA, Section 11 2022 Bill).
6.6. Mandatory disclosure obligations
A potential arbitrator must disclose any circumstances likely to give justifiable doubts about his impartiality or independence if appointed. This duty subsists throughout the proceedings unless the arbitrator had previously disclosed the circumstances to the parties (Section 8(1) ACA) and extends to all information which could be relevant.
Where an arbitrator falls short of the required standard of disclosure, the court has held that this amounts to misconduct, upon which an award may be set aside (unreported decision of the High Court of Lagos State (Coram Oyekan-Abdullai J) delivered on 25 February 2020 in Global Gas Refinery Limited v. Shell Petroleum Development Company).
6.7. Grounds for challenge
Section 8(3) of the ACA stipulates two grounds upon which the appointment of an arbitrator may be challenged: where there are existing circumstances that give rise to justifiable doubts as to their impartiality/independence or if they do not possess the qualifications agreed by the parties.
The LSAL extends these grounds to include cases where an arbitrator is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to their capacity to do so, and where the arbitrator has refused or failed to use all reasonable dispatch in conducting the proceedings or making an award and that substantial injustice has been or will be caused to the applicant.
The grounds for challenging the appointment of an arbitrator under the 2022 Bill are the same than those under the ACA.
6.8. Mandatory rules governing the challenge of arbitrators
Parties have the freedom to determine the procedure for challenging an arbitrator. Where there is no agreed procedure, Section 9(2) and 45 of the ACA applies to domestic and international arbitration respectively. A party who is aware of any circumstances likely to give rise to any justifiable doubts as to the arbitrator’s impartiality or independence is required to challenge the arbitrator’s appointment within 15 days of becoming aware of the constitution of the arbitral tribunal or becoming aware of any circumstances that may impair the tribunal’s independence/impartiality. The procedure also requires a written statement of the reasons for the challenge to be submitted to the tribunal for determination.
The timeline for such a challenge has been shortened to 14 days in the 2022 Bill.
An arbitrator’s mandate may be terminated if they withdraw from office or the parties agree to terminate the appointment by reasons of the arbitrator’s inability to perform their function or if for any reason they fail to act without undue delay (Section 10 ACA). A party cannot unilaterally remove or terminate the appointment of an arbitrator except through the procedure outlined above in Sections 6.7 and 6.8.
6.10. Liability and immunity of arbitrators
No provision in the ACA confers immunity on arbitrators. There is, however, nothing in Nigerian law which precludes the parties from granting the arbitrators immunity against liability for actions done in the discharge of their actions.
Section 18 of the LSAL confers immunity on an arbitrator for anything done or omitted in the discharge of their function as arbitrator, unless the act or omission is determined to have been in bad faith.
The 2022 Bill confers a similar immunity on arbitrators against liability for anything done or omitted in the discharge of their functions as provided in the Bill, unless their actions or omissions are shown to have been in bad faith (Section 13(1) of the 2022 Bill).
7 . Assistance by the State courts
Parties to an arbitration can seek the assistance of Nigerian courts in the manner specifically provided for under the ACA (Section 34 of the ACA). The Courts can assist parties with the appointment of the arbitrator(s), taking evidence, presentation of documents, issuing witness summons in support of the arbitration process, granting a stay of proceedings and enforcing or setting aside an award.
7.1. Interim measures
Overview of interim measures
Under the ACA, parties may make an application to the arbitral tribunal for an interim measure of protection in respect of the subject matter of the dispute (Section 13 of the ACA and Article 26 of the Arbitration Rules to the ACA). Article 26(3) provides that a party’s request for interim measures addressed to the court shall not be deemed incompatible with the agreement to arbitrate, or as a waiver of the agreement. Therefore, although there is no express provision in the ACA permitting parties to approach a court for an order of interim protection, parties usually rely on the provisions of Article 26(3) to approach the courts for interim measures to protect the subject of the dispute.
The LSAL, on the other hand, expressly empowers the court to make interim orders to preserve the right of parties pending arbitration (Section 6(3) of the LSAL). Upon the constitution of the arbitral tribunal, the court may only grant interim measures expressly provided under the law.
The 2022 Bill also extends the powers to grant interim reliefs to the court, as it provides that a court shall have the power to issue interim measures of protection for and in relation to arbitration proceedings whose seat is Nigeria or another country within 15 days of any application (Section 19 of the 2022 Bill).
Relevance of availability of emergency arbitrator mechanism
The ACA does not provide for emergency relief, appointment of an emergency arbitrator or emergency arbitration proceedings.
The 2022 Bill, however, provides for the appointment of an emergency arbitrator to deal with any urgent relief sought by any party to an arbitration agreement before the constitution of the tribunal (Sections 16 of the 2022 Bill).
A party requiring urgent relief may, for the appointment of an emergency arbitrator, apply to an arbitral institution designated by the parties or, absent such designation, to the court. The application may be filed along with or after the filing of the Notice of Arbitration but prior to the constitution of the tribunal.
7.2. Taking of evidence
The arbitral tribunal has the power to determine the admissibility, relevance, materiality and weight of any evidence placed before it (Section 15(3) ACA). In practice, parties typically adopt the IBA Guidelines on Taking Evidence in International Arbitration. The arbitral tribunal may require the parties to produce documents, exhibits or other evidence that will be relied on in support of their cases. Where the parties agree to an oral hearing, the tribunal shall give the parties notice of the hearing and shall receive such oral testimony in private.
The arbitral tribunal may appoint an expert(s) to give evidence on issues to be determined, or it may request a party to give the expert any relevant information/documents or provide access to goods or other property for inspection (Section 22 (1) of ACA).
The parties may also approach the court to compel the attendance of factual witnesses and the production of documents. The court may also issue a writ of subpoena ad testificandum or duces tecum to compel the attendance before any tribunal of a witness within Nigeria (Section 23(1) of the ACA and section 43 of the 2022 Bill).
7.3. Appointment or challenge of arbitrators
Where parties fail or where the party-appointed arbitrators are unable to make an appointment or where a third party, including an institution, fails to perform any duty imposed on it under the procedure, the court, in the absence of any agreement by the parties to the contrary, may make the necessary appointment (Section 7 ACA). For international arbitration, the default appointing authority is the Secretary-General of the Permanent Court of Arbitration at The Hague (Sections 44(2) and 54(2) ACA).
With respect to challenges to arbitrators, in domestic arbitration the arbitrators, and not the court, are empowered to determine any challenge to their appointment (Section 9(3) ACA). In international arbitration, the designated appointing authority is empowered to determine a challenge to the arbitrators’ appointment (Section 45(9) ACA).
7.4. Other available assistance
Where a party to an arbitration agreement institutes an action in court, in breach of the agreement, the non-breaching party can apply for a stay of the court proceedings pending arbitration (Sections 4 and 5 of the ACA; Section 6, LSAL).
8 . General procedural (minimum) requirements
Domestic arbitration under the ACA must be conducted in accordance with the procedure contained in the Arbitration Rules set out the ACA (Arbitration Rules). This is mandatory and the parties cannot opt out of this (Section 15(1), ACA). The ACA, however, further provides that where the Arbitration Rules do not contain a provision in respect of any aspect of arbitral proceedings, the arbitral tribunal may conduct the proceedings in such a manner as it deems appropriate, to ensure that parties are granted the opportunity of a fair hearing.
For international arbitration, the parties can either agree in writing to use the Arbitration Rules, UNCITRAL Arbitration Rules or any other international rules acceptable to the parties (Section 53, ACA).
Rules governing non-participation
Where a party refrains from participating in the arbitration, the tribunal may proceed in the following manner:
- where the claimant fails to state its claim, the tribunal shall terminate the proceedings;
- where the respondent fails to state its defence, the tribunal may continue the proceedings without treating such failure as an admission of the claimant's allegations; and
- where any party fails to appear at a hearing or to produce documentary evidence, the tribunal may continue the proceedings and make an award (Section 21 ACA).
Requirements for physical/virtual hearings
In view of the absence of express provisions relating to virtual hearings, the omnibus powers granted to arbitral tribunals to conduct the arbitral proceedings in such a manner as to ensure that parties are granted the opportunity of a fair hearing are broad enough to empower a tribunal to determine the venue and mode of the proceedings to be via virtual hearings, having regard to the circumstances of the case and the convenience of the parties (Sections 15 and 16 ACA).
Virtual hearings are increasingly employed for preliminary and case management meetings and interlocutory hearings. However, evidential hearings continue to be conducted largely in person.
The Bill is also silent on the mode of hearings; however, the arbitral tribunal is similarly empowered to conduct the arbitral proceedings in a manner that ensures that each party is given an equal opportunity to present its case and that the parties are accorded a fair resolution of the dispute without unnecessary delay and expense.
Rules requiring arbitrators to hold hearings or documents-only arbitration
Parties are free to agree on whether a hearing needs to be held. In the absence of an agreement, the arbitral tribunal decides whether a hearing is necessary or if it will rule based only on the submissions made.
The tribunal must give sufficient notice to parties of any hearing or meeting held for inspection of documents, goods, or other property.
9 . Confidentiality
It is an established principle of law that arbitrations are private and confidential. Hearings are to be held in camera unless otherwise agreed by the parties (Article 25(4) of the Arbitration Rules of the ACA). An award can also only be made public with the consent of both parties (Article 32(5) of the ACA Arbitration Rules and Article 36(8) of the Lagos State Court of Arbitration Rules).
10 . Awards
10.1. Requirements as to content and form
An award must be in writing, dated and signed by the arbitrator(s) or a majority of them, provided the reason for the minority not signing is stated. The award shall state the reasons upon which its conclusions are based unless agreed otherwise (Section 25 ACA). An award shall state the date on which it was made and the place of arbitration and a copy of an award shall be delivered to the parties (Section 26).
10.2. Time limit
Unless otherwise agreed by the parties, Nigerian law does not impose a time limit for rendering an award. The 2022 Bill does not impose a time limit either, however, the provisions of Section 31, which requires the tribunal to ensure a fair resolution of the dispute without unnecessary delay, imposes a duty to render awards within a reasonable time.
Aside from the powers to award costs and grant interim remedies or security for costs (Section 13, ACA), the ACA does not prescribe or limit the types of remedies that a tribunal can grant. In practice, the courts typically recognise and enforce awards that contain declaratory reliefs, monetary awards, specific performance and the award of interest. Parties, in practice, may agree to prescribe the types of remedies that may be granted by the arbitral tribunal. In the absence of a guiding provision in the ACA, and because the tribunal derives its jurisdiction from the arbitration agreement, it is likely that a court will uphold such limitations as may be agreed by the parties, except where such limits are prejudicial to the rules of natural justice.
The 2022 Bill, however, empowers the tribunal to grant interim measures for Nigerian-seated arbitrations and expressly permits the enforcement of interim awards by the courts.
11 . Post-award proceedings
11.1. Interpretation and correction of awards
A party, within 30 days of the receipt of an award and with notice to the other party, may request the tribunal to:
- correct any computation, clerical or typographical errors or any errors of a similar nature in the award; or
- give an interpretation of a specific point or part of the award (Section 28 ACA).
The tribunal can also, of its own volition, correct any errors in computation, clerical or typographical errors or any errors of a similar nature that are in the award.
The 2022 Bill also mirrors the position above (Section 49 of the 2022 Bill).
11.2. Challenge of an award
A party may apply to a court to set aside an award within 3 months of the date of the award or correction of the award. In the case of an additional award, a party may apply to set aside the award from the date on which the request for the additional award is disposed of by the tribunal. An award can be set aside or refused recognition if:
- there has been misconduct by the arbitrators;
- in the award, the arbitrators exceeded their jurisdiction;
- the award was improperly procured or obtained by fraud; or
- there is an error on the face of the award (Sections 29 and 30 of the ACA).
The grounds for challenge of an award in international arbitration are as outlined in Section 48 of the ACA and they are in accordance with the provisions of Article 34(2) of the Model Law. The grounds are:
- incapacity of the parties to the arbitration agreement;
- invalidity of the arbitration agreement under Nigerian law;
- absence of notice of arbitration for a party or inability to present a case;
- award deals with a dispute not submitted to arbitration;
- tribunal not constituted in accordance with the arbitration agreement; and
- an error on the face of the award.
The grounds for setting aside an award have also been enumerated by the Nigerian Supreme Court in Taylor Woodrow Nig Ltd v. S.E. GMBH (1993) 4 NWLR Pt. 285 127.
In the 2022 Bill, there are similar grounds for setting aside an award which reflect those provided for in the UNCITRAL Model Law (as revised in 2006), including legal incapacity, the invalidity of the arbitration agreement under the laws to which the parties are bound, the award exceeding the scope of submission, an improper notice of appointment of an arbitrator, the composition of the tribunal not being in accordance with the parties’ agreement and, where there is no agreement, the composition not being in accordance with the Act. The 2022 Bill also provides for setting aside an award where the dispute is not arbitrable, or the award is against Nigeria’s public policy.
11.3. Recognition and enforcement proceedings
Domestic Awards can be enforced under the ACA or through an action on the award under the common law. The award will be enforced in the same manner as a judgment or order of the courts to the same effect, under the procedures provided under the ACA, and shall be recognised as binding upon application in writing to the court (Section 31 of the ACA). A party wishing to recognize and enforce the award must provide:
- a duly authenticated original award or a duly certified copy thereof;
- the original arbitration agreement or a duly certified copy thereof; and
- where the award or arbitration agreement was not made in the English language, a duly certified translation thereof into the English language.
Where the award is to be enforced under the common law, the party seeking to enforce must file an originating summons or notice, supported by an affidavit and a written address. The applicant must also prove that:
- there was a valid arbitration agreement;
- the arbitration was properly conducted; and
- the award was obtained validly.
An action to enforce an award must be brought within the period stipulated in the applicable law of limitation. For example, the Limitation Law of Lagos State provides that an action to enforce an arbitral award must be brought within six years (or 12 years if the arbitration agreement is under seal (i.e., via deed)) of accrual of the cause of action).
11.4. Cost of enforcement
The fees charged for the enforcement of awards are the typical filing fees fixed by the court.
11.5. Enforcement of orders of emergency arbitrators
The ACA does not provide for the enforceability of emergency arbitrators’ decisions. However, the 2022 Bill provides for the enforcement of decisions/orders of emergency arbitrators, which are binding on parties and enforceable by the court upon application by a party. Any decision of the emergency arbitrator shall cease to be binding:
- if so decided by either the emergency arbitrator or the arbitral tribunal;
- upon the final arbitral award being rendered;
- upon the termination of the arbitration; or
- if the arbitral tribunal is not constituted within 90 days from the date of the emergency arbitrator's decision.
12 . Enforcement of foreign awards
In Nigeria, foreign awards may be enforced in the following ways:
- By an Action upon the award. In Toepher Inc. of New York v. Edokpolor (trading as John Edokpolor & Sons)  All N.L.R. 307, the Nigerian Supreme Court held that a foreign arbitral award could be enforced in Nigeria by suing upon the award, even where there is no reciprocal treatment in the country where the award was obtained. The applicant must prove the existence of the conditions for enforcement at common law listed above (see Section 11.3).
- By registration under the Foreign Judgment (Reciprocal Enforcement) Act 1990.
- Recognition and enforcement under Section 51 of the Arbitration and Conciliation Act 1990.
- Recognition and enforcement under the New York Convention.
- Recognition and enforcement under the ICSID Convention.
12.1. Process for enforcing New York Convention awards
Where the recognition and enforcement of an international award is sought, the New York Convention applies in Nigeria, provided the contracting state has reciprocal legislation recognising the enforcement of arbitral awards made in Nigeria in accordance with the provisions of the Convention. The enforcing party must apply to the High Court.
For the recognition or enforcement of an award, an applicant must provide:
- the duly authenticated original award or a duly certified copy;
- the original arbitration agreement or a duly certified copy; and
- a translation of the above documents if they are not in the official language of the country where enforcement is sought.
12.2. Grounds for resisting enforcement of New York Convention awards
Article 5 of the Convention, which contains the grounds for a refusal to enforce an award, is restricted to a narrow list of defects affecting the arbitral procedure or the award. These defects must be serious and include irregularities such as invalidity of the arbitration agreement, lack of due process or violation of public policy of the enforcement state. The grounds are:
- Where the party seeking refusal of enforcement proves:
- the incapacity of a party or invalidity of the arbitration agreement;
- the violation of due process;
- the arbitral tribunal exceeding its authority;
- the improper constitution of the tribunal or procedural irregularities.
- When an award has not yet become binding or has been set aside or suspended.
- Where the award is in respect of a matter which is not capable of settlement by arbitration or it would be contrary to public policy to recognize the award.
12.3. Enforcing Non-Convention awards
Please refer to Section 12 above.
13 . Professional and ethical rules
An arbitrator has certain moral or ethical duties towards parties involved in the proceedings. These are scattered throughout laws, codes and rules governing ethics and integrity in arbitration in Nigeria. For instance, Sections 14 and 15 of the ACA provide for equal treatment of parties and ensuring fair hearing respectively while Section 8 ACA and Articles 9 and 10 of the Arbitration Rules dwell on independence, impartiality and disclosure requirements. Generally, the Rules of Professional Conduct 2007 (RPC) provide for rules guiding the conduct of legal practitioners, which will also apply to counsel and arbitrators who are in the legal profession.
13.1. Applicable to counsel
There are no specific rules of ethics applicable to counsel conducting arbitration in Nigeria. However, the RPC generally applies to counsel practising in Nigeria and the Rules prescribe the ethical standards required of counsel.
13.2. Applicable to arbitrators
See Section 13 above. An arbitrator is bound by the ethical duties imposed either by the parties’ agreement, the chosen law, or the code of ethics applicable under institutional rules under which the proceedings are conducted. These generally include the duty to decline to accept an appointment if, as a prospective arbitrator, he is conflicted or manifestly unable to give the case sufficient time and attention.
14 . Third-party funding
There are no provisions under the ACA for Third-party funding (TPF). The 2022 Bill, however, recognises TPF as an arrangement where an independent, commercial funder, with no prior connection to the dispute between the parties, provides a party with full or partial funding (i.e., covers, in all or in part, the party’s legal fees and expenses) for the proceedings in exchange for a portion of or the full amount recovered by that party after the determination of the dispute.
The 2022 Bill restricts the application of the torts of maintenance and champerty to TPF in respect of arbitrations seated in Nigeria or any arbitration-related proceedings in a court within Nigeria. In addition, the 2022 Bill expressly provides that a tribunal shall fix costs of arbitration in its awards and the term cost was defined to include the costs of obtaining third-party funding (Section 52(1)).
14.1. Applicable regulatory requirements
There is no current legislation that expressly permits or prohibits TPF in respect of arbitration, as of the time of this publication. However, Rules 50(3) and 51 of the RPC expressly prohibit TPF arrangements with respect to court matters.
14.2. Overview of the third-party funding market in this jurisdiction
In Nigeria, the TPF market is frowned upon by the courts based on the common law principles of Champerty and Maintenance, which prohibit a third party from funding litigation between disputants. On that basis, it is likely that a court may render an agreement to provide such funds illegal and void on the grounds of public policy.
The 2022 Bill has not yet been passed. Until the time it is, not much activity is expected in the funding market in Nigeria.
15 . Trends and recent developments
There is an ongoing legislative process to amend the ACA through the 2022 Bill. The Bill mainly seeks to repeal the ACA and introduce innovative provisions that accord with international best practices in arbitration. The 2022 Bill is largely based on the UNCITRAL Model Law 2006 (as amended) and contains the following notable provisions:
- Security as to measures, i.e., empowering the tribunal to request that a party seeking interim measures provide appropriate security in connection with the measures, as well as making that party liable for any costs and damages caused by the grant of the measures.
- Consolidation and joinder of parties, i.e., parties may agree that the arbitral proceedings should be consolidated with other arbitral proceedings, including arbitral proceedings involving a different party or parties with the agreement of that party or parties.
- An Award Review Tribunal (the ART), i.e., parties have the option to specify in their arbitration agreement that awards made in arbitrations seated in Nigeria may be reviewed by a second arbitral tribunal. Once constituted, the ART will endeavour to give its award within 60 days.