Nigeria: The Award Review Tribunal – An Answer To The Issues Of Enforcement Of Arbitral Awards In Nigeria?

Last Updated: 23 November 2018
Article by Ridwan ‘Tola Bello

There is currently a bill before the National Assembly for the amendment of the Arbitration and Conciliation Act (ACA) 1988.

The Arbitration and Conciliation Act (Repeal and Re-enactment) Bill (The Bill) has successfully passed through the Senate and awaits the concurrence of the House of Representatives and the assent of the President to become law

Why the need to reform the Arbitration and Conciliation Act (ACA)?

Under the present framework, "lengthy" and "expensive" are words that are often used to describe arbitration proceedings in Nigeria.

Further, Nigerian courts have severally been criticized for their unwelcome intervention in arbitration proceedings.

This is despite the pro-arbitration stance and even Practice Directions form the Chief Justice of Nigeria encouraging the judiciary to embrace arbitration as a means of dispute resolution.

The bill as proposed aims to tackle these issues amongst others.

It is noteworthy that, the ACA is based on the provisions of the UNCITRAL Model Law. Over the course of time, has extensively developed the model law in conformity with the trends in international business.

Regrettably, the ACA has not kept track with the work of UNCITRAL and advancements in the world. The 1988 legislation is now 30 years old.

Since 1988 there have been various developments in the way businessmen do business and in the way lawyers practice. In other words, the ACA is outdated.

Challenges under the Arbitration and Conciliation Act

One of the core objectives of this reform effort is to bring the arbitration law in Nigeria more in line with certain global advancements in arbitration and to address some practical gaps – making it more effective and attractive to users.

Another reason, perhaps the most fundamental, is that the existing legislation does not take account of the peculiarities of the Nigerian environment for the enforcement of contracts and enforcement of contractual obligations.

In spite of having legislation that's based on what a good number of people around the world considered to be ideal model legislation, and in spite of the fact that many countries have adopted this model law, we still continue to experience incidences of protracted litigation due to the local peculiarities of our local environment.

Issues of Enforcement of Arbitral Awards under the Arbitration and Conciliation Act

When an arbitration proceeding eventually comes to a conclusion, enforcement can be quite problematic if the losing party decides to challenge and set aside the arbitral award.

Under the present framework, the scope for courts to review arbitral awards is very wide and is, in effect; almost comparable to the full merits review that applies to first instance court decisions.

Indeed, there's an extent to which the ACA should have been faithful enough to one of the most fundamental principles of the Uncitral model law, that is, the very limited scope for judicial review of arbitral awards.

However, the ACA, instead of keeping the narrow grounds that is obtainable in the Uncitral Model law, has made it possible to challenge awards on grounds of misconduct.

In other words, the old common law principle of misconduct which pretty much almost turns an award into the same thing as a judgment with the potential for full merits review was imported. This has been successfully exploited by lawyers to make the system not what it was expected to be.

There is now an increasing perception particularly as it concerns enforcement that arbitration is simply a form of pre-trial proceedings because after a successful party obtains an award, the enforcement process becomes litigation in and of itself in the sense of going to a court of the first instance and appellate levels.

Thus finality of awards, which is one of the strongest advantages of arbitration, is not something which the current legislation in its current form really assures. For these reasons it was considered that there was a need to reform the legislation.

The Reform

In an attempt to tackle this issue, the Bill has removed the concept of "misconduct" and aligned the grounds on which awards may be challenged with the more limited "due process" and "jurisdictional" grounds contained in the UNCITRAL Model Law and the New Your Convention.

The Bill has also taken a bold step to address this issue by considerably reducing the wide scope for judicial review that currently exists and, in its place, providing for an appellate level arbitral process that will review the award of first instance arbitral tribunals.

The Award Review Tribunal

The Award Review Tribunal as contained in Section 55 (7) – 55 (14) of the Bill is one of the more interesting innovations in the Bill. The creation of the award review tribunal is an innovative step which will go a long way in ensuring the finality and preservation of arbitral awards.

The concept of the Award Review Tribunal, in a sense one could say, is inspired by what is obtainable at the International Centre for Settlement of Investment Disputes (ICSID). This proceeding for nullification is a second legal arbitration. It's effectively an appellate layer of arbitration.

What is obtainable in the Bill is an "opt-in" provision. Parties are required to specifically choose it in their arbitration agreement thus making it optional. This is one of the fundamental features of the concept.

Parties have to opt into it for it to be applicable to the transaction. Parties are given the option to refer their awards to the tribunal for review instead of going to a court of the first instance to set aside an award.

The award review tribunal is expected to conclude the review within three months and either uphold or set aside the award in whole or in part.

An award that has been upheld by the award review tribunal can only be set aside by a court on the limited grounds of arbitrability and/or public policy.

Understanding the Award Review Tribunal

The philosophy behind this was, mainly, to balance 2 concerns. The first concern, of course, was finality. Parties do not want a process which they had agreed from the start to be determined by private persons to end up taken over by a three-tiered judicial process, for an average duration of 11 to 15 years.

That sort of environment isn't conducive for the concept of finality which is supposed to be one of the most attractive features of arbitration. The Bill ensures finality by providing for just two grounds on which any party can go to court. These two grounds are areas which the state has a legitimate interest in regulating.

First of all, the state has a legitimate interest in deciding which issues will be arbitrable and which will not be, and this is settled by legislation. Another concern is how then does the Bill ensure that the process enjoys finality, except on only those two narrow grounds of intervention by the courts?

How do parties address rogue arbitrators and conspicuous errors in the award? The review tribunal takes this concern into account by providing a second bite at the cherry. The review tribunal is one that operates with the same efficiency that arbitration itself operates. The Bill proposes that this appellate tribunal would simply be looking at paperwork/documentation.

It would not be taking witnesses' evidence or anything. This would leave room for the tribunal to focus on errors in the award or for rogue arbitrator decisions.

Reaction to the Award Review Tribunal

There have been mixed reviews about this innovation. Concerns have been raised about the applicability and effectiveness of this appellate tribunal. One of such concerns is that it adds to the complexity of arbitration and it adds yet another layer similar to litigation because recalcitrant parties will always find a way to attack the award on the merits.

Another possible argument would be that restricting the grounds on which a court can review the award might be contrary to the constitutional rights of access to courts.

Yet another concern is that perhaps this provision would have been better placed in the rules of arbitral institutions rather than in a federal enactment.

Addressing the issue of unconstitutionality, arbitration as a dispute resolution mechanism in Nigeria, as it currently exists, has been argued to be unconstitutional. Even the current legislation contains restrictions on the grounds on which the parties can approach the court.

The objective of this proposal in the Bill is that this restriction has proven to be insufficient to achieve the objective that was originally intended. If it is then accepted in theory that there is a restriction, then the current arbitration act itself is already susceptible to challenge on the basis that it is unconstitutional.

On whether these provisions on an appellate tier review is best placed in the rules of arbitral institutions rather than an enactment from the federal legislature, indeed, arbitral institutions can implement a review level of arbitration within their rules. For instance, the ICC has a review level in the form of the award scrutiny contained in the ICC Rules.

What the Bill proposes goes beyond the contemplation of the ICC Scrutiny. The Bill proposes to further limit, through the review tribunal, the court's intervention in arbitration to just questions of public policy and arbitrability.

This cannot be achieved through the rules of an arbitral institution. In actual fact, if this is introduced in the rules of an arbitral institution, the process would then become susceptible to another level in an already very lengthy process.

This is because after the review stage process there would, without a doubt, be a further review instituted by dis-satisfied parties at the courts' level on the grounds contained in the current legislature.

Therefore, if this proposal is introduced into rules of arbitral institutions only, then the Courts will still be able to review awards on all the seven grounds thereby further compounding the problem the bill seeks to solve and nothing would have been accomplished.

It must be emphasized that the Bill as it stands still contains all the grounds in the UNCITRAL Model Law on which an award can be reviewed. However, these grounds are limited in application to the review tribunal, whilst the court's intervention is limited to just public policy and arbitrability.

Conclusion

In conclusion, enlightenment has a huge role to play in the implementation and the development of arbitration in Nigeria. There has to be a lot of sensitization of all the relevant stakeholders from the courts to the lawyers, and to the business community itself.

People's minds have to be prepared for the environment in which there is very limited scope for having recourse against arbitral awards. Arbitration in Nigeria, after 30 years of its legislation, is unfortunately still at its infancy.

For Arbitration in Nigeria to reach its intended potential, innovations such as the Award Review Tribunal has to be embraced by the stakeholders. Arbitral Institutions will also do well to sensitize and encourage their members to take full advantage of innovations.

It is hoped that the Award Review Tribunal is met with the same welcome and support, innovations such as the emergency arbitrator procedure were met with globally.

We will only know how effective the Award Review Tribunal will be in tackling the issues of enforcement of arbitral awards in Nigeria if the Legislature takes the much-needed step of passing the Bill into law and disputing parties take full advantage of the innovations such as the Award Review Tribunal contained in the bill.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
PUNUKA Attorneys & Solicitors
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
PUNUKA Attorneys & Solicitors
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions