There is no doubt that arbitration has become a conventional vehicle for the resolution of commercial disputes in Nigeria. Hence, this article seeks to educate the reader on the following:
a. What is arbitration;
b. Stages of arbitration;
c. Recognition and Enforcement of Award; and,
d. Application to set aside an award.
1. WHAT IS ARBITRATION?
Arbitration means a commercial arbitration whether or not administered by a permanent arbitral institution. Section 57 of the Arbitration and Conciliation Act, 1988 ( LFN 2004)
It is a private dispute resolution mechanism established for the settlement of disputes by a neutral third party (the Arbitrator) or panel of neutrals referred to as the Arbitral Tribunal.
Arbitration does not apply in criminal cases, election petition matters, matrimonial cases, interpretation of the law, statute or document, or cases of urgency among others.
The principal legislation that governs arbitration is the Arbitration and Conciliation Act 1988 (Laws of the Federation of Nigeria 2004 Cap A18) (ACA), which is the federal statute. However, some states in Nigeria also have their arbitration laws, for example, the Lagos State Arbitration Law, 2009 (LSAL).
2. STAGES OF ARBITRATION PROCEEDINGS
a. Initiating the Arbitral Proceedings- Arbitral proceedings are initiated by a Notice of Arbitration. Section 17 of the ACAprovides 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".
The Notice of Arbitration shall contain 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, the general nature of the claim, and an indication of the amount involved if any, the relief or remedy sought, among others.
a. Appointment of Arbitrators- Parties appoint the arbitrator(s) based on the procedure agreed upon. Where no procedure was agreed on, then the appointment will be per the procedure provided by the relevant statute.
b. Preliminary Meeting- the preliminary meeting is an avenue for disputed parties to meet with the arbitrator 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 the mode of presenting them; the fees and remuneration of the arbitrators; etc.
c. Submission of Statement of Claim and Defence- The disputed parties will submit their respective pleadings to the arbitrator. The statement of claim is submitted by the party that initiated the arbitration called the claimant. Likewise, the statement of defence is to be filed by Defendant.
e. 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.
f. 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 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.
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.
3. RECOGNITION AND ENFORCEMENT OF ARBITRAL AWARD
A. DOMESTIC AWARD
An arbitral award shall be recognized as binding and enforceable subject to where any of the parties to an arbitration agreement request the Court to refuse recognition or enforcement of the award. Section 32 of the ACA.
The courts with jurisdiction over applications for enforcement of domestic arbitral awards are the High Court of a State, the High Court of the Federal Capital Territory, Abuja, or the Federal High Court. Sections 57 of the ACA.
An action to enforce an arbitral award accrues from the date the dispute leading to the arbitration arose instead of when the award was rendered. This is by virtue of Section 7(1)(d) of the Limitation Law.
B. INTERNATIONAL AWARDS SECTION 51 ACA
International awards are enforceable in Nigeria under the Arbitration and Conciliation Act, and they may be enforced under the Foreign Judgement Act.
It provides that an arbitral award shall, irrespective of the country in which it is made, be recognized as binding and shall upon application in writing to the court be enforced by the court.
The party relying on an award or applying for its enforcement shall supply the original arbitration agreement or a duly certified copy of same, a duly certified translation in the English language in the case of an award or arbitration agreement not made in the English language.
Also, awards may be enforced under the Foreign Judgment Act 1961 and the Reciprocal Enforcement Judgement Act 1922, and the New York Convention 1958 (Convention on the Recognition and Enforcement of Foreign Award). Section 54 of the ACA.
4. APPLICATION TO SET ASIDE AN ARBITRAL AWARD – SECTION 29 OF ACA
Arbitral awards cannot be appealed against. However, an arbitral award can be challenged by an application to set it aside based on very limited grounds.
A party seeking to challenge an award shall apply to the Court to set aside the arbitral award. The Court may set aside an arbitral award if the party making the application furnishes proof that the award contains decisions on matters which are beyond the scope of the submission to arbitration or/and where an arbitrator has misconducted himself.
An award can be challenged by an application to any of the State High Courts or the Federal High Court within the applicant's jurisdiction to set it aside on any of the above grounds.
The application to challenge the award must be brought within three months of the award.
Arbitration has become the preferred mode of resolving commercial disputes because of its unique features of efficiency, effectiveness, and user-friendliness. However, the ACA needs to be amended to be in line with global standards and demands.
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.