Nigeria: International Arbitration 2017, Third Edition


The main arbitration law of Nigeria is the Arbitration and Conciliation Act 1988 (ACA) (Cap A18 Laws of the Federation of Nigeria 2004). ACA is largely based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law, with minimal differences. Nigeria is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and ACA domesticated Nigeria's treaty obligations arising under the New York Convention. Nigeria is a party to some Regional Conventions concerning the recognition and enforcement of arbitral awards. See, for instance, the Economic Community of West African States (ECOWAS) Energy Protocol. Article 26 thereof provides for the settlement of disputes between a contracting state and an investor by the International Centre for Settlement of Investment Disputes (ICSID), if the investor's country and that of the contracting party are both parties to the ICSID Convention or a sole arbitrator or ad hoc arbitration tribunal established under the United Nations Commission on International Trade Law (UNCITRAL) Rules, or an arbitral proceeding under the Organisation for the Harmonisation of Trade Laws in Africa (OHADA). There is also the Treaty of ECOWAS (1993 revised Treaty). Article 16 thereof establishes an Arbitration Tribunal whose powers, status, composition and procedure were to be set out in a subsequent protocol.

In 1989, the Regional Centre for International Commercial Arbitration Lagos (RCICAL) was established in Lagos, Nigeria under the auspices of the Asian African Legal Consultative Organisation (AALCO) as a non-profi t, independent, international arbitral institution to provide, amongst other things, a neutral forum for dispute resolution in international commercial transactions. Its establishment is also geared towards encouraging settlement of disputes arising from international trade and commerce and investments within the region where the contract was performed. The continued operation of the RCICAL in Nigeria was ratifi ed by a treaty executed in April 1999 between Nigeria and the AALCO. The legal framework for the existence of the RCICAL in Nigeria is embodied in the Regional Act No. 39 of 1999. The RCICAL has an autonomous international character and enjoys diplomatic privileges and immunities under international law for the unfettered conduct of its functions. See the Diplomatic Immunities and Privileges (Regional Centre for International Commercial Arbitration) Order 2001. RCICAL renders assistance in the enforcement of awards made under its Rules. See Rules 35.6 and 35.8 of RCICAL Rules. There is no different arbitration law for international arbitration as ACA governs both domestic and international arbitration. There are myriad arbitral institutions in Nigeria including but not limited to the Lagos Court of Arbitration, the Regional Centre for International Commercial Arbitration and the Lagos Multi-Door Courthouse. Foreign arbitral institutions also have branches in Nigeria such as the International Chamber of Commerce Nigeria and the Chartered Institute of Arbitrators, UK (Nigeria Branch). Each of these institutions have their respective rules governing arbitration and parties may elect that arbitrations be subject to the rules of the institutions rather than the rules attached to ACA. There are no special courts for international arbitration, but for a foreign arbitral award to enforced or for an application to set aside an arbitral award, an application must be made either to the Federal High Court or to the High Court of the State.

Arbitration agreement

The basic legal requirement of an arbitration agreement under this law is that an arbitration agreement must be in writing or must be contained in a written document signed by the parties. Section 1 of ACA provides that every arbitration agreement shall be in writing and contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of communication which provide a record of the arbitration agreement, or in an exchange of points of claim and of defence in which the existence of an arbitration agreement is alleged by one party and not denied by another. Any reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if such contract is in writing and the reference is such as to make that clause part of the contract. This provision presupposes that arbitration must be consensual and indicates that an arbitration agreement may either be an express clause in a contract whereby parties agree to refer future disputes to arbitration, or in a separate document (Submission Agreement), whereby parties agree to submit their existing dispute to arbitration. An arbitration agreement may also be inferred from written correspondence or pleadings exchanged between parties.

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.

The following additional legal requirements for a valid arbitration agreement can be distilled from the provisions of ACA:

5.1 The arbitration agreement must be in respect of a dispute capable of settlement by arbitration under the laws of Nigeria. See section 48(b)(i) and 52(b)(i) ACA.

5.2 The parties to the arbitration agreement must have legal capacity under the law applicable to them. See section 48(a)(i) and section 52(2)(a)(i) ACA.

The arbitration agreement must be valid under the law to which the parties have subjected it or under the laws of Nigeria. In other words, the agreement must be operative, capable of being performed and enforceable against the parties. See sections 48(a)(ii) and 52(a) (ii) ACA.

ACA does not stipulate any particular subject matter that may not be referred to arbitration. The question of whether or not a dispute is arbitrable is therefore left for interpretation by the courts. In Ogunwale v. Syrian Arab Republic (2002) 9 NWLR (Part 771) 127, the Court of Appeal held that the test for determining whether a dispute is referable to arbitration is that the dispute or difference must necessarily arise from the clause contained in the agreement. However, not all disputes are necessarily arbitrable. Only disputes arising from commercial transactions are referable to arbitration (see section 57(1) of ACA on the defi nition of arbitration and commercial disputes). Disputes not falling within the category of commercial disputes (e.g. domestic disputes), would not be arbitrable under ACA, though they may be referable to customary arbitration. Such disputes as competition or anti-trust disputes with elements of criminality and nullifi cation of patent rights are generally not arbitrable, although there are some exceptions. In Federal Inland Revenue Service v. Nigerian National Petroleum Corporation & 2 Ors. - Suit No. FHC/ CS/774/2011, a case involving the Federal Inland Revenue Service (FIRS), NNPC, Shell Petroleum and other international oil companies (IOCs) operating in Nigeria, a Federal High Court in Abuja voided an arbitral award under a Joint Operating Agreement between the government and the IOCs on the ground that the subject matter of the arbitration (interpretation, application and administration of the Petroleum Profit Tax Act, the Deep Offshore Act, Education Tax Act and Company Income Tax Act) was not arbitrable, but was a function solely to be carried out by Federal Inland Revenue Service. However, the Court of Appeal in Statoil (Nig) Ltd v. Nigerian National Petroleum Corporation (2013) 14 NWLR (Pt. 1373) 1 effectively overturned the decision of the Federal High Court. The Court of Appeal essentially held that jurisdiction of an arbitral tribunal is premised on the agreement of the parties and that parties are to be bound by their agreement, implying that, albeit the dispute may be related to taxation matters, if the parties agree to refer it to arbitration, then the arbitral tribunal has jurisdiction.

Also, some matters are generally more suitable for litigation than arbitration. For instance, applications for immediate enforcement of rights or preservation of res, e.g. the enforcement of fundamental human rights, application for Anton Pillar, Mareva and other injunctions, are less suitable for arbitration than litigation. In addition, since an arbitrator has no statutory power of joinder under ACA, multi-party proceedings may be less suitable for arbitration under ACA, unless the arbitration agreement makes specifi c provision for it. It is hoped that ACA may be revised to address multiparty provisions, as other arbitral institutions like the International Chamber of Commerce (ICC) and UNCITRAL Rules have done.

Section 40(3) of the Lagos Arbitration Law provides that a party may, by application and with the consent of the parties, be joined to arbitral proceedings, but ACA does not contain such provision. It follows that whilst Federal law does not allow joinder of non-parties, conceptually such a joinder is possible under the Lagos Arbitration Law. At present, no jurisprudence has developed on this point. In contemporary practice and with the spate of increase in multi-party (and multi-contract) arbitrations, parties who were not parties to the original arbitration agreement are made to submit to the jurisdiction of an arbitral tribunal. For instance, in FGN v. CTTL (Unreported Suit No. FHC/L/CS/421/2009), the Federal High Court refused to set aside an ICC award against the Federal Government of Nigeria, a non-signatory and its state agency which signed the arbitral agreement, on the basis that though FGN was not a party to the agreement, it had given presumed consent by its conduct and involvement with the execution and implementation of the contract.

ACA cloaks the arbitral tribunal with power to rule on its own jurisdiction – the competence-competence rule. There is no specifi c provision in ACA that an arbitration is separable from the substantive contract. However, there is copious jurisprudence that an arbitration agreement is severable and separate from the substantive contract and therefore survives novation, unenforceability, termination or otherwise of the substantive contract, such as NNPC v Klifco (Nig) Ltd (2011) 10 NWLR (Pt. 1255) 209.

To read this article in full, please click here.

Originally published by Global Legal Group Ltd, London.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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