Introduction
The Arbitration Law of any nation is the established legal framework for resolving disputes outside the traditional court systems by providing parties to a dispute, with a fair and impartial alternative to litigation.As a piece of legislation, it may seek to foster efficiency, cost-effectiveness, and confidentiality in resolving conflicts by allowing parties to choose their own arbitrator(s) and procedural rules, thereby tailoring the process to suit their specific needs and preferences.
On 26th May 2023, the former President of Nigeria, President Mohammadu Buhari assented to the Arbitration and Mediation Bill 2022 which morphed into the Arbitration and Mediation Act 2023 (“AMA”). The AMA repealed the age-long Arbitration and Conciliation Act 1988 (“ACA”) which had been in existence for over three (3) decades. The enactment of the AMA has been described by the Chartered Institute of Arbitrators of Nigeria (“CIArb”) as a pivotal tool that will bring significant developments and shape the future of arbitration in Nigeria.[1] The above position of the CIArb is not far fetched, as the explanatory memorandum of the AMA highlights as its purpose, the provision of “a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and mediation, and make(s) applicable, the convention on the recognition and enforcement of foreign arbitral awards (New York Convention) to any award made in Nigeria or in any contracting state arising out of international commercial arbitration.” The article seeks to highlight some of the novel and notable provisions of the AMA.
Some Notable Innovations of the Arbitration and Conciliation Act 2023
Granting And Enforcement Of Interim Measures
The Black’s Law Dictionary[2] defined “interim measures of protection” to mean “an international tribunal’s order to prevent a litigant from prejudicing the final outcome of a lawsuit by arbitrary action before a judgment has been reached. This measure is comparable to a temporary injunction in national law.” An interim measure is a temporary measure ordered by a tribunal, usually in the form of an award or order, preserving the res (subject matter of the dispute) pending the determination of the dispute.
Under the repealed ACA,[3] there were no express provisions for the grant, recognition, and enforcement of interim measures by a Court. Strictly speaking, the power to grant interim measures under the ACA was vested solely in the arbitral tribunal. It has however been opined[4] that the power of a Court to grant interim measures could be implied from the provision of the ACA.[5] These uncertainties came to rest with the enactment of the AMA which expanded the scope for the grant of interim measures by vesting the power to grant same in the arbitral tribunal as well as the Court.[6]
Similarly, under the repealed ACA, there were no provisions for the recognition and enforcement by a Court of interim measures granted in favour of a party by the arbitral tribunal. This deficiency under the repealed ACA was remedied under the AMA by providing for the recognition and enforcement of interim measures by the Court.[7] Thus, an interim measure granted by an arbitral tribunal is binding and can be enforced by a Court upon application by a party. Where the Court considers such application proper, it may order the requesting party to provide appropriate security if the arbitral tribunal has not made a determination with respect to security or where such order as to security is necessary to protect the rights of third parties.[8]
The Court may, however, refuse to recognise and enforce such interim measure(s) where the decision of the arbitral tribunal with respect to the provision of security has not been complied with or where the interim measures are incompatible with the powers conferred on the Court[9]. With respect to the incompatibility of the interim measures, the Court can reformulate the interim measure to the extent necessary to adapt it to its own vires and procedures.
Third-Party Funding
Third-party funding is an arrangement between a party to an arbitration proceedings and a neutral party/non-party (“Third-party funder”) to an arbitration proceedings, whereby the Third-party funder undertakes to provide financial assistance in part or whole to the party to the arbitration proceedings in exchange for a share of the damages that would be awarded to the party to the arbitration proceedings in the event that the party succeeds.[10] The third-party funding is akin to the common law doctrine of maintenance and champerty. Historically, maintenance and champerty were criminal offences, torts, and unlawful arrangements.[11]
With the emergence of the AMA, the torts of maintenance and champerty do not apply in relation to third-party funding arrangements in respect of arbitrations seated in Nigeria or arbitration-related proceedings in any court within Nigeria.[12] With the provision of AMA on Third-party funding, person(s) and entities with little or no financial capability in pursuing or defending a claim(s) before an arbitral tribunal are encouraged to seek financial assistance from a Third-Party funder. In addition, the arbitral tribunal is empowered to fix the cost of obtaining third-party funding in its final award.[13]
Appointment of Emergency Arbitrator
The AMA made provisions for a party seeking emergency relief to apply for the appointment of an emergency arbitrator.[14] The party seeking such relief (s) may, concurrent with or following the filing of a request for a dispute to be referred to arbitration but before the constitution of the arbitral tribunal, request by an application for the appointment of an emergency arbitrator. The application is to be made to the arbitral institution designated by the parties or the Court. From the wording of the AMA, it could be said that an application for the appointment of an emergency arbitrator can only be made prior to the constitution of the arbitral tribunal. Thus, where a party requires emergency relief, such as maintaining the status quo or preserving the res after the constitution of the arbitral tribunal, such a party may apply to the arbitral tribunal or the Court for interim measures of protection.[15]
Upon a decision to accept the application seeking the appointment of an emergency arbitrator, the Court or arbitral tribunal shall appoint an emergency arbitrator within two (2) business days after the date the application is received.[16] Where the appointment of an emergency arbitrator is challenged, the court or arbitral tribunal shall decide same within three (3) business days after a reasonable opportunity has been afforded the emergency arbitrator and the parties to provide submissions in writing.[17] Due to the urgency of the emergency relief, the emergency arbitrator shall upon appointment, make an order (“emergency decision”) within 14 days from the date the file was received.
In addition, the AMA has also made flexible the proceedings of an emergency arbitrator in the sense that such proceedings may be conducted by a meeting in person at a location that the emergency arbitrator considers appropriate or by video conference, telephone, or similar means of communication.[18] This expeditious approach is geared toward the due consideration and actualization of the relief.
Establishment of the Award Review Tribunal (Art)
The AMA created the Award Review Tribunal[19] which (subject to the parties’ agreement) is saddled with the responsibility of “first-level review” of an arbitration award in an arbitration proceeding seated in Nigeria. The grounds for such review must be a ground provided for under the AMA.[20] Thus, a party who is aggrieved by an arbitration award may, if provided for in the arbitration agreement, apply to the ART to review the arbitration award and the ART shall within Sixty (60) days from the date of its constitution, conduct proceedings and render its decision in the form of an award.[21] Parties are also at liberty to agree on the procedure and the constitution of the ART and where there is no such agreement, the ART shall consist of the same number of arbitrators in the arbitral tribunal that first determined the dispute (“First Instance Tribunal”).[22]
Where the ART affirms the First Instance Tribunal’s award, an aggrieved person can apply to the Court to set aside the decision of the ART. In such a case, the Court can set aside same only on the ground that the dispute is non-arbitrable or that the award is contrary to public policy. However, where the ART sets aside the First Instance Tribunal’s award, the Court may reinstate the initial award if it is of the view that the decision of the ART is unsupportable having regard to the grounds of the decision.[23]
Consolidating Arbitration Proceedings
Consolidation is the unification of two or more claims into a single proceeding. The AMA provides for the consolidation of arbitral proceedings involving the same or different parties with the agreement of the parties.[24] The arbitral tribunal may also order concurrent hearings upon agreement by the parties.
This is an innovative feature of the AMA as it will reduce the risk of parallel proceedings and inconsistent awards. To a great extent, it will save time and resources. By consolidating the proceedings, parties can benefit from the efficiency and cost-effectiveness of arbitration while ensuring a fair and equitable resolution of their disputes.
Joinder Of Parties
Unlike the repealed ACA, the AMA made provisions for an additional party to be joined to an arbitral proceeding, provided that the additional party is bound by the arbitration agreement giving rise to the arbitration.[25] Thus, a party can apply to the arbitral tribunal to join an additional party to the arbitral proceeding, provided that the additional party is bound by the arbitration agreement giving rise to the arbitral proceedings. This is also a novel feature of the AMA as parties to an arbitration agreement are given an opportunity to be heard for the just determination of the issues before the arbitral tribunal.
Provision For A Sole Arbitrator In Default
Both the repealed ACA and the AMA made provisions for the constitution of the arbitral tribunal in cases where parties to an arbitration agreement fail to agree on the number. Under the repealed ACA, parties to an arbitration agreement have the right to decide the number of arbitrators to be appointed. However, in cases where no specific determination is made regarding the number of arbitrators, the default number shall be three (3).[26]
Under the AMA, parties to arbitration agreement also have the right to decide the number of arbitrators to constitute an arbitral tribunal, however, in cases where no such determination is made, the arbitral tribunal shall consist of a sole arbitrator.[27] The appointment of a sole arbitrator can offer distinct cost advantage over having multiple arbitrators. This becomes beneficial for parties facing budget constraints or when the dispute involves smaller financial implications. The presence of a single arbitrator allows for a more efficient and expedited arbitration process, since there is no requirement for deliberations or consensus among multiple arbitrators, decision-making can be accelerated, leading to a faster resolution of the subject dispute.
In addition, with respect to international arbitration, the AMA stipulates that in cases where no specific procedure is established for selecting an arbitrator and no appointing authority is designated or agreed upon by the parties, the Director of the Regional Centre for International Commercial Arbitration in Lagos shall assume the role of the appointing authority.[28]
Immunity For Arbitrators
Under the AMA, arbitrators (including emergency arbitrators), appointing authorities, and arbitral institutions are granted immunity from any liability for acts and omissions that took place during the course of their functions under the Act. The sole exception to this immunity is if such acts or omissions are performed in bad faith.[29]
Statute Of Limitation in Arbitration and Mediation Proceedings
To validly institute a civil action, it is a well-settled principle of the law that a specific time limit exists within which such action can be brought before a court for proper adjudication. The Statute of Limitation is the law responsible for determining the time limit.[30] With respect to arbitration, the AMA has ended the ongoing debates surrounding the applicability of statutory limitation periods in arbitration, as well as the issue concerning the time limit for enforcing an arbitral award. Prior to the enactment of the AMA, the Supreme Court[31] held that the limitation period for enforcing arbitral awards must be calculated from the date when the dispute initially arose and not the date when the award was delivered.
However, the AMA overrides this position by stipulating that the relevant statutes of limitation shall be applicable to arbitral proceedings in the same manner as they apply to judicial proceedings.[32] In addition, it provided that when computing the time for initiating proceedings for the enforcement of an arbitral award, the period between the commencement of the arbitration and the date of the award shall be excluded.[33] Furthermore, where a Court set aside or annuls an arbitral award, the limitation period relevant to the dispute excludes the period between the commencement of the arbitration and the issuance of the order annulling the award. Again, with respect to the mediation proceedings, the limitation period is suspended, and it resumes on the day that mediation ends without a settlement.[34]
Enforcement Of Arbitration Agreement
Under the repealed ACA, stay of proceedings and reference of same to an arbitral tribunal was subject to the discretion of the court, despite the existence of a valid arbitration agreement. For a party to an arbitration agreement to obtain a stay, he (requesting party) had the responsibility of showcasing his willingness to engage in arbitration.[35] The inclusion of the “willingness” criterion in the provisions of the repealed ACA led to considerable ambiguity and debates. In some cases, the court has held that there is an obligation on the requesting party to initiate arbitration proceedings prior to pursuing a stay.[36] Consequently, this has impacted negatively on the effectiveness of enforcing arbitration agreements.
However, with the introduction of the AMA, the requirement of demonstrating “willingness” has been eliminated. The AMA mandates that a court must uphold an arbitration agreement by halting ongoing proceedings and referring the parties to arbitration.[37] The only exception to this is where the Court finds that the arbitration agreement is void, inoperative, or incapable of being performed. Furthermore, where a court makes an order for a stay of proceedings, it may where necessary make an interim or supplementary order for the purpose of preserving the rights of the parties.[38]
Grounds For Setting Aside An Arbitral Award
Under the repealed ACA, a party is allowed to dispute an award based on the ground of “misconduct”.[39] The ambiguous interpretation of the term “misconduct” provided an opportunity for unsuccessful parties to mask their actual intent under the “misconduct” allegation to essentially seek a re-evaluation of the award’s merits. This situation led to ambiguity and loss of confidence in the arbitration process. The AMA explicitly streamlined the grounds upon which an award may be set aside.[40] The ambiguity created by the repealed ACA has been cured by the AMA.
Recognition Of Electronic Arbitration Agreement
The repealed ACA provided that all arbitration agreements must 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 that provide a record of the arbitration agreement.[41] The newly enacted AMA made an expansion of the provision of the ACA. In addition to the existing criteria stipulated by the repealed ACA, the AMA introduced the concept of “electronic communication” as a fulfillment of the writing requirement. Specifically, it states that the necessity for an arbitration agreement to be documented in writing can now be met through an “electronic communication” that is both accessible and capable of being utilized for subsequent reference.[42] Electronic communication has been defined by the AMA[43] to “mean any communication that the parties make by means of data messages, that is, any information generated, sent, received, or stored by electronic, magnetic, optical, or similar means, including electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.”
While the repealed ACA could be interpreted to encompass electronic forms of communication within its clause referring to “other means of communication” which provide a record of the arbitration agreement, the exact definition of “other means of communication” remained uncertain. The AMA, through its explicit stipulation, has definitively resolved this ambiguity, clarifying what falls under the category of “other means of communication.”
Procedural Framework For Mediation
The AMA has additionally established both substantive and procedural guidelines for international and domestic commercial mediation, along with the agreements arising from mediation processes.[44] For instance, a settlement agreement arising from mediation is binding upon the parties and can be enforced by a Court as a contract, consent award or consent judgment.[45] In addition, communications made during mediation proceedings are not admissible in any court or arbitral proceedings.[46]
Conclusion
The enactment of AMA and its provisions deserve commendation for introducing a range of innovative measures that are poised to establish a sturdy legal foundation for arbitration and mediation practices in Nigeria. The AMA has aptly considered contemporary trends and seamlessly integrated international best practices into its provisions to wit: the establishment of an award review tribunal, third-party funding, the provision for emergency arbitration, interim reliefs, and so on. With its innovative provisions, the AMA amplifies Nigeria’s allure as a hub for resolving disputes, while also elevating its standing as a preferred seat for international arbitration in Africa. Lastly, a substantial responsibility rests on arbitral tribunals and courts to synchronize their interpretations of the AMA with its underlying intentions. This alignment is crucial in breathing life into the intended purpose of the AMA.
Footnotes
[1] Assent to arbitration, mediation bill will boost dispute resolution – CIArb, https://punchng.com/assent-to-arbitration-mediation-bill-will-boost-dispute-resolution-ciarb/ accessed on 31st August 2023.
[2] The Black’s Law Dictionary (9th Edition) Page 889
[3] Section 13 of the Arbitration and Conciliation Act, Cap A18, Law of the Federation of Nigeria, 2004 (“ACA”)
[4] Roseline Obiageli Nwosu (Mrs), ‘Effective Use of Interim Measures of Protection in Arbitration’ https://nji.gov.ng/wp-content/uploads/2020/11/EFFECTIVE-USE-OF-INTERIM-MEASURES-OF-PROTECTION-IN-ARBITRATION.pdf accessed on 1st August 2023
[5] Article 26 to the First Schedule to the ACA.
[6] Sections 19 – 20 of the Arbitration and Mediation Act, 2023 (“AMA”).
[7] Section 28 of the AMA.
[8] Section 28(3) of the AMA
[9] Section 29 (1) (a) & (b) of the AMA; Please see section 58 of AMA for other grounds.
[10] See Section 91 of the AMA for the definition of Third-party funding agreement and third-party funder.
[11] Zhuang WenXiong, ‘The Subsumation of Maintenance and Champerty Under Third Party Orders’ https://www.jstor.org/stable/24872165 accessed on 1st August 2023.
[12] Section 61 of the AMA
[13] Section 50 (1) (g) of the AMA
[14] Section 16 of the AMA
[15] Sections 19 – 20 of the AMA
[16] Section 16 (5) of the AMA
[17] Section 17 (2) of the AMA
[18] Section 18 (3) of the AMA
[19] Section 56 (1) of the AMA
[20] Section 55 (3) of the AMA
[21] Section 56 (6) of the AMA
[22] Section 56 (4) of the AMA
[23] Section 56 (8) & (9) of the AMA
[24] Section 39 of the AMA
[25] Section 40 of the AMA
[26] Section 6 of the ACA
[27] Section 6 (2) of the AMA
[28] Section 59 of the AMA
[29] Section 13 (1) of the AMA
[30] Harrison Ogalagu, Akinbobola Akinluyi & Nnamdi Ezekwem, ‘An Examination of when a Suit/Action is Statute-Barred: Review of the Supreme Court Decision in Karshi & Ors v. Gwagwa (2022) LPELR-57544 (SC)’ www.topeadebayolp.com accessed on 7th August 2023.
[31] City Engineering Nigeria Ltd v. Federal Housing Authority (1997) 9 NWLR (Pt. 520) 224
[32] Section 34 (1) of the AMA
[33] Section 34 (4) of the AMA
[34] Section 71 of the AMA
[35] Section 5 (1) & (2) of the ACA
[36] Onward Ent. Ltd. v. MV Matrix (2010) 2 NWLR (Pt. 1179) 530
[37] Section 5 (1) of the AMA
[38] Section 5 (3) of the AMA
[39] Section 30 of the ACA
[40] Section 55 of the AMA
[41] Section 1 of the ACA
[42] Section 2 (4) of the AMA
[43] Section 91 of the AMA
[44] Part II of the AMA
[45] Section 82 (2) of the AMA
[46] Section 77 (1) of the AMA