A CRITICAL REVIEW OF THE ROLE OF NIGERIAN COURTS IN COMMERCIAL

ARBITRATION

BY

BAMIGBOYE MIKE OLUWASEYI

MATRIC NO 149279

A LONG ESSAY SUBMITTED TO THE FACULTY OF LAW IN PARTIAL FULFLMENT

OF THE REQUIREMENTS FOR THE AWARD OF THE BACHELOR OF LAWS (LLB)

DEGREE OF THE UNIVERSITY OF IBADAN, IBADAN, NIGERIA.

DECEMBER 2015

1

CERTIFICATION

This Long Essay was written by Bamigboye Mike Oluwaseyi (Matric No. 149279) under my

supervision.

………………………………….………….. …………………….

Supervisor Date

Dr. Alero E. Akerodolu

Senior Lecturer,

Faculty of Law,

University of Ibadan

2

ABSTRACT

Arbitration is an alternative dispute resolution (ADR) method for the fair settlement of disputes

under which parties agree to be bound by the decision of a person or persons other than by a court of

law, whose decision is, in general, final and legally binding on both parties. With the tremendous

growth in trade and investments, commercial arbitration has become a frequently used mechanism to

settle investment/trade/contractual disputes.

Most people are of the opinion that resolution of dispute by litigation in court is time consuming and

money consuming whereas arbitration may speed the resolution and lower the expenses of disputes.

However to ensure the integrity of the arbitral process and protect the public interest, the courts must

support and supervise that process. On the other hand, to prevent the confidence of users of the

arbitral system from being damaged, the level of judicial control should not be too high. The debate

in commercial arbitration is what scale of judicial intervention should be allowed. While it is argued

that arbitration must be free from courts, in order to be effective, it is also accepted that arbitration

needs the support of national courts to be effective. Flowing from this contention, laws and rules

have been formulated to balance the competing interests.

In this project, through statutes, treaties, books, journals and other relevant materials; I have

discussed the key features of commercial arbitration, theories behind judicial intervention in

commercial arbitration and the role of domestic courts on the major concepts of commercial

arbitration such as; arbitration agreement, stay of proceedings, the concept of arbitrality,

seperability, competence-competence, assistance in taking evidence and, recognition and

enforcement of arbitral awards by court without which the arbitral process cannot hold.

The work concludes that the increasing growth in trade and investments requires the presence of

active commercial arbitration to settle disputes but since arbitration is private in nature, parties need

courts to enforce the arbitration agreement and enforce arbitral awards. It also establishes that there

is need to sensitize domestic courts to support the arbitral process, while tilting the scale of

intervention with circumspection; without which arbitration will remain ineffective, particularly in

developing economies.

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DEDICATION

For all that I was, all that I am and all that I will be, I owe it to my family- This is for you.

4

ACKNOWLEDGEMENT

My love will forever go to my creator who blesses me in all things.

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TABLE OF CASES

A.J.D.C v. L.G.N [2000] 4 NWLR (Pt. 653] 494 at 504………………………………..........59, 62

Absalom Ltd v. Great Western (London) Garden Village Society (1933) A.C 392…………77

Achonu v. N.E.M & Gen. Ins. Co [1971](1) SCLR 449 at 455-456………………………...61

Afcon Nigeria Limited v. Ikoyi Club 1938 suit No. FHC/L/CS/751/95 of 2/7/1996

[unreported].......................................................................................................................83

Agu v Ekewibe (1991) 3 NWLR (Part 180) 385 at 407……………………………...26, 28, 43, 46

Akanni v. Makanju (1978) 11-12 SC 13 at 26……………………………………………………...46

Araka v. Ejeagwu [2000] 15 NWLR (692) 684……………………………………………………75

Arbico (Nig) Ltd v. NMT Ltd[2002] 15 NWLR pt 789 at 7……………………………........75,80

Assampong v Amuaku (1932) 1 WACA 192 …………………………………………………….…28

Awosile v Sotunbo(1992) 5 NWLR (pt 243) 514……………………………………………….….28

Aye-Fenus Ent. Ltd v. Saipem (Nig.) Ltd (2008) 1 CLRN 1……………………………………..85

Backbone Connectivity Network (Nig.) Ltd & 16ors v. Backbone Technology Network Inc & Ors.

[unreported] Suit No. CA/A/399/2013 of 10/7/2014…………………………................60

Baker Marine v. Chevron [2000] 12 NWLR (Pt. 681) at 393; ……………………………..…77

Begha v. Tiza (2000) 4 NWLR (Pt.652) 193; ……………………………………………………...46

Bendex Engineering Corporation & Anor. V………………………………………….................72

Bill Construction Co. Ltd v. Imani & Sons Ltd [2006] 19 NWLR (Pt 1013)………………..74

Bremer Gmbh v. Soules & Anthony Scott [1985] 1 Lloyd’s Rep. 160 at 164………………66

Bueger v. Barnett (1919) 89 L.K.T.B 161………………………………………………................77

City Eng. (Nig) Ltd v. Federal Housing Authority [1997] 9 NWLR (Pt 520) 224…….......58

Collins v. Collins (1958) 26 Beav 306 at 312………………………………….……..…............18

Commerce Assurance Limited vs. Alhaji Buraimoh Alli (1992) 3 NWLR (232)……….…….17

Confidence Ins. Ltd Trustees of OSCE[1999] 2 NWLR(Pt.373) at 388……………………59, 61

Cummings v Heard (1869) LR 4 QB 669, ……………………………………………...................72

Curacao Trading Co. B.V v. Harkisandas & Co. (1992) 2 Lloyd’s Rep 186………………...80

Eagle Star Insurance Co Ltd v. Yuval Insurance Co. Ltd [1978] 1 Lloyd’s Rep 357.CA.......61

Bendex Engineering Corporation & Anor. v Efficient Petroleum Nigeria Ltd, (2001) 8 NWLR (Pt

715) 333…..................................................................................................................72

El-Assad v. Misr (Nig) Ltd [1968] NCLR 173 at 176……………………………………………..65

6

Enviromental Dev. Construction v. Umara Association [2000] 4 NWLR (pt 652) 293 at 304

C.A...............................................................................................................................45, 80

Fidelitas Shipping Co Ltd v V/O Exportchleb (1965) 1 Lloyd’s Rep 223……………………...72

Foli v Akese (1930) 1 WACA………………………………………...........................................28

Gates v. Arizona Brewing Co. Ariz 266,269,95,p.2d,49,50(1939)………………………………16

Gott v. Gandy 2 E & b 845 at p.847…………………………………………………………………58

Gunter Henck v. Anre & co. Cie (1970) 1 Lloyd’s Rep 235………………...........................40

Ibidapo v. Lufthansa Airlines [1997] 4 NWLR 124…………………………..............................47

Ighoroje v. Maude Sokoto [1966] NCLR 301 at 305,……………….......................................62

Inyang & Ors v Essien & Ors (1957) 2 F.S.C. 39, ……………………………………..

Ives & Barber v. Williams [1894] 2 Ch. At 484…………………………………………

John Onyenge & Ors vs. Chief Love day Ebere & Ors (2004) 11 MJSC 184……...………….26

K.S.O & Allied Products Ltd. v. Kofa Trading Co. Ltd. (1996) 3 NWLR 244………………...81

Kano State Urban Development Board v Fanz Construction Ltd (1990) 4 NWLR (pt 142)

1…………..........................................................................................8, 11, 13, 18, 59, 61, 62, 77

Kotoye v. Central Bank of Nigeria (1989) 1 NWLR(Pt 98) 419…….…………….....................83

Kurubo v.Zach Motison (Nig.) Ltd (1992) 5 NWLR (Pt.239) 102….……………………..........58

Kwara State Minsitry of Health & Anor v. Mallam Issah Electrical Enterprises [2012]……18

Larbi v Kwasi, (1952) 13 WACA 76………………………………………………………..……….27

Lignes Aeriennes Congolaises (L.A.C) v. Air Atlantic Nigerian Limited (A.A.N) (2006) 2 NWLR

part 963 at 49…………………………………………………………..……………………...58

LSDPC v. Adold Stamm International Ltd(1994) 7 NWLR 545………………………..………..77

M.V Lupex v. Nig. Overseas Chartering & Shipping Ltd [2003] 15 NWLR (Pt 844) 469

SC…..............................................................................................................................34, 59, 62

Confidence Ins.Ltd Trustees of O.S.CE [1999] 2 N.W.L.R (Pt.373) at 388……................59, 61

Magbagbeola v. Sanni [2002] 4 NWLR (Pt. 756) 193……………...........................................87

Mehr v. Nig. Inv. & Ind. Co. Ltd [1966] NCLR 351 at 358……………………..................59, 60

Mensah v Takyiampong & Ors (1940) 6 WACA 118……………………………………………...27

Middlelemis & Gould v. Hartlepool Corpn (1971) IWLR. 1646; (1973) All E.R. 175…........75

MISR (Nig) Ltd v. Oyedele (1966) 2 ALR (Comm.) 157;……………………………….………...11

Moseley v. Simpson (1873) L.R. 16 Eq. 226………………………………………..………………76

7

Nigerian Ports Authority v. Panalpina World Transport Nigeria Ltd & others [1974] 4 UILR

89……………………………….………………………………………………………...……………...18

NNPC v. Klifco (2011) 10 NWLR (Pt. 1255) 209…………………………………......................87

NNPC v. Lutin Investments Ltd & Anor (2006) 2 NWLR(Pt. 965) 566………………........11, 15

NPA v. Cogefa [1971] 2 NCLR 44……………………………………......…………………………61

NPMC Ltd. v. Compagne Noga I & I.SS (1971) 1 NMLR 223 at p. 226……………………….61

Nwoke v .Okere..…………………………………………………………………………………….…26

Nwuka v. Nwaeche (1993) 5 NWLR (Pt.293) 296………………………...……………….……...46

Obembe v. Wemabod Estates [1977] 5 SC 115…………………………..…………….…58, 61, 87

Ofomata & Ors v Anoka & Ors (1974) 4 EC.S.L.R 251………………………………………….28

Ogunwale v. Syruan Arab Republic [2002] 9 NWLR (Pt 717) 127.………………………...…..66

Ohiaeri v Akabeze (1992) 2 NWLR (pt 221) 1…………………………………………………..8, 28

Okechukwu v. Etukokwu [1998] 8 NWLR (Pt 562) 513 at 529-530……………................73, 80

Okereke v. Nwankwo [2003] 9 NWLR (PT.826) 592 S…………………………………………...47

Okpuruwu vs. Okpokam (1998) 4 NWLR Part 90, 554 at 586…………….........3, 26, 28, 74, 80

Omoregbe v. Lawani (1980) 3 4 SC. 108………………………………………………..……........68

Oparaji & Ors v Ohanu & Ors (1999) 6 SCNJ 27 at 38………………………………...

Owners of M.V Lupex vs. Nigeria Overseas Chartering and Shipping Ltd. (2003) 15 NWLR (Part

844) 469………………………………………………………………….....................34, 59, 62

Oyekan v. Adele [1957] 2 All E.R 785 (1957) 1 WLR 876……………………………………….47

R.S. Hartley Ltd. v. Provincial Ins. Co. Ltd. (1957) Lloyd’s Rep. 121……………..……….77

Ras Pal Gazi Const. Co. v. FCDA [2001] 10 NWLR (Pt. 722) at 562……………………72, 87

Re Haigh and London & N.W & G.W. Railways (1896) 1 QB 649…………………............76

Re Hopper (1961) 31 L.J. Ch. 420…………………………………………………........................76

Samuel v. Cooper (1835) 2 Ad. & El. 752……………………………………………...................76

Scheep v. “Mv’ Araz” [2000] 15 NWLR (Pt 691) 622, …………………………………............58

Shell Trustees (Nig.) Ltd v. Imani & Sons Ltd. [2000] 6 NWLR Pt (662) 639…..………….46

Sonar (Nig) Ltd. v. Nordwind [1987] 4 NWLR (PT.66) 520…………………………................58

South Sea Co. v. Burnstead (1734) 2 Eq. Cas. Ab. 80…………………………………...............76

Taylor Woodrow (Nig) Ltd. v. GMBH (1991) 2 NWLR (pt 175) 602………………….………..77

United Insurance v. Stocco [1973] 8 NSCC. 96; (1973) NCLR 231………………......72, 74, 75

8

United Steelworkers v.Warrior & Gulf Navig. Co., 363 U.S. 574, 582 (1960)…………….….57

United World Ltd Inc. v. Mobile Telecommuniations Ltd (1998) 10 NWLR (Pt 568) 106…18

William v. Wallis & Cox (1914) 2 K.B. 497 at p. 485……………………………………............76

Wuraola v. Northern Assurance Co. Ltd [1966] 1966 NCLR 138-139…………………….......61

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TABLE OF STATUTES, CONVENTIONS AND RULES

NIGERIA

1999 Constitution of the Federal Republic of Nigeria…………………………………………..83

Admiralty Jurisdiction Rules 2011. Cap A5 Laws of the Federation of the Federal Republic of

Nigeria 2004……………………………………………………………………………………...34

Arbitration and Conciliation Act. Cap A18, Laws of the Federation of the Federal Republic of

Nigeria 2004……………………………………………………………..1, 8, 9, 13, 18, 29, 30, 31,

33, 36, 44, 45, 46, 48, 50, 57, 58, 59, 62, 65, 66, 67, 68, 69, 71, 72, 75, 78, 79, 81, 82, 85, 86, 87.

Arbitration Law 18 of Lagos State 2009………………………………………………………9, 31

Arbitration Ordinance of 1914 Cap 13, Laws of the Federation 1958, now repealed………...1, 28

Companies Ordinance of 1912 Cap 37, Laws of the Federation, 1958, now repealed……………1

Cooperative Societies Laws of Lagos State Cap. C15, Laws of Lagos State of Nigeria 2004…..48

Federal High Court Act, Cap F12 Laws of the Federation of the Federal Republic of Nigeria

2004………………………………………………………………………………………………34

Foreign Judgments (Reciprocal Enforcement) Act Cap. 152 LFN, 1990……………………48, 83

High Court (Civil Procedure) Rules, Lagos State 2012………………………………………..83

Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Decree 1990; Cap N87 LFN

2004……………………………………………………………………………………………...48

Nigerian Investment Promotion Act 1995……………………………………………………….36

Nigerian Investment Promotion Commission Decree 1999 Cap. N117 LFN 2004……………..48

Petroleum Act Cap. P10 LFN 2004…………………………………………………………….48

Public Enterprises (Privatization and Commercialization) (Decree No. 28 of 1999) Cap.P38 LFN

2004………………………………………………………………………………………………48

The Evidence Act 2011Cap E14 Laws of the Federation of Nigeria, 2004……………..67, 69, 70

ENGLAND

English Arbitration Act of 1996………………………………………………………………7, 38

Civil Procedure Act 1833………………………………………………………………………...23

UK Arbitration Act 1698, 1854, 1924, 1930, 1950, 1975, 1979……………………………….23

FRANCE

Code of Civil Procedure in 1806………………………………………………………………...25

10

Constitution of 1791………………………………………………………………………….….25

INDIA

Arbitration (Protocol and Convention) Act 1937

Arbitration Act 1940 …………………………………………………………………………….25

Arbitration and Conciliation Act 1996 No 26 of 1996 [“1996 Act”]…………………………..25

Bengal Regulations 1772………………………………………………………………………...25

Foreign Awards (Recognition and Enforcement) Act 1961……………………………………26

OTHER RULES

UNCITRAL 1985…………………………………………………………………. 7, 9, 11, 23, 48

UNCTAD 2007…………………………………………………………………………..………37

ICC Arbitration Rules…………………………………………………………………………...24

United Nations Convention on the Recognition and Enforcement of Foreign Arbitration Awards

1958………………………………………………………………………………………….42, 47

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LIST OF ABBREVIATIONS

AC Appeal Cases

ACA Arbitration and Conciliation Act

ADR Alternative Dispute Resolution

ALL NLR All Nigeria Law Report

CIARB Chartered Institute of Arbitrators

FHC Federal High Court

Harv. L. Review Harvard Law Review

ICC International Chamber of Commerce

ICSID International Centre for Settlement of Investment Disputes

J.Intl Arb Journal of International Arbitration published by Kluwer

LCIA London Court of International Arbitration

LFN Laws of the Federation of Nigeria

Med/Arb Mediation/ Arbitration

NWLR Nigerian Weekly Law Report

UNCITRAL United Nations Commission on International Trade Law, Vienna

WACA West African Court of Appeal

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TABLE OF CONTENT

COVER PAGE…………………………………………..……………...……………………..i

CERTIFICATION…………………………………………………………..………………...ii

ABSTRACT……………………………………………………………………..…………...iii

DEDICATION…………………………………………………………………..……………iv

ACKNOWLEDGEMENT………………………………………………………………..…..iv

TABLE OF CASES…………………………………………………………………………..vi

TABLE OF STATUTES……………………………………………………………………..ix

LIST OF ABBREVIATIONS………………………………………………………………...xi

CHAPTER ONE: GENERAL INTRODUCTION

1.0 BACKGROUND TO THE STUDY………………………………………………….....1

1.1 STATEMENT OF THE PROBLEM………………………………………………….…4

1.2 AIMS AND OBJECTIVES OF THE STUDY…………………………………………...5

1.3 SIGNIFICANCE OF THE STUDY ……………………………………………………..6

1.4 RESEARCH METHODOLOGY………………………………………………………...6

1.5 LITERATURE REVIEW………………………………………………………………...7

1.6 STRUCTURE OF THE STUDY…………………………………………………….....10

1.7 DEFINITION OF TERMS…………………………………………………………...…10

ARBITRATION……………………………………………………………………..……11

COMMERCIAL ARBITRATION………………………………………………………..11

AWARD……………………………………………………………………….………….11

TRIBUNAL………………………………………………………………………….…....12

13

ARBITRATOR …………………………………………………………………………..12

DISPUTES…………………………………………………………………..……………12

COURT…………………………………………………………………………..……….13

1.8 SUMMARY………………………………………………………………………..…...13

CHAPTER TWO: ARBITRATION IN NIGERIA

2.0 INTRODUCTION ……………………………………………………………………...14

2.1 THE CONCEPT OF ARBITRATION…………………………………………….........17

2.1.1 ESSENTIAL FEATURES OF ARBITRATION………………………………………18

2.2 AN HISTORICAL BACKGROUND OF ARBITRATION………………………..…..18

2.2.1 DEVELOPMENT OF ARBITRATION……………………………………...…..........25

2.2.2 ARBITRATION IN NIGERIA………………………………………………………...29

2.3 FORMS OF ARBITRATION………………………………………………………..…29

2.3.1 DOMESTIC ARBITRATION………………………………………………………..29

2.3.2 INTERNATIONAL ARBITRATION………………………………………………..30

2.3.3 AD-HOC ARBITRATION………………………………………………………..….31

2.3.4 INSTITUTIONAL ARBITRATION……………………………………………........32

2.3.5 MARITIME ARBITRATION……………………………………..…………….........33

2.3.6 CONSTRUCTION ARBITRATION………………………………………………....34

2.3.7 INVESTMENT ARBITRATION……………………………..……………………...35

2.3.8 MULTI-PARTY ARBITRATION………………………………..…………………..37

2.4 ADVANTAGES AND DISADVANTAGES OF ARBITRATION……………..……..43

2.5 GENERAL PRINCIPLES OF ARBITRATION………………………………………..46

2.6 SOURCES OF NIGERIAN ARBITRATION LAW……………………………...........48

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2.7 THE LEGAL FRAMEWORK OF ARBITRATION IN NIGERIA……………...…….49

2.8 THE LAW AND PROCEDURE APPLICABLE TO ARBITRATION IN NIGERIA...49

2.9 SUMMARY…………………………………………………..……………………. ….51

3.0 CHAPTER THREE: THE ROLE OF THE COURT IN THE ARBITRAL PROCESS

3.0 INTRODUCTION……………………………………………………………...………53

3.1 THEORIES OF JUDICIAL INTERVENTION……………………………………….53

3.1.1 JURISDICTIONAL THEORY………………………………………………………..54

3.1.2 CONTRACTUAL THEORY………………………………………………………….55

3.1.3 FIXED/ HYBRID THEORY……………………………………………….................55

3.1.4 AUTONOMOUS THEORY…………………………………………………………...56

3.2 THE ROLE OF COURT AT THE COMMENCEMENT OF ARBITRATION……….57

3.2.1 REVOCATION OF ARBITRATION AGREEMENT………………………………..58

3.2.2 STAY OF COURT PROCEEDINGS…………………………………………............62

3.2.3 PROTECTING THE RES……………………………………………………………...64

3.2.4 APPOINTMENT OF ARBITRATOR…………………………………………………67

3.3 THE ROLE OF COURTS DURING THE ARBITRAL PROCESS…………………….67

3.3.1 ATTENDANCE OF WITNESSES……………...……………………………………..69

3.3.2 PRODUCTION OF DOCUMENTS……………………………………..……….........71

3.4 SUMMARY…………………………………………………………..………………….71

CHAPTER FOUR: JUDICIAL INTERVENTION IN THE ENFORCEMENT OF

ARBITRAL AWARDS

15

4.0 INTRODUCTION……………………………………………………………………..72

4.1 THE COMPLEMENTARY ROLE OF THE COURT………………………………...73

4.2 CHALLENGE OF ARBITRAL AWARDS…………………………………………….74

4.2.1 SETTING ASIDE OF AWARD……………………………………………………….78

4.2.2 REMISSION OF AWARD………………………………………………………........79

4.2.3 LEGAL EFFECTS OF A SUCCESSFUL CHALLENGE…………………………….79

4.3 RECOGNITION AND ENFORCEMENT OF AWARDS……………………………..80

4.3.1 REFUSAL OF RECOGNITION AND ENFORCEMENT OF AWARD ……...……..82

4.3.2 PROCEDURE FOR APPLICATION TO COURT…………………………………....83

4.4 SUMMARY………………………………….……………………………………........84

CHAPTER FIVE: CONCLUSION

5.0 INTRODUCTION………………………………………………………………………85

5.1 SUMMARY OF FINDINGS………………………………………………………...….86

5.2 RECOMMENDATIONS……………………………………………………………….93

5.3 CONCLUSION…………………………………………………………………….......94

BIBLIOGRAPHY…………………………………………………………………106

CHAPTER ONE: GENERAL INTRODUCTION

1.0 BACKGROUND TO THE STUDY

16

Nigeria whilst under colonisation was primarily not a subject but an object of commercial law.

Even in business terms, what were regarded as Nigerian companies were, in fact, integral parts of

foreign corporate persons especially those of Britain, Holland and France. This was a deliberate

policy of the British, Dutch and French Governments. The British Government found that

customary laws regulated local legal relationships and therefore imposed the English legal

system on Nigerians and such laws are referred to as the “Received English Laws” to administer

the new colony and also to regulate the new forms of commerce (which they brought with them)

such as patents, copyright, oil exploration etc. which were alien to the natives.1 These “Received

English Laws” operated concurrently with local customary laws with primacy given to the

former in most cases.2 This situation remained unchanged until the Companies Ordinance of

19123 and the Arbitration Ordinance of 19144came into force. The foreign corporate persons

operated through transnational corporations. As they saw Nigeria as an “outpost”, her interest

was not paramount in their transactions.5

However, with political independence, Nigeria became a subject of law, its doors were thrown

open to other nationals to participate in the economic development of the country and local laws

were passed with their attendant complexities. Nigerians also got involved in negotiating

international contracts. It is worthwhile mentioning that that time in commerce involved mainly

the import of consumer goods and export of raw materials.6 In negotiating such contracts,

Nigerians were usually disadvantaged as they lacked the expertise to ensure that the terms were

favourable. This is so because commerce had acquired (and still retains) a regime of technical

rules and procedures. It involved persons usually domiciled in different legal jurisdictions and

thus subject to different legal systems and consequently a more sophisticated form of

1 Udoma, 1994. History and the Law of the Constitution of Nigeria, (Lagos, Malthouse) p.3; Chukwumerie, 2003. Commercial and Investment Arbitration in Nigeria’s Oil and Gas Sector, The Journal of World Investment. Vol.4, No.5. P 8302 Asein J.O, 2005. Introduction to the Nigerian Legal System, 2nd Edn. Lagos, Ababa Press Ltd. 140-145; Ajayi, 1960. The Interaction of English Law with Customary Law in Western Nigeria, 4 Journal of African Law. P.98; Ayua, The blend of Customary Law with English Law, 4-8 Ahmadu Bello Univ. L.J, 5-6(1885-90)3 Cap 37, Laws of the Federation, 1958, now repealed4 Cap 13, Laws of the Federation 1958, now repealed5 Asouzu, The Legal Framework for Commercial Arbitration and Conciliation in Nigeria. P.2266 Orojo J.O, 2008. Company Law and Practice in Nigeria, 5th Edn, Butterworths. Page 3

17

commercial life.7 Today, the situation has not changed much. This has given rise to the issue of

how to resolve commercial disputes that could arise from such relationships.

Commercial disputes can be resolved through various processes. Indeed the conventional courts

see this as their prerogative. However, over the years, there has been widespread dissatisfaction

with the delays and costs associated with these conventional courts. Consequently a movement

for an alternative dispute resolution (ADR) mechanism was initiated.8 Akeredolu9 explains that,

usually, it is an alternative to the adversarial system of dispute resolution i.e. litigation and

establishes that the meanings today are broader. These alternatives refer to both procedures and

institutional structures for dispute resolution other than the courts and each implicating different

levels of privatization10and now includes such methods and procedures used to resolve disputes

either as alternatives to the traditional dispute resolution mechanism of the court or in some cases

as supplementary to such mechanism.11 Hence, meditation, conciliation, med-arb, mini-trial and

full arbitration have been resorted to in the commercial world.12 To provide a more efficient

system of conflict resolution, another movement advocated a ‘multi-door’ court house instead of

the ‘mono-door’ approach.13

Arbitration is an alternative dispute resolution (ADR) method for the fair settlement of disputes

under which parties agree to be bound by the decision of a person or persons other than by a

court of law, whose decision is, in general, final and legally binding on both parties. Arbitration

enables parties to resolve their disputes without recourse to the courts.

7 Tobi. N, 1996. Sources of Nigerian Law, Lagos, MIL Professional Pub. Ltd. p.88 See generally Wilkinson J J. 1990. Alternative Dispute Resolution Practice Book, London, Wiley Law Publications; Marriott AL and Brown H. 1999. ADR Principles and Practice, 2nd Ed,, London, Sweet and Maxwell.9 Akeredolu, A. 2011. Court-Connected Alternative Dispute Resolution in Nigeria, Unib Law Journal, Vol. 1(1) pp. 45-46, October,2011.10 See also Dayton, K. 1991. The Myth of Alternative Dispute Resolution in Federal Courts, 76 Iowa Law Review 889 at 89711 Orojo J O. and Ajomo M.A. 1999. Law and Practice of Arbitration and Conciliation in Nigeria. Lagos: Mbeyi & Associates (Nigeria) Limited P. 312 Akeredolu, A. op.cit pp. 46-51 See also Candide Johnson C.A and Shashore O. 2011. Commercial Arbitration Law and International Practice in Nigeria, LexisNexis, Durban, South Africa. Pp 221-23913 A multi-door courthouse is one that has many doors for litigation, mediation, conciliation ad arbitration while a mono-door is for litigation only. See Koleoso, O. 2010.An Appraisal of the Law and Procedure of the Abuja Multi-Door Court House, in Aliyu Ibrahim ed. Op.cit, p 34 cited in Akeredolu, A. op.cit 52.

18

Arbitration is not a new phenomenon having enured as a method of resolving disputes since

biblical times.14 The object of this adversarial process is to ensure that the basis of any intra-party

relationship is fraught with less friction so as to ensure the continuity of a business relationship.

It will be shown that during the pre-colonial time till the present, there existed traditional

indigenous institutions that adapted a variant of this adversarial process.15 Arbitration enjoys

international acceptance because of its peculiar characteristics, which includes choice of arbiters,

confidentiality, speed, cost effectiveness flexibility and finality.16 Its procedures are more

efficient and less stressful and have been able to defeat the slow speed of litigation. It is also

aimed at facilitating world trade and globalization.17

The essence of commercial arbitration is to avoid court proceedings in the resolution of

commercial disputes; the parties having chosen their judges ought to stick to them and abide by

their decision.18 Despite the political and social problems presently facing Nigeria, she still

remains a viable investment centre. This quality not only develops internal trade and investments

among Nigerians but also attracts businessmen from Western Europe, the Americas, the Far East

and the former communist bloc. Invariably disputes arise from such commercial transactions.

Whereas originally such disputes were settled by conventional courts, alternative dispute

resolution mechanisms have now been put in place. Arbitration is one of such alternatives and is

enjoying a period of expansion.19 This is so because the number of disputes submitted to

arbitration is growing while new arbitration rules are being evolved and new arbitration centres

opened.20 Increasingly, the watchwords in commercial transaction seem to be “arbitrate, don't

litigate”.21

14 For example see 1 King, Chapter 3 verses 16-18 where King Solomon resolved the dispute between two womenover the motherhood of a child.15 Okpuruwu v Okpokam 1988 4 NWLR (pt 90) 554 at 57216 Candide Johnson C.A and Shashore O (SANs) 2011. Commercial Arbitration Law and International Practice in Nigeria, LexisNexis, Durban, South Africa. Pp 09-01117 Rhodes-Vivour D, Arbitration and Alternative Dispute Resolution as Instruments for Economic Reform18 Orojo J O. and Ajomo M.A. Op.cit. P.313.19 Orojo and Ajomo. Op cit 320 Candide Johnson C.A and Shashore O (SANs) 2011. Commercial Arbitration Law and International Practice in Nigeria, LexisNexis, Durban, South Africa. pp 021-02721www.ciarb.org/news/ciarb-blog/arbitrate-dont-litigate.php See also Honourable Dreier W.A 2004. Mediate, Arbitrate-Don’t Litigate, The Metropolitan Corporate Counsel, Vol. 12, No. 8, 2004. www.metrocorpcounsel.com retrieved on December 9th,2014.

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Other major developments in the field of arbitration include deliberate legislative efforts not only

at the national but also international levels to advance the process. Accordingly, the Federal

Government of Nigeria promulgated the Arbitration Act in 1988 which has now been repealed

and reproduced as the Arbitration and Conciliation Act.22

Nonetheless, the courts continue to play an important but limited role in the effectiveness of

arbitration as an ADR method in ensuring enforcement or fairness and justice. These roles are

now statutory and the question, which naturally arises, is whether this intervention does not

defeat the rationale behind ADR, which is to relieve the courts of its heavy load as well as

provide disputants with a quicker and cheaper method of resolving disputes. With court support

and minimum intervention, arbitration has the potential to flourish, but if the scale is tilted

differently, then parties will avoid both the courts and arbitration.

This project will be in-depth study of the role the Nigerian courts play in commercial arbitration-

i.e. the nature, relevance and scope of judicial intervention in arbitration as well as focus on the

role the Nigerian courts have to play in the ever-progressive realm of commercial arbitration.

The negative consequences that may flow from the relationship between the court and the

arbitral process will be discussed. It will also proffer solution to the identified unacceptable

interference of the courts in arbitral matters.

1.1 STATEMENT OF THE PROBLEM

Arbitration is a proceeding, governed by contract, in which a dispute is resolved by an impartial

adjudicator, chosen by the parties, whose decision the parties have agreed to accept as final and

binding. Arbitration is the most formalized and commonly used ADR technique. Due to its

formalized form, the courts inevitably have a role to play in the arbitral process. 23 For instance,

22 Cap A18, Laws of the Federation of the Federal Republic of Nigeria 2004.23 “Ideally, the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organization which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge they take over the baton and retain it until they have made an award. At this point, having no longer a function to fulfill, the arbitrators hand back the baton so that the court can, in case of need, lend its coercive powers to the enforcement of the award.” Lord Mustill: 1993. 9th Joint ICC/AAA/ICSID colloquium on international arbitration held in Paris on Nov.6, 1992. Comments and Conclusions in Conservatory Provisional Measures in International Arbitration, 13. Publication (International Chamber of Commerce) no. 519

20

the courts have jurisdiction in setting aside and enforcement of an award and in appeals

pertaining to the misconduct of an arbitrator. However, the conferring of jurisdiction on the

courts to interfere in the arbitral process may create problems such as the courts interfering in

arbitral matters rather than playing a complementary role.24 The relationship between the courts

and the arbitral process has been described as flunctuating from time to time, ranging from

suspicion and opposition to open support for same.25 In order to maintain the character of

arbitration as an alternative to dispute resolution, it is imperative to clearly define the role the

courts have to play in arbitration lest the whole essence of arbitration be defeated. The court

must guard itself against interfering unduly in the arbitral process. Statutes provide for instances

when courts can intervene. These provisions sometime may be conflicting or vague; creating

loopholes that can be exploited by some parties. The questions are whether these interventions

by the courts will not return litigants to the courts from which they had opted out.

This study is therefore undertaken in order to examine the statutory role that the court plays in

the arbitral process and determine the negative consequences if any that flows from the

interaction between the court and the arbitral process.

1.2 AIMS AND OBJECTIVES OF THE STUDY

In modern business practice, commercial disputes are resolved more by arbitration than by

conventional courts. Arbitration, as a field of study, is however neglected in the

undergraduate curriculum of faculties of law in Nigeria despite its practical relevance. The

Nigerian Law School is also inadequate in this regard. Hence, the objectives of this work

include:

To examine arbitration as an alternative dispute resolution technique and highlight the

benefits derivable from arbitration as an alternative dispute resolution mechanism.

24 Mustill, Lord Justice and Boyd, Stewart C. 1989. Law and Practice of Commercial Arbitration in England. 2nd ed. London, Butterworths. 525 Akeredolu A. E 2012. Attitude of the Nigerian Supreme Court to Commercial Arbitration in retrospect: 2001-2010,Journal of Law and Conflict Resolution, Vol.4(5) pp 77-84, November 2012. Available online at http://www.academicjournals.org/JLCR

21

To examine the relationship between the court process and arbitral processes and to what

extent this relationship assists arbitration in the pursuit of its aims.

To examine and determine the adequacy or otherwise of the provisions and procedure for

judicial intervention under the Nigerian legal framework. .

Flows from the above, to proffer a viable solution to the identified gaps in the legal

framework.

1.3 SIGNIFICANCE OF THE STUDY

This research is timely as it is undertaken when most disputants, predominantly commercial

entities are opting for arbitration as an alternative to litigation. Also, significant at this time is the

fact that several states in Nigeria are mainstreaming ADR into the judicial system of

administration of justice. This is merely evident of the fact that the importance and viability of

arbitration as an alternative to dispute resolution is being appreciated. Further, with regard to the

litigation technicalities which are gradually creeping into the realm of arbitration and

consequently defeating the aims and objectives it set out to achieve (primarily, the congestion of

the courts), there is therefore, the need to clearly define the roles of the courts in the arbitral

process so as to avert a situation where arbitration takes on the character of litigation rather than

that of ADR thus defeating the rationale behind the introduction of ADR in the Nigerian legal

system. The recommendations in the work will therefore be useful in the proposed reforms of the

Arbitration and Conciliation Act. It will also improve the practice and procedures of arbitration

in Nigeria.

1.4 RESEARCH METHODOLOGY

This research is primarily qualitative, in that it will focus on substantive matter rather than

mathematical or quantitative matter. Therefore, materials to be used in the course of this research

work includes primary data such as statutes and treaties and secondary documents such as

textbooks, law reports, journals, obligatory essays and dissertations . The data will be content

reviewed and analysis subjected to interpretations

22

1.5 LITERATURE REVIEW

There are lots of materials on commercial arbitration. However, what makes this work

imperative is the fact that these materials are based essentially on foreign enactments which are

not identical with our own nor strictly applicable in Nigeria. The learned authors of Russell on

Arbitration26based their current edition on the English Arbitration Act of 1996. Although the

work remains a standard text on arbitration and the new edition has been totally re-written to take

account of the Act, it was not based wholly on the UNCITRAL Model Law whereas our

Arbitration and Conciliation Act is based largely on it. Thus, in reading the text and reported

English cases, some circumspection is necessary. The work of Ronald Bernstein et. al.,27 deals

with the general principles of arbitration and veered off into specific areas like Commodity Trade

Arbitration, Maritime Arbitration, Construction Industry Arbitration, Agricultural Property

Arbitration and added International Commercial Arbitration and Alternative Dispute Resolution.

Again all the statutory enactments that form the basis of parts of the Book are only persuasive in

Nigeria and is also not based wholly on the Model Law. Alternative Dispute Resolution (ADR)

is an area that is growing. While some people argue that arbitration is part of the ADR, others

argue otherwise.28 ADR is developed in the USA. In 1990, Philip Naughton in his

article29discussed the origin and development of the process. He asserted that in the last few

years the greatest growth in the use of ADR in the US may have been in the Courts rather than

through private intervention. This is so because the courts have been forced to seek new methods

of diminishing the dramatic congestion of court time in many jurisdictions. In Nigeria, there have

26 Sutton, David St John, et. Al.:1997 Russell on Arbitration, Sutton K. G ed. 21st Ed, London: Sweet and Maxwell; p 4027 Bernstein R, et. al. 1998.Handbook of Arbitration Practice, 3rd Ed, London: Sweet & Maxwell;. See also Redfern A and Hunter M. 1991. Law & Practice of International Commercial Arbitration ,2nd Ed, (London: Sweet&Maxwell. Lew, Julian D. M., 1978. Applicable Law in International Commercial Arbitration. New York: Oceana Publications, Inc. p 51-52.28 Naughton P. 1990 Alternative Forms of Dispute Resolution – Their Strengths and Weaknesses. Arbitration: The Journal of the Chartered Institute of Arbitrators Vol. 56, No.2, p 7629 Ibid

23

been a few books30 and many articles on arbitration31. There is also a monograph on drafting and

negotiating commercial agreements.32 However, Akpata’s work33gives an illuminating account of

the development of arbitration in Nigeria - from pre-colonial to the present, the history of

statutory enactments on arbitration in Nigeria and a full commentary on all the sections of the

Act, including the Schedules to the Act. In his commentary he drew heavily from his experience

on the high bench. It is noteworthy that the learned jurist sat on appeal in one of the leading cases

on arbitration in Nigeria i.e. Kano State Urban Development Board v Fanz Construction Ltd 34

and has also taken part in several arbitral proceedings. The work of Orojo35was based on the

repealed Arbitration Act of 1914.36 Besides the 1914 Act dealt with domestic arbitration and

therefore its provisions are not completely exhaustive to this research, except perhaps as a

historical source material.

30 Akpata E. 1997. The Nigerian Arbitration Law in Focus, Lagos: West African Book Publishers Ltd; Orojo J O. 1983. Nigerian Commercial Law & Practice, London: Sweet & Maxwell. Orojo J O and Ajomo M A: 1999. Law and Practice of Arbitration and Conciliation in Nigeria, Lagos: Mbeyi &Associates (Nig) Ltd; Ezejiofor G:1997. Law of Arbitration in Nigeria, Ikeja: Longman Nigeria PLC; Ajogwu F.I. 2013. Commercial Arbitration in Nigeria: Law & Practice, 2nd Edn. Lagos: Centre for Commercial Law Development; Candide Johnson C.A and Shashore O (SANs) 2011. Commercial Arbitration Law and International Practice in Nigeria, LexisNexis, Durban, South Africa. 31 Akeredolu A. 2011. Court-connected Alternative Dispute Resolution in Nigeria, Unib Law Journal, Vol 1,No 1, October 2011; Akeredolu A.E, 2012. Attitude of the Nigerian Supreme Court to commercial arbitration in retrospect: 2001-2010, Journal of Conflict resolution Vol. 4(5). Pp. 77-84, November 2012; Okezie C.1999. Judicial Supervision of Commercial Arbitration: The English Arbitration Act of 1996, (1999) 15 Arbitration International, Issue 2. Pp. 171-191 available on www.kluweronline.com; Ezejiofor G. 1993, The Nigerian Arbitration and Conciliation Act: A Challenge to the Court. Journal of Business Law, London, Sweet & Maxwell; Ezejiofor G. 1992. The pre-requisites of Customary Arbitration. Journal of Private and Property Law Vols XVI and XVIII; Akanbi M.M. 2010. Examining the Effect of Section 34 of the Arbitration and Conciliation Act of 1988 on the Jurisdiction of Courts in Nigeria. Nigerian Journal of Public Law, Vol. 2 No.1, PP 298-309 (Dept. of Public and Private Law, Faculty of Law,University of Nigeria);Asouzu A.A, 1994. Developing and Using Commercial Arbitration and Conciliation in Nigeria. Lawyers Bi-annual, Vol. I; Agbaje, F (1997) Law and Practice of Commercial Arbitration in Nigeria , The Advocate, A Journal of the Law Students Society, University of Jos, Vol. III and Nnalue, USF, 1997.Promoting Conflict Resolution through Non-adjudicatory Process, Abia State University Law Journal, Vol. I, p 5732 Mofunanya M B. 1990 Drafting and Negotiating International Commercial Agreements, (Lagos: Friendship Publishers)33 Op.cit34 Kano State Urban Development Board v Fanz Construction Ltd (1990) 4 NWLR (pt 142) 1. See also Ohiaeri vAkabeze (1992) NWLR (pt 221) 1 where Justice Akpata read the lead judgement35 Op.cit36 This obviously was a relic of colonialism and its adjunct bodies of law foisted on the country. The law was made to apply to the different regions then created – the Western, Eastern and Northern Regions is well as Lagos State which was then the Federal Capital Territory. The Act was strictly tailored for domestic arbitration

24

Two major texts by Ezejiofor37 and Orojo and Ajomo38are also useful. While the former focused

more on commercial arbitration and gave prominence to domestic arbitration (including

customary arbitration), the latter is essentially a practice book. Both works cover “conciliation”

which is not the focus of this work. Candide Johnson and Olashore’s work39 "fills the yawning

gap created by the absence of updated versions of Orojo and Ajomo’s and Akpata’s books on

commercial arbitration"40 while also providing a cure to quackery by placing at the disposal of all

practitioners a manual that can guide them through the legal terrain and practice of arbitration in

Nigeria. The work discusses the judicial approach to challenges to arbitration and invitations to

intervene in the arbitral process under the Arbitration and Conciliation Act. It goes further to

make a comparative study of changes and choices available in Nigeria as a jurisdiction and at

Lagos as a seat of arbitration and also making commentaries on the provisions of the Arbitration

and Conciliation Act and the Lagos State Arbitration Law of 2009, the UNCITRAL Model Law

on International Commercial Arbitration 1985 and the proposed Uniform State Arbitration and

Conciliation Bill. A comprehensive work by the learned silk Fabian Ajogwu SAN on Nigerian

Arbitration41 is based on the Arbitration and Conciliation Act.42 It discusses the framework for

arbitration, the agreement to arbitration and the practice and procedure of commercial

arbitrations in Nigeria. Of particular reference is its provision for the practical issues that parties,

counsel, arbitrators and all that are involved in this system of dispute resolution face, both in

domestic and international arbitration as it relates to the Nigerian legal system. The jurisprudence

and recent case law discussed which makes it the basis of academic research, forming a practical

resource in the field of commercial arbitration in Nigeria makes it commendable.

The work of Okezie Chukwumerije43 establishes that the permissible degree of judicial

intervention in the arbitral process is not invariably inconsistent with the interest of the parties as

the courts provide useful assistance that guarantees both the effectiveness and efficiency of the

arbitral process. Professor Mustapha Akanbi’s work44 builds on this principle of judicial support 37 Op.cit38 Op.cit39 Op.cit40 According to Late Hon. Justice Kayode Eso JSC (as he then was), in the foreword to the book41 Ajogwu F.I. 2013. Commercial Arbitration in Nigeria: Law & Practice, 2nd Edn. Lagos: Centre for Commercial Law Development.42 CAP A18 Laws of the Federation of Nigeria 200443 Okezie C.1999. Op.cit44 Akanbi, M.M. Op.cit

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by discussing the effect of Section 34 of the Arbitration and Conciliation Act of 1988 on the

Jurisdiction of Courts in Nigeria with a view to expand the cordial relationship between the

courts and the arbitral process. Of particular mention is a journal article by Dr Alero Akeredolu45

which chronicles the attitude of the Nigerian Supreme Court to commercial arbitration by

reviewing the only four cases that came on appeal from 2001-2010, thus revealing that in the

decade under review, the courts have shown a willingness to completely support the arbitral

process and the choice of parties to resolve their dispute outside the court system.

1.6 STRUCTURE OF THE STUDY

This project consists of five chapters which will extensively discuss the role of Nigerian Courts

in Commercial arbitration.

Chapter one looks at the background of study, purpose and objectives of study, statement of

problems, significance of study, methodology, chapterization, literature review and definiton of

key terms.

Chapter two introduces the concept of arbitration in commercial arbitrations giving an historical

background and also stating its forms and types, advantages and disadvantages of arbitration,

general principles governing arbitration, sources of Nigerian arbitration law and the legal

framework for arbitration in Nigeria, within the context of existing literature.

Chapter three examines the judicial intervention in arbitration prior to the establishment of the

arbitral tribunal as well as the role the courts play at the commencement of arbitration. It also

discusses the various theories of judicial intervention in arbitration, while Chapter four discusses

in details the complementary role of the court in the recognition and enforcement of arbitral

awards.

Chapter five will summarize the identified problems in the legal framework and provide relevant

recommendations.

45 Akeredolu A. E. 2012 op.cit

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1.7 DEFINITON OF KEY TERMS

Commercial arbitration as a specialized field of study has acquired a regime of technical words,

terms and concepts that can only be contextually understood. A doctrinaire definition of these

terms is therefore imperative.

Arbitration: The Black’s Law Dictionary46 defines arbitration as a method of dispute resolution

involving one or more neutral third parties who are usually agreed to by disputing parties and

whose decision is binding. Akeredolu47 defines it as a private, voluntary procedure which two or

more parties agree to use to resolve their dispute, wherein, the arbiter is neutral, the decision is

based on the merits and it is final and binding between the parties. It has also been defined as a

reference to the decision of one or more persons, either with or without an umpire, of some

matters in difference between the parties.48 It is the reference of a dispute or differences between

not less than two parties for determination, after hearing both sides by persons other than a court

of competent jurisdiction. Although, an arbitration agreement may relate to present or future

differences, arbitration is the reference of actual matters in controversy.49 Arbitration means a

commercial arbitration whether or not administered by a permanent arbitral institution.50

Commercial Arbitration: concerns all relationships and transactions of a commercial nature or

pertaining to commerce, whether contractual or not. Relationships of a commercial nature

include, but are not limited to the following transactions: any trade transaction for the supply or

exchange of goods or services; distribution agreement; commercial representation or agency;

factoring; leasing; construction of works; consulting; engineering; licensing; investment;

financing; banking; insurance; exploitation agreement or concession; joint venture and other

forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or

road.51

46 8th edition, P.11247 Akeredolu A. op.cit 4948 David St. John, Judith Gill and Mathew and Mathew Gearing. 2007. Russell on Arbitration. 23 rd ed. London: Sweet and Maxwell. P.549 Halsbury’s Laws of England, 4th Edition, para 501 p. 225, and K.S.U.D.B. v Fanz Construction Ltd (1990) 4 NWLR (pt 142) 1 at 32; MISR (Nig) Ltd v. Oyedele (1966) 2 ALR (Comm.) 157; NNPC v. Lutin Investments Ltd & Anor (2006) 2 NWLR(Pt. 965) 56650 Section 57(1) of the Arbitration and Conciliation Act51 UNCITRAL Model Law on International Commercial Arbitration 1985. Article 1(although this was made to apply to international commercial arbitration) available at www.uncitral.org/pdf/english/texts/arbitration/ml.../06-

27

Award: Candide Johnson and Olashore52 define this as a decision made by an arbitrator or an

umpire, which is considered binding and enforceable on the parties. In other words, it is a

decision delivered by the body designated by the parties for dispute resolution.53 The award

encompasses the whole of the arbitral process and is akin to a judgment of a court of law which

is pronounced after consideration and determination of the facts presented before the court and

settles all issues in dispute.54 Ajogwu defines it as a determination on the merits by an arbitral

tribunal in an arbitral proceeding and is analogous to a judgment in a court of law.55

Arbitrator/ Tribunal: An arbitral tribunal is constituted by a sole arbitrator or an uneven

number of arbitrators, according to the parties’ agreement. In the absence of an agreement

between the parties, the tribunal comprises of a sole arbitrator.56 The arbitral tribunal is the judge

of its own competence and jurisdiction and decides disputes in accordance with such rules or

equity as the parties agree to.57 It therefore means a person or constituted panel who decides the

rights and awards liabilities of parties in a dispute, and makes a decision called an award for that

purpose.

A dispute is defined as ‘to quarrel, argue, to question the truth of, to fight hard for.’ 58 It has been

described as a conflict or controversy, especially one that gives rise to a particular

lawsuit.59Whenever there are disputes between individuals and different parties, primacy is given

to restoring the relationships, soothe hurt feelings and to reach a compromise on how to improve

future relationships.60 It includes differences and means a justiciable issue or disagreement triable

54671_Ebook.pdf52 Op.cit 14153 Ibid 14254 Ibid55 Ajogwu F.I. 2013. Commercial Arbitration in Nigeria: Law & Practice, 2nd ed. Lagos: Centre for Commercial Law Development. P.115 See also Fagbemi S.A (2006) Recognition and Enforcement of Arbitration Awards: The Law and Practice. University of Ibadan J. Private and Business Law 5:11156 Candide Johnson and Olashore. Op.cit 24557 Section 1 and 6 of the Arbitration and Conciliation Act58 The New Webster’s Dictionary of Contemporary English, International edition, 2004, New York: Lexicon Publications Inc. P27359 Black’s Law Dictionary 8th edn at 505.60 Fayemi,A.K. 2009 ‘Agba (elder) as Arbitrator: A Yoruba socio political model for conflict resolution’’- A review of Lawrence O. Bamikole. Journal of Law and Conflict Resolution Vol.1 (3), pp. 060-067, August, 2009. Cited in Akeredolu, A. 2011. Court-Connected Alternative Dispute Resolution in Nigeria, Unib Law Journal, Vol. 1(1) P. 39, October,2011.

28

civilly,61 hence must be issues that can be compromised by way of accord and satisfaction.62

Rather than view a conflict as a battle, parties view it as a problem and decide to talk about it to

explore possible ways of resolving it in a mutually satisfactory manner.63 To resolve the dispute,

however, would involve deciding who is entitled to the object and on what terms against the

other.64 This is the focus of ADR mechanisms.65 Thus the term covers both an arbitration clause

and an actual referral of a particular existing dispute. There is no “dispute” within the meaning of

an agreement to refer disputes where there is no controversy in being, as when a parties admits

liability but simply fails to pay, or when a cause of action has disappeared owing to the

application, where it applies, of the maxim actio personalis noritur cum persona66. It can

therefore be defined as a conflict of claims.

A court has been defined as an organ of the judicial arm of government, whose functions are the

application of the law to controversies brought before it and public administration of

justice.67The 1999 Constitution of the Federal Republic of Nigeria vests judicial power in the

courts. 68 The Arbitration and Conciliation Act defines it as a body or an organ of the judicial

system of a state and includes the High Court of a State, the High Court of a Federal Capital

Territory, Abuja or the Federal High Court69

1.8 SUMMARY

In this introductory chapter, contextual definitions to the key terms, phrases and concepts used in

this work have also been provided. We have highlighted the general objective of the study and

posited what we consider as the statement of the problem. We also described the methodology

61 Ezejiofor, 2005 (reprint) The Law of Arbitration in Nigeria, Lagos:Longman Nig. Plc. P.3; Halsbury’s Laws of England, 24th Edition. London, United Kingdom: Butterworths. Paragraph 50362 Akeredolu A. E 2012. Op.cit63 Epie, C. 2004. Alternative Dispute Resolution Skills: Understanding the Problem Solving(Win/Win) Approach in Negotiations. Legal Practice Skills and Ethics in Nigeria.Ed. Nwosu, K.N. Lagos: DCONconsulting.P 439 at 447.64 Akindipe & Sanni. 2006. Fact finding and Dispute Resolution. Introduction to legal Method. 2nd ed. Sanni, A. Ed. Ife: OAU Press Ltd. P.137-138 65 Akeredolu, A. 2011. Court-Connected Alternative Dispute Resolution in Nigeria, Unib Law Journal, Vol. 1(1) P. 41, October,2011.66 K.S.U.D..B. v Fanz Construction Ltd, supra at 3367 Black’s Law Dictionary 6th edn at 352. 68 Section 6 of the 1999 Constitution of the Federal Republic of Nigeria (as amended)69 Section 57(1) CAP A18 Laws of the Federation of Nigeria 2004

29

that we intend to adopt and reviewed a few of the existing literature in the area. In the remaining

chapters, we intend to consider the nature of arbitration by tracing its evolution, distinguish its

various forms as well as focus on the main objective of this work, which is an examination of the

relationship between the court process and the arbitral process.

CHAPTER TWO: ARBITRATION IN NIGERIA

2.0 INTRODUCTION

Disputes are bound to arise in business relationships and commercial transactions. The concept

of a free-market economy presents opportunities for clashes of interests and disputes in the

pursuit of economic gains. These disputes can be resolved amicably through alternative dispute

resolution methods or by civil action in a law court.70 Arbitration and other similar processes are

alternative options to litigation. Though included in the generic meaning of the term “alternative

dispute resolution” arbitration in some literature is not classed as an ADR procedure.71 When

commercial disputes arise, it is only natural that the parties will want to resolve them peacefully,

and the common methods of doing so are by negotiation, litigation, arbitration, conciliation and

mediation, and other alternative dispute resolution methods.72 In the last fifty years, arbitration

has become the most important mechanism for resolving (international) commercial disputes.73

The principal advantages of arbitration in Nigeria are the opportunity to be able to appoint a

person with relevant knowledge to resolve the dispute as well as the relatively shorter time taken

to resolve the dispute as compared to litigation which takes much longer.74

2.1 THE CONCEPT OF ARBITRATION

70 Ajogwu F. 2013. Commercial Arbitration in Nigeria: Law & Practice, 2nd ed. Lagos: Centre for Commercial Law Development. P171 Asouzi A.A, 1999. International Commercial Arbitration and African States. Cambridge University London. Chapter 7 – ICSID Arbitration and Conciliation: The African Experience. See also Yves Derains, ‘Sovereign Immunity and Financial obligations” (2000) Business Law International. Issue No. 3, 141. Delaume, 1987. Sovereign Immunity and Transnational arbitration. 3 Arbitration International 28 at 43. See also Rhodes-Vivour A.O, (2003) Sovereign Immunity and Arbitral Proceedings. Journal of the Nigerian Branch CIArb. Vol.I No IV. It is submitted that the general stand on the issue is fluid in that opinions are divided and that arbitration is in a curious position when discussing ADR processes and should be left out of the ADR process. Supra Note 1, at 472 Orojo J O and Ajomo M.A supra, 273 Varady.T and Barcelo J.J, 2006. International Commercial Arbitration, A Transnational Perspective, 3rd Ed. West Academic Publishing. P 21-22.74 Olufunke Adekoya & David Emagun. Nigeria Arbitration Guide, IBA Arbitration Committee. Retrieved 7/10/2014, 11;56pm from www.aelex.com/media/Nigeria%20Arbitration.pdf

30

Lord Lloyd of Hampstead in defining ‘Law’ has postulated that much juristic ink has flowed in

an endeavour to provide a universally acceptable definition for the limits of defining should also

be considered from a further view point. To define is strictly to substitute a word or words for

another set of words, and these further words may and generally will stand in need of additional

explanation.75 A description rather than definition is however expedient. The identification of

arbitration as it is constituted in legal lore is not very difficult. There is a near consensus of

judicial utterance and statutory provision posing it as a process for hearing and deciding

controversies of economic consequence arising between parties. It begins with and depends

upon an agreement of the parties to submit their claims to one or more persons chosen by them to

serve as their arbitrator.76 Arbitration is a procedure for the settlement of disputes, under which

the parties agree to be bound by the decision of an arbitrator whose decision is in general, final

and legally binding on both parties. The process derives its force principally from the agreement

of the parties;77 and in addition from the state as supervisor and enforcer of the legal process. 78

The meaning and nature of arbitration was laid out in Nigerian National Petroleum Corporation

v. Lutin Investment Ltd & Anor79thus:

“An arbitration is the reference of a dispute or difference between not less than two parties

for determination, after hearing both sides in a judicial manner, by a person or persons

other than a court of competent jurisdiction. The arbitrator, who is not an umpire, has the

jurisdiction to decide only what has been submitted to him by the parties for determination,

if he decides something else, he will be acting outside his authority and consequently the

whole proceedings will be null and void and of no effect. This will include any award he

may subsequently make.”80

75 Dias, R.W.M. 1985. Jurisprudence 5th Ed London: Butterworth; p. 676 Wesley A. St. 1960. Arbitration – W hat Is It?, 35 New York University Law Review 1031. Faculty Scholarship Series, Yale Law School Faculty Scholarship. Retrieved October 19th, 2014. 2.29pm at http://digitalcommons.law.yale.edu/fsspapers77 This clause is sometimes referred to by the French term ‘clause compromissoire,’ which is a clause to agree to submit future contract disputes to arbitration. It is sometimes also refered to as ‘compromis’, which is an agreement to submit an existing dispute to arbitration.78 Orojo J O and Ajomo M.A. op.cit 3. See also. Stewart R.S, 1996. The Applicable law in International Arbitration under the New English Arbitration Act, Volume XIII, No IV, 1997, The Journal of the London Court of International Arbitration, Retrieved Oct. 19, 2014. 2:38pm at http://www.srshackleton.com/publications/79 (2006) 2 NWLR (Pt.965) 506.80 Ibid pp. 542-543,paras G-A

31

It is described as the process of resolving disputes between people or groups by referring them to

a third party either agreed on by them or provided by law, who makes a judgment.81 It has also

been described as a contractual proceeding whereby the parties to any controversy or dispute, in

order to obtain an inexpensive and speedy final disposition of the matter involved, select judges

of their own choice and by consent submit their controversy to such judges for determination, in

the place of the tribunal provided by the ordinary process of law.82 Ezejiofor describes it as the

fair resolution of a dispute between two or more parties by a person or persons other than by a

court of law. An exercise is not arbitration if it does not answer this definition 83 and Ajogwu

refers to it as the reference of a dispute by parties thereto for settlement by a person or tribunal of

their own choice, rather than a court; the basis of arbitration is the consent of the parties to

submit or refer their dispute to arbitration.84

The strength of arbitration lies in the enabling law that confers it with the sanction of

enforcement once a final award is made in a judicious manner. The concept of arbitration as an

alternative dispute resolution method has its origins from the desire of parties to have a less

formal and less expensive way of settling disputes in a shorter time.85

Arbitration is the most prominent and a special spectrum of ADR, it is based on certain attributes

it shares with litigation and can be regarded as a process of resolving disputes between people or

group by referring them to a third party either as agreed by them to a third party either as agreed

on by them or provided by law who makes a judgment.86 The practice of arbitration therefore,

comes, so to speak, naturally to the primitive bodies of law; and after courts have been

established by the state and a recourse to them has become the natural method of settling

disputes, the practice continues because the parties to a dispute want to settle it with less

formality and expense that is involved in a recourse to the courts.87

81 Halsbury‘s Vol. II (III) p2. Para. 182 Gates v. Arizona Brewing Co. Ariz 266,269,95,p.2d,49,50(1939) Cited in Domke M, 2003. Commercial Arbitration: The Law and Practice of Commercial Arbitration, Gabriel M. Wilner. 3rd Ed., Callaghan, p.183 Ezejiofor G, 1997. The Law of Arbitration in Nigeria. Ikeja, Longman. Page 384 Ajogwu F.. 2013. Commercial Arbitration in Nigeria: Law & Practice, 2nd Ed. Lagos: Centre for Commercial Law Development. P.585 Ibid86 Orojo and Ajomo Op.cit pp.3-687 Holdsworth, 1964. History of English Law, Sweet & Maxwell, London, Vol. XIV, 187.

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It is a method of dispute resolution in which a neutral third party, an arbitrator, conducts an

evidentiary hearing and/ or reviews written submissions from the parties. Upon consideration of

the evidence, the arbitrator makes a legally binding decision which can be enforced in the same

manner as a civil court judgment.88 This suffices that it is a reference of dispute by voluntary

submission, pursuant to an agreement to arbitrate89 of parties to an impartial person for

determination on the basis of evidence and argument presented by such parties who agree in

advance to accept the decision of the arbitrator as final and binding.90 He is described to be like

an expedient judge.91 Therefore, where there is an agreement to refer a dispute to arbitration, any

process carried out in accordance with that agreement will qualify to be arbitration, provided its

characteristics are in accordance with those of Arbitration.92Arbitration is the most formalised of

all ADR techniques93. Not only is arbitration adversarial in nature, but the decision rendered in

an arbitral matter is binding with very limited opportunity to appeal on the merits.94 Additionally,

the parties in arbitral matters have the discretion whether or not to employ the services of legal

counsel to represent them. All this accounts for the formalized nature of arbitration.95

2.1.1 ESSENTIAL FEATURES OF ARBITRATION

88 “Arbitration proceedings as I have already shown are not the same thing as negotiations for settlement out of court. An award made, pursuant to arbitration proceedings constitute the final judgment on all matters referred to the arbitrator. It has a binding effect and it shall upon application in writing to the court be enforceable by the court…………I must say nowhere in the Act is the High Court given the power to convert an arbitration award into its own judgment. See Commerce Assurance Limited vs. Alhaji Buraimoh Alli (1992) 3 NWLR (232) What this means simply is this: “An Award is on par with the judgment of the court” Per Hon. Justice Katsina-Alu in Ras Pal Gazi Construction Company Ltd v. FCDA (2001) 10 NWLR Part 722 page 572.para. D-F. Also See http://www.usam.com/services/arb_qa.shtml accessed on October 1st, 2014.89 ICC International Court of Arbitration Bulletin,(2001) 40 90 Domke M,2003. Commercial Arbitration: The law and practice of commercial arbitration, Gabriel M. Wilner. 3rd Ed., Callaghan, p.1. Wehringer C.K , 1969, Arbitration: Precept and Principles . New York: Oceana Publications Inc. 1.91 Ajogwu F, Op.cit. 692 ICC International Court of Arbitration Bulletin,(2001) 4093 Redfern A and Hunter M, 1991. Law and Practice of International Commercial Arbitration, London, Sweets& Maxwell. 2nd. Edn. 3.94 ICC International Court of Arbitration Bulletin,(2001) 4095 ICC International Court of Arbitration Bulletin,(2001) 40

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It is argued that at times it is difficult to determine whether a process can be appropriately

referred to as arbitration.96 This is because it has some of the features of ADR properly so-called

and some of the features of adjudication through court process.97 Due to this, some authors have

come up with certain criteria to determine whether any process purporting to be arbitration

indeed is arbitration. One of these criteria is that the arbitrator or arbitral tribunal must be chosen

unanimously by the parties to the dispute. If the parties decide not to choose the arbitrator, they

should at least consent to the way in which the choice of the arbitrator is made.98 This is also

provided for by the Arbitration and Conciliation Act.99 That there must be a dispute100 between

the parties is another feature of arbitration as it is the distinguishing feature between arbitration

and other processes which merely declare the rights of the parties which can be done without a

dispute being in existence such as valuation.101 Unless a difference has actually arisen, it does not

appear that there can be arbitration.102 Another important feature is that the resolution of the

dispute and therefore the power of the arbitrator’s decision to bind the parties stems from the

consent of the disputants and not any other source. This merely reinforces the consensual nature

of arbitration.103 Some authors argue that arbitration is a judicial process and this is another

feature of arbitration.104

This entails that the arbitral tribunal is obliged to arrive at a decision not only in accordance with

the law chosen by the disputants but also in accordance with the arbitration procedure applicable

96 Mustill, Lord Justice and Boyd, Stewart C. 1989. Law and Practice of Commercial Arbitration in England. 2nd Ed. Butterworths. 41-4597 Orojo and Ajomo. Op.cit 498 Ibid99 Ibid100 “A dispute arises when the parties to an agreement cannot or fail to agree or resolve an issue arising out of the content of the agreement; each party either clings to his own view point or becomes indomitably not amenable to reason and common logic. It equally arises when there has been infraction of one’s right or instead it could be threatened”. Per Pats-Acholonu, JCA, in United World Ltd.Inc. v. M.T.S Ltd Suit NO. CA/L/291/95; [1998] 10 NWLR(Pt. 586) 106 at 116.101 Nigerian Ports Authority v. Panalpina World Transport Nigeria Ltd & others [1974] 4 UILR, p.89.102 Per Romilly MR in Collins v. Collins (1958) 26 Beav 306 at 312,In Kwara State Minsitry of Health & Anor v. Mallam Issah Electrical Enterproses [2012] The court held that where there was no iota of dispute between the parties to be referred to arbitration, there was no dispute between the parties, and therefore nothing to be referred to arbitration. The court in KSUDC v. Fanz Construction Ltd, 4 NWLR (1990)(Pt.142) 1 at 33, per Agbaje JSC observed that “there is no dispute within the meaning of an agreement to refer disputes where there is no controversy in being, as when a party admits liability but simply fails to pay”103 Tweedale A and Tweedale K. 2007. Arbitration of Commercial Disputes: International and English Law and Practice, Oxford University Press. 34104 Ibid

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to the dispute.105 Furthermore, the tribunal is similarly required to act in a manner which is fair

and impartial as between the disputants.106 Finally, the decision of the tribunal which is referred

to as an award must be intended to be binding.107 Where a decision is merely advisory or it is at

the discretion of the parties whether or not to be bound by the decision, the process will not

qualify to be arbitration.108

2.2 A HISTORICAL BACKGROUND TO ARBITRATION

If we are to understand fully the present role of national courts in commercial arbitration, and

what shape it is likely to take in future, it is important to look at past developments that are the

basis for our current system of arbitration. In short, to understand the future you need to

understand the past. Mustill109opines that commercial arbitration must have existed since the

dawn of commerce, since all trades potentially involve disputes, and successful trade must have a

means of dispute resolution other than force.

Conventionally, litigation was almost the sole means of resolving dispute judicially whether

commercial or otherwise. Historically, however, conciliation, mediation and arbitration had

major roles to play in resolving disputes. According to Akpata,110

“Arbitration or mediation was used for resolving conflicts because of their emphasis on

moral persuasion and their ability to maintain harmony in human relationship”

For ease of exposition, this section is broken down into two, namely, the development of

arbitration generally and the specific developments with regard to arbitration in Nigeria.

2.2.1 DEVELOPMENT OF ARBITRATION

Arbitration has its roots in history. This picture was graphically captured by Serge Lazareff thus:

105 Ibid106 Ibid. See also Section 7(5) Arbitration and Conciliation Act.107 Ibid 34108 Ibid; Arbitration is one of the ADR techniques that provide a decision that is binding on the parties.109 Mustill, 1989. Arbitration, History and Background, 6 Journal of International Arbitration, No.2 .p 43110 Akpata E. 1997. The Nigerian Arbitration Law in Focus, Lagos: West African Book Publishers Ltd. p. 11

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“…arbitration, it is said, has its roots in history. Modern commercial arbitration is a true

product of the city, even though there were precedents in the late XVIIIth century. It is

well known that the first contracts to be submitted to arbitration dealt with commodities.

As the disputes involved in most cases perishable goods, they had to be settled rapidly

and confidentially. London became, in the XIXth century, the centre for maritime and

financial matters, insurance, commodities and then metals. This is still the case today”.111

Despite this development, the common law courts were slow to show interest in dealing with

commercial matters. This was understandable because their jurisdiction had a geographical

limitation. The courts were restricted to matters which had arisen in England and between

English citizens. According to Smith & Keenan:

“Foreign matters and many of these commercial disputes did involve either a foreign

merchant or a contract made to be performed abroad, were left to some other body,

especially if it could raise questions about the relations between the King and Foreign

Sovereign…”112

According to biblical theory, King Solomon was the first arbitrator when he settled the issue of

who was the true mother of a baby boy. In the story,113 two mothers were making claims to one

baby. Two of them had delivered baby boys. One of the babies died in the night and the mother

whose baby had died was now claiming the surviving child as hers. King Solomon proposed that

since neither was willing to relinquish their claim, it would be best to cut the baby into two and

hand one-half to each of them.114 The true mother immediately protested, and said that she would

rather give up her baby to the other woman rather than to see her baby killed. Solomon declared

that the woman who had shown the compassion was the true mother and returned her baby to

her. Thus he managed to find out the truth. Philip the Second, the father of Alexander the Great,

used arbitration as a means to settle territorial disputes arriving from a peace treaty he had

negotiated with the southern states of Greece as far back as 337 B.C.115

111 Lazareff, M.S. in Chapman M .J; 1997 Commercial and Consumer Arbitration. Statutes & Rules, London: Blackstone Press Limited, p 5112 Smith K and Keenan D:1983 English Law, 7th Ed, London: Pitman; p. 11113 The King James Bible I Kings 3:16-28.114 Nevertheless, this proposition would never have been carried out by King Solomon. The term “Judgment of Solomon” was coined from this early biblical story, and is now used to refer to wise judges who use a strategy to trick parties into discovering the truth of the matter. See Judgment of Solomon, online: Wikipedia, The Free Encyclopedia. http://en.wikipedia.org/wiki/Judgment_of_Solomon (accessed October 13th, 2014)115 Ibid

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Arbitration owed its beginnings to commercial disputes as it started with trade disputes being

resolved by peers as early as the Babylonian days.116 The Sumerian Code of Hammurabi117was

promulgated in Babylon, and under the Code it was the duty of the sovereign to administer

justice through arbitration.118 The Greeks were subsequently influenced by their Egyptian

ancestry and continued the use of arbitration. This then moved along with the times into the

Roman civilization and was slowly influenced by Roman laws.119 Such was the move not just

within the Roman Empire but also over the countries with which Rome traded.120 In England,

arbitration began even before the King’s courts were established.121 According to Massey,122

England used arbitration as a common means of commercial dispute resolution as far back as

1224. It developed as a means for merchants and traders to avoid the courts.123 Hence,

Arbitration is a system of justice, born of merchants. As succinctly put by Keenan124

“Disputes between merchants, local and foreign which arose at the fairs where most

important commercial business was transacted in the fourteenth century were tried in the

courts of the fair or borough and were known as courts of pie powder’ (pieds poudres)

after the dusty feet of the traders who used them”

116 “The History of Arbitration”, online: Australian Arbitration http://www.australianarbitration.com/historyarbitration.117 (C. 2100 BC) the Code of Hammurabi is the longest surviving text from the Old Babylonian period. It is far more significant in legal history than any of its forerunners, such as Ur-Nammu. Made up of 282 laws, carved in forty-nine columns on a basalt stele, the Code addresses a variety of issues arising out of civil, criminal and commercial matters. Hammurabi describes the code as “laws of Justice” intended to clarify the rights of any “oppressed man”: Steven K, 2009. The Code of Hammurabi. online: The History Guide http://www.historyguide.org/ancient/hammurabi.html. (accessed on 13th October 2014)118 Douglas M.J, 2008. The Historical Foundations of World Order: The Tower and The Arena. The Netherlands: Martinus Nijohff Publications, 195.119 The arbitrator then acted in the ancient Roman traditions of the praetor peregrinus, an official appointed to deal speedily with disputes involving foreigners and travelling merchants who helped to establish the lex mercatoria.see Redfern A and Hunter M op.cit. p 476120 Ibid121 William H.P, The Law of Contract, Vol. IV, (The W.H. Anderson Company, 1919) c. 75 at 2526ff.122 Robert V. M (Jr.), History of Arbitration and Grievance Arbitration in the United States, online: Arbitration History http://www.wvu.edu/~exten/depts/ilsr/arbitration_history.pdf >. 123Daniel A., 2001, Arbitration or Adjudication: Atkinson Law http://www.atkinson-law.com/DisputeResolution/Arbitration/Arbitration_Article_002.htm>. 124 Smith & Keenan: Op.Cit.10

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Arbitration is of primordial origin; it has been in existence for thousands of years in one form or

the other.125With the development of the courts of the fair and borough, maritime disputes were

heard by maritime courts sitting in major ports such as Bristol. Subsequently, the Court of

Admiralty developed and took over the work of the mercantile courts. From the seventeenth

century, the common law courts began to acquire the commercial work and many rules of the

law merchant were incorporated into the common law. In doing this, the problem of jurisdiction

over foreign nationals still arose. This was achieved partly by fiction. Smith and Keenan

accurately captured the situation when they wrote thus:

“… to get over the fact that technically it still lacked jurisdiction over matters arising

abroad, the court accepted allegations that something that had occurred abroad had in

fact occurred in England within its jurisdiction e.g. by using the fiction that Bordeaux (in

France) was in Cheapside (in England)”126

Historically, therefore arbitration had an attraction for merchants and traders especially those of

them dealing in perishable commodities and the need to dispose of the disputes expeditiously and

in accordance with mercantile law and custom. However, with time it became obvious that the

common law courts had their own inhibitions. According to Ezejiofor:

“As the value of this mode of dispute settlement became more pronounced it was

discovered that the practice under the common law was not entirely satisfactory and

needed amplification. Consequently provisions were made in successive statutes, to

improve upon the common law practice.”127

Apart from the issue of technicality, at common law, arbitral agreement could be oral or in

writing. For such agreements to be valid there must be an actual dispute and a submission to a

particular arbitrator.128 An arbitrator appointed by parol agreement can be removed by either of

125 Roebuck D, 1998. Sources for the History of Arbitration. 14 Arb Intl; Cleopatra Compromised: Arbitration in Egypt in the First Century BC. (2008) International Journal of Arbitration, Mediation and Dispute management,74 Arbitration 3 at 263. www.sweetandmaxwell.co.uk/catalogue. Retrieved on October 19th, 2014126 Smith & Keenan, Op.Cit.11127 Ezejiofor, Op. cit 20128 Doleman & Sons v Ossett Corpn. (1912) 3 K.B 257

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the parties.129 Because of these deficiencies, it became clear that statutory intervention was

imperative.

The earliest recorded evidence relating to a written law of arbitration in England dates back to

1698.130 More fundamental is the Common Law Procedure Act of 1854. According to

Ezejiofor,131 the object of these enactments were to reinforce the binding effect on the parties of

submission to arbitration to make awards more easily enforceable and to remedy other defects

which the common law practice had highlighted. In 1889, the UK Parliament passed the

Arbitration Act. This Act was itself, in large part, declaratory: either of previous statutes (that of

1854, the Civil Procedure Act 1833 and the Arbitration Act of 1698) or of commercial and

conveyance practice.132 There were other Acts of 1924, 1930 and 1934 that led to a Consolidation

Act of 1950, known as the Arbitration Act 1950. Others were those of 1975 and 1979. On the

sources of Arbitration Laws in England Sutton, et. al. state thus:

“There is no single source of English Arbitration Law. Prior to the Arbitration Act 1996,

there was not even a partial statutory code, for the conduct of arbitrations. The

Arbitration Acts 1950-1979 were more concerned with filling the gaps in an incomplete

arbitration agreement and specifying the powers of the High Court.”133

Thus, the 1996 Arbitration Act restated the former arbitration legislation with some changes. It

has codified principles established by previous case law and also adopted part of the Model law.

Be that as it may, the Arbitration. Act, 1996 is the principal UK arbitration statute. This Act was

also influenced by the United Nations Commission on International Trade Law (UNCITRAL)

Model Law.134 This analysis is not to suggest that arbitration was conducted in England only.

129 Halsbury Laws of England 3rd Ed. Vol 2, p. 3130 Julian D.M. Lew, Loukas A. Mistelis & Stefan Kröll, 2003, Comparative International Commercial Arbitration, Kluwer Law International, at 19.131 Ezejiofor, Loc. Cit.132 Walton, A: Russell on Arbitration, 1979. 19th Ed, London: Steven & Sons; p. 3133 Sutton, et al Op. Cit. at 17134 UNCITRAL is the United Nations Commission on International Trade Law adopted by the UN General Assembly on 21st June, 1985. Its mandate is to further the progressive harmonization and unification of the law of international trade. The following countries, territories, or states within the United States have adopted the UNCITRAL Model Law on International Commercial Arbitration: Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Belarus, Bulgaria, Cambodia, Canada, Chile, in China: Hong Kong Special Administrative Region, Macau Special Administrative Region; Croatia, Cyprus, Denmark, Egypt, Germany, Greece, Guatemala, Hungary,

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However, we are reminded by Lazareff135 that arbitration does not only have its root in history

but a true product of the City of London. He went further to assert thus:

“…commercial arbitration as we know it, started between the two World wars.

Eisemann, Secretary General of the ICC Court of Arbitration, used to say that the first

ICC arbitration he conducted, was spontaneous, without rules and horrendously, without

a fee, (International) Commercial arbitration was then a procedure whereby gentlemen

would settle in a gentlemanly way disputes between gentlemen. The penalty for non-

compliance was blackballing nothing more. How far away that seems today!”136

It is far away indeed because there are various Arbitration Rules now.137 Similarly arbitration

proceedings are almost as costly and prolonged as litigation, the fees paid arbitrators are high and

the consequence for non-compliance is recourse to the courts for enforcement. There are two

other reasons why the evolution centered on England. Firstly, London was the centre of trade

worldwide. Indeed the London Court of International Arbitration was founded in 1892; it is

located in London and is probably the oldest arbitration institution in the world.138 Secondly our

legal history is intertwined with the English legal system. A fortiori our laws on arbitration

leaned heavily on the English laws until 1988. Arbitration can be seen therefore as one of the

invisible exports of England. Today, there are arbitral centres and institution worldwide.

Wherever they are located, the point has to be made that arbitration evolved essentially as a

private sector judicial proceedings. The law came in to merely reinforce its importance and

relevance.

India, Iran (Islamic Republic of), Ireland, Japan, Jordan, Kenya, Lithuania, Madagascar, Malta, Mexico, New Zealand, Nicaragua, Nigeria, Norway, Oman, Paraguay, Peru, the Philippines, Poland, Republic of Korea, Russian Federation, Singapore, Spain, Sri Lanka, Thailand, Tunisia, Turkey, Ukraine, within the United Kingdom of Great Britain and Northern Ireland: Scotland; in Bermuda, overseas territory of the United Kingdom of Great Britain and Northern Ireland; within the United States of America: California, Connecticut, Illinois, Louisiana, Oregon and Texas;Zambia, and Zimbabwe. Available at http://www.uncitral.org/uncitral/en/uncitraltexts/arbitration/1985Modelarbitrationstatus.html.135 Lazareff. Op.cit.136 Ibid137 For example, there are UNCITRAL Arbitration Rules, London Court of International Arbitration Rules, ICCRules 2012 and American Arbitration Rules, among others.138 Ezejiofor, Op. Cit. at 144

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Eastwards, in India, arbitration was conceived in the system called the Panchayat. Indian

civilization was an express proponent of encouraging settlement of differences by tribunals

chosen by the parties themselves.139 Usually the tribunals were constituted of wise men in the

community. Arbitration in India then continued its development with the first Bengal

Regulations, enacted in 1772 during the British rule, followed by more specific legislation, the

Indian Arbitration Act 1940, which was later modernized by the Arbitration and Conciliation Act

1996.140 In Bangladesh, a traditional dispute resolution mechanism known as the shalish is

common. Disputes that are normally resolved by shalishare are those involving marital disputes,

desertion, divorce, child custody, and maintenance and land issues.141 In Italy, there existed

varieties of special courts dealing with diverse trade disputes, in the shape of officium

mercanziale, which later became the sources and the enforcement agencies of new commercial

and maritime law.142 In France, the French Revolution considered arbitration as a droit naturel

and the Constitution of 1791 proclaimed the constitutional right of citizens to resort to

arbitration. It was also included in the Code of Civil Procedure in 1806. The origins of the

concept of arbitration in France go back to the ancient courts of Pie Poudre143set up by boroughs

to settle disputes between merchants on market days. Even in England, for long a centre for

international commercial arbitration due to its pivotal position as the centre for shipping,

insurance, commodity and financing businesses, arbitration was initially closely controlled by

the English courts. In 1883 the Court of Common Council of the City of London set up a

committee to consider the establishment of a tribunal for the arbitration of trans-national

commercial disputes arising within the ambit of the City. The initiative came from the London

business community, which was becoming increasingly dissatisfied with the slow and expensive

process of litigating in the English courts. In 1919 the world’s business community established

139 “The History of Arbitration”, online: Australian Arbitration available at <http://www.dst.org.in/kinds_of_arbitration.htm>. cited in Xavier G. 2010. Evolution of Arbitration as A Legal Institutional And The Inherent Powers of the Court :Putrajaya Holdings Sdn. Bhd. v. Digital Green Sdn. Bhd. ASLI Working Paper, No.009. Singapore, Asian Law Institute. Available at www.law.nus.sg/asli/pub/wps.html.140 No 26 of 1996 [“1996 Act”]. See Krishna Sarma, Momota Oinam & Angshuman Kaushik, 2009, Development and Practice of Arbitration in India – Has it Evolved as an Effective Legal Institution. CDDRL Working Papers, Number 103. Prior to the enactment of the 1996 Act, there were three main statutes governing arbitration in India. These were the Arbitration (Protocol and Convention) Act 1937, the 1940 Act, and the Foreign Awards (Recognition and Enforcement) Act 1961. All these acts are now repealed with the coming into force of the 1996 Act.141 Bangladesh, Gender and Social Justice”, online: Asian Development Bank. Available at <http://www.adb.org/gender/practices/governance/ban002.asp>.142 Mustill, Arbitration, History and Background. Op.cit p.45143 This is from the French ‘pied poudreux’, meaning vagabond),

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the International Chamber of Commerce.144 The ICC has been the voice of the international

business community and has been a major driving force in the promotion of both arbitration as a

mechanism for the resolution of commercial disputes and the need for regulations to uphold and

support the arbitration process.145 In looking to the future of arbitration, one similarly has to look

at the current and future needs of international business practice to consider what future

developments will occur in the field of commercial arbitration.

2.2.2 ARBITRATION IN NIGERIA

In Nigeria, the practice of disputes settlement through the process of arbitration is not new in

Nigeria.146 Arbitration had been with various indigenous communities in Nigeria before the

advent and the introduction of the British legal system of court litigation into the

country147 recognizing practices such as oath taking before shrines.148 In the Ibo-speaking part of

Nigeria, the age-grade or amala perform arbitral functions. Similarly in the Yoruba-speaking

parts, the Obas perform arbitral functions.149 Professor Ezejiofor, has done a lot of work in this

area.150 According to the erudite scholar:

144 Commonly referred to as the ICC.145 The ICC is currently undertaking a review of its Rules, the most recent of which came into force on 1 January 1998. The review started at the beginning of 2008 and was considered necessary in order to reflect the increasing diversification of the industries using ICC arbitration and the increasing complexity of disputes being referred to ICC arbitration. The review is being undertaken by a Task Force of 120 members, and should report by the end of this year.146 Candide Johnson and Olashore. Op.cit pp.05-07147 Gadzama J.K. 2004. Inception of ADR and Arbitration in Nigeria, a paper presented at NBA conference Abuja; Eunice R. O. (2004) Alternative Dispute Resolution; Dele P. (2005) What is Alternative Dispute Resolution? Lagos, Dee Sege Nigeria Limited page 11. Also In the case of Okpuruwu vs. Okpokam (1998) 4 NWLR Part 90, 554 at 586 the Honorable Justice Oguntade JCA (as he then was) observed thus: “In the pre-colonial times and before the advent of the regular courts, our people (Nigerians) certainly had a simple and inexpensive way of adjudicating over disputes between them. They referred them to elders or a body set up for that purpose. The practice has over the years become strongly embedded in the system that they survive today as custom.”148 In the case of John Onyenge & Ors vs. Chief Love day Ebere & Ors (2004) 11 MJSC 184 at 199-200 The Hon. Justice Nikki Tobi delivering the lead Judgment stated thus: “Learned Senior Advocate does not seem to like the tradition or custom of oath taking. He cited a number of cases including Nwoke Vs Okere, supra. This Court recognizes oath-taking as a valid process under customary law arbitration. It is my view that where parties decide to be bound by traditional arbitration resulting in oath taking, common law principles in respect of proof to title of land no longer apply. In such a situation the proof of ownership or title to land will be based on the rules set out by the traditional arbitration resulting in oath taking. It is in this regard that I find it difficult to go along with counsel in his submissions bordering on the common law”.149 Nnalue, U. S. F “Promoting Conflict Resolution through Non-Adjudicatory Process” (1997) in Abia StateUniversity Law Journal p.57 See also Agu v Ekewibe (1991) 3 NWLR (Part 180) 385 at 407150 Ezejiofor G. 1992 The Pre-requisites of Customary Arbitration ; Journal of Private and PropertyLaw Vols 16 and 18 p. 34 and Ezejiofor. Op. Cit. at 22

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“Customary law arbitration is particularly important institution among the non-urban

dwellers in the country. They often resort to it for the resolution of their differences

because it is cheaper, less formal and less rancorous than litigation. Because the system

helps in the promotion of peace and stability within the communities and because it

assists in the reduction of pressure on the over-worked regular courts, its employment as

a dispute settlement mechanism should be encouraged by all organs of the state.”

As observed by Holdsworth,

“The practice of arbitration therefore, comes, so to speak, naturally to primitive bodies

of laws, and after courts have been established by the state and recourse to them has

become the natural method of settling disputes, the practice continues because the parties

to a dispute want to settle them with less formality and expense than is involved in a

recourse to courts”151

The above is true of England and Nigeria. Despite the fact that we have embraced the English

Legal System, recourse to customary arbitration is still a method of settling disputes especially in

rural areas. In land matters, arbitration was used to settle disputes relating to land. Thus, in Larbi

v Kwasi,152 the Privy Council held that a customary arbitration was valid and binding and that it

was repugnant to good sense for a losing party to reject the decision of the arbitrator to which he

had previously agreed. Similarly, in Mensah v Takyiampong & Ors153 the West African Court of

Appeal held, inter alia, that

“…. in customary arbitration, when a decision is made, it is binding upon the parties, as

such decisions upon arbitration in accordance with native law and custom have always

been that the unsuccessful party is barred from reopening the question decided and that if

he tries to do so in the Courts, the decision may be successfully pleaded by way of

estoppels.”

151 Holdworth History of English Law (1964) Vol. XIV p. 187152 (1952) 13 WACA 76153 (1940) 6 WACA 118. See generally Orojo J.O and Ajomo Op. Cit. at 36

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One distinguishing feature of customary arbitration is that it is usually oral. This takes it outside

the ambit of statutory arbitration. From a long line of decided cases it is obvious that arbitration

is not alien to customary jurisprudence.154 It is therefore surprising that Uwaifo JCA held in

Okpuruwu v Okpokam155that:

“No community in Nigeria regard(sic) the settlement by arbitration between disputing

parties as part of native law and custom… there is no concept known as customary or

native arbitration in our jurisprudence.”

Idornigie156 states that although the pre-requisites of customary arbitration were, with due respect

wrongly stated in Agu v Ikewibe157 and Ohiaeri v Akabeze,158 they were correctly restated in

Awosile v Sotunbo159as follows: Voluntary submission of the dispute to arbitration by the parties;

agreement by the parties expressly or by implication, to be bound by the award; conduct of the

arbitration according to customary law; publication of a decision which is final.160

Customary arbitration soon became unable to provide for needs of modern business

relationships; therefore with the advent of development came the need to have in place a suitable

legal framework for the conduct of arbitration and ADR in Nigeria. The first statute on

arbitration in Nigeria was the 1914 Arbitration Ordinance. The ordinance came into force on the

31st day of December 1914.161 The Law was based on the English Arbitration Act of 1889 and

was applicable to the whole country which was then being governed as a unitary state. When

Nigeria became regionalized in 1954 and later Federal the ordinance became the respective laws

of the regions and later the states.162 The provisions of the ordinance included the criticized

“statement of case procedure” which obliged an arbitrator to state a case for the decision of the

154 See Ofomata & Ors v Anoka & Ors (1974) 4 EC.S.L.R 251; Assampong v Amuaku (1932) 1 WACA 192 Inyang & Ors v Essien & Ors (1957) 2 F.S.C. 39, Foli v Akese (1930) 1 WACA ?; (1988) 4 NWLR(pt 90) 554 at 572.155 1988) 4 NWLR(pt 90) 554 at 572.156 Idornigie P.O 2002. The Legal Regime Of International Commercial Arbitration, A thesis in the Faculty of Law, Submitted to the School of Postgraduate Studies, University of Jos, in partial fulfilment of the requirements for the award of the degree of Doctor of Philosophy of the University of Jos.157 (1991) 3 NWLR (pt 180) 385 at 407158 1992) 2 NWLR (pt 221) 1159 (1992) 5 NWLR (pt 243) 514. See also Oparaji & Ors v Ohanu & Ors (1999) 6 SCNJ 27 at 38160 Orojo J.O & Ajomo M.A Op.cit Chapter 1, pages 3 & 13161 Ibid162 Ibid Page 135

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court.163 The provisions did not limit court intervention in arbitration proceedings. The ordinance

based law was enacted as Chapter 13 of the 1958 Revised Laws of Nigeria and Lagos. As a

result of the Law’s gross inadequacies to satisfy the needs of arbitration consumers, the Federal

Military Government later repealed chapter 13 and promulgated the Arbitration and Conciliation

Decree (No. 1 of 1988)164 hereinafter referred to as ACA .The ACA is a modification of the

United Nations Commission on International Trade Law (UNCITRAL) Model Law on

International Arbitration .On the international arena, States that have adopted the Model Law are

regarded as “investor friendly “. Sadly the ordinance based arbitration law remains in the statute

books of some of the states constituting the Federal Republic of Nigeria.165 These States are

enjoined to bring their arbitration laws in line with modern developments. Up until the 20 th

century, the national courts lagged behind in recognizing the decisions of arbitrators. This may

be because the courts saw arbitration as a rival, as well as being suspicious about the standards

being applied in arbitrations at the time.

2.3 FORMS OF ARBITRATION

There are various forms and classifications of arbitration based on different criteria such as by

location and parties (domestic/international); by administrator (ad-hoc/institutional) or by subject

matter (Construction, Maritime etc.) These are discussed below.

2.3.1 DOMESTIC ARBITRATION

Domestic arbitration is one between persons who at the time of concluding the contract are doing

business in the same country and the contract is to be performed in the same country where they

carry on business.166 The nationality of the parties and their place of residence are irrelevant to

this determination. Thus, Arbitration in Nigeria between Nigerians or Nigerian Companies or

persons carrying on business in Nigeria is a domestic one. Similarly, if the parties are foreigners

163 Sections 6, 9, 10, 11, 12, 13 & 15 of the Ordinance. Section 15 provides as follows “any arbitrator or umpire may at any stage of the proceedings under reference, and shall if so directed by the court or a judge, state in the form of a special case for the opinion of the court, any question of law arising in the course of the reference. See also Section 7(b) & Section 19 of the 1889 Arbitration Act.164 Adegbite, 1990. Law and Business Activities in Nigeria, in Law Development and Administration in Nigeria (ed. Osibanjo and Kalu) page 667-694165 For example Caps.15 Laws of Akwa-Ibom State, 8 Laws of Oyo State, 8 Laws of Ogun State.166 Mustill & Boyd, op.cit. 631

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and nationals of different countries, provided they both carry on business in Nigeria at the

conclusion of the contract and the arbitration is to be held in Nigeria, it will be regarded as

domestic.167 In the appointment of arbitrators, where the parties are unable to agree on a sole

arbitrator or the parties are unable to agree on a third arbitrator, the appointment is made by the

court on the application of a party in the case of a domestic arbitration168 whereas in the case of

an international arbitration, it is made by the appointing authority.169 Domestic arbitration was

the only type of arbitration before the rise of international trade. Indeed, in Nigeria before the

Act, only domestic arbitration was regulated by statute. International Arbitration was then

governed either by ad hoc provisions made by the parties or by institutional rules incorporated by

parties. Since the enactment of the Act, detailed provisions are available for both domestic and

international arbitration.

2.3.2 INTERNATIONAL ARBITRATION

International arbitration has become the principal method of resolving disputes between States,

individuals and corporations in almost every aspect of international trade, commerce and

investment.170 It would simply suggest that the parties to this arbitration are in different states or

countries.171An arbitration is international if the parties to an arbitration agreement have, at the

time of the conclusion of the agreement, their places of business in different countries; 172 it

would also be an international arbitration if the place of arbitration is situated outside the country

in which parties have their place of business, provided such place is determined in or pursuant to

the arbitration agreement.173

Arbitration will be international where the parties have agreed that 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 to is outside the country in which the parties have

their places of business.174 The parties to an international arbitration may also expressly agree

despite the nature of the contract, that any dispute arising from the commercial relationship shall

167 Orojo J.O and Ajomo M.A, Op.cit 52168 Section 7(2)(b) Arbitration and Conciliation Act169 Section 44(3) Arbitration and Conciliation Act170 Redfern and Hunter op.cit 1171 Ibid 8-12. See also Ajogwu F. Op.cit 8172 Ibid173 Ibid. See also Section 57(2)(b)(i) Arbitration and Conciliation Act174Ibid. See also Section 57(2)(b)(ii) Arbitration and Conciliation Act

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be treated as an international arbitration.175 Both the arbitration law of the seat of the arbitration

(the lex arbitri) and substantive laws will come into play, and they are likely to be different

national laws. Many countries have adopted as their arbitration law the UNCITRAL Model Law

on International Commercial Arbitration. The regulatory framework for international commercial

arbitration includes private agreements, agreed-upon rules, and international practice, as well as

national laws and international conventions.176 Although parties have substantial autonomy to

control the arbitration process, the supplementation and reinforcement of the process by both

national and international laws help ensure that the process functions in a fair and effective

manner. The regulatory framework also gives parties confidence that they will have a reasonable

method of recourse when problems develop in their international business transactions.

2.3.3 AD HOC ARBITRATION

An ad hoc arbitration is one conducted pursuant to an agreement which does to refer to an

institution charged with setting up the arbitral tribunal and administering the proceedings, but is

rather self –executing.177 The arbitration is conducted within the framework of the submission

and any applicable law.178 The parties to an ad hoc arbitration make provisions for the procedure

to be followed in arbitration.179 Most domestic arbitrations in Nigeria are ad hoc; the rules mostly

used are the Arbitration Rules,180 which are mandatory for domestic and international

arbitration.181 The advantage of an ad hoc arbitration is that the parties can make provisions to fit

the particular facts of the dispute between them.182 Nevertheless, this is fraught with great

175 Ibid 15 See also Section 57(2(d) Arbitration and Conciliation Act176 Ibid 6-7177 OrojoJ O & Ajomo M A. Op cit., p.55178 In Nigeria, the Arbitration and Conciliation Act, Cap A19, Laws of the Federation of Nigeria, 2004, which applies to both domestic and international arbitrations, governs arbitration proceedings. Parties in international arbitration however have a right to decide on what rules would apply. However, where the venue of the arbitration is in Lagos State and the arbitration agreement does not expressly refer to any other law, the Lagos State Arbitration law of 2009 will govern the proceedings. Both the Lagos State Arbitration Law of 2009 and the Arbitration and Conciliation Act, Cap A19, Laws of the Federation of Nigeria, 2004 are modeled after the UNCITRAL Model Law, but the state law incorporates recent amendments to the Model Law.See also: Russell on Arbitration, Op.cit 42179 Redfern and Hunter. Op.cit 52180 Contained in the Arbitration and Conciliation Act Cap A19, Laws of the Federation of Nigeria, 2004181 Olufunke Adekoya & David Emagun. Arbitration Guide, IBA Arbitration Committee www.aelex.com/media/Nigeria%20Arbitration.pdf (accessed 7/10/2014) Most domestic disputes make the Chairman of the Nigerian branch of the Chartered Institute of Arbitrators the appointing authority in case of default. International arbitration clauses commonly refer to either the London Court of International Arbitration (LCIA) or the International Court of Arbitration of the International Chamber of Commerce (ICC).182 Redfern A and Hunter M, op.cit. p 56

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challenges as parties have to provide for a comprehensive set of rules to govern every aspect of

the arbitration; this draft document is unduly bulky and cumbersome. Parties often solve this

problem by adopting the Arbitration rules as the governing rule183together, of course, with any

applicable rules of the common law or doctrines of equity.

2.3.4 INSTITUTIONAL ARBITRATION

Parties adopting this form agree that arbitration is conducted by or under the auspices of an

arbitration institution which promotes or administers the arbitral process, under its own rules.184

There are many institutions and they vary in cost and quality of administration.185 Many

companies prefer to work with the older, better established institutions, even if the cost may be

somewhat higher. This is often because of the several advantages they offer.186 For example

Parties are concerned that if they go with a brand new arbitral institution, that institution might

not be in business a few years down the road when a dispute might arise.187

There are several arbitration institutions all over the world which formulate rules and provide

facilities for the conduct and supervision of arbitrations, this includes the International Court of

Arbitration of the International Chamber of Commerce (the ICC court),188 Permanent Court of

Arbitration (PCA), European Court of Arbitration189 however in Nigeria; such institutions

include the Chartered Institute of Arbitrators,190 the Nigerian Branch of the Chartered Institute of

Arbitrators (UK)191 Parties to such arbitrations must conduct themselves in accordance with the

procedural rules of the institution they have elected.192 The most important functions of these

institutions are to make sure the arbitrators are appointed in a timely way that the arbitration

moves along in a reasonable manner and that fees and expenses are paid in advance.193 Others are

183 Ibid184 Redfern and Hunter op.cit 54185 Ibid 186 Ibid 56187 Ibid 58188 Ibid 60189 With headquarters in Strasbourg and departments throughout Europe http://cour-europe-arbitrage.org/index.php?lang=en (accessed October 13th, 2014)190 Founded in 1975 and granted a Royal Charter in 1979191 Established in 1998.192 Redfern and Hunter. Op.cit 55193 Moses; M L. 2008 The Principles and Practice of International Commercial Arbitration, Cambridge University Press, The Edinburgh Building, Cambridge. 9

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administrative and logistical services, which includes arranging stenographic transcripts of

hearings and interpretations during hearings, translation of documents, forwarding written

communication of a party or the arbitrators, arranging the venue for the meetings of the tribunal,

helping the tribunal to send the parties notice of the time, date and place of hearing and other

deliberations of the arbitral tribunal.194

Apart from routine administrative and logical support, the supervisory roles195 of these

institutions vary widely. While the roles of some are far-reaching, those of others are merely

peripheral. Thus, while some of the institutions demand that they must review the terms of

reference of the tribunal, others insist on vetting the draft awards and making recommendations

as to their substance before they are handed down by the arbitral tribunal.196 Yet, some do not

involve themselves in such fundamental issues.197

2.3.5 MARITIME ARBITRATION

Maritime is an adjective that describes activities relating to sea navigation or commerce. 198

Maritime Arbitration is thus settlement of maritime disputes by arbitration. Thus, the Arbitration

and Conciliation Act in Section 57(1) provides that the range of relationships for which

arbitration may be employed to resolve disputes that arise under them include transaction for

supply or exchange of goods or services; distribution agreement; commercial representation or

agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment;

financing; banking; insurance; exploitation agreement or concession; joint venture and other

forms of industrial or business cooperation; carriage of goods or passengers by air, sea,199 rail or

road.

The major maritime activity that often leads to disputes to be resolved by arbitration is carriage

of goods by sea.200 Disputes that arise out of other maritime activities such as financing, building,

construction, sale, acquisition, repairs of ships, the deployment of ships, fishing, salvage, charter 194 Kanowitz L, 2003. Cases and Materials on Alternative Dispute Resolution, American Casebook Series, West Publishing Co.St. Paul, Minnesota195 Redfern and Hunter. Op.cit 56196 Ibid197 Gary B.B, 2001. International Commercial Arbitration (Commentary and Materials) The Hague,Transnational Publishers and Kluwer Law International.198 Black’s Law Dictionary, 7th Edition, page 981199 Emphasis mine200 Orojo J.O and M.A Ajomo Op.cit 60

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parties,201 damage to goods and liability therefore, damages to the ship, lay days and demurrage

including damages resulting from late entry to port or late access to the wharf, force majeure,

maritime insurance202 are included in this form of arbitration. The largest arbitration centre in the

world is London followed by New York; other centres include Paris, Tokyo and Hamburg.203

Although Nigeria is not one of the big Maritime Powers, it has some shipping activities and so

persons in Nigeria sometimes get involved in maritime contracts which give rise to maritime

disputes and arbitration as a charter party204 will most invariably contain an arbitration clause.

The laws that relate to maritime arbitration in Nigeria are The Arbitration and Conciliation

Act,205 The Admiralty Jurisdiction Act,206 The Admiralty Jurisdiction Rules 2011, The Federal

High Court Act207 and Case law208

2.3.6 CONSTRUCTION ARBITRATION

Arbitration in the construction industry is one of the oldest and common forms of arbitration in

Nigeria209 Construction projects which includes construction of roads, bridges, dams, factories

and high rise buildings involve several professions and several types of works. They involve

architects, engineers of various types, quantity surveyors and building contractors. Several

contracts are involved. There are also various designs and drawings, calculations, pricing and

costings. The chances of disputes arising are therefore relatively higher than in many other

contracts. The disputes can arise from several causes, for example, poor performance, variation,

delay and so on.210 One important peculiarity of construction industry contracts is that the more

201 Oditah.F. 2010. Emerging trends in the enforcement of maritime arbitration awards and ADR settlements, A paper presented at the IMASA/MAA_Seminar on Promoting Maritime Administration and Alternative Dispute Resolution in the West and Central African Sub-Region. Lagos. 28 April 2010.202 Fabrizio M,2005. Unity and Diversity in International Arbitration: The Case of Maritime Arbitration, 20 Am. U. Int’l L. Rev.,2005203 Orojo J.O and Ajomo M.A. Op Cit, For a list of maritime arbitrators associations operating in various countries; See Ajogwu F, page 158

204 A Charter Party or Charter is a specific contract by which the owner of a ship lets the whole or principal part to another person for the conveyance of goods on a particular voyage to one or more places or until the expiration of a specified time, like a form of hire. It is also used in this sense to cover the contract that arises when a ship owner agrees to carry goods by water and receives freight the contract is called a contract of affreightment rather than a charter party..[BALLENTINE, LAW DICTIONARY WITH PRONUNCIATIONS 280 (1930)]205 CAP. A18 LFN 2004206 CAP. A5 LFN 2004207 CAP.F12 LFN 2004208 Cases such as Owners of M.V Lupex vs. Nigeria Overseas Chartering and Shipping Ltd. (2003) 15 NWLR (Part 844) 469. This established the duty of courts to grant stay of proceedings pending arbitration.209 Orojo J.O and Ajomo M.A Op.cit 59210 ibid

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important ones are largely standardized211 and each of these standard contracts contains a

provision for settlement of dispute by arbitration.212 It should be noted that a relatively good

number of arbitrations are held every year in Nigeria in the construction industry and parties are

more inclined to appoint professionals in the industry as arbitrators because of the technical

nature of the contract. According to Orojo and Ajomo,213 The Nigerian Institute of Architects, the

Nigerian Society of Engineers and the Nigerian Society of Engineers and the Nigerian Institute

of Quantity Surveyors all have their procedures for appointing arbitrators usually by reference to

their Presidents. A common feature of the construction contract is the provision for the resolution

of disputes at any stage of the performance of the contract. This enables the construction to

continue while disputes that arise at any stage before completion are resolved.214

2.3.7 INVESTMENT ARBITRATION

Investment arbitration in its most common form refers to arbitration between a State and a

foreign investor pursuant to a standing offer to arbitrate of a government in a bilateral or

multilateral investment treaty concluded between the state and the investor’s home country.215

The main obstacle, among many others, for foreign investors, was lack of mechanisms to protect

their investment in the host state. The history of private foreign investment at the time was

marked by suspicions on the part of foreign investors arising from possible deficiencies of the

legal systems of the host states of investments in protecting foreign investors and their

investment.216 This form of arbitration is not peculiar to Nigeria.217 The deliberate effort of the

government of Nigeria to encourage private participation in economic activities found unique

211 Bernstein, op cit. part 5.335. For example in Government building contracts, the provisions follow a pattern. These are largely derived from the forms of contracts used in the more developed countries. They include the forms of the English Royal Institute of British Architects (RIBA) and the Joint Contracts Tribunal (JCT). These forms are designed by persons involved in construction such as architects, building contractors, quantity surveyors, municipal authorities, specialist sub-contractors and lawyers. Another Form which is international and widely used in Nigeria in international construction contracts is the International Federation of Construction Engineers (FIDIC)212 Section 1(2) Arbitration and Conciliation Act213 Orojo J.O & Ajomo M.A. Op. cit 60214 Russell on Arbitration, Op.cit Para 2-082215 On the consent to arbitration in investment treaties see generally, Schreuer’ C. 2001 ICSID Convention: A Commentary, Cambridge University Press. 191 et seq.; such standing offers to arbitrate may also exist in investment legislation. In addition, the parties may agree to submit future disputes in an arbitration clause in a post-dispute compromise: See. Dugan C.F, D.Wallace, N. Rubins and Sabahi B, 2008. Investor-State Arbitration . Oxford, Oxford University Press, Ch.X.216 Rubins N and Kinsella S, 2005 International Investment, Political Risk and Dispute Resolution. Oceana Publications. 218.217 Orojo J.O and Ajomo M.A. Op Cit. 61

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expression in the Nigerian Investment Promotion Act 1995.218219 The Act was designed to

promote investment in Nigeria especially by foreigners. The early efforts to do so concentrated

on finding guarantees that states could and were willing to provide to foreign investors in the

event that their investment was expropriated or otherwise damaged in a host state. One of the

main guarantees was assurance of access to a neutral dispute settlement forum in case of a

dispute between the host state and the investor, as foreign investors were pessimistic about the

neutrality of the host state courts.220 It was envisaged that there will inevitably be disputes arising

from such investments; the statute however provides for the machinery for resolving such

disputes. Such considerations led to a proposal to use the institution of “arbitration” to resolve

disputes between investors and host states.221 Section 26 of the Act provides that where a dispute

arises between an investor and any Government of the Federation in respect of an enterprise

under the Act, all efforts shall be made through mutual decision to reach an amicable settlement.

But where this not achieved, then the dispute may be submitted, at the option of the aggrieved

party, to arbitration. It provides thus:

(a) in the case of a Nigerian investor, in accordance with the rules of procedure for arbitration as Specified in the Arbitration and Conciliation Act222

(b) in the case of a foreign investor within the framework of any bilateral agreement on investment protection to which the Federal Government and the country of which the investor is a national are parties; or,(c)In accordance with any other national or international machinery for settlement of investment disputes agreed on by the parties.

It is further provided in Section 26(3) that where in respect of such a dispute, there is

disagreement between the Federal Government and the investor as to the method of dispute

settlement to be adopted, the International Centre for Settlement of Investment Dispute Rules

will apply.223 218 Orojo,J.O 2008. Company Law and Practice in Nigeria, 5th Edn. Butterworths. 4219 It has gone through several amendments from 1972 when it was enacted and can be found in220 Dugan C.F et al. Op.cit pp 13 et seq.221 Ibid 45 et seq.222 CAP A19, Laws of the Federation of Nigeria, 2004, 223 The highlight of the efforts to facilitate access to a neutral arbitration forum was the discussions that culminated in the creation of the International Centre for the Settlement of Investment Disputes (ICSID) and the ICSID Convention under the auspices of the World Bank. The initiative to create ICSID began at the United Nations. Later, however, it was taken over by the World Bank. The ICSID Convention, albeit not an investment treaty, is an important element of the investment arbitration regime as a number of investment treaties refer the resolution of disputes between the ICSID state parties and investors of other state parties to the ICSID. See ICSID website at http://icsid.worldbank.org [Accessed October 22, 2014]. See Convention on the Settlement of Investment Disputes

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2.3.8 MULTIPARTY ARBITRATION

This form of arbitration is an exception to the general principle that there are two parties to an

arbitral proceeding and no third party can make himself a party to the arbitral proceedings since

an arbitration agreement is usually bilateral and so an arbitration proceeding under one contract

cannot, without agreement of the parties, be used to solve disputes under another contract.224 This

type of arbitration usually occurs in complex contracts where several parties are involved as a

result of related contracts or subcontracts.225 In large scale projects, especially the international

ones such as engineering constructions, or the supply and the installation of industrial plants,

several parties are involved. The project may be on a joint venture or consortium arrangement

and may involve several related contracts or subcontracts.226 It often occurs where a party has a

claim against two or more persons in respect of the same transaction, one claim against a party to

the contract and another against a third party or where a claimant entered into separate

agreements with two or more persons in respect of the same transaction and so have separate

claims against them. In view of the possibility of attendant repeated evidence, avoidable

expenses and the danger of different and inconsistent decisions on the same facts; parties would

wish to have all the disputes settled in one single proceeding to which all agree to be parties. 227 In

a regular court, this situation may be dealt with by a consolidation of the various matters or

claims. This may not be possible in arbitral proceedings without the agreement or consensus of

the parties involved. This consensus to multiparty arbitration is usually difficult where a dispute

has arisen; some jurisdictions recognize multi party agreements that seek to deal with this

peculiar situation by making provisions for the powers of the Arbitrator.228 The problems of

multi-party arbitration are not easy to solve, and a consensual approach rather than the coercive

is preferable with a single arbitral tribunal in charge of the dispute resolution.229 For instance, the

between States and Nationals of other States, (1966) 575 U.N.T.S. 159 (ICSID Convention or Washington Convention). Due to the political environment of the UN the discussion was transferred to the World Bank,which presumably was a more business-oriented and less political body. Dugan C.F et al.,Op.cit 49. Also See UNCTAD,2007. Bilateral Investment Treaties 1995–2006: Trends in Investment Rulemaking, New York and Geneva: United Nations, (hereinafter UNCTAD 2007), p.100.224 Orojo J.O and Ajomo M.A. Op.Cit 62225 Ajogwu F. Op.cit 48226 Redfern A and Hunter M. Op cit184227 Orojo J.O and Ajomo M.A. Op Cit.228 London Maritime Arbitration Association Terms 1987, Section C of the First Schedule.229 Gillis W.J, 1987. A Multi-party Arbitration Scheme or International Joint Ventures, in Arbitration International, Arb. Intl. p 2-213

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United Kingdom’s Arbitration Act of 1996 recognizes this problem and has dealt with it to a

reasonable extent. Section 35(1) of the Act states that:

The Parties are free to agree:(a) that the tribunal proceedings shall be consolidated with other arbitral proceeding or(b) that concurrent hearings shall be held on such terms as may be agreed

However, subsections of that particular section provides that the power of consolidation of

proceedings must have been agreed to by the parties and given the arbitral tribunal failing which

the tribunal lacks the power or jurisdiction to so do.

2.4 ADVANTAGES AND DISADVANTAGES OF ARBITRATION

Why should parties to Arbitration choose to go to arbitration, rather than to an established

national court? Why has arbitration become accepted worldwide as the principal method of

resolving disputes?230 Several reasons have been adduced for this and some will be discussed

below.

Arbitration has developed as an alternative to litigation. The benefits of arbitration are however

substantial. It has derived its recent rapid growth and appeal from the apparent relief which it

affords from the complexity and other problems which disputants have to cope with in litigation;

Constantino and Merchant 231explains this to include overloaded dockets, cost of Litigation (in

money, personnel time, lost opportunities), desire to empower disputants to participate in

resolving their own disputes, increasing interest in flexible dispute resolution process (unlike

rigid court processes), interest in confidentiality and avoidance of publicity. In fact, it has

become the first resort approach for resolving commercial disputes.232

Like litigation, arbitration is adjudicatory but the procedure is usually less formal and is quicker.

According to Akeredolu233 lawyers and litigants look to the courts as the only way to resolve

230 Redfern and Hunter . op.cit 31231 Cited in Ojielo,M.O. 2001. Alternative Dispute Resolution, CPA Books, Lagos.1232 Anon, YPF Repsol: Spain says Argentina shot itself in foot, BBC News Online, 17 April 2012, available at http://www.bbc.co.uk/news/world-europe-17739204 (last visited on 09.07.2014) 233 Akeredolu A, The proposed Alternative Dispute Resolution Centre of the National Industrial Court: Prospects and Challenges. Available at

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disputes even though there are even recognized cultural processes that would do just as

well. Arbitration comes in the wake of this to provide for a quicker means of reaching a decision

than a court, in view of the relative informality and simplicity of the procedure as well as the

availability of arbitrators who will not complain of congestion234 of matters in the court.235 Parties

also like being able to choose arbitrators with particular subject matter expertise which may be

lacking in the traditional court system.236 The parties can choose their tribunal. Singer237

comments that a further advantage of ADR over litigation is the possible expertise of the

Arbitrators, which is particularly important in industrial property disputes that often involve

complicated technical issues. By using Commercial Arbitration, parties can have an adjudicator

who is knowledgeable about both: respective industrial property laws and about technology.

Moreover, Arbitration panels can provide parties with extreme diversity of knowledge.238

Ingeborg Schwenzer,239 a professor and arbitrator in Switzerland, finds the atmosphere in

arbitration to be very different from litigation – “more professional, less nasty.” Where they fail

to agree or one party defaults, there is provision by rules or statutes or indeed by agreement, for

appointment to be made by other person, agency or court.240

The ability to keep the procedure and the resulting award confidential is a hallmark of the

arbitral process. Confidentiality is provided in some institutional rules, and can be expanded (to

cover witnesses and experts, for example) by the parties’ agreement to require those individuals

to be bound by a confidentiality agreement. Many companies want confidential procedures

because they do not want information disclosed about their company and its business operations,

or the kinds of disputes it is engaged in, nor do they want a potentially negative outcome of a

http:// nicn.gov.ng/publications/the%20alternative%20dispute%20resolution.pdf (accessed on October 14th,2014)234 This congestion is caused by the growing diversity and size of population, increase in the number of judicially and statutorily created rights, lower locus standi standards for enforcement of rights, increase in crime and Criminal prosecutions. See generally, Friedman, L.M. 1985. Total Justice, Resnik, J (1982) ‘Managerial Judges’ 96 Harv L. Rev. 376; Resnik, J (1986) Failing Faith: Adjudicatory Procedure in Decline, 53 U. CHI. L Rev. 4961.235 Orojo J.O & Ajomo M.A op. cit 44236 Weinstein, J.B 1994. Limits on Judges learning, speaking and Acting – Part 1 – Tentative First Thoughts: How many Judges Learn? 36 Ariz L. Rev. 539, 540 – 41 – where he makes the point that Judges come to the bench as generalists.237 Singer, M. 1996. New Boundary: Arbitration in Various Discipline(s): Commercial Arbitration as a means for Resolving Industrial Property and Transfer of Technology Disputes 3 Croat. Arb Y.B 107238 Ibid. See Section 22 of the Arbitration and Conciliation Act239 Cited in Moses M.L, Op.cit 15240 Section 7, Arbitration and Conciliation Act

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dispute to become public.241 As Justice Mocatta said in Gunter Henck v. Anre & co. Cie,242 “one

of the major attractions of arbitration indubitably is the lack of publicity in relation to the

proceedings.” While one advantage that has been touted in the past is that arbitration is less

expensive than litigation,243 many today do not think that advantage actually exists.244 David

Wagoner245 argues that as arbitrations have grown in number and in the amount of money at

stake, parties have increasingly incorporated many litigation tactics and best practices into

arbitration. These tactics tend to raise the costs, create delays, and increase the adversarial nature

of the process. Nonetheless, even if the arbitration process has begun to resemble litigation in a

number of ways, parties tend to find that arbitration is still worth the cost, because of the other

advantages it provides.246

The finality and the binding nature of the decision of an arbitrator reflecting the consensual247

nature of arbitration is another major advantage of arbitration, except such decisions that are set

aside by the court under the conditions stated in the Arbitration and Conciliation Act248 this

241 Moses, M.L ,Op.cit 3242 (1970) 1 Lloyd’s Rep 235243 In Nigeria, there has been no evaluative study on the costs of litigation viz -a-viz ADR. See Carr, C.A and Jericks, M.R (1999 –2000) The Privatisation of Business and Commercial Dispute Resolution: A Misguided Policy Decision, Kentucky Law Journal, Vol 88, No 2, Pg 183 – 243 @ 203 available at www.http://papers.ssin.com The authors refer to Lande, J, (1998) Failing Faith in Litigation? A survey of Business Lawyers and Executives’ Opinions, 3 Harv. Neg. L. Rev 1, 26, 36 indicating that 96% of the business executives and 91% of the in-house counsel surveyed believe that less than half of the lawsuits involving a business are resolved at an appropriate cost. See also Pollock E.J 1993. Mediation Forms Alter the Landscape, Wall St. J Mar 22, B1. states that ‘since 1990, 406 companies saved more than $150 million in legal fees and expert – witness costs by using litigation alternatives’ in cases with an aggregate of over $5 billion in dispute.244 Most business executives and their in-house counsels do at least perceive that traditional court system is too expensive but due to a lack of empirical data, it is unclear whether ADR is in fact cheaper than litigation. The Center for Public Resources (CPR) Institute for Dispute Resolution claims that for a 5 year period ending in 1995, 652 companies using CPR panelists reported a total cost savings of over $200 million with an average cost savings of more than $3 00,000 per company. Available at http://www.cpradr.org/poll_597.htm.245 Interview with David Wagoner, March2007. Cited in Moses M.L ,op. cit. 16246 Moses M.L ,op. cit 5. Also see Orojo J O and Ajomo M A Op.cit, page 44. Some have argued still in favour of ADR by contending that not only ‘monetary’ costs should be calculated but also personnel productive hours spent in preparation and prosecution of cases, the loss of value of monetary damages which occur as a result of staying too long in the court system. See Carroll, E. and Mackie, K. 2000. International Mediation- The Art of Business Diplomacy, The Hague, Kluwer Law International, 13, where the authors state that indirect costs also need to be factored into any estimates of the cost of litigation or arbitration compared to mediation – including management time and expense on investigation, identifying local counsel or agent, contributing to case analysis and strategy and much more.247 This consensual nature includes the freedom of choice of law, both substantive and procedural bearing in mind their mutual convenience and interest. Failure to do so may result in the arbitral tribunal having to determine the applicable law through the principles of conflict of laws.248 Section 30. Arbitration and Conciliation Act

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makes it difficult to contest an arbitral award thus there is limited room for an appeal of a formal

arbitration decision.249

Parties who opt for arbitration in dispute resolution are able to preserve business or personal

relations because an arbitral proceeding is a relatively friendly one. The can resolve their dispute

by arbitration and continue their relationship unimpaired.250 According to Jay Walker,251 founder

of Priceline.com, it is not a matter of who wins; it is a matter of who loses less. Hence, a win-win

situation;252 Arnold,253 comments that with ADR254, you can preserve on-going relationships,

licensor – licensee relationships, Joint – venture relationships etc. that litigation inevitable

destroys. Its desirability in international transactions cannot be overlooked. An empirical study

of why parties choose international arbitration to resolve disputes found that the two most

significant reasons were the neutrality of the forum (that is, being able to stay out of the other

party’s court) and the likelihood of obtaining enforcement,255 by virtue of the New York

Convention, a treaty to which over 140countries are parties.256 An arbitration award is generally

easier to enforce internationally than a national court judgment because under the New York

Convention, courts are required to enforce an award unless there are serious procedural

irregularities, or problems that go to the integrity of the process. The New York Convention is

considered to have a pro-enforcement bias, and most courts will interpret the permissible

grounds for non-enforcement quite narrowly, leading to the enforcement of the vast majority of

awards.

249 Although, the court plays a supervisory role and may set aside an award in extreme circumstances as provided for by the law. This will be dealt with later in this paper. See Section 31, 32 and 51 of the Arbitration and Conciliation Act.250 Orojo J O & Ajomo M A op. cit 45251 J. Walker in an interview with C. Bagley, Boston Massachusetts, 2013. Cited in Ajogwu F. 2013. Commercial Arbitration in Nigeria: Law & Practice, 2nd Edn. Lagos: Centre for Commercial Law Development. 1252 Legal Practice Skills and Ethics in Nigeria: Essays in honour of Chief Babatunde Ibironke Ed. Nwosu K.N, 2004. Lagos: DCON Consulting, 439 at 447253 Arnold T. 1995. A Better mousetrap: ADR Vol xxx No 1, les Nouvelles, p. 33-34254 Arbitration has been established as a form of ADR255 B¨ uhring-Uhle, C. A Survey on Arbitration and Settlement in International Business Disputes, in Christopher R. Drahozal & Richard W. Naimark eds. 2005, Empirical Perspectives on International Commercial Arbitration, in Towards a Science of International Arbitration: Collected Empirical Research 25, Kluwer law international, 36 available at http://www.amazon.com/Towards-Science-International-Arbitration-Collected/dp/9041123229256 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards,1958,UNDOC/E/CONF.26/8/Rev.1(“New York Convention”). Available at www.uncitral.org. See also AppendixA. United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

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Not everything in the garden is lovely. Arbitration has its critics.257 A disadvantage is that

arbitrators have no coercive powers – that is, they do not have the power to make someone do

something by being able to penalize them if they do not. A court, for example, can impose a fine

for contempt if someone does not comply with a court order. Arbitrators, on the other hand,

cannot impose penalties, although they can draw adverse inferences if a party does not comply

with an order of the tribunal. However, with respect to non-parties, arbitrators generally have no

power at all. Although, the Arbitration and Conciliation Act258 states that courts shall not

intervene in any matter governed by the Act, it may be necessary at times for the parties or the

tribunal to seek court assistance when coercive powers are necessary to ensure compliance with

the orders of the tribunal.259 Moreover, in multiparty disputes, an arbitral tribunal frequently does

not have the power to join all relevant parties, even though all may be involved in some aspect of

the same dispute. Because the tribunal’s power derives from the consent of the parties, if a party

has not agreed to arbitrate, usually it cannot be joined in the arbitration. A tribunal generally does

not have the right to consolidate similar claims of different parties, even if it would be more

efficient for all concerned to do so.260

An arbitral award has been held to be final and binding and generally not subject to appeal even

if the arbitrator makes a mistake of fact or law. However, there are some limitations on that rule,

the exact limitations are difficult to define, except in general terms, and are fact driven.261

However, a party may apply to Court to set aside the award or to refuse recognition and

enforcement of the award only on special grounds.262

257 Redfern and Hunter. Op.cit 34258 Section 34 Arbitration and Conciliation Act259 This is limited to the appointment of tribunal or substitute arbitrators, removal of arbitrator on ground of misconduct, making of interim orders, compelling attendance of witnesses, enforcement and recognition of awards or refusal of same, setting aside of awards. See Also Idigbe A I (SAN) 2006. Court Control Of Arbitral Process by A Paper Presented At The Nigerian Bar Association Section On Business Law 2-Day Workshop on ADR as an Alternative and Expeditious and Cost Effective Means of Dispute Resolution, Lagos. 5th July 2006 available athttp://www.nigerianlawguru.com/articles/arbitration/COURT%20CONTROL%20OF%20ARBITRAL%20PROCESS.pdf260 Orojo J.O & Ajomo M.A Op.cit 46261 Although there is ongoing campaigns for wider rights of appeal Platt R, 2013 The Appeal of Appeal Mechanisms in International Arbitration: Fairness over Finality? 30 Journal of International Arbitration, Issue 5, pp. 531–560 Volume 30 Issue 5 ISSN: 0255-8106 available at www.kluwerlawonline.com

262 This will be discussed in details in chapter 3. See sections 29, 30, 48 & 52 of the ACA. The circumstances under which the Court would set aside an arbitral award are clearly spelt out in the aforementioned sections of the ACA

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2.5 THE GENERAL PRINCIPLES OF ARBITRATION

In arbitration, there are guiding general principles which must be adhered to. These include:

The Voluntary Agreement263

Every arbitration panel derives its validity from the agreement to arbitrate by the parties to the

underlying contract264 unlike a court which has the constitutional authority to adjudicate on civil

and criminal matters. This means that the parties to the contract must voluntarily submit

themselves to the arbitration panel unlike in a court proceeding where one could be compelled to

appear before a judge through the issuance of summons. When parties agree to arbitrate their

disputes, they give up the right to have those disputes decided by a national court. Instead, they

agree that their disputes will be resolved privately, outside of any court system. This agreement

must however be in writing and signed by both parties;265 this agreement exists independently

and survives the main contract.266

An arbitration agreement may also be inferred from written correspondence or pleadings

exchanged between parties and can be by any other means of communication which provides a

record of the arbitration agreement. It also need not be contained 267 the rights it creates are the

rights to establish the process for resolving the dispute. In their arbitration agreement, the parties

can select the rules that will govern the procedure, the location of the arbitration, the language of 263 Agu v. Ikewibe (1991) 3 NWLR(Pt. 180) 385 at 417-418264 The parties’ arbitration agreement is frequently contained in a clause or clauses that are embedded in the parties’ commercial contract. The agreement to arbitrate is thus entered into before any dispute has arisen, and is intended to provide a method of resolution in the event that a dispute will arise. However, if there is no arbitration clause in the parties’ contract, and a dispute arises, at that time the parties can nonetheless enter into an agreement to265 Section 1 Arbitration and Conciliation Act. With respect to an arbitral clause in a contract, the clause itself does not have to be separately signed. It is sufficient for the parties to sign the contract as a whole. See Van Jan den Berg,A. 1981. The New York Arbitration Convention of 1958. 192. However, there are situations of non-consensual or compulsory arbitration as depicted in statutes and consumer standard form contracts. For instance, under the Pension Reform Act, the regulator National Pension Commission PENCOM can refer any dispute to arbitration. Also under the National Investment Promotion Act, any foreign investor who registers under the Act is automatically entitled to bring a treaty arbitration under the ICSID system. Arbitration provisions contained in such statutes are deemed to be binding on any person to whom they apply.266 This is known as the Doctrine of Seperability. The seperability doctrine is a legal fiction that, in addition to the container contract, the parties also formed a second contract consisting of just the arbitration clause. It is recognised as being autonomous, albeit that it will be governed by the same law as that whichgoverns the substantive contract. See Redfern A and Hunter M. Op.cit 194267 Section 1(1) (a) and (b) of the Arbitration and Conciliation Act

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the arbitration, the law governing the arbitration, and frequently, the decision-makers, whom the

parties may choose because of their particular expertise in the subject matter of the parties’

dispute. The parties’ arbitration agreement gives the arbitrators the power to decide the dispute,

and defines the scope of that power. In essence, the parties create their own private system of

justice.268

Binding Decision

The outcome of arbitration is an award which is final and binding.269 Compared to the judgment

of a court, arbitral awards are not subject to formal appeals, though such decisions could be

challenged on stated grounds, for example that the tribunal was not established in accordance to

the agreement of the parties. Decisions taken by a properly constituted arbitration panel is

binding on the parties to the underlying contract. This binding nature of this decision stems from

the first principle that the parties have voluntarily agreed to arbitrate. The arbitration agreement

thus constitutes the relinquishment of an important right –to have the dispute resolved judicially

–and use other dispute resolution processes. Therefore a decision of an arbitrator will be binding

on the parties to the dispute to reflect the consensual nature of arbitration, except such decisions

are set aside by the court under the conditions stated in the Act.270 In Environmental Dev.

Construction v. Umara Association 271, the court held that where parties voluntarily submit to

arbitration, a party would not be allowed to scuttle out of it simply by reason that it did not

favour it. The submission of the parties is irrevocable unless by leave of court, or by a judge or

by mutual consent, and shall have the same effect in all respect as if it had been made an order of

the court. This makes it difficult to contest an arbitral award thus creating limited room for an

appeal of a formal arbitration decision.

Properly Constituted Tribunal

The parties have the choice in appointing their own arbitrators, who may be experts in

international arbitration and or persons with requisite trade or industrial experience in the subject

matter of dispute.272 A tribunal for an arbitration proceeding must be properly constituted; in

268 Moses, M.L, Op.cit 17269 Fagbemi S.A Op.cit270 Section 30, Arbitration and Conciliation Act271 [2000] 4 NWLR (pt 652) 293 at 304 C.A272 Section 6 Arbitration and Comciliation Act

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most cases the choice of arbitrator is made by the parties to the dispute. In other cases,

appointment of arbitrators could be by the court or by a nominated third party where this is

provided for in the agreement by parties to the dispute.

Constitution of an arbitration tribunal must be in accordance with provisions of the arbitration

clause in the contract which would express the choice of the parties. Where the parties to a

dispute expressly agree as to the qualification of the arbitrator, the individual or body appointing

must take this into consideration. Where an appointed arbitrator is unqualified according to the

agreement of the parties, his appointment could be deemed ineffective; the effect of this is that

any award granted by him can be set aside when contested.273

Fair Hearing

Mustill and Boyd274 comment that an arbitrator is under a moral obligation to use skill, diligence

and care in carrying out his duties. The principle of fair hearing imposes a moral duty on the

arbitrator to ensure that all parties to the dispute are granted a fair hearing. This principle is not a

technical doctrine but rather one of substance as was held in Shell Trustees (Nig.) Ltd v. Imani &

Sons Ltd.275 In compliance with this principle, the arbitrator is to remain impartial in carrying out

his duties. Unlike in mediation, an arbitrator seeks to perform his duty whilst removing himself

from the settlement process. He arbitrates on the substantive issues before him and does not

personally attempt to get the parties to reach a settlement. In arbitration, the arbitrator assumes

the role of an umpire who is to give a fair hearing to both parties and then make an award based

on the strength of each party’s case.

As a guiding principle, an arbitrator must be impartial and adopt fair procedures for the

resolution of the dispute before him.276 He must also keep within his jurisdiction while exercising

his powers. Although not bound by the fair hearing safeguards enshrined in the Evidence Act277

the arbitrator is bound by the rules of natural justice and must be manifestly and undoubtedly

seen to be affording each disputant an environment conducive to fair hearing. Such is the

importance of the duty to be fair that an allegation of impartiality would almost likely raise

273 Ajogwu F, Op.cit 17274 Mustill M.J and Boyd S,C Op.cit 11275 [2000] 6 NWLR Pt (662) 639 at 660-661 C.A276 Section 14 Arbitration and Conciliation Act277 Cap E14 Laws of the Federation of Nigeria, 2004

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presumption of lack of fearing as a necessary and effective corollary to perceived impartiality;

exposing an award to the risk of eventual setting aside.

2.6 SOURCES OF NIGERIAN ARBITRATION LAW

There are three main sources of Nigerian Arbitration Law. They are the Customary law,

Common law and doctrines of equity, Trade usages and Statutes. They are discussed below:

Customary Law

Customary law is a source of Nigerian arbitration law.278 The recognition by the courts of

customary arbitration is based on acceptance of the age old practice of customary arbitration.279

Nigerian courts have also recognized the validity and applicability of customary arbitration

where it has fulfilled all the essential requirements of an arbitration proceeding.280

Common Law and Equity

Before independence in 1960, Nigeria was a colony of Britain and inherited the general laws of

England including the Common law281 and doctrines of equity. The common law and doctrines of

equity are those laws and principles laid down by the courts of England.282 As a general rule, the

common law of England and its doctrines of equity apply in Nigeria except where they have

been modified or rejected in Nigeria either by statute or by our courts subject to the provisions of

Section 315 of the constitution dealing with existing laws.283 For practical purposes, the common

law means the case law of Nigeria and such principles of English common law and doctrines of

equity as are still applicable in Nigeria. Nigerian courts still rely on English decisions as

persuasive authorities in their own decisions.284

Trade Usages278 Agu v. Ikewibe (1991) 3 NWLR (Pt.180) 385; Begha v. Tiza (2000) 4 NWLR (Pt.652) 193; Nwuka v. Nwaeche (1993) 5 NWLR (Pt.293) 296;Akanni v. Makanju (1978) 11-12 SC 13 at 26279 Agu v. Ikewibe (supra); Akanni v. Makanju (supra)280 Okereke v. Nwankwo [2003] 9 NWLR (PT.826) 592 SC281 See generally David R and Brierly, J.E.C. 1978 Major Legal Systems in the World Today, 2nd ed. London, Stevens & Sons, pp. 286-367282 Obilade A.O: 1979.The Nigerian Legal System, Ibadan. Spectrum Law Publishing. 69283 Ibidapo v. Lufthansa Airlines [1997] 4 NWLR 124284 Oyekan v. Adele [1957] 2 All E.R 785 (1957) 1 WLR 876

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Section 22(4) of the Act provides that the tribunal shall decide in accordance with the terms of

the contract and shall take account of the usages of the trade applicable to the transaction. This

provision allows the tribunal to take into account the terns of a contract and usages of trade

applicable to the particular transaction in dispute. Thus, trade usages serve as a source of

Nigerian law of arbitration. The tribunal is empowered to appoint experts on a point arising from

the arbitral proceeding.285

Statutes

Local and international statutes form the single largest source of Nigerian arbitration laws. The

foreign statutes include the UNCITRAL Model Law,286 the New York Convention, 1958287 and

the UNCITRAL Arbitration Rules288 while local statutes are the Arbitration and Conciliation Act

1990289 and the Foreign Judgments (Reciprocal Enforcement) Act. Other sources include statutes

that simply provide for arbitration and how it may be conducted. This includes the Petroleum

Act,290 Public Enterprises (Privatization and Commercialization) Decree,291 Nigeria LNG (Fiscal

Incentives, Guarantees and Assurance) Decree 1990,292 Nigerian Investment Promotion

Commission Decree 1999293 as well as Cooperative Societies Laws of Lagos State.294 However,

an award under the Co-operative Societies Law cannot be set aside under Arbitration Law.295

2.7 LEGAL FRAMEWORK OF ARBITRATION IN NIGERIA

285 Candide Johnson and Olashore. Op.cit 360. See also Section 42 of the Arbitration Law of Lagos State 2009.286 Op.cit287 330 UNTS 38. This is the convention on the Recognition and Enforcement of Foreign Awards. This convention also provides for the recognition of both the arbitration agreement and the arbitral award. Nigeria acceded to Convention on 17th March, 1970. And is expressly applicable to Nigeria by Section 54 of the Act found in Part III of the Act.288 This was fashioned by the UNCITRAL adopted by the United Nations General Assembly in 1976 and recommended for use in arbitral proceedings in member states of the UN in settling disputes in the context of international commercial arbitration. These rules have been adopted as the Arbitration Rules under the Arbitration and Conciliation Act and set out in the first schedule to the Act.289 Cap A18 LFN 204290 Regulation 41291 Decree No. 28 of 1999 Section 270 & Section 28(1)292 Section 22293 Section 26(2) & (3)294 Section 44 (2) (b) of the Co-operative Societies Law Cap. C15, Laws of Lagos State of Nigeria 2004. This provides for disputes to be referred to arbitration. 295 Sasegbon,D. 2005. Sasegbon’s Laws of Nigeria; An Encyclopedia of Nigerian Law and Practice, 1st edn. Vol. 3. Para 13.

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According to Fabian Ajogwu,296 the legal framework for arbitration in Nigeria dates back to the

year of the amalgamation of Northern and Southern protectorates of Nigeria with the passing of

the Arbitration Ordinance of 1914 on 31st December, 1914. This ordinance was re-enacted in

1958 when the Arbitration Ordinance of 1958297 came into force. The 1958 statute applied to the

whole country and was adopted by each region into its own laws. In the western region, the 1958

Ordinance was enacted as the Arbitration Law, Chapter 18, Laws of Western Region of Nigeria

1959. Lagos State subsequently enacted the Ordinance as the Arbitration Law, Chapter 10, Laws

of Lagos State, 1973.

On the 14th of March 1988, the Arbitration and Conciliation Decree, No 11 of 1988 was enacted

by the Federal Military Government. This decree applied throughout the federation and supersed

all state arbitration laws. In May 1999, a democratic regime came into power in Nigeria and a

new constitution was promulgated. The 1999 Constitution empowered the Federal Government

to make laws on matters contained in the exclusive legislative list while the State Governments

had the authority over the concurrent, legislative list and matters not contained in the exclusive

list. Section 315 of the 1999 Constitution, preserved the validity of the 1988 Decree. Hence, the

current applicable arbitration statute in Nigeria is the Arbitration and Conciliation Act, Cap A18,

LFN 2004.

2.8 APPLICABLE LAW AND PROCEDURE

It is important to understand the applicable laws that operate because in some arbitrations, the

arbitrators’ task will primarily be to understand the facts and to apply the contract terms as

contained in the arbitration agreement to the facts; when procedural issues arise in some, they

will be resolved in accordance with the rules chosen by the parties. Legal questions may not be

raised or argued. In other arbitrations, difficult or technical legal questions may be at the core of

the dispute. It should be noted that the law and procedure applicable depends on whether the

arbitration is domestic or international; they are derived from four main sources, namely, statute,

296 Ajogwu,F. Op.cit.115297 This 1958 ordinance was cited in Chapter 13 in the Laws of the Federation of Nigeria and Lagos 1958

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agreement of the parties, by determination of the arbitral tribunal and by the law of the place

where the arbitration is held.298

DOMESTIC ARBITRATION

The law and procedure applicable will be the laws of the relevant country. In majority of the

cases it is the country where the contract is to be performed.299 Where Nigeria is concerned, the

procedural rules are determined by statute or by the arbitral tribunal. Section 15 of the Act

provides that the arbitral proceedings shall be in accordance with the procedure contained in the

Arbitration Rules set out in the First Schedule of the Act. These rules apply to domestic and

international arbitral proceedings, although they are optional in respect of international

arbitration but mandatory in respect of domestic arbitrations in Nigeria. Thus, party autonomy in

arbitral proceedings is very much limited. Even where there are no applicable provisions in the

Rules in any particular case, it is for the tribunal to determine what rules will apply so as to

ensure fair hearing.300

INTERNATIONAL ARBITRATION

The applicable law here is not always obvious. This may be determined by agreement of the

parties, by the arbitral tribunal and by the lex arbitri.301 Subject to Section 53 of the Act,302 the

parties to an international commercial agreement may agree in arbitration agreement shall be

referred to arbitration shall be in accordance with the Arbitration Rules in the Act, or the

UNCITRAL Arbitration Rules303 or any other international arbitration rules acceptable to the

parties.304 Even where the parties have agreed on specific rules, the tribunal is conferred with

powers to apply rules that will ensure fairness and justice the arbitration institution rules lacks

298 Referred to as the lex loci arbitri and It is sometimes referred to as the procedural law, or as the curial law. In fact, the lex arbitri is mostly a procedural law, but it also has some substantive elements. In any event, the line between substance and procedure is not always clear, and is not always viewed the same way in different countries. See Redfern and Hunter op. cit 8-12. Also see Orojo J.O and Ajomo M.A op. cit 31299 Ajogwu,F Op.cit 21300 Section 15(2)&(3) Arbitration and Conciliation Act, This power includes power to determine admissibility, relevance, materiality and weight of any evidence placed before it. The tribunal is free to look beyond the country for guidance and, usually, the Rules of some arbitration institutions are found to be persuasive and are adopted or used as a guide. See generally; ibid 301 Orojo J.O and Ajomo M.A op. cit 175302 Arbitration and Conciliation Act303 Although when they do this, they are in effect choosing the Arbitration Rules in the Act because they are virtually the same.304 See generally Orojo J O and Ajomo M.A Op.cit Chapter 5

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necessary provisions for particular circumstances.305 In majority of the cases and as a general

theory in international arbitration, the procedural rule at the lex arbitri governs arbitration.306 This

guides matters of procedure which includes the composition of the tribunal, validity of the

arbitral agreement, time limits, arbitrability of subject matter, jurisdiction of arbitrators,

challenge of arbitrators, form and validity of arbitral award and finality of arbitral award.307

2.9 SUMMARY

In this chapter, we have highlighted how arbitration evolved. As has been observed, arbitration is

a private sector judicial proceeding. It evolved essentially out of the customs, usages and

practices of early merchants. As the common law courts were not equipped to handle such

matters, the merchants developed the law merchant (lex mercatoria). Subsequently, the common

law courts got involved as well as the state providing the statutory frame work. To buttress the

private nature of the proceedings, the doctrine of party autonomy is predominant. In other words,

the laws or rules will apply if, and only if, the parties do not provide otherwise. Of course, there

are mandatory provisions which are anchored on fundamental principles, for instance, public

policy. As a Colony of Britain, Nigeria was influenced by the British legal system, including

arbitration laws. However, we had and still have customary arbitration which, on certain

conditions highlighted above, can be enforced by the court or operate by way of estoppels. Side

by side with this is statutory arbitration. The next chapter will discuss the relationship between

arbitration and the courts.

305 For example, Article 11 of the ICC Rules of Arbitration306 Redfern A and Hunter M. Op.cit. 21307 Bramwll B in Stadhard v. Lee 3 B&S 364 at p.372

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CHAPTER THREE: THE ROLE OF THE COURT IN THE ARBITRAL PROCESS

3.0 INTRODUCTION

Arbitration is not a separate system of justice but one that functions within a legal system though

it depends upon the agreement of the parties. To ensure that the principle of party autonomy

prevails and limit the role of the courts in arbitral proceedings, Section 34 of the Arbitration and

Conciliation Act provides that the court is generally barred from intervening in any matter

governed by the Act although it provides a scope for some measure of intervention in the arbitral

process.308 The nature of this relationship has been described as a relay race309 where initially ‘the

baton is in the grasp of the court’ as it is the sole organization with power to give effect to the

arbitration agreement.310 Then the arbitrators take over until making an award and once the award

is made, their function is fulfilled so the baton is once again handed to the courts to ‘lend its

coercive powers to the enforcement of the award’.311

308 “A court shall not intervene in any matter governed by this Act except where so provided in this Act” 309 Lord Mustill, 1993. Comments and Conclusions in Conservatory Provisional Measures in International Arbitration, 9th Joint Colloquium, ICC Publication p. 118 310 Ibid311 Ibid

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National court involvement in arbitration is a fact of life as prevalent as the weather. As

Professor Jan Paulsson has noted,312 “the great paradox of arbitration is that it seeks the co-

operation of the very public authorities from which it wants to free itself.” National courts

become involved in arbitration for a whole host of reasons, but do so primarily because national

laws are permissive and parties invite or encourage them to do so.313 Parties in arbitration want a

prompt, less expensive and final resolution of the dispute, whilst states also want to ensure, that

the arbitral process is just and impartial.314 While it is argued that arbitration must be free from

courts, in order to be effective, it is also accepted that arbitration needs the support of national

courts to be effective.315 Flowing from this, this interference takes place at the beginning of the

arbitration, during arbitration process and at the end of the arbitral process. Consequently, there

are express provisions in the Act for the intervention of the court in the following areas: stay of

proceedings, revocation of arbitration agreement, appointment of arbitrator, attendance of

witnesses, setting aside of award, remission of an award, enforcement of award and refusal of

enforcement of award. This section discusses the role of the courts before and at the

commencement of arbitration and also considers the jurisdiction of the courts to intervene in

arbitral proceedings.

3.1 THEORIES OF JUDICIAL INTERVENTION

The extent, to which court should supervise the arbitral process, if at all, must depend on the

essential nature of arbitration. Bernard316 propounded three theories on this issue as far back as

1937. Under the first theory, the arbitration agreement and the arbitral award are separate, and

the latter should be regarded as akin to a court judgment. Under the second theory the award

derives from the agreement, so that they are inseparable. Thus the arbitral award is essentially a

contract rather than a court judgment. The third theory is a compromise between the first two,

312 Paulsson J. Arbitration in Three Dimensions, LSE Legal Studies Working Paper No. 12.2010 available at www.ssrn.com/abstract=1536093>) at 2.313 Okezie,C. 1999, Judicial Supervision of Commercial Arbitration, 1999 Arbitration International, Vol.15No.2314 Ibid315 Redfern, A, 1986. International Commercial Arbitration: Jurisdiction Denied: The Pyramid Collapse JBL 15.316 Lew, Julian D. M., 1978. Applicable Law in International Commercial Arbitration. New York: OceanaPublications, Inc. 51-52.

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and claims that an arbitral award can be regarded as akin to a court judgment only where a court

order is needed for its enforcement.317 These three theories are now respectively known as the

"Jurisdictional Theory", the "Contractual Theory" and the "Mixed or Hyrid Theory".318 In the

1960s, a fourth theory developed, known as the "Autonomous Theory". All are discussed below.

3.1.1 JURISDICTIONAL THEORY

This theory suggests that arbitration operates within a framework of law, and a state has the

power to control and regulate all the arbitrations happening in its jurisdiction. While the theory

concedes that arbitration is based on the agreement of the parties, it insists that matters such as

the validity of the arbitration agreement and award, the powers of arbitrators, and the

enforceability of awards, all depend on the law of the place of arbitration and the law of the place

of enforcement of the arbitral award. An arbitration agreement will be valid and an arbitral award

will be enforceable only if both laws, the law of the place of arbitration and the law of the place

of enforcement, recognize that the parties have the right to refer the dispute to arbitration, that

the arbitrators have jurisdiction over the case concerned, and that the arbitral award is

enforceable.319 The law permits the parties to have recourse to arbitration because it wants the

arbitration to perform a court-like function. The only difference between arbitrators and judges is

that arbitrators are appointed by the parties and judges by the state. Since the powers and

functions of arbitrators and judges are extremely similar, the arbitral award should be regarded as

a sort of judgment, and should have the same effect.320 The theory limits the autonomy of

arbitrators and emphasizes the power of the state law, requiring the arbitral award to be

consistent with the law of the place of enforcement.

3.1.2 CONTRACTUAL THEORY

This theory emphasizes the contractual character of arbitration. Its supporters give three main

reasons why the essence of arbitration is contractual. First of all, arbitration is based on the

317 Ibid318 Hong-lin Yu, 1988. Total Separation of International Commercial Arbitration and National Court Regime, 5(2) J. Int'l Arb.,148; Georgios I. Z, 1999. Problems of Applicable Law in Commercial and Martime Arbitration, 16(4) J.Int'l Arb.,177; Gunther J. H, 2001. The Duty of the Tribunal to Render an Enforceable Award, 18(2) J. Int'lArb.,147-148319 Jian, H. 2000 Theory and Practice on Modern International Commercial Law, Beijing: Law Press. 35.320 Klein, F.E. 1955. Considtions sur 1' arbitrage en droit international priv? Bale: Heilbing & Lichtenhahn, para.105-112.

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agreement of the parties. Where there is no arbitration agreement, no party can force another to

arbitrate, except in the rare instances of compulsory arbitration.321 Secondly, all issues regarding

the constitution of the arbitral tribunal can be decided by the agreement of the parties, including

the appointment of arbitrators, the time and place of arbitration, among others. The parties may

also agree on the arbitral procedure, while domestic arbitration law only provides default rules to

deal with situations where the parties have not agreed on such issues.322 Thirdly, the reason why

an arbitral award is recognized and enforced is because of the binding force of the arbitration

agreement.323 Each party has an obligation to enforce the award; otherwise the other party can

apply to the court for enforcement.324 This theory sees domestic law as creating a framework for

the arbitration. Thus the court will not enforce an arbitration agreement, if, under the law of the

forum, the court has exclusive jurisdiction over the subject matter of the dispute. Nor will it

enforce an arbitral award which is in conflict with public policy.

3.1.3 FIXED OR HYBRID THEORY

This theory asserts that arbitration has both a jurisdictional and a contractual character. In 1952,

Sauser-Hall explained this theory in detai1325pointing out that arbitration cannot transcend the

legal system, and there must always be laws which determine the validity of arbitration

agreements and the enforceability of arbitral awards. He also considered that arbitration derived

from private contracts, and that the appointment of arbitrators and the rules governing the arbitral

process should mainly stem from the agreement of the parties. As a result, he believed the

jurisdictional and contractual character of arbitration correlative and indivisible.326 Supporters of

this theory insist that although the jurisdictional and contractual theories are diametrically

opposed, they can work in a concerted way to explain the essence of arbitration. Thus the

arbitration agreement is a contract, and its validity should be determined in accordance with

contractual principles. If according to the law of the forum, the court has exclusive jurisdiction

321 Morris S. 1966. A Paradox in the Theory of Commercial Arbitration. 21 Arb. J. 156; Wallace E.V, 1967. Drafting a New York Arbitration Agreement. No. 3, N. Y. Continuing Legal Education.322 Eisemann, F, 1967. L'arbitre - partie, in International Arbitration: Liber Amicorum for Martine Domke. Hague:Martinus Nijhoff. 79.(English translate)323 Niboyet, J.P, 1950. Trait de droit international priv? francais, tomes V, VI 2. Paris: Sirey, para. 1284.(English translate)324 Domke M, Op.cit.2325 Sauser-Hall, G. 1952. L'arbitrage en droit international prive, in 44-I Anuaire de L'institut de Droit International, Grand: Bureau de la Revue de droit international, 469.326 Ibid

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over the subject matter of the dispute, or if the arbitrators conduct the proceedings in defiance of

basic principles of equity, or if the award conflicts with the public policy of the forum, the court

in which the enforcement is sought will refuse to recognize or enforce the arbitral award.327

3.1.4 AUTONOMOUS THEORY

This theory is advanced by Devichi.328 It maintains that arbitration is not jurisdictional or

contractual, or even mixed, but a completely independent system.329 In order to determine the

essence of arbitration, she considers it is necessary to examine the function and aim of

arbitration. This theory views arbitration from a completely different angle from the other three

theories. They concentrate on the aspects of arbitration which accord with domestic law and a

contract is enforced. By contrast, the autonomous theory concentrates on the issues of the

arbitration itself, such as the aim of arbitration, the arbitral proceedings, the function of

arbitration and the reason why it can have such functions. Devichi suggests that neither the

jurisdictional theory nor the contractual theory can correctly reflect the essence of arbitration,

while the fact that they are in fundamental conflict precludes them being combined. She also

argues that the three traditional theories all impose limits upon arbitration which would restrict

certain advantages which might otherwise lead businessmen to prefer arbitration to litigation,

and which would prevent arbitration from developing. The supporters of this theory argue that

arbitration was first created and then developed by businessmen, regardless of the law. The law

simply affirms arbitration. The autonomy of the parties to determine both substantive and

procedural law is based on neither the contractual nor the jurisdictional character of arbitration,

but on the necessity of commercial custom.330 Similarly, the reason why arbitration agreements

and awards are enforceable is not because they are contracts, or because the state in which

enforcement occurs gives concessions but because businessmen across the world would not be

able to conduct international commercial relations successfully if arbitral awards were not

enforceable. While parties create their own dispute resolution mechanisms as an alternation to

court settlement, they sometimes ask a court to provide pre and post-arbitration enforcement just

327 Jian, H, 2000. Theory and Practice on Modern International Commercial Law, Beijing: Law Press. 36.328 Rubellin-Devichi, J. 1965. L'arbitrage. Nature Jurisdigue Droit interne et droit international pr iv? Paris:Librairie Genei le de Droit et Jurisprudence, 14.329 Ibid330 Ibid

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as a contract is enforced.331 Thus, the essential nature of arbitration is contractual, although it

could be said that arbitration has a judicial function.

3.2 THE ROLE OF COURT AT THE COMMENCEMENT OF ARBITRATION

Judicial intervention in arbitration should refrain from interfering with the exercise of the powers

entrusted to arbitrators by the parties and rather be confined to assisting the arbitral process when

the need arises. Judicial involvement in arbitration is justified on the basis that the powers of

arbitrators derive from the agreement between the parties, rather than being conferred by the law

or state, so that the courts may often have to employ their inherent powers to fill the inevitable

gaps. There are several arguments against the arbitral process being completely independent of

national court systems.

Firstly, the judiciary is essential in guaranteeing the integrity of the arbitration process.332

Secondly, the authority of arbitrators is conferred by agreement and extends no further, so that

there must be safeguards against arbitrators exceeding the authority. Thirdly, parties may want

insurance against erratic and unpredictable results. Fourthly, states may want to review arbitral

decisions to protect weak parties, third parties, or their national interests. In relation to disputes

which the parties have agreed to refer to arbitration the court serves two functions. On the one

hand, the court provides assistance and support and, on the other, it supervises and controls.

The involvement of courts in modern commercial arbitration generally begins even before the

arbitral tribunal is established, when the courts are used to protect evidence or the res, to avoid

damage.333 Prior to the establishment of the arbitral tribunal, courts become involved where a

party initiates proceedings to challenge the validity of the arbitration agreement; where one party

institutes court proceedings despite, and perhaps with the intention of avoiding, the agreement to

arbitrate; or where one party needs urgent protection that cannot await the appointment of the

tribunal. The courts then enforce arbitration agreements for the arbitral process to start; during

the pendency of the arbitration itself, it issues interim orders.

331 Hirsch,A. 1979. The Place of Arbitration and The Lex Arbitri, 34 Arb. J. 43.332 Lutz, R.E, 1988. International Arbitration and Judicial Intervention, 10 Loy. L. A. Int'l & Comp. L. J.621.333 Lew J., Op.cit 367

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3.2.1 REVOCATION OF ARBITRATION AGREEMENT

Arbitration is based on a valid agreement to arbitrate. As stated earlier,334 an arbitration

agreement is simply an agreement by the parties to refer any or all existing or future disputes

arising from their legal relationship to a neutral person or persons for determination of their

respective rights and liabilities, in relation to a the dispute under reference. Arbitration is a

creature of consent, and that consent should be freely, knowingly, and competently given.335

Therefore, to establish that parties have actually consented, the Act provides that the agreement

must be in writing and signed by both parties.336 Section 2337 provides that unless a contrary

intent is expressed therein, an arbitration agreement shall be irrevocable except by agreement of

the parties or by leave of court or a judge. Even the death of any party does not revoke or render

the agreement invalid, as it shall be made enforceable by or against the personal representatives

of the deceased.338 The choice or arbitration does not bar resort to the courts to obtain security for

an eventual award.339 It is pertinent to state that the private nature of arbitration does not oust

jurisdiction of the courts, all that the agreement does is to postpone the right of access to court.340

Since, the parties to a contract are allowed within the law to regulate their rights and liabilities

themselves,341 all that the court is required to do is to give effect to the intention of the parties as

it is expressed in and by their contract.342 This calls for two things from the courts. First, it must

determine whether an arbitration agreement is valid and then whether to enforce a valid

arbitration agreement which has not been mutually abandoned.343

Once parties enter into a valid arbitration agreement, one of them cannot unilaterally revoke it,

he must apply to the court for revocation under Section 2 of the Act. However, the Act does not

334 Chapter II335 United Steelworkers v.Warrior & Gulf Navig. Co., 363 U.S. 574, 582 (1960) (“. . . [A] party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”)336 Ibid note 214 and 214337 Arbitration and Conciliation Act, LFN 2004338 Section 3 Arbitration and Conciliation Act339 Scheep v. “Mv’ Araz” [2000] 15 NWLR (Pt 691) 622, Obembe v. Wemabod Estates [1977] 5 SC 115340 City Eng. (Nig) Ltd v. Federal Housing Authority [1997] 9 NWLR (Pt 520) 224 at 248 per Belgore JSC; Lignes Aeriennes Congolaises (L.A.C) v. Air Atlantic Nigerian Limited (A.A.N) (2006) 2 NWLR part 963 page 49 at 73 paragraph D341 Gott v. Gandy 2 E & b 845 at p.847 per Erle, J342 Sonar (Nig) Ltd. v. Nordwind [1987] 4 NWLR (PT.66) 520 Para G343 Kurubo v.Zach Motison (Nig.) Ltd (1992) 5 NWLR (Pt.239) 102

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state in what circumstances the court will grant leave, but it is suggested that it must be in

circumstances when a contract can be lawfully repudiated before performance.344 The arbitration

agreement was freely and voluntarily entered into by the parties. To depart from it, the party

seeking a revocation has to show good reason. One of such circumstances is when something

happens which makes the performance of the arbitration agreement impossible or which destroys

the foundation of the contract to arbitrate.345 Like any other contract, the arbitration contract will

be frustrated and can be formally revoked by the court on application by a party. The court will

then be empowered to exercise the power of revocation in the event of a supervening

impossibility causing a frustration of the objects of the arbitration agreement.346 Also where some

supervening issues of law would arise to make a continuation of the performance of the

arbitration agreement illegal,347 the contract will be deemed frustrated and an application for

revocation on this ground by a party where the other party does not agree will be held by the

court. Arbitration will only apply when the dispute or difference which the parties to an

arbitration agreement agree to refer is a justiciable issue which can be tried as civil matters. 348

The courts role is to decide whether a dispute is arbitrable or not. The court will revoke an

agreement to arbitrate when the agreement relates to disputes that cannot be settled by

arbitration.349

3.2.2 STAY OF COURT PROCEEDINGS

A stay of court proceedings literally means the postponement or halting judicial proceedings or

an order to suspend all or part of such proceeding.350The parties’ agreement that their dispute

shall be settled by arbitration is a solemn contract like any other and so a party to the agreement

will not be allowed to unjustifiably breach that agreement by bringing a court action in respect of

the same subject-matter. When a party to an arbitration agreement decides to institute

proceedings in court, rather than explore arbitration as agreed by parties, if the other party

agrees, the court action will proceed. Where the Defendant351 insists on his right to have the 344 Orojo and Ajomo. Op.cit 321345 Mustill & Boyd, op.cit 508346 Ibid347 Sagay I.E, 2009. Nigeria Law of Contract, Spectrum Books Limited, Ibadan. 359-456348Ezejiofor. 2005(reprint) cited in Akeredolu A.E. Op.cit349 KSUDC V. Fanz Construction Ltd, 4 NWLR (1990) (Pt 142 ) 1 at 32350 Candide Johnson and Olashore. Op.cit 258351 Since it is the defendant to the action or the party who counterclaims who would want to take the matter away from the court, it is he who will apply to court and that before he has filed his defence to the action or the

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matter resolved by means of arbitration, the court’s responsibility is to ensure that the parties’

agreement is valid and will be enforced by referring them to arbitration.352 There are plethora of

cases where parties notwithstanding the provisions of an arbitration clause, institute matters in

court for determination.353 Sections 4 and 5 of the Arbitration and Conciliation Act354 empowers

the court to stay proceedings and preserve the res.355

Section 5 of the Act provides thus:

(1) If any party to an arbitration agreement commences any action in any court with respect to any matter which is the subject of an arbitration agreement, any party to the arbitration agreement may at any time after appearance and before delivering any pleadings or taking any other steps in the proceeding, apply to the court to stay the proceedings.(2) A court to which an application is made under subsection 1 of this section may if it is satisfied-(a.) That there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration; and(b.) That the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, make order staying the proceedings.

It is a well settled principle of law that proceedings in the court may be stayed, pending

arbitration, in circumstances where an arbitration clause is inserted in the agreement between the

parties in order that a stay might be granted. The applicant for a stay must satisfy certain

conditions, one of which is that no steps shall have been taken by him after appearance. 356 It is

worthy of note that the power of the court as conferred by statute is discretionary which must be

judicially and judiciously exercised.357 The role of the court is to lean towards ordering a stay of

court proceeding and make such consequential orders as to the preservation of the res only where

the parties have agreed to refer their dispute in a contract within the contemplation of the clause

to arbitration and the court considers such agreements valid; it is not for the court to attend to

counterclaim352 Section 4(2) Arbitration and Conciliation Act353 United World Ltd Inc. v. Mobile Telecommuniations Services Ltd (1998) 10 NWLR (Pt 568) 106;Mehr v. Nig.Inv. & Ind. Co..Ltd[1996] N.C.L.R. 351 at 358; M.V Lupex v. Nig. Overseas Chartering & Shipping Ltd[2003] 15 NWLR (Pt 844) 469 SC; Confidence Ins.Ltd Trustees of O.S.CE [1999] 2 N.W.L.R (Pt.373) at 388; A.J.D.C v. L.G.N [2000] 4 NWLR (Pt. 653] 494 at 504. See generally Ajogwu F. Op.cit 80354 CAP A18 LFN355 The subject matter of the dispute356 Per Taylor, C.J in Mehr v. Nig. Inv. & Ind. Co. Ltd [1966] NCLR 351 at 358357 Orojo and Ajomo. Op.cit 319

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other prayers which an applicant may make in his motion since the court lacks jurisdiction to

hear the matter.358

The court ought to give due regard to the voluntary agreement of the parties by enforcing the

arbitration clause as agreed to by them. However, for the court to exercise such discretionary

powers conferred by statute, the applicant for a stay of court proceedings must have asserted the

right to evoke the arbitration provision before taking other steps in the proceedings. Orojo and

Ajomo359 suggest that this application must be made after appearance and before the applicant

has delivered any pleadings or taken any other steps in the proceedings.

‘Step in the proceedings’ has been defined as ‘action which impliedly affirms the correctness of

the proceedings and the defendant’s willingness to be bound by the court’s decision’.360 Thus, an

exchange of correspondence between parties or their counsel after entering appearance or efforts

made out of court to settle the matter in controversy between the parties or moving the court to

seek a party’s right to rely on the arbitration provision will defeat a defendant’s right to rely on

arbitration provision.361 A party who requests for days within which to file a statement of

Defence will be deemed to have taken steps in the proceedings.362 A step in the proceeding

means something in the nature of an application to the court and not mere talk of some step, such

as taking out a summons or something of that kind, which is in the technical sense, a step in the

proceedings.363 Hence, a motion to strike out an action after summons had been issued364 or to

counterclaim365 will amount to steps in the proceedings.

Taking steps may also include filing necessary processes as required by the rules of court after

appearance.366 It therefore means that a party desiring to file an application for a stay of

358 Backbone Connectivity Network (Nig.) Ltd & 16ors v. Backbone Technology Network Inc & 2ors Suit No. CA/A/399/2013 of 10/7/2014.359 Ibid360 Eagle Star Insurance Co Ltd v. Yuval Insurance Co. Ltd [1978] 1 Lloyd’s Rep 357.CA361 Confidence Ins. Ltd Trustees of OSCE[1999] 2 NWLR(Pt.373) at 388362 NPMC Ltd. v. Compagne Noga I & I.SS (1971) 1 NMLR 223 at p. 226, Obembe v. Wemabod Estate Ltd. (1977) 5 SC. 115 at p. 132363 Per Lindley, L.J in Ives & Barber v. Williams [1894] 2 Ch. At 484364 Achonu v. N.E.M & Gen. Ins. Co [1971](1) SCLR 449 at 455-456365 NPA v. Cogefa [1971] 2 NCLR 44366 Ajogwu F. Op.cit 86

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proceedings in view of an arbitration clause need not take any steps in the proceedings

commenced by the plaintiff; where he does, the implication is that the defendant may be deemed

to have waived his right or the agreement as contained in the arbitration clause. It readily shows

the defendant’s willingness to advance his case against a party and abandon his right to

arbitration. The courts have taken the position that where a party has expressly or impliedly

waived his right to arbitration, he is barred from applying to court to stay proceedings. He cannot

approbate and reprobate.367 However, the subject matter must be the type which ought or should

be referred to arbitration.368 Although, party barred from staying proceedings for taking steps in it

could still independently proceed with his right against the plaintiff for damages for breach of the

arbitration clause,369 the court in Ighoroje v. Maude Sokoto370held that the effect of Section 5 of

the Act therefore was that once a defendant has filed a Defence, he could not have the

proceedings stayed to proceed to arbitration, but that did not interfere with his right to proceed

independently against the plaintiff for damages for breach of the arbitration clause.

It needs to be stated that the right to apply for a stay of proceedings has a time limit within which

it must be made. The Supreme Court in the case of KSUDB v. FANZ Construction Ltd371 held

that the defendant is “not given by the law a carte blanche as to when to apply for the stay of

proceedings”. Hence, it must be raised timeously372and only a party to an arbitration agreement

can bring an action before the court for the grant of an order to stay proceedings.373

As a condition, a party applying for stay of proceedings must show in his affidavit, evidence in

support of the application by means of documentary evidence the steps he took or intends to take

for proper conduct of the arbitration. It is not enough to merely depose that he is ready and

willing to do all things necessary to cause the matter to be decided by arbitration and for proper

conduct of such arbitration for he is mandated to show that “at the time when the action was

commenced …., he remains ready and willing to do all things necessary to the proper conduct of

the arbitration.”374 The court is bound to stay proceedings unless it is satisfied that there is

367 Wuraola v. Northern Assurance Co. Ltd [1966] 1966 NCLR 138-139368 Kano State Urban Development Board v. Fanz Construction Co. Ltd [1990] 4 NWLR (Pt. 142)369 D. Sasegbon, Op.cit 67370 [1966] NCLR 301 at 305, Williams J371 [1990] 4 NWLR (Pt 142) 1 at 28372 This is known with the latin maxim viigilantibus non dormientibus jura subveniunt.373 AJDC v. LGN [2000] 4 NWLR (Pt 563) 494 at 504 Per Ayoola, JSC374 Section 5(b) Arbitration and Conciliation Act

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sufficient reason to justify a refusal to refer the dispute to arbitration despite the agreement of the

parties. The court may only refuse to order a stay of proceedings where the defendant establishes

that he would suffer injustice from the arbitration tribunal or that agreement between the parties

is null and void, inoperative and incapable of being performed.375

3.2.3 PROTECTING THE RES

Parties to a dispute choose arbitration because of the flexibility and privacy of the proceedings,

their ability to choose the tribunal and the enforceability of the award.376 Enforceability entails

ensuring that any award which may be made in the arbitral proceedings is not rendered

ineffectual by the dissipation of assets by a party. Interim measures are very important in arbitral

proceedings because they protect the rights and interests of the parties before or during the

arbitration377 and ensure the smooth execution of an arbitration award.378 Such interim measures

are made prior to the issuance of the award by which the dispute is finally decided for the

purpose of preserving and maintaining the status quo.379

An aggrieved party may request the court or the Arbitral Tribunal as the case may be to make an

interim order to protect the property for the following reasons:380

i. To ensure that the property in dispute is not allowed to waste or be depleted to the

detriment of either party

ii. It may be too late should the Tribunal wait till the final Award. The threat is that the

Award may be rendered nugatory.

iii. To ensure that the value of the res is not depleted.

iv. Property/Res may be preserved for its evidential value so that one party is not unduly

prejudiced.

v. The need to ensure that the party in possession of the Res does not abuse same such that

should the other party succeed in his claim, he will still get the full benefit of the Award.

375 M.V Lupex v. Nig. Overseas Chartering & Shipping Ltd [2003] 15 NWLR (Pt 844) 469 SC376 Sutton, David St John, et.al.op.cit 11.377 For example by preserving assets and evidence and maintaining the status quo of the parties378 The Article of Michael Hwang SC and Rajesh C. M 2002. The Role of Courts in Arbitration: Singapore and Other Asian Perspectives. Journal of the Chartered Institute of Arbitrators “Arbitration” Vol. 68, Number 3 August @ page 223-237.379 Candide Johnson and Olashore. Op.cit 303. See also Zuckerman A. 2006. Zuckerman on Civil Procedure: Principles and Practice. Sweet and Maxwell. 265380 Orojo J,O & Ajomo M.A. 179

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Section 13 of the Arbitration and Conciliation Act381 vests the tribunal with powers to order any

party to take such interim measures of protection as the arbitrator may consider necessary in

respect of the subject matter of the dispute and request any party to provide appropriate security

in connection with the subject matter.382 The implication of this provision is that the Arbitral

Tribunal shall have the power to make interim orders directing either party to preserve the res

pending the completion of the proceedings. It should be noted that this provision applies only

where the property to be protected is in the custody of one of the parties. Where the property is

in the hands of a third party, the Arbitral Tribunal (for obvious reasons) has no such power

against a third party.

The power to make an interim order of preservation or conservation against a third party lies

with the national courts since it has powers over all persons within its jurisdiction. Article 26

(3)383 of the Arbitration and Conciliation Act which applies by virtue of Section 53 of the Act

provides that “...A request for interim measures addressed by any party to court shall not be

deemed incompatible with the agreement to arbitrate, or a waiver of that agreement. Such

interim measures includes “measures for the conservation of the goods forming the subject-

matter in dispute, such as ordering their deposit with a third person or the sale of perishable

goods” This provision can also be extended to a situation where a party as a first step approaches

the court for an order of preservation or conservation of the res pending the constitution of the

arbitral tribunal.384 Candide Johnson and Olashore submit that even where a party has only

applied to the court for a stay of proceedings under Sections 4 and 5 of the Arbitration and

Conciliation Act. The court shall stay proceedings if the matter ought to be before arbitration and

that, inherent in the court’s power to stay proceedings is its power to make preservatory orders

either by making them a condition for a stay or by making an order for interim protection before

making the order for stay of proceedings.385

381 Cap A. 18 Laws of the Federation of Nigeria 2004382 This is in order to maintain the status quo as between the parties to prevent one party suffering detriment against the other. It could be by a Mareva injunction, appointment of receivers, detention, custody and preservation. See Mustill & Boyd op.cit .38; Orojo J.O and Ajomo M.A. Op cit. 180-183; Candide-Johnson and Olashore. Op.cit pp.303-13383 (borrowed from Article 26 of the UNCITRAL Arbitration Rules)384 Busari O. 2012. Protecting the Res In Arbitration – Recent Developments In International Commercial Arbitration. Arbitration and ADR Committee Session of the 6th Business Law Conference of the Nigerian Bar Association Section on Business Law, Lagos, Nigeria 17th-20th June, 2012.385 Candide Johnson and Olashore. Op.cit 260

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In granting an order of protection of the res, the court may under the Rules of courts request any

party to provide appropriate security for cost, should it turn out that the order was wrongly made

and the other party suffers injury on account thereof. This could be expedient where the

defendant is resident outside the country and has no asset in the country; the plaintiff runs the

risk that any judgment against the defendant may not be satisfied. The plaintiff by a request for

interim preservation restraining the respondent from removing his assets outside the country can

ensure that any judgment obtained is not a hollow one.386

3.2.4 APPONTMENT AND REMOVAL OF ARBITRATOR

Once a decision to refer a dispute to arbitration has been made, selecting an arbitrator is critical

not only for the reputation of the arbitral tribunal process but for its standing. In deciding on a

choice of arbitrator, the parties need to pay attention to the claim to determine whether it is

essentially a legal problem or whether a particular expertise is required to evaluate facts quickly

and appropriately. Parties do this essentially to ensure that their disputes are resolved by “judges

of their own choice”.387 The court does not have an inherent jurisdiction to appoint an arbitrator

or umpire or to compel any party to the agreement of reference to do so.388 Where the parties

have failed to make adequate provision for the constitution of the arbitral tribunal, or fail to agree

on one arbitrator and there is no applicable institution or other rules389

Section 7 of the Act provides for the intervention of the court in domestic arbitration to appoint

an arbitrator on the application of any party to the agreement. It provides thus:

(1) Subject to subsection (3) and (4) of this section, the parties may specify in the arbitration agreement the procedure to be followed in appointing an arbitrator.(2) Where no procedure is specified under subsection (1) of this section-(a) in the case of an arbitration with three arbitrators, each party shall appoint one arbitrator and the two thus appointed shall appoint the third, so however that-(i) if a party fails to appoint the arbitrator within thirty days of receipt of request to do so by the other party; or(ii) if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointments, the appointment shall be made by the court on the application386 Orojo J.O and Ajomo M.A. 183387 This expression comes from the Hague Convention of 1907388 El-Assad v. Misr (Nig) Ltd [1968] NCLR 173 at 176389 Orojo J.O and Ajomo M.A. Op.cit Chapter 2

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of any party to the arbitration agreement;(b) in the case of an arbitration with one arbitrator, where the parties fail to agree on one 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.(3) Where, under an appointment procedure agreed upon by the parties-(a) a party fails to act as required under the procedure; or(b) the parties or two arbitrators are unable to reach agreement as required under the procedure; or(c) third party, including an institution, fails to perform any duty imposed on it under the procedure, any part may request the court to take the necessary measure, unless the appointment procedure agreed upon by the parties provides other means for securing the appointment.(4) A decision of the court under the subsections (2) and (3) of this section shall not be subjected to appeal.(5) The court in exercising its power of appointment under subsection (2) and (3) of this section shall have due regard to any qualifications required of arbitrator by the arbitration agreement and such other consideration as are likely to secure the appointment of an independent and impartial arbitrator.

The court may ask the solicitors to the parties to nominate possible candidates. 390 In making the

appointment the court must have due regard to any qualifications required of the arbitrator by the

arbitration agreement and such other consideration as are likely to secure the appointment of an

independent and impartial arbitrator391 and such powers so exercised is not subject to appeal. In

the case of international arbitration, the domestic court is not permitted to intervene. The

appointing authority designated by the parties performs the functions of the court in appointing

an arbitrator.392 A person who knows of any circumstances likely to give justifiable doubts as to

his impartiality or independence if appointed, is obliged to disclose such circumstances when

approached in connection with an appointment as arbitrator. This duty to disclose continues after

the person has been appointed as an arbitrator and subsists throughout the proceedings, unless

the arbitrator had previously disclosed the circumstances to the parties.393

Generally, the parties may determine the procedure to be followed in challenging an arbitrator’s

independence and impartiality and the courts play a limited role in the challenge process. 394

There is also the danger of parties using the issue of jurisdiction to cause unnecessary delay

390 Especially in accordance with Section 7(2). Ogunwale v. Syruan Arab Republic [2002] 9 NWLR(Pt 717) 127 391 Bremer Gmbh v. Soules & Anthony Scott [1985] 1 Lloyd’s Rep. 160 at 164392 Orojo J. O. and Ajomo M.A. Op.cit 323393 Section 8 Arbitration and Conciliation Act394 Court Control of Arbitral Process.2006 Op.cit. The final decision on jurisdiction rests with the court as a dissatisfied party may choose to apply to court. The result is that there is concurrent control of the arbitration by the court and the arbitral tribunal on the question of jurisdiction. ? Ibid

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particularly when there is an application before the court.395 Unless the arbitration agreement

provides other directions as to challenges, a party who intends to challenge an arbitrator must

give notice of its challenge within 15 days after the appointment of the arbitrator it wishes to

challenge or within 15 days after the circumstances it complains of became known to it. The

challenge must be in writing with the reasons for the challenge and must be served on the other

party, the arbitrator being challenged and the other members of the tribunal.

Upon receipt of the challenge, the other party may agree and the arbitrator may also agree and

withdraw from his appointment. However, in domestic arbitrations,396 where the other party does

not agree or the challenged arbitrator refuses to withdraw, the decision on the challenge will be

made by the arbitral tribunal or by the court397 or other appointing authority (if the initial

appointment was by the court or other appointing authority). Redfern and Hunter398 suggest that

an application to the court to challenge the appointment of an arbitrator must be brought

timeously and that failure to comply with the time limits should bar any attack of the award. For

international arbitrations, the challenge will be determined by the appointing authority (if the

initial appointment was made by an appointing authority); or in all other cases, by the designated

appointing authority or the Permanent Court of Arbitration where none was designated.

3.3 THE ROLE OF COURTS DURING THE ARBITRAL PROCESS

Though, it is expected that arbitration once commenced should be conducted without any need to

refer to a court, however the involvement of court is necessary in order to ensure the proper

conduct of the arbitration. Disputes in commercial relationships often arise as a result of disputed

facts. It may become necessary and invaluable for the tribunal to conduct an investigation into

the factual background of the dispute.399 This fact may be proved by oral evidence of a witness,

by written or sworn evidence or by documents only. Section 20 of the Act400 provides that subject

to the agreement of the parties, the arbitral tribunal shall decide whether the arbitral proceedings

395 Ibid396 Section 11 Arbitration and Conciliation Act397 Section 30(2) Arbitration and Conciliation Act398 Redfern A and Hunter M, Op.cit 211399 Ajogwu F. op.cit 102400 Section 20 (1) (a) (b) (c) Arbitration and Conciliation Act

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shall be conducted by holding oral hearings, on the basis of documents or by both holding of oral

hearing and the basis of documents.

3.3.4 ATTENDANCE OF WITNESSES

More often than not, a party may wish to call a witness and the witness is willing to appear on

his or her behalf. There are however instances in which a prospective witness is unwilling to

appear.401

Section 175 of the Evidence Act402 provides that

“All persons shall be competent unless the court considers that they are prevented from understanding the questions out to them, or from giving rational answers to those questions, by reasons of tender years, extreme old age, disease, whether of body or mind, or any other cause of the same kind"

A witness of a party may voluntarily attend and testify at an arbitral proceeding either to give

evidence or corroborate already adduced evidence, but sometimes a witness may not wish to

attend voluntarily and it then becomes necessary to compel his attendance where the applicant

who requires it shows the evidence is relevant.403 Since the arbitral tribunal has no coercive

power. It relies on the court to exercise such powers and assist the arbitral process by compelling

attendance before any tribunal of a witness wherever he may be within Nigeria. It may also order

to bring up a potential witness in prison for examination before the arbitrator. Section 23 of the

Act provides inter alia as follows:

(1) The court or the judge may order that writ of subpoena ad testificandum or of subpoena duces tecum404 shall issue to compel the attendance before any arbitral tribunal of a witness wherever he may be within Nigeria. Emphasis mine(2) The court or a judge may also order a writ of habeas corpus ad testificandum405

shall issue to bring up a prisoner for examination before any arbitral tribunal.

It is important to note that while any party to an arbitral proceeding may sue out a writ of

subpoena ad testificandum406 or subpoena duces tecum407 no person shall be compelled under any

such writ to produce any document which he could not be compelled to produce on the trial of an

401 Candide-Johnson and Olashore. Op.cit 362402 Cap E14, Laws of the Federation of Nigeria403 Omoregbe v. Lawani (1980) 3 4 SC. 108. 404 Emphasis mine405 Emphasis mine406 A subpoena ordering a witness to appear and give testimony in court. [Black’s Law Dictionary 8th edn at 1467]407 A subpoena ordering a witness to appear and to bring specified documents, records or things referred to in the judicial proceedings. [Black’s Law Dictionary 8th edn at 1467]

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action.408 If a witness summoned by writ of subpoena refuses without reasonable excuse to attend

or refuses to answer a question, he is liable for contempt of court provided that the writ has been

served on him not less than four days before the day on which his attendance before the

arbitrator is required by writ.409

Sometimes, a witness whom a party desires to call is resident outside Nigeria. Section 23 of the

Act makes no provision in this respect. Orojo and Ajomo410 suggest that accordingly, Section

15(2)411 will apply and the arbitral tribunal “may subject to the Act, conduct the arbitral

proceedings in such a manner as it considers appropriate so as to ensure fair hearing.” Where

such witness is overseas and reasonably unavailable, a written statement by him as to matters

within his personal knowledge is admissible under Section 83 of the Evidence Act 2011412and the

court may order proof by affidavit.413

3.3.5 PRODUCTION OF DOCUMENTS

A document may be private or public and is defined in the Evidence act as including:

“Books, maps, plans, drawings, photographs and also includes any matter expressed or inscribed upon any substance by means of letters, figures or marks or by more than one of these means, intended to be used or which may be used for the purpose of recording that matter”414

Documentary evidence remains the best evidence that can be presented in an arbitral proceeding,

particularly where the documents came into existence at the time of the events that gave rise to

the dispute. This is because the presentation of documentary evidence is easier and less time

consuming and can be effectively challenged to attack its evidentiary weight.415 The reason for

this heavy reliance on contemporary documents is that the application of the so called best

evidence rule applies primarily to the weight attached to the evidence rather than its admissibility

and the evidence of documents will invariably be regarded as being of great weight.416

408 Section 20(6) of the Arbitration and Conciliation Act. See Competence and Compellability. Section 175 to 186 of the Evidence Act 2011409 Mustill & Boyd op.cit 350410 Orojo J.O and Ajomo M.A op.cit 230411 Arbitration and Conciliation Act412 Section 83(1) & (2) Evidence Act 2011413 Section 110 of the Evidence Act 2011414 Section 258 Evidence Act 2011415 Ajogwu F. Op.cit 100416 Redfern A and Hunter M, Op.cit 296

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Section 19(2) of the Arbitration and Conciliation Act provides that the parties may submit with

their Points of Claim and Points of Defence “all documents they consider to be relevant or they

may add a reference to the documents, or other evidence they hope to submit at the arbitral

proceedings.” Ideally, there are processes employed by parties to facilitate proceedings by

reducing areas of surprise and obtain possible admissions subject to the approval of the tribunal.

This includes the doctrine of Discovery which is the listing of all documents which are or have

been in a party’s possession or power relating to any matter before the arbitrator and an

inspection of documents so listed by the other party followed by interrogatories where necessary

to obtain answers to disputed issues in circumstances where they are likely to be called.417

Sometimes, there may be a document in the possession of one of the parties which he does not

produce because it is unfavourable to his case but which the other party requires for his case. The

court is not called to intervene in this respect; a party who has secondary evidence of the

document may give Notice to the other party to produce the document and a party giving Notice

will be free to give secondary evidence of the document.418 In cases where a party giving Notice

does not have secondary evidence of the document in the possession of his adversary, the

tribunal is required to state his willingness to exercise its discretion to draw an adverse inference

from the refusal to disclose the documents.419

It is expedient to note that where documents relevant to the facts in issue are in the possession of

the parties to the agreement or third parties, the tribunal lacks the power to order production of

such documents.420 There is a lacuna in the Act as it does not make specific provision in respect

of production of such documents. Nevertheless, the repealed Arbitration Act, 1914 provided inter

alia that the parties “shall subject to any legal objections,…produce before the arbitrators…all

417 See Bernstein Op.cit.144, 166. In practice, the parties are encouraged to and usually do agree on a list of documents which can be tendered by consent and as a bundle instead of tendering individual documents. The documents are then numbered as Exhibits and the parties can refer to them at any stage of their evidence or submission.418 See section 87, 89, 90 of the Evidence Act 2011419 Redfern A and Hunter M, op cit 331420 Moreover, a party generally does not want a tribunal to think that it has reason to hide relevant information.Thus, compliance is usually forthcoming, and resort to the court to enforce such an order may not frequently occur. On the other hand, court assistance is more likely to be needed where documents and witnesses are under the control of a third party, that is, a party that is not subject to the arbitration agreement.

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books, deeds, papers, accounts writings and documents within their possession and power

respectively which may be required or called for…” it follows that if a party refused to comply,

the other party could apply to court to compel him. In view of this lacuna, Orojo and Ajomo421

suggest that in view of Section 34 of the Act, a party can by application to a competent court

secure an order for discovery and production of such documents vide the provisions of Section

23 of the Arbitration and Conciliation Act.422 This is also in tandem with provisions of the

English Arbitration Act of 1996.423 The liability for contempt as earlier mentioned424 will also

apply where a witness refuses to comply.

3.4 SUMMARY

We have examined that although court assistance to arbitral tribunals in taking evidence is

possible today in Nigeria under the Act; courts tend to have a great deal of discretion, which

contributes to a lack of clarity with respect to how much help a court will actually provide.

There is clearly resistance on the part of some courts to provide the same level of assistance in

arbitration as they provide in litigation. No doubt this resistance stems in part from a sense that

one advantage of arbitration is that the disclosure obligations are not as arduous as in litigation.

Nonetheless, as arbitration proceedings expands to cover more complex issues, including, for

example, statutory rights in areas such as employment,425 there may be a justifiable need for more

extensive discovery. When a tribunal has determined that certain disclosure is needed, court

assistance in obtaining it becomes increasingly important to a fair process and a reasonable

result. Having discussed the role of the courts before and during the arbitral process, the next

chapter goes a step further to discuss the role of the courts after the arbitral process which

includes the recognition and enforcement of awards

421 Orojo J O and Ajomo M.A. Op.cit 324422 Cap A18, Laws of the Federation 2004. See Candide-Johnson and Olashore. Op.cit 362423 English Arbitration Act of 1996, Section(s) 43and44.424 Mustill & Boyd op.cit 352425 Akeredolu A, Op.cit.

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CHAPTER FOUR: JUDICIAL INTERVENTION IN THE ENFORCEMENT OF

ARBITRAL AWARDS

4.0 INTRODUCTION

Having passed through the trouble and expense of arbitration, parties expect that unless

settlement is reached,426 the proceedings will end with an award which is a determination on

the merits by an arbitrator, and is binding on parties and enforceable upon application to a

court like judgment of court427 except it is set aside. Parties (including their privies) to arbitral

proceedings expect that their dispute will end peacefully and satisfactorily since the arbitral

award is conclusive, final and binding, subject to the right of recourse against the award. That an

award is conclusive, final and binding can be garnered from the fact that it operates as estoppel

per rem judicata428and no appeal lies against it on merit.429 Furthermore, an implied term of an

arbitration agreement is that the parties will carry out the terms of the award without delay. On

the part of the arbitral tribunal, it becomes functus officio unless there is a statutory function to

perform.430 Unfortunately, this rational expectation is not usually realized as the unsuccessful

party sometimes exercises the right of recourse against the award and thus refuses to honour it.

On the other hand, the successful party normally takes measures to enforce the award if the

unsuccessful party fails to honour it voluntarily. The option usually open to the unsuccessful

426 Section 25 of the Arbitration and Conciliation Act provides for settlement during the arbitral proceedings where parties agree to mutual terms without the assistance of the tribunal. This automatically terminates the proceedings and may upon request by the parties be written in the form of an award. In the conventional courts, such agreements are submitted to the court and adopted as judgment of the court. See Ajogwu F. Op.cit 121427 Section 31(1) & (3) Arbitration and Conciliation Act428 Cummings v Heard (1869) LR 4 QB 669, Fidelitas Shipping Co Ltd v V/O Exportchleb (1965) 1 Lloyd’sRep 223, United Nigeria Insurance Co Ltd v Stocco (1973) NCLR 231 and Ras Pal Gazi Construction Co v FCDA, supra.429 In Nigeria, no appeal lies against an arbitral award. See Bendex Engineering Corporation & Anor. vEfficient Petroleum Nigeria Ltd, (2001) 8 NWLR (Pt 715) 333430 For example, interpretation and correction of the award under section 28 of the Act which will be discussed later in this chapter

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party is to challenge the award by impeaching it in order to have it set aside or oppose the

enforcement. This chapter examines the grounds for impeaching an award, the procedure for

enforcement and the extent of the courts’ intervention in arbitral proceedings. It also examines

the relationship between arbitral and court proceedings.

4.1 THE COMPLEMENTARY ROLE OF THE COURT

Arbitral proceedings are traditionally alternatives to litigation. Parties resort to it because of the

problems of litigation. Ordinarily, therefore, the courts should have no business intervening in

arbitral proceedings. Paradoxically, all municipal systems have measures of control over arbitral

proceedings either by way of judicial review or appeal. Through such measures, the national

courts interfere with arbitral proceedings. If parties embrace the doctrine of party autonomy and

take the arbitral proceedings for better or for worse, the courts will have no role to play in this

regard. However, when an award is given, the unsuccessful party instead of honouring his side of

the bargain takes steps to set it aside.

An arbitral award is a determination on the merits by an arbitration tribunal in an arbitral tribunal

in an arbitral proceeding, and is analogous to a judgment in a court of law. It disposes of all

issues between the parties. An award stricto sensu represents the final431judgment of the

tribunal432 and subject to certain exceptions; the delivering of final award renders the arbitral

tribunal functus officio.433 It is the law that arbitral awards per se lack enforcement or

enforceability. It does not carry any element of sanction until a court of law434 by its judicial

powers breathes enforcement or sanction into it. At the completion of the arbitral proceeding, the

award is a toothless dog which cannot bite until a court of law gives teeth to it.435 The Supreme

Court in Okechukwu v. Etukokwu436 per Nikki Tobi JSC addressed the nature of an award in

terms of the complementary role of the court to its recognition and enforceability thus:

431 Emphasis mine. This is to state that our concern here is with a final award and differentiate it from a provisional award which is made on a provisional basis subject to final determination of the merits. It is different from a partial or interim award which is a determination of only certain issues between the parties leaving it open to the parties to resolve the dispute or to continue to arbitrate the remaining issues and is sometimes referred to as an interim award.432 Ajogwu F. Op. cit 115433 This exception is provided for in Section 28 of the Arbitration and Conciliation Act.434 Emphasis mine435 Ajogwu F op. cit 120436 [1998] 8 NWLR (Pt 562) 513 at 529-530

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“Section 31(1) of the Arbitration and Conciliation Act, Cap 19, Laws of the Federation of Nigeria, 1990 provides:- An Arbitral award shall be recognized as binding and subject to this section and section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.” In law an arbitral award per se lacks enforcement or enforceability. It does not carry any element of sanction until a court of law, by its judicial powers, breathe enforcement or sanction on it. At the completion of the arbitration, the award is a toothless dog which cannot bite a court law gives teeth to it. In Ofomata and Another v. Anoka and another (1974) 4 ECSLR. 251, Agbakoba. J, said at page 253,- “ But unlike a judgment which has force until set aside, the decision of an arbitration lacks intrinsic or inherent force until pronounced upon by a competent judicial authority.” In Okpuruwu v. Okpokam (1998) 4 NWLR (Pt.90) 554, Oguntade, JCA, said at page 587; - “It must always be borne in mind that the decision of an arbitration whether native or orthodox lacks intrinsic or inherent force until pronounced upon by a competent judicial authority. So that at the end of the day, it is the court that baptizes an arbitration decision giving it in the process the power to operate as estoppel per rem judicatam”

It is therefore expedient to state that once an award has been given, it qualifies for recognition

and enforcement under relevant applicable laws or conventions subject to the right of either party

to apply to court to set aside the award.

4.2 CHALLENGE OF ARBITRAL AWARDS

The principle in law is that an award operates as final and conclusive judgment of the dispute as

long as determination of the rights and liabilities of the parties thereto are concerned 437 and is

binding as between the parties.438 The finality of an award preventing a right of appeal439 is not to

say there is no right of recourse against an award in appropriate cases, for the law makes

provision for the challenge of the award where some fundamental irregularities have been

committed such that the principles of justice and fair hearing have not been observed.440 This

concept of challenge to an arbitral award denotes the act of appealing an award or having

recourse to a court of competent jurisdiction to nullify the award arises where a party is

dissatisfied with the award delivered by the Arbitrator.441 The essence is to have it modified by

437 Bill Construction Co. Ltd v. Imani & Sons Ltd [2006] 19 NWLR (Pt 1013); United Insurance v. Stocco [1973] 8 NSCC. 96 at 101438 Section 31 ACA. Ras Pal Gazi Const. Co. v. FCDA [2001] 10 NWLR (Pt. 722) at 562439 Mustill & Boyd, op.cit 646440 Orojo & Ajomo op cit 269441 Ajogwu F. op cit. 140

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the relevant court and once an award has been modified, it is deemed set aside and nullified and

no longer valid and enforceable and no court of law has the power to grant recognition and

enforcement to such an award.442 The Arbitration and Conciliation Act limits challenges and

appeals against arbitral awards only to the extent and within the time provided by it.

4.2.1 SETTING ASIDE OF AWARD

The power to set aside an award in domestic arbitration is statutory being contained in sections

29 and 30(1) of the Act443 Section 29(1) provides that:

A party who is aggrieved by an arbitral award may within three months-(a) from the date of the award or(b) in a case falling within section 28 of this Act, from the date the request for additional award is disposed of by the arbitral tribunal, by way of an application for setting aside request the court to set aside the award in accordance with subsection (2) of this section.

A party who is aggrieved by an arbitral award444may within 3 months from the date of the award

or in a case falling within Section 28 of the Act, from the date the request for additional award is

disposed of by the arbitral tribunal apply to the court to set aside the award. If the application is

not made within the stated time limit, the right is lost and barred.445 Like a judgment, there is a

rebuttable presumption in favour of an arbitral award and the burden of proof is on the party who

is aggrieved and wishes to set aside the award446 and such application must be made by a party to

the agreement or his personal representative.447 The Court in Arbico (Nig) Ltd v. NMT Ltd448gave

interpretation to the Section 29 and 30 stating the grounds on which an award will be set aside as

follows:

442 Redfern A and Hunter M. Op.cit.104443 Arbitration and Conciliation Act444 This must be a party to the agreement and consequently to the arbitral award and not under any contractual incapacity. See generally,Candide-Johnson and Olashore. Op.cit 389445 Araka v. Ejeagwu [2000] 15 NWLR (692) 684; United Insurance v. Stocco [1973] 8 NSCC. 96; Middlelemis & Gould v. Hartlepool Corpn (1971) IWLR. 1646; (1973) All E.R. 175446 Section 29(2) Arbitration and Conciliation Act “…if the party making the application furnishes proof that the award contains decisions on matters which are beyond the scope of submission to arbitration…”447 Section 3, Arbitration and Conciliation Act. The award being a product of the valid arbitration agreement with which the parties and their personal representatives are bound.448 [2002] 15 NWLR pt 789 at 7

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i. Where the award contains decisions on matters which are beyond the scope of the

submission to arbitration:449 The main ground here is that the award contains decisions on

matters not covered by the submission,450 this will be tantamount to the arbitrator acting beyond

the scope of this power and functions and such decision may be set aside and may even qualify

as misconduct.451 Although, if the decision covers both matters within their authority and matters

outside authority, and both can be separated, it is possible to save those which are within his

authority and set aside those outside his authority.452

ii. Where the arbitral proceedings or award has been improperly procured. This may

happen as a result of improper relationship between the arbitrator and a party or his solicitor as

for example where the arbitrator has been deceived or material evidence has been fraudulently

concealed.453 Giving money to an arbitrator without knowledge and consent of the other, even

though in payment of his charges and expenses was held to be a sufficient cause to set aside an

award under this heading454treating the arbitrator with the intention of influencing the arbitrator455

as well as employing an arbitrator for reward in another capacity456 will be sufficient ground for

setting aside his award and such awards will be deemed improperly procured.

iii. Where the arbitrator has misconduct himself.457 The Act does not define “misconduct”, but

at common law, it has been used in a technical sense as denoting irregularity and goes beyond

the personal character of the arbitrator. The term also covers cases where there is a breach of

natural justice458 or a mishandling of the arbitration as is likely tantamount to some substantial

miscarriage of justice.459 The court should not be too readily to set aside awards where the parties

have agreed to abide by the decision of a tribunal of their own selection, unless it can be seen

that there has been something radically wrong and vicious in the proceedings.460 The power of

449 Section 29(2) Arbitration and Conciliation Act450 That is, on the matters on which the parties have not asked the arbitrator to arbitrate upon.451 Samuel v. Cooper (1835) 2 Ad. & El. 752452 Section 29(2) Arbitration and Conciliation Act453 South Sea Co. v. Burnstead (1734) 2 Eq. Cas. Ab. 80454 Russell on Arbitration, 19th edn. P. 463455 Moseley v. Simpson (1873) L.R. 16 Eq. 226456 Re Haigh and London & N.W & G.W. Railways (1896) 1 QB 649457 Section 30(1) Arbitration and Conciliation Act458 Orojo J.O & Ajomo M.A. Op cit. 273-274459 Per Atkin J. in William v. Wallis & Cox (1914) 2 K.B. 497 at p. 485460 Re Hopper (1961) 31 L.J. Ch. 420

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the court to intervene is to protect the reasonable expectations of the parties as to fairness in the

conduct of the proceedings.461 Halsbury’s Laws of England462 “sets out what constitutes

misconduct and list examples of acts that have been held to amount to misconduct.” The

Supreme Court463 laid down a wide range of facts that can constitute misconduct hence ground

for setting aside the arbitral award inter alia to include where there is an irregularity in the

proceedings. For example where the arbitrator failed to give the parties notice of the time and

place of meeting as well as where the arbitrator after hearing evidence from both arbitrator

counsels received further evidence from one without informing or hearing the other. The court in

LSDPC v. Adold Stamm International Ltd.464 held that an allegation of bias must be proved

before it can be acted upon. This is necessary so as not to hold every irregularity of procedure as

amounting to misconduct. It has been suggested that what amounts to misconduct is a question of

fact and degree in all cases and it could be said that where an arbitrator receives inadmissible

evidence which goes to the root of the issues submitted to the arbitration, it may amount to

misconduct and may justify an application to set aside the award.465

iv. Where there is an error of law on the face of the award. An error of law simpliciter does

not necessarily vitiate an award.466 But where the error of law appears on the face of the award, it

may be a ground to set aside an award. The supreme court in Taylor Woodrow (Nig) Ltd. v.

GMBH467 recognized that where specific question of law is submitted to the arbitrator; the court

cannot interfere but where a matter or matters in which a question of law becomes material are

submitted, the court can and will interfere, if an error appears on the face of the award. 468 The

error must however be material to the decision; the court is not empowered to set aside if the

error is not material to the decision ultimately handed down by the tribunal. 469 Russell warns that

461 Orojo J.O & Ajomo M.A Op cit 275462 4th Edition. Volume II, Paragraph 622463 Kano State Urban Development Board v. Fanz Construction Co. Ltd. [1990] 4 NWLR (142) at 37464 (1994) 7 NWLR 545465 Ajogwu F. Op.cit. 121466 Baker Marine v. Chevron [2000] 12 NWLR (Pt. 681) at 393; R.S. Hartley Ltd. v. Provincial Ins. Co. Ltd. (1957) Lloyd’s Rep. 121467 (1991) 2 NWLR (pt 175) 602468 Per Ogundare JSC Citing Absalom Ltd v. Great Western (London) Garden Village Society (1933) A.C 392469 Kano State Urban Development Board v. Fanz Construction Co. Ltd. (supra); Bueger v. Barnett (1919) 89 L.K.T.B 161

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the court should be slow to upset an award because precisely legal phrase has not been used in

expressing the decision.470

Subject to section 43 of the Arbitration and Conciliation Act471 which provides that Part III of the

Act shall apply solely to international arbitration and conciliation, section 48472 provides for the

setting aside of an award by the court in an international arbitration on any of the nine

circumstances or grounds set out in the section which includes where the subject matter of the

dispute is not capable of settlement by arbitration under laws of Nigeria or where the award is

contrary to public policy of Nigeria.473 It must however be noted that the grounds under the first

subsection must be proved with facts by the party who alleges, however, the court must make a

finding by itself under subsection (b).

4.2.2 REMISSION OF AWARD

The court has a statutory jurisdiction to remit the matters referred for the reconsideration of the

arbitrator. Section 29 (3) provides for the remission of an award to the arbitrator in a limited

circumstance, it provides that where an application is brought before the court for setting aside

an award under subsection(1) of this section, the court may at the “request of one of the parties

suspend proceedings for such period as it may determine to afford the arbitral tribunal an

opportunity to resume the arbitral proceedings or take such other action to eliminate the ground

for setting aside of the award.” However the Court has no jurisdiction to remit either the award

or the matters which were the subject of the reference,474 this because a court of law will not

entertain an application to set aside an award where the complaint is about trifling or immaterial

matters as opposed to the whole matter adjudicated upon.475 It has been stated that the effect of

this remission to the arbitrator is that the award may be so altered that there is no more ground to

set aside under this section and that a party may only make the request where there is a pending

proceeding for setting aside the award.476 I agree that this will help save some awards from

failure.

470 Russell on Arbitration. 19th Edition. 437471 Cap A18, Laws of the Federation 2004472 Ibid473 Section 48(b)474 Mustill & Boyd, op.cit 548475 This is the Latin maxim de minimis non curat lex476 Orojo J.O & Ajomo M.A. Op.cit 273

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4.2.3 LEGAL EFFECTS OF A SUCCESSFUL CHALLENGE

The legal effects of a successful challenge of an award differ depending on the ground of the

challenge. The court may decide to confirm the award, refer it back to the arbitral tribunal for

reconsideration or vary the award, or set it aside in whole or in part. When it is set aside, it

becomes unenforceable and of no legal effect so that the position is the same as if the award had

never been made.477 Where the award is set aside for procedural defects and not on grounds

affecting the validity of the agreement such as failure to allow witness to testify or even

misconduct of the arbitrator, then the arbitration agreement subsists and remains effective and

can be resubmitted for arbitration since what was set aside is the award not the agreement. 478 The

court may suspend the proceedings and remit the award to the tribunal to reconsider the matter in

issue.479 The court may also, in its order setting aside the award, direct that new arbitrators be

appointed to conduct the new arbitral proceedings.480 This means the parties are still bound by

the agreement.

4.3 RECOGNITION AND ENFORCEMENT OF AWARDS

According to the learned author of Commercial Arbitration in Nigeria,481 the recognition and

enforcement of arbitral awards is an important part of the Nigerian and international legal

system, providing the final legal mechanism for the conclusion of disputes governed by an

arbitration clause. Without a legal framework for recognizing or enforcing arbitral awards, the

arbitration process would be of little value to anyone. An award will only be worth it for the

winning party when such a party can enforce the stipulations of the award against the losing

party. The recognition and enforcement of awards can arise in either a domestic or international

legal context. However, there are certain specific matters that need to be proved in an action to

enforce the award, which include that a submission has been made, or that there is a contract

containing an arbitration clause. Unless set aside, the decision arrived at by arbitrators is

conclusive between the parties and is unimpeachable as the decisions of any constituted court of

477 Mustill and Boyd op.cit 565478 Redfern A and Hunter M, op cit. 447479 Section 29(3) Arbitration and Conciliation Act480 Mustill & Boyd, op. cit 565481 Ajogwu FI op. cit. page 129

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law.482 Every arbitral award duly made is to be recognized as binding483 and is expected to be

complied with.484 Thus, while Section 31(1) recognizes the award as binding, it is only “upon

application in writing to the court” that it can be enforced. If we recall the words of Nikki Tobi,

JSC485 that “an arbitral award per se lacks enforcement or enforceability…., and is a toothless

dog which cannot bite until a court of law gives teeth to it” The Act provides that the duly

authenticated original award (or certified true copy) and the original arbitration agreement (or

duly certified copy) shall accompany such application.486 Russell487 adds that the applicant must

also make full disclosure of any matters which he knows may affect the granting of the leave to

enforce the award. Section 31(3) provides that “the award may by leave of the court or judge be

enforced in the same manner as the judgment or order” of the court.

To this end, when an award orders the specific performance of an act in accordance with his

contractual obligations, it has been suggested that488 the award still requires the leave of court for

its enforcement unlike an order of a court for specific performance which immediately obtains

the force of law. The award for specific performance must stipulate a date for the performance of

the act ordered so as to facilitate enforcement of the award. Asides this, the court has the power

to make further similar orders for the purpose of enforcing an arbitral award.489 It should be noted

that Section 51 of the Act provides for the procedure for the enforcement of awards in

international arbitration.

4.3.1 REFUSAL OF RECOGNITION AND ENFORCEMENT OF AWARD

482 Environmental Development Construction v. Umara [2000] 4 NWLR (part 652) 293483 This is the basis for res judicata which means that an award operates as a bar to a fresh arbitration or action unless an award as been nullified. See Ajogwu F. op. cit. page 130. According to Oguntade JCA in Okpuruwu v. Okpokam supra, “…it operates as estoppels per rem judicatam”484 Arbico Nigeria Ltd v. Nigerian Machine Tools Ltd [2000] 15 NWLR (Pt 789) 1 CA at p.32; Article 32(2) Arbitration Rules in the First Schedule to the Arbitration and Conciliation Act which states that “the award…shall be final and binding on the parties. The parties undertake to carry out the award without delay”. Thus the parties are “bound by his (arbitrator’s) decision whether the conclusion be right or wrong, that is, for better for(sic) worse unless it appears on the face of the award clearly that the arbitrator has decided contrary to the law”485 Okechukwu v. Etukokwu supra486 Section 51(2) Arbitration and Conciliation Act. An award or arbitration agreement not made in English language must be accompanied by a certified translation in English where appropriate [Curacao Trading Co. B.V v. Harkisandas & Co. (1992) 2 Lloyd’s Rep 186.487 Russell on Arbitration. Op.cit 396488 Ajogwu F. Op.cit 138489 City Engineering Nigeria Ltd v. Federal Housing Authority [1997] 9 NWLR(520) 224 at 245

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Section 32 of the Act provides for any of the parties to an arbitration agreement to request the

court to refuse recognition or enforcement of the award; this application must be made at any

time after the award is made, especially as the application and order for enforcement may be

made ex parte.490 The grounds upon which the court is to refuse recognition or enforcement of

the award is not stated under this section, nevertheless Section 52491 provides for grounds upon

which an application for recognition and enforcement may be refused in international

arbitrations; and the Courts have in the exercise of their discretion applied them to domestic

arbitrations in Nigeria. It provides thus:

1. Any of the parties to an arbitration agreement may, request the Court to refuse recognition or enforcement of the award.2. The Court where recognition or enforcement of an award is sought or where application for refusal or recognition or enforcement thereof is brought may, irrespective of the country in which the award is made, reuse to recognize or enforce any award-(a) If the party against whom it is invoked furnishes the Court proof-(i) That a party to the arbitration agreement was under some incapacity, or(ii) That the arbitration agreement is not valid under the law which the parties have indicated should be applied, or failing such indication, that the arbitration agreement is not valid under the laws of the country where the award was made, or(iii) That he was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise not able to present his case, or(iv) That the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or(v) That the award contains decisions on matters which are beyond the scope of submission to arbitration, so however that if decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the award which contains decision on matters not submitted to arbitration may be recognized and enforced, or(vi)That the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the agreement of the parties, (vii) Where there is no agreement between the parties under subparagraph (vi) of this paragraph, that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the law of the country where the application took place, or(vii) That the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made; or

(b) if the court finds-

490 K.S.O & Allied Products Ltd. v. Kofa Trading Co. Ltd. (1996) 3 NWLR 244 at page 254 where the Supreme Court approved the use of originating Notice of Motion and followed earlier decisions that “…where it is sought to enforce a right conferred by a a statute and in respect of which no rules of practice and procedure exist, the proper procedure is an originating Notice of Motion.491 Part III of the Arbitration and Conciliation Act

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(i) That the subject-matter of the dispute is not capable of settlement by arbitration under laws of Nigeria; or(ii) That the recognition and enforcement of the award is against public policy of Nigeria.

Where an award is being refused recognition and enforcement because it has not yet become

binding on the parties or has been set aside or suspended by a court in the country where the

award was made; the court where refusal is sought may if it considers necessary postpone its

decision and may on the application of the party claiming recognition or enforcement order the

other party to provide appropriate security.492 The court in Nigeria493 shall recognize and

recognize an award of a foreign tribunal as binding and enforce them in accordance with its rules

of procedure.494 In line with the award of a foreign tribunal, it must be stated that Setting aside

where it is done by the court of the seat of arbitration may affect the validity of the award in such

a way that no other national court in any other country will regard the award as valid for

recognition and enforcement.495 On the other hand, mere refusal to recognize and enforce an

award does not affect the validity of such an award in other national courts.496 This indeed is a

significant difference for practitioners to note in making their decision as to challenge of an

award. Another significant issue in recognition and enforcement is information as to existence of

assets of the losing party. It is important to shop for execution of an award in those countries

where there are assets to satisfy the award.497 Finally, when the winning party files an application

to court to enforce an award, the unsuccessful party may oppose the application by filing another

application to set aside the award. In such a case, the position of the law is that the application

for setting aside takes priority over the one for enforcement.498

4.3.2 PROCEDURE FOR APPLICATION

Although the Act provides for applications to courts as detailed above, it does not make

provision for the procedure for such applications. Recourse is therefore had to the Rules of the

492 Section 52(3) Arbitration and Conciliation Act493 Nigeria enacted the Arbitration legislation based on the UNCITRAL Model Law on International Commercial Arbitration as adopted in 1985 which wholesomely recognizes the Convention of the Recognition and Enforcement of Foreign Arbitral Awards done in New York on June 10, 1958. This information is available on www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html accessed October 27th 2014.494 Article III of the Arbitration Rules as contained in the Second Schedule.495 Redfern and Hunter. Op.cit 592496 Orojo and Ajomo op.cit 291-293497 Court Control of Arbitral Process. Op.cit 19498 Orojo and Ajomo Op.cit 297-311

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Court.499 The standard procedures that have been used in the court apply, namely by Originating

Summons or Originating Notice of Motion ex parte500 supported by an affidavit501 and the court

may order that notice be given.502 Under the Foreign Judgments (Reciprocal Enforcement) Act,503

a foreign tribunal award may be registered for enforcement in the High Court provided that at the

date of the application for such registration, the award could be enforced by execution in the

country where the award was made.

4.4 SUMMARY

In this chapter, we considered how an arbitral award can be impeached and the procedure for

enforcement. Ordinarily, arbitral awards are self-executing. However, where an unsuccessful

party is desirous of challenging an award, the nationality of such an award is fundamental in

determining which national court has jurisdiction. This can be determined by the law applicable

to the arbitral proceedings or that of the place where the award is made. The Act has elaborate

provisions on recourse against an award. The point was made that a party challenging an award

must apply to a High Court to set aside the award within the prescribed period otherwise it would

be statute barred. The grounds for setting aside are generally that the award contains decisions on

matters which are beyond the scope of the agreement or that the arbitrator misconducted himself

or that the arbitral proceedings or award has been improperly procured.

499 As earlier noted in Chapter 1. Section 57(1). It must be stated that although section 251 of the 1999 constitution of the Federal Republic of Nigeria specifies exclusive jurisdiction of the Federal High Court in respect of certain matters, section 57(1) however literally confers additional jurisdiction to hear the matters on enforcement and recognition on arbitral awards. Although the matter keeps arising in few cases In the Federal High Court whether the court is not to exercise jurisdiction over arbitral matters whose subject matter fall outside the scope of Section 251. [See Afcon Nigeria Limited v. Ikoyi Club 1938 suit No. FHC/L/CS/751/95 of 2/7/1996,unreported] Orojo J.O and Ajomo M.A (Op.cit) however submit that the Federal High Court is empowered in accordance with the guiding principle laid down in section 57(1). See sections 257(2) and 272(2) of the 1999 Constitution of the Federal Republic of Nigeria for the jurisdiction of the High Court of the Federal Capital Territory and High Court of a State over arbitral matters respectively.500 Russell op.cit p.395. Also see High Court of Lagos State (Civil Procedure) Rules, Order 3, rule 2(2) and Order 46. Similar provisions are contained in other High Court (Civil Procedure) Rules.501 This affidavits supports the application and exhibits particulars prescribed in Section 31(2) and 51(2) of the Arbitration and Conciliation Act502 The supreme court in Kotoye v. Central Bank of Nigeria (1989) 1 NWLR(Pt 98) 419 held that an application to court in civil matter must always be subject to the provisions of fair hearing under section 33(1) of the 1979 Constitution[now 36(1)] This is to ensure a party against which an order ex parte is being made Is not denied his constitutional right of fair hearing.503 Cap. 152 LFN 1990

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In some cases, instead of setting aside an arbitral award, such award can be remitted to the

arbitral tribunal for reconsideration under the rules of remission. When an award is set aside, it

may annul the whole or part of the award or the arbitration agreement. It is important therefore to

determine the real effect of setting aside an award. When an unsuccessful party fails to

voluntarily honour the award, the Act also made provisions for recognition and enforcement.

There are grounds for refusing recognition and enforcement. These grounds are fundamentally

the same as those for setting aside. There is a summary procedure for purposes of enforcing

domestic awards. However, in the case of foreign awards, there are also provisions in the Act

and where it is a Convention Award; the New York Convention has provisions for this. The next

chapter concludes this project and summarizes the identified problems in the legal framework

and provide relevant recommendations.

CHAPTER 5: CONCLUSION

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5.0 INTRODUCTION.

This work attempts to critically evaluate the legal regime regulating commercial arbitration as

applicable in Nigeria. This involved the examination of the origin and evolution of arbitration

generally and commercial arbitration specifically. The main thrust of this work is to examine the

role of the courts in commercial arbitration. To achieve this, the work was structurally arranged

to evaluate the legal regime regulating commercial arbitration. Applicable legal instruments were

considered. Consequently, arbitration is not alien to our jurisprudence. It was established that the

principle of party autonomy underscores the arbitral process;504 to ensure that this principle of

prevails and limit the role of the courts in arbitral proceedings, section 34 of the Act provides

that “a court shall not intervene in any matter governed by this Act except where so provided in

the Act”.505 Consequently, there are express provisions in the Act for the intervention of the court

in the following areas: stay of proceedings,506 revocation of arbitration agreement,507 appointment

of arbitrator,508 attendance of witnesses,509 setting aside of award,510 remission of an award,511

enforcement of award512 and refusal of enforcement of award.513

In arriving at an award, the project briefly discussed the composition of the arbitral tribunal and

how an arbitral award can either be set aside or enforced. In Nigeria, once an arbitral award is

made, there is no provision for appealing against it to a court. The main remedy for an aggrieved

party is to apply to the court to set it aside or explore the limited right of remission for

reconsideration by the arbitral tribunal. In setting aside an award or enforcing it, the relationship

between arbitral and court proceedings was critically appraised. It is sometimes said that the

relationship between national courts and arbitral tribunal is one of “partnership”. If so it is not a

partnership of equals. Arbitration may depend upon the agreement of the parties, but it is also a

system built on law and which relies upon that law to make it effective nationally and

504 Aye-Fenus Ent. Ltd v. Saipem (Nig.) Ltd (2008) 1 CLRN 1.505 Arbitration and Conciliation Act506 Section 4 and 5 of the Arbitration and Conciliation Act507 Section 2 ibid508 Section 7 ibid509 Section 23 ibid510 Section 29, 30 and 48 ibid511 Section 29(3) ibid512 Section 31 and 51 ibid513 Section 32 and 52 ibid

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internationally. Conclusively, national courts could exist without arbitration, but arbitration

could not exist without the courts.514

5.1 SUMMARY OF FINDINGS

It was observed that alternative dispute resolution is virtually any process whose objective is to

facilitate the resolution of disputes by the consensus of the parties to the dispute in a non-

adjudicative manner and that it offers an alternative for parties to resolve their disputes to

litigation. It was also noted that in Nigeria, arbitration is the most formalized and important form

of alternative dispute resolution, the other forms of dispute resolution includes negotiation,

mediation, conciliation, med-arb, neutral fact finding.

It has also been observed that the Nigerian government has created the enabling environment for

the growth and development of arbitration in Nigeria. Firstly, it ratified both the New York

Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Secondly it passed

the Arbitration and Conciliation Act. In realization of its position in the West African sub-region,

the Federal Government has established the Regional Centre for International Commercial

Arbitration in Lagos under the auspices of the Asian-African Legal Consultative Committee. The

Centre has been very active. In June 2000, it organized an introductory course/workshop at

Abuja. This was a follow up to the one it organized in Lagos in April 1999. Through such

workshops, the level of awareness of arbitral processes is raised.

It is also my finding that the court plays a complementary role in the arbitral process vide

Section 34 of the Arbitration and Conciliation Act which empowers the court to intervene in

arbitration in very limited circumstances which includes stay of proceedings,515 revocation of

arbitration agreement,516 appointment of arbitrator,517 attendance of witnesses,518 setting aside of

514 Redfern and Hunter, Op.cit515 Section 4 and 5 of the Arbitration and Conciliation Act516 Section 2 ibid517 Section 7 ibid518 Section 23 ibid

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award,519 remission of an award,520 enforcement of award521 and refusal of enforcement of

award522 and that in any event, no court may by Section 34 intervene in an arbitral process

beyond what the Act specifically stipulate.523

I have observed that the court includes the High Court of a state and the Federal High Court.

There is a need to review an earlier position, that an Act cannot confer additional jurisdiction

which the constitution has not given to a court.524 This is not an indictment of the seasoned

academic and mediator but an humble alternative submission that the combined effect of Section

251(1) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) and Section 57

arbitration and Conciliation Act means that both the High Court of a State and the Federal High

Court have concurrent jurisdiction in the first instance when the subject is arbitration.525 Hence, it

appears settled that these provisions confer additional jurisdiction to these courts.526

Contrary to positions expressed by authors527 on the subject of arbitration that there is a

contradiction in the provisions of Sections 4 and 5 of the Arbitration and Conciliation Act which

leaves the law uncertain and problematic. It is my position that there is no contradiction at all in

these provisions since no court will prevent parties from resorting to arbitration where there is a

valid agreement. Section 4 states ‘shall’ where a party specifically requests arbitration before

taking steps in the matter in defence in the court and Section 5 states ‘may’ where a party has

already submitted to the court’s jurisdiction by taking steps for example by filing a defence.528

5.2 RECOMMENDATIONS

In this work, attempts have been made to examine the nature, scope, form and contours of

arbitration. In view of the forgoing, the following recommendations are made to limit the abuse

519 Section 29, 30 and 48 ibid520 Section 29(3) ibid521 Section 31 and 51 ibid522 Section 32 and 52 ibid523 Ras Pas Gazi Company Limited v. Federal Capital Development Authority (supra)524 Akeredolu A.E 2012 op.cit525 Magbagbeola v. Sanni526 NNPC v. Klifco Nigeria Ltd (2011) 10 NWLR (Pt. 1255) 209527 Candide Johnson and Olashore Op.cit 257528 Obembe v. Wemabod (supra)

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of court intervention and obstruction of the arbitration process and promote party autonomy in

regulating how disputes should be determined.

a. Although commercial arbitration is well developed in other jurisdictions, a lot still has to

be done to raise the consciousness of businessmen and the academia in Nigeria to its

importance. Increasingly, arbitration is now a subject of its own and there is a shift from

litigation to arbitration whenever there are commercial disputes. Given its growing

importance especially in international trade, the National Universities Commission

should develop the syllabus and list it if not among the core subjects to be taught in the

undergraduate levels in our Universities but as an optional subject. The Council of Legal

Education should also do ditto in its curriculum at The Nigerian Law School.

b. Reporting of cases is a vital component of any legal system. It contributes to the

knowledge of the law since cases usually clarify positions of law on a particular subject.

However despite the fact that arbitration has been part of our jurisprudence for so long,

there is no system of reporting arbitration cases asides those cases handed down by the

regular courts. Although arbitration matters are private and confidential in nature, it will

increase the awareness of arbitration and contribute to legal studies if the consent of

parties is obtained so as to allow the Chartered Institute of Arbitrators publish arbitration

matters in a law report just as it publishes its journal.

c. The Federal Government of Nigeria has done a lot in terms of providing the regulatory

framework. However, since government is also involved in commercial transactions, the

Ministry of Justice should ensure that all government departments and parastatals fully

embrace arbitration otherwise the efforts thus far will be worthless. Apart from

government, the various Chambers of Commerce and professional associations should

encourage their members to fully embrace arbitration in resolving commercial disputes.

One way of doing this is to ensure that there is an arbitration clause (or ADR clause) in

all commercial agreements and when commercial dispute arise, arbitration should first

be resorted to before litigation. A proper safety valve is to have Scott v Avery and

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Atlantic Shipping Clauses. With such clauses in a contract, resort will be made to

arbitration before litigation and the arbitral process must be started within a time frame.

d. There are various arbitral institutions and rules. Consequently, arbitration can be

institutional and/or ad hoc. It is generally advisable to adopt institutional rules than

drafting all the rules in ad hoc arbitration. Drafting such rules is fraught with the

possibility of omitting some indispensable elements.

e. In most common law jurisdictions, the doctrine of case management has been adopted.

Under this doctrine, there is a duty imposed on a judge to settle a case by other means

than litigation, if the case is one that can be subjected to the other processes. Ultimately,

this will lead to a reform of the court process and increase access to justice. The Lagos

State Government is working on this. All the States of the Federation and indeed the

Federal Government are enjoined to embrace the doctrine. This will assist in

decongesting our courts. In reforming the court process, criteria should be set to

determine which process fits any particular dispute.

f. It has also been observed in this project that the attitude of Nigerian courts to arbitration

has changed from one of suspicion to one of support for the arbitral process. Although, it

is my observation that arbitration is still not widely known not only among lawyers but

also among judges; if arbitration will take root in Nigeria, it is imperative that lawyers

and judges through the Nigerian Bar Association and National Judicial Commission

respectively are trained in the field of arbitration. This can be done through regular

seminars and workshops.

g. In western jurisprudence, the generally held view is that arbitration or mediation is their

preserve. It has been observed that these processes are indigenous to Nigeria and are still

prevalent in rural communities. However, given the nature of customary jurisprudence

(largely unwritten), a study should be carried out with a view to formalizing these

processes. This can be done at state levels bearing in mind the internal conflicts of law

rules.

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h. The Act is in need of review and reform. This is not an indictment of its drafters but the

review and reform are aimed at properly locating Nigeria in the commercial arbitration

world. After all Nigeria was the first African country to adopt the Model Law. It is

however necessary for the Federal Government to adopt the recommendations of the

National Committee on the Reform and Harmonization of Arbitration and ADR Laws in

Nigeria (the National Committee), which it established in 2005 and whose report served

as a bedrock in the enactment of the Lagos State Arbitration Law 2009. This uniform

law if enacted will help in positioning Nigeria as a global arbitration hub.

i. The Act provides that where the parties fail to appoint arbitrator(s) or a third party fails

to perform the function of appointing arbitrator(s) under section 7 of the Act, any party

may request the court to make such appointment and such appointment shall be final. I

submit that this provision cannot be sustained in a democratic dispensation and in a

judicial structure like Nigeria that has an appellate system. In consonance with the

practice in other jurisdictions, the leave of court should be sought for any appeal from a

decision of the court under the section.

j. It is highly expedient that there should be a strengthening of interim measures like

investing in an arbitrator more coercive powers of preservation (injunctions) as well

those necessary to command obedience to directions issued by the arbitral tribunal. This

should be incorporated into the Act accordingly.

k. The issue of immunity of arbitrators need be mentioned. While it is conceded that an

arbitrator should be appointed based on his qualification and experience, it is pertinent to

remember that he performs quasi-judicial functions. In order to sustain this status and

attract persons of high integrity to act as arbitrators, the Act should expressly provide for

their immunity as is now done in other jurisdictions. This is not to suggest that

arbitrators should be granted absolute immunity but qualified immunity covering acts

done or omitted to be done in the process unless wilfully done or actuated by malice or

improper consideration. Such a provision will reinforce their independence and

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impartiality and protect them from unnecessary and unwarranted harassment.

Furthermore, just like the American Bar Association Rules and that of the London Court

of International Arbitrators, the immunity should also extend to the arbitral institutions

and their employees.

l. In tandem with the above, no section of the Act talks about ethics as it concerns

arbitration; it is my recommendation that the Act should make provisions for the

discipline of arbitrators who has misconduct himself in the course of arbitration. For

example, a court setting aside an award as a result of such misconduct should be able to

recommend such arbitrators to a body created by the Act similar in function to the Legal

Practitioners Disciplinary Committee (LPDC). This misconduct must however be grave,

and not merely an error of law, for example, an arbitrator who demonstrates grave

impropriety or takes bribe or wilfully grants undue communication with a party for the

purpose of perverting justice should qualify for discipline since he puts himself in the

position of a quasi-judicial arbiter.

m. Prior to the commencement of arbitral proceedings, preliminary meetings or meeting for

directions are usually held. Such meetings are very helpful in giving the parties the

opportunity to meet and obtain directions from the arbitral tribunal on the conduct of the

proceedings, identify the issues in dispute, the language of the proceedings, whether oral

evidence will be taken or it is going to be “documents only”, place of arbitration and the

applicable law. This is only so far a matter of common practice. However, I suggest that

this practice should be statutorily provided for.

n. The Act makes no provision for the dismissal of arbitral proceedings for want of diligent

prosecution as is done in other jurisdictions. In order to avoid inordinate delays in

arbitral proceedings, statutory powers should be given to arbitral tribunals to dismiss

arbitral proceedings in such a situation.

o. On an application to set aside an arbitral award, section 29 of the Arbitration and

Conciliation Act provides for limitation period while section 30 of the Act dealing with

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the same subject does not so provide. Accordingly, section 30 of the Act should be read

subject to section 29 of the Act. Similarly the provisions in Part III of the Act dealing

with international commercial arbitration should be read subject to other provisions in

Part I of the Act dealing with domestic arbitration.

p. Also flowing from the above and in reaction to the regularity with which unsuccessful

parties launched actions to challenge awards on the slightest pretext under sections 29

and 30 of the Act, it is my recommendation that a reviewed Act expressly provides that a

party seeking to challenge an award must show proof of substantial injustice in order to

discourage frivolous applications. Courts should also be empowered to award cost

against any party who seeks to delay the arbitral process by recourse to courts on

frivolous grounds. This should be deemed as an abuse of court process and deserving of

penalty in order not to defeat the expectation of a speedy trial, which is an essential

feature of arbitration

q. The limitation on the powers of the court to refuse the enforcement of an arbitral award

as provided in section 51 is section 32 of the Act. However, section 32 deals with

domestic arbitration and does not provide for the grounds for such refusal. Therefore,

section 52 of the Act should be substituted for section 32. This is so because section 52

not only deals with international arbitration but the grounds for refusing recognition and

enforcement.

r. As stated in this project, the rationale behind the introduction of arbitration to our

jurisprudence was to relieve the courts of its heavy load of cases and to afford the parties

a quicker and cheaper method of dispute resolution. However, the fact that the parties

have to make recourse to the courts under certain circumstances defeats the whole

rationale behind arbitration because when this matters are brought before the court, they

join the backlog of cases that are already before the courts. In light of this, it is

recommended that courts should devise a system whereby arbitral matters that are taken

to the courts as of necessity via section 34 of the Arbitration and Conciliation Act do not

have to join the backlog of cases so as not to defeat the whole rationale behind

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arbitration. The courts can make it mandatory for any matter taken before it, which is the

subject of arbitration to be heard in chambers.

5.3 CONCLUSION

Arbitration is private in nature, as such parties will need courts to enforce the arbitration

agreement and also enforce arbitral awards. The reality therefore is that without courts support,

the arbitral process cannot be effective. This explains why some countries are not attractive to

international arbitration, for the simple reason that their courts are not supportive to arbitration.

The courts are duty bound to promote arbitration as a freely adopted contractual wish of the

parties, not merely as a means of decongesting the courts but also as a necessary adjunct in the

entire legal system. Contrary to the perception in western jurisprudence that arbitration,

mediation and conciliation are alien to customary jurisprudence, arbitration, as a means of

settling disputes, is indigenous to African traditional societies including Nigeria. The various

ethnic groups in Nigeria use arbitration to resolve disputes. Accordingly, this project traced the

origin and evolution of arbitration from pre- to post-colonial period and its general evolution.

Generally, the essence of arbitration is that a dispute has arisen or potential for a dispute will

arise and the parties, instead of going to the conventional courts, decide to refer the dispute to a

private tribunal (arbitrators) for settlement in a judicial manner. The implication of that

agreement is that the decision of the arbitral tribunal (called an award) will be final and binding

on the parties. In order to ensure that such a method of settling disputes is effective, assistance is

usually given by the ordinary machinery of law to ensure that such awards can be enforced.

Similarly as a safeguard against impartiality, the court can, in certain instances, impeach an

award. This project has brought to the fore the relationship between arbitral and court

proceedings.

This is novel bearing in mind that it is the defects in court proceedings that led to arbitration.

Arbitration, as a field of study is still taking root in Nigeria, a fortiori commercial arbitration.

The neglect was not only by businessmen but at the tertiary institutions. In modern business

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practice especially in international business, disputes which are inherent in such relationships are

resolved more by arbitration than by litigation. Indeed alternative dispute resolution (ADR)

processes have been fully developed in other jurisdictions as means of resolving commercial

disputes.

This project also briefly mentioned what case management is all about. The doctrine of case

management has been embraced in other jurisdictions. Essentially, this work critically evaluated

the legal instruments regulating commercial arbitration in Nigeria.

The prominently featured legal instrument in this work is the Arbitration and Conciliation Act

which is the extant law in Nigeria on arbitration and conciliation. After a critical appraisal of the

Act, it is obvious that it is in need of review. This is because I consider the Act as containing

inadequate provisions, technical oversight and inelegant drafting. In my recommendations, I

highlighted the defects in the Act as it concerns the relationship between the courts and the

arbitral process and proffered solutions.

Local and foreign cases on arbitration have been reported and fully discussed. Thus it has not

only made literature on arbitration readily available but also the relevant instruments easily

accessible to legal practitioners, accountants, surveyors, architects, businessmen and the

academia. The project has also expounded the benefits derivable from arbitration and also

cautioned on the pitfalls to be avoided. Consequently, it examined the nature, scope, form and

contours of this field of human endeavour. This, I hope will enrich knowledge in this virgin area

of intellectual activity that is fast growing.

Finally, this project has highlighted the need to formalize traditional arbitral institutions so that

the western world can learn from our rich cultural heritage instead of the euro-centric view that

arbitration and indeed the ADR processes are alien to customary jurisprudence.

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