16 February 2021

Overview Of Alternative Dispute Resolution Process In Nigeria

Alternative Dispute Resolution (ADR) is simply a process of initiating alternative methods and procedures of resolving a civil or commercial dispute without resorting to litigation, which can be expensive, cumbersome, and time-consuming.
Nigeria Litigation, Mediation & Arbitration
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Alternative Dispute Resolution (ADR) is simply a process of initiating alternative methods and procedures of resolving a civil or commercial dispute without resorting to litigation, which can be expensive, cumbersome, and time-consuming. ADR processes and litigation cannot run together, it has to be one process at a time. Ideally, ADR is usually resorted to before instituting a court action but subject to the circumstances of each case, it can be resorted to before judgment is given in a matter. If litigation is pending and the parties resort to ADR, the terms of the settlement reached by the parties would be brought to court and entered as a consent judgment.

Alternative Dispute Resolution is regulated by the Arbitration and Conciliation Act (ACA), applicable to the whole federation. The Constitution of the Federal Republic of Nigeria 1999 (as amended) also gives constitutional backing to ADR in Section 19, which provides for the settlement of international disputes by Arbitration, Mediation, Conciliation, Negotiation, and Adjudication.

Methods of Alternative Dispute Resolution

Flowing from the above, the following are the main methods of alternative dispute resolution methods available for settling disputes in Nigeria.

  • Negotiation - Negotiation is a problem-solving process in which the parties to a dispute or an imminent conflict voluntarily come together either personally or by their representatives, to discuss their differences and attempt to reach a joint decision or resolution of the conflict, on their own and without the involvement of a third party. Negotiation is different from other types of alternative dispute resolution mechanisms as no third party is involved.
  • Mediation- Mediation is an alternative dispute process in which a neutral and impartial third party called the mediator is invited by the disputing parties to facilitate the resolution of the dispute by the self-determined agreement of the disputants. The mediator facilitates communication, promotes understanding, focuses the parties on their interests, and uses creative problem-solving techniques to enable the parties to reach their own mutual settlement/agreement. The mediator is usually jointly procured by both parties and the process is voluntary as the parties are not under any obligation to accept the suggestions of the mediator.
  • Conciliation- Conciliation as an alternative dispute method involves a neutral third party who can give an opinion or suggestion. It is a system of ADR where a third party known as the conciliator uses his best endeavours to bring the disputing parties to a voluntary settlement of their dispute. Conciliation is regulated by the Arbitration and Conciliation Act (ACA) Laws of the Federation of Nigeria (LFN) 2004.
  • Arbitration- Arbitration is the most initiated method of ADR where parties to a dispute submit to a third party called an arbitrator or arbitral tribunal for the resolution of their dispute. The decision of the arbitrator or arbitral panel called an award, is binding on the parties and enforceable by the courts. Arbitration is regulated by the Arbitration and Conciliation Act (ACA) Laws of the Federation of Nigeria (LFN) 2004 and also regulated by the Lagos State Arbitration Law, 2009.

An arbitration clause is sometimes found in contractual agreements executed between contracting parties and the position of the law is that parties to an agreement that contains an arbitration clause must first abide by the arbitration clause before going to court. When a party to an arbitration clause in an agreement proceed to court contrary to the arbitration clause, the other party can apply for a stay of proceeding, and the court, upon the fulfilment of the relevant conditions will stay the action as provided by Sections 4 & 5 of the Arbitration and Conciliation Act.

Advantages of utilizing the Alternative Dispute Resolution (ADR) process over instituting a litigation

  • It is cheaper than litigation- ADR can be more expensive than litigation but in long term, it is cheaper than litigation. In ADR, all the expenses are borne by the parties while in litigation; some of the expenses are not borne by the parties.
  • It is faster than litigation- in litigation, there is a competition of so many litigants with different cases, but in ADR, the parties' case is likely to be the only one.  ADR is less time-consuming unlike instituting a court action which can be time-consuming from factors such as adjournments, the unwillingness of parties, etc.
  • It is less formal- The courtroom where litigation is carried out is usually tense. For the lawyers, it is difficult, there are a lot of rules and procedures which must be followed, and also for the layman, it is extremely difficult. An ADR session is more of a business meeting where coffee can even be served. Hence the layman is likely to prefer such an environment.
  • The parties to the dispute can determine the Coram. This implies that they determine the mediator or arbitrator or conciliator who will preside over their case, but where they fail to agree, there are provisions of the law for such appointments to be done either by the court or an agency.
  • Involvements of people- ADR processes are parties driven. Parties can determine the time, venue, and pace in the ADR process, unlike in litigation where parties are not involved. It is controlled by the court.
  • Preservation of the relationship between the parties- Most ADR has a win-win situation on both sides of parties to the dispute, as it preserves the pre-dispute relationship that existed between the parties before the dispute.
  • Privacy of the parties: ADR helps preserve the privacy of the parties. In litigation, the process must be held in public except under certain conditions thus in private.
  • It promotes friendliness - most parties to litigation do not return as friends even in matrimonial proceedings. And in the commercial area of law, ADR is most relevant as there might still be a need to continue the business relationship.

It is also important to state that Alternative Dispute Resolution processes are not useful in all cases. Such cases include the followings:

  • In criminal cases generally, ADR is not utilized.
  • ADR cannot be used to resolve election petitions, being matters of public policy.
  • In matrimonial cases, ADR cannot be used to resolve matters like the dissolution of marriage, nullity of a void marriage, and restitution of conjugal rights.
  • Dispute relating to binding interpretations of the law, statute, or document. The court is the only institution that can do so.
  • Cases of urgency seeking immediate reliefs like an injunction.

Stages of Arbitration Proceedings

  • Initiating the Arbitral Proceedings- Where a dispute arises about a particular transaction, which the subject of an arbitration agreement, one of the parties is required to notify the other in writing, called a Notice of Arbitration.  It serves as a notification of the dispute to the other party as well as a request for the parties to go into arbitration. Section 17 of the ACA provides that "the arbitral proceedings in respect of a particular dispute are deemed to commence on the date the request to refer the dispute to arbitration is received by the other party".

Article 3(3) of the Arbitration Rules provides that the Notice of arbitration/declaration of dispute shall contain the following;

  • A demand that the dispute is referred to arbitration.
  • The names and addresses of the parties
  • A reference to the arbitration clause or the separate arbitration agreement that is invoked.
  • A reference to the contract out of or to which the dispute arises.
  • The general nature of the claim and an indication of the amount involved, if any.
  • The relief or remedy sought.
  • A proposal as to the number of arbitrators to be appointed if the parties have not previously agreed on it.
  •    Appointment of Arbitrators- at this stage, the parties appoint the arbitrator(s) following the procedure agreed upon. Where no procedure was agreed on, then the appointment will be per the procedure provided by the relevant statute. Where the parties fail to appoint one within the specified time, the court shall make the appointment upon application by any of the parties.
  •    Preliminary Meeting- the arbitrator (s) meet with the disputed parties to agree on certain preliminary points such as determining jurisdiction and powers of arbitrators, the mode of hearing whether oral or documentary; the number of witnesses and mode of presenting them; the manner in which processes would be presented; the fees and remuneration of the arbitrators; the deposit of costs, etc.
  •   Submission of Statement of Claim and Defence- the statement of claim is submitted by the party that initiated the arbitration called the claimant. It contains a summary of his case and the remedies sought. It is to be accompanied by all documents considered by the claimant to be relevant to establishing his claim and the written statements of the evidence of witnesses should also accompany the points/statement of claim as provided by Article 18 of the Arbitration Rules.

The points/statement of defence is submitted by the other party and may contain a counterclaim, if necessary. It shall contain the same particulars as to the points/statement of claim. Also, it is t be accompanied by all the documents sought to be relied on.

  •    Hearing- arbitral hearing proceedings are less formal and private unless the parties agree otherwise. Where a party fails to appear at the hearing, after adequate notice has been issued, the arbitral tribunal shall continue with the trial. After the hearing, a date for the pronouncement of the award is fixed by the arbitrators.
  •    Award- Section 24 of the ACA provides for the making of award and termination of proceedings. An award is the decision of the arbitral tribunal. It determines the rights of the parties to the dispute with finality. The award shall be in writing and should contain the following:
  • The names of the parties to the dispute.
  • The reasons for the award, unless the parties earlier agreed that no reason should be given by the arbitrator.
  • The date the award was made.
  • The place of the arbitration.
  • It must be signed by the arbitrator(s) or a majority of them.

After the final award is made and issued to the parties, the arbitral proceeding is deemed to be terminated as provided in Section 27(1) of the ACA.

Recognition and Enforcement of Arbitral Awards in Nigeria

By the provision of Section 31(1) of the ACA, an arbitral award is recognized as legally binding on the parties and is enforceable by the court on an application in writing. The application is accompanied by:

  • The duly authenticated original award or a duly certified copy of it.
  • The original arbitration agreement or a duly certified copy of it.
  • Where these conditions are satisfied, then by leave of court, the award shall be enforced in the same manner as a judgment or order to the same effect.

Recognition/Enforcement of International Arbitral Awards

By the provisions of Section 51(1) of the ACA, an arbitral award irrespective of the country in which it was made, be recognised as binding and may be enforced by a court in Nigeria upon an application in writing.

The application is by way of a Motion on Notice supported by an affidavit and shall be accompanied by:

  • The duly authenticated original award or a duly certified copy of it.
  • The original arbitration agreement or a duly certified copy of it.
  • Where the award or arbitration agreement was not made in English, then a certified translation of it into the English Language.


In Nigeria, the ADR process is becoming an acceptable and best method of resulting in commercial disputes. Howbeit, the ADR process, especially the arbitration is not without its disadvantages. One of the major disadvantages of such process is the situation by which a losing party in the arbitration will institute a court action or file an application in court seeking to set aside the arbitral award on grounds of misconduct of arbitrator or an award has been improperly procured or an award contains decisions on matters not submitted to the arbitrator. However, such application must be filed in court within 3 months after the arbitral award has been delivered.

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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