1 Legal framework
1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
The relevant laws on arbitration in Nigeria are:
- the Arbitration and Conciliation Act 1988 (ACA); and
- the Lagos State Arbitration Law 2009 (exclusively applicable in Lagos State).
The ACA specifically requires arbitration agreements to be in writing (Section 1(1) of the ACA).
1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
The ACA differentiates between domestic and international arbitration. The ACA is divided into four parts and contains three schedules. While Part I deals with "arbitration", Part III expressly focuses on "additional provisions relating to International Commercial Arbitration and Conciliation". Although the word ‘domestic' is not expressly stated in Part I, the inference is that it is restricted to domestic arbitration.
‘Arbitration' in the ACA is defined as "a commercial arbitration whether or not administered by a permanent arbitral institution" (Section 57(1) of the ACA). On the other hand, Section 57(2) provides that an arbitration is considered international if any of the following applies:
- The parties to an arbitration agreement have their places of business in different countries;
- One of the following is situated outside the country in which the parties have their places of business:
- the place of the arbitration;
- any place where 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;
- The parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country; or
- The parties, despite the nature of the contract, expressly agree that any dispute arising from the commercial transaction shall be treated as an international arbitration.
1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
Yes, the arbitration legislation in Nigeria is based on the UNCITRAL Model Law on International Commercial Arbitration. The ACA incorporated the 1995 UNCITRAL Model Law on International Commercial Arbitration. Nigeria was the first African state to adopt the UNCITRAL Model Law.
1.4 Are all provisions of the legislation in your jurisdiction mandatory?
Yes, in Nigeria, all provisions of the ACA are mandatory, as the act provides a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and conciliation.
1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?
Yes, an initiative is underway to amend the arbitration legislation in Nigeria through the Arbitration and Conciliation Act (Repeal and Enactment) Bill, 2019, which was sponsored by the Honourable Mohammed Tahir Monguno.
The bill passed the first reading on 11 July 2019, the second reading on 18 December 2019 and the third reading on 23 July 2020.
1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Yes, Nigeria is a signatory to the New York Convention. This is evident in the Second Schedule of the ACA, which refers to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Nigeria ratified the convention on 17 March, 1970, with reciprocal and commercial reservations, incorporated into the preamble of the ACA.
1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?
Yes, Nigeria is a signatory to:
- the Revised Treaty of the Economic Community of West African States;
- the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965, which prescribes that disputes between an investor and the state will be resolved by arbitration; and
- the Nigeria-Morocco Bilateral Investment Treaty, which was signed on 3 December 2016 with the aim of improving bilateral trade relations and strengthening the business relationship between the two countries.
2 Arbitrability and restrictions on arbitration
2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?
In Nigeria, case law determines arbitrability. The dispute must involve a justiciable issue that can be civilly tried; the general consensus is that criminal matters cannot be the subject of arbitration. Commercial disputes are arbitrable in Nigeria; and the scope of the term ‘commercial', as defined in Section 57 of the Arbitration and Conciliation Act (ACA), is very broad. Disputes involving criminal, tax or constitutional matters, or bankruptcy, are not arbitrable in Nigeria, as in many other states.
2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?
There are no restrictions on the choice of seat of arbitration. Party autonomy remains the paramount consideration (Section 16 of the ACA).
3 Arbitration agreement
3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?
Section 1(1) of the Arbitration and Conciliation Act (ACA) explicitly sets out the requirements for the validity of an arbitration agreement in Nigeria, as follows:
Every arbitration agreement shall be in writing 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.
3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
Yes, Section 12(2) of the ACA includes provisions on the separability of arbitration agreements, as follows: "For the purposes of subsection (1) of this section, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract and a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the validity of the arbitration clause."
3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
Yes, Sections 16(1) and 18(1) of the ACA provide for the seat or language of the arbitration respectively, if no agreement by parties in this regard exists.
Section 16(1) of the ACA provides for the arbitral tribunal to decide on the seat of the tribunal with consideration to the circumstances of the case, including the convenience of the parties.
With respect to the language of the arbitration, Section 18(1) of the ACA empowers the arbitral tribunal to determine the language to be used, bearing in mind the relevant circumstances of the case.
4 Objections to jurisdiction
4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
Under Sections 12(3)(a) and (b) of the Arbitration and Conciliation Act (ACA) and Article 21(3) of the Arbitration Rules, First Schedule, an objection to the jurisdiction of the tribunal must be raised no later than the time of submission of the points of defence. A party is not precluded from raising such a plea because it has appointed or participated in the appointment of an arbitrator.
An objection to the arbitral tribunal exceeding the scope of its authority must be raised as soon as the matter alleged to be beyond the scope of its authority arises during the proceedings.
In either case, the arbitral tribunal must admit a later plea if it considers that the delay was justified.
4.2 Can a tribunal rule on its own jurisdiction?
Yes, the arbitral tribunal can rule on its own jurisdiction by virtue of Section 12 of the ACA. The arbitral tribunal is competent to rule on questions pertaining to its own jurisdiction (‘competence-competence') and on any objections with respect to the existence or validity of the arbitration agreement.
4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
The parties always have the right to approach the courts of the seat. However, by virtue of Sections 12 and 34 of the ACA, most judges will be inclined to refer the matter back to arbitration for the arbitral tribunal to rule on its own jurisdiction. Should the ruling with respect to the tribunal's jurisdiction be reserved until the declaration of its final award, a party may apply to the court to have the final award aside (this also applies in relation to a ruling of the tribunal with respect to a challenge to its jurisdiction).
5 The parties
5.1 Are there any restrictions on who can be a party to an arbitration agreement?
No restrictions on who can be a party to an arbitration agreement are stipulated in the Arbitration and Conciliation Act (ACA). Any person or body can be a party to an arbitration agreement, provided that the person or body has the capacity to enter into the agreement.
5.2 Are the parties under any duties in relation to the arbitration?
There are no express duties for the parties under the ACA. Party autonomy drives the process.
5.3 Are there any provisions of law which deal with multi-party disputes?
No provisions in the ACA deal with multi-party disputes. However, consolidation may be resorted to if the parties willingly submit to arbitration and confer on the tribunal the power to consolidate the disputes.
6 Applicable law issues
6.1 How is the law of the arbitration agreement determined in your jurisdiction?
In Nigeria, arbitration agreements are determined based on the terms contained in the arbitration agreement. Jurisdiction is vested in the arbitral tribunal if the prerequisite for the validity of the arbitration agreement is met (ie, it is in writing).
6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?
Under Section 47(1) of the Arbitration and Conciliation Act (ACA) and Article 33(1) of the Arbitration Rules, the tribunal is mandated to apply the laws chosen by parties as applicable to the substance of the dispute.
Pursuant to Section 47(3) of the ACA, where the substantive law is unclear because the parties have not agreed on this themselves, the arbitral tribunal will apply the law as determined by the conflict of laws rules which it considers applicable.
7 Consolidation and third parties
7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
The Arbitration and Conciliation Act (ACA) does not provide for the consolidation of separate arbitrations into a single arbitration proceeding.
7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?
The ACA does not provide for the joinder of additional parties to an arbitration which has already commenced.
7.3 Does an arbitration agreement bind assignees or other third parties?
Generally, an arbitration agreement binds only the parties which have signed it; it does not bind assignees. However, Section 3 of the ACA covers instances of death – in this situation, enforcement is possible against the personal representative of the deceased.
8 The tribunal
8.1 How is the tribunal appointed?
It is within the discretion of the parties to determine the composition of the tribunal (Section 6 of the Arbitration and Conciliation Act (ACA)). Where no such determination is made, the number of arbitrators will be three.
Section 7 of the ACA sets out the procedures for the appointment of the arbitrators. This may be specified in the arbitration agreement, as stipulated in Section 7(1) of the ACA. If the procedure is not expressly stated in the arbitration agreement, Section 7(2) provides for the appointment of three arbitrators: each party will appoint one arbitrator and the two so appointed will then appoint a third arbitrator. If a party defaults, upon application by the other party, appointment will be made by the court. The court will also appoint a single arbitrator upon default by the parties. In both cases, this will take place within 30 days of the disagreement. The court's decision on the appointment is not subject to appeal (Section 7(4) of the ACA). In making its appointment, the court must have due regard to any qualifications required of the arbitrator under the arbitration agreement and such other considerations as are likely to secure the appointment of an independent and impartial arbitrator (Section 7(5) of the ACA).
Section 44 of the ACA includes similar provisions for the composition of the tribunal as it relates to international arbitration.
8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
The ACA does not explicitly stipulate the number or qualifications required of the arbitrators; this is subject to the arbitration agreement between the parties. However, Section 6 of the ACA and Article 6(1) of the Arbitration Rules, First Schedule state that if no determination as to the number of arbitrators is made, the number is deemed to be three.
8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
An arbitrator can be challenged on the grounds set out in Section 8(3) of the ACA, as follows:
- The arbitrator failed to disclose circumstances that are likely to give rise to justifiable doubts as to his or her impartiality and independence; or
- The arbitrator does not possess the qualifications agreed by the parties.
The procedure to be complied with when challenging an arbitrator may be determined by parties. If the parties have reached no agreement in this regard, a party that intends to challenge an arbitrator must send the arbitral tribunal a written statement on the reasons for the challenge within 15 days of becoming aware of the constitution of the arbitral tribunal or the basis for the challenge. The tribunal will decide on the challenge unless the arbitrator who has been challenged withdraws or the other party agrees to the challenge (Section 9 of the ACA).
8.4 If a challenge is successful, how is the arbitrator replaced?
If a challenge is successful, the arbitrator is replaced in the same manner and under the same rules and procedure as applied to the appointment of the challenged arbitrator (Section 11 of the ACA).
8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?
Arbitrators have a duty to ensure that the parties are accorded equal treatment and are each given full opportunity to present their case (Section 14 of the ACA).
8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
(a) Procedure, including evidence?
The powers of an arbitrator in relation to procedure are as follows:
- the power to rule on a challenge to its jurisdiction;
- the power to make interim orders; and
- the power to order a deposit of costs.
The powers of an arbitrator in relation to evidence are stipulated in Section 15(3) of the ACA. They include the power to determine the admissibility, relevance, materiality and weight of any evidence placed before it.
(b) Interim relief?
The powers of an arbitrator in relation to interim relief are expressly provided for in Section 13 of the ACA, which states that the arbitral tribunal may, at the request of a party, order any party to take such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute.
(c) Parties which do not comply with its orders?
The powers of an arbitrator in relation to parties which do not comply with its orders are not explicitly stated in the ACA.
(d) Issuing partial final awards?
The powers of an arbitrator in relation to the issue of partial final awards are explicitly provided for in Article 32 of the Arbitration Rules, which vests the arbitrator with the power to make interim, interlocutory or partial awards (Article 32(1) of the Arbitration Rules, First Schedule).
(e) The remedies it can grant in a final award?
The powers of an arbitrator in relation to the remedies it can grant in a final award are not explicitly provided for in the ACA.
The powers of an arbitrator in relation to interest are not explicitly provided for in the ACA or the Arbitration Rules.
8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
Section 21 of the ACA provides that:
- if the claimant fails to state its claim, the arbitral tribunal will terminate the proceedings;
- if the respondent fails to state its defence, the arbitral tribunal will continue the proceedings without treating such failure in itself as an admission of the claimant's allegations; and
- if any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make an award.
8.8 Are arbitrators immune from liability?
There is no provision in the ACA that expressly vests arbitrators with immunity.
9 The role of the court during an arbitration
9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
The court will stay the proceedings pursuant to Sections 4(1) and 5(1) of the Arbitration and Conciliation Act (ACA) and refer the parties to arbitration if any party so requests no later than when submitting its first statement on the substance of the dispute.
9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
The Nigerian courts have powers in relation to arbitrations seated both in and outside Nigeria, especially in relation to recognition and enforcement of an arbitral award.
The powers of the court with respect to arbitration include:
- the power to stay the proceedings;
- the power to appoint arbitrators upon default;
- the power to enforce an arbitral award; and
- the power to set aside an award.
Under Section 34 of the ACA, a court will exercise its powers in arbitration as provided by the ACA and will not intervene in any matter governed by the act.
9.3 Can the parties exclude the court's powers by agreement?
No, the parties cannot exclude the court's powers by agreement.
10.1 How will the tribunal approach the issue of costs?
Articles 38 to 40 of the Arbitration Rules, First Schedule and Section 49 of the Arbitration and Conciliation Act govern the costs of arbitration. In principle, these are borne by the unsuccessful party. However, the arbitral tribunal may apportion the costs between the parties if it determines that apportionment is reasonable taking into account the circumstances of the case. The tribunal may request the parties to deposit an equal amount as an advance.
10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?
There are no restrictions on what the parties can agree in terms of costs.
11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?
The Arbitration and Conciliation Act does not prohibit third-party funding.
12.1 What procedural and substantive requirements must be met by an award?
Section 26 of the Arbitration and Conciliation Act (ACA) sets out the procedural and substantive requirements for an award as follows:
- The award must be in writing and signed by the arbitrators;
- The award must state the following:
- the reason for the award;
- the date on which the award was made; and
- the place of the arbitration; and
- A signed copy of the award must be sent to the parties.
12.2 Must the award be produced within a certain timeframe?
There is no specific timeframe for the production of an award under the ACA.
13 Enforcement of awards
13.1 Are awards enforced in your jurisdiction? Under what procedure?
Domestic and international awards are enforceable in Nigeria. The procedure for enforcement of an award is set out in Sections 31(1) and 51(1) of the Arbitration and Conciliation Act (ACA). An arbitral award will be recognised as binding upon written application to the court for enforcement.
Pursuant to Sections 31(1) and 51(1) of the ACA, a party relying on an award or applying for its enforcement must supply:
- the duly authenticated original award or a duly certified copy;
- the original arbitration agreement or a duly certified copy; and
- a duly certified translation into English, where the award or arbitration agreement is not in the English language.
14 Grounds for challenging an award
14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?
Awards cannot be appealed in Nigeria, but may be set aside on the grounds provided in Sections 29 and 30 of the Arbitration and Conciliation Act (ACA) where a party, within three months of the date of the award, furnishes proof that:
- the award contains decisions on matters which are beyond the scope of the submission to arbitration;
- the arbitrator is guilty of misconduct; or
- the award was improperly procured.
14.2 Are there are any time limits and/or other requirements to bring a challenge?
The time limit for an aggrieved party to challenge an arbitral award in court is within three months of the date of the award or, in the case of additional award, from the date on which the request for an additional award is disposed of by the arbitral tribunal.
14.3 Are parties permitted to exclude any rights of challenge or appeal?
There is no right to appeal in arbitration; exclusion is therefore not practicable. The right to challenge an award cannot be excluded if such challenge falls within the ambit of Sections 29 and 30 of the ACA.
15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?
The Arbitration and Conciliation Act does not explicitly provide for confidentiality. However, as a matter of practice, the process in itself is confidential.
15.2 Are there any exceptions to confidentiality?
Confidentiality as a matter of practice is usually ensured in the arbitration agreement. Exceptions to confidentiality can be made by agreement of the parties in the arbitration agreement.
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.