ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN NIGERIA AND THE CHALLENGE OF TIME LIMITATION

ABSTRACT Considering  the importance  of arbitration in the settlement  of commercial  disputes  world over, this work has its focus on the effect of time limitation in the enforcement of foreign arbitral awards in Nigeria being that the current legal position in Nigeria on the limitation period for enforcement of arbitral awards appears to be narrow and too limited compared to what obtains in other parts of the world especially in jurisdictions like England, China and Hong Kong which in our view are better attractions for foreign investors. An analysis of case law and legal regime of principles of recognition and enforcement of foreign arbitral awards in Nigeria is also carried out, the purpose being  to show the progressive acceptability of arbitration  as  an  alternative  means  to  settling  commercial  disputes.  The  work  equally examines the possibility or otherwise of enforcing an arbitral award that is subject to set-aside proceeding  in Nigeria.  Furthermore,  examination  of the attitude of the national  courts to international  commercial  arbitration  in  Nigeria  is  also  carried  out.  The  study  adopts  a descriptive and analytical approach because the work describes and analyses the present state of the law in Nigeria with respect to the area of focus. The objective is to show like in some jurisdictions  such as China, England  and Hong Kong that the limitation  for  commencing enforcement proceedings runs from the final date on which, pursuant to the award, the losing party is obliged to comply with its terms. Finally, some recommendations are offered in view of making Nigeria the centre of interest in conducting foreign arbitral proceeding as well as enforcement of such awards.

CHAPTER ONE INTRODUCTION

1.1.     Background of the Research

Formerly, traditional means of settling disputes have been a common occurrence in Nigeria.1

Before the advent of colonial administration in the late 19th century, parties were represented by persons skilled in oratory prowess, who could argue and who possessed  the persuasive power of argument.2   The most serious disputes were resolved by a  council of elders that would take testimony and sometimes hear the arguments of agents advocating on behalf of the  disputants.3   It  was  the  general  belief  then  that  no  appeal  could  come  from  those judgments partly because the people feared and  believed in the elders and therefore their wisdom could not be questioned.  As  conservative  as this would sound, embedded  in this practice was what has come to be known as arbitration today.

Arbitration has been defined as the reference of a dispute or difference between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent  jurisdiction.4   Arbitration  is defined  in

section 57 (1) of the Arbitration and Conciliation Act5  as commercial arbitration whether or

not administered by permanent arbitral institute. According to Redfern & Hunter, 6  arbitration means a situation where “two or more parties, faced with a dispute which they cannot resolve for themselves,  agreeing that some private  individual  will resolve  it  for  them and if the arbitration runs its full course….it will not be settled by a compromise but by a decision”.

1  A.  Omoghoyega,  “Enforcement  of  Foreign  Arbitral Award  in  Nigeria,” (28  March  2011)  available  at www.etd.ceu.hu/ 2011/abe-Omogboyega.pdf (last accessed 27 August 2012).

2   A. S. Tiewol & A.T. Francis, “Arbitration and the Settlement of Commercial Disputes: a Selective Survey of

African Practice,” The International and Comparative, L.G. 393.396 (1975), p. 17.

3   S. Liundi, “Introduction: Status of Tanzania and Zanzibar and Applicable Laws”, in Arbitration in Africa, 78

– 79 E., Contran & A. Amissah eds., 1996 quoted in  Omogboyega, loc. cit., above at note 1.

4   Halsbury’s  Laws of England, 3rd  edn. Vol. II p. 2; Misr (Nig.) Ltd. v. Oyedele 1996 2 ALR Comm. 157, cited in G. Ezejiofor, The Law of Arbitration in Nigeria, (Ikeja, Lagos: Longman Nig. Plc., 1997), p. 3.

5 Cap. A18, LFN 2004.

6 Redfern & Hunter, Law and Practice of International Commercial Arbitration, (2nd edn., London: Sweet and

Maxwell, 1991), p. 3.

Ezike sees arbitration as a method of settling disputes under which the parties agree to  be bound by the  decision of a third  person whose  decision  is,  in general,  final and  legally binding on both parties7  . As far as the term arbitration is concerned, there are almost as many other definitions of the term as there are commentators on the subject.

Until now, resolutions of transnational disputes remain a relatively strange system in Nigeria,  ultimately  due  to  the  incessant   interference  of  the  military  in  politics   and governance.   Although  Nigeria  gained  her  independence  in  1960,  it  did  not   embrace international commercial arbitration formally by way of statute until the  enactment of the Arbitration and Conciliation Decree 1988. Before then however, practitioners had been well

steeped in international commercial arbitration outside the country.8

The  need  for  resorting  to  arbitration  is more  compelling  considering  the  general advantages  linked  with  arbitration  and  closely  bearing  in mind  the  lethargic  attitude  of Nigerian courts to the resolution of complex business disputes.9  This without doubt scares foreign investors. The disparities between the systems of thinking,  national ideologies and methods  of conducting  business  in various parts of the world,  a national  of a particular jurisdiction will be more likely to present a more  convincing case by the standards of the

court of her jurisdiction than will a foreigner.10  The negative perception of a judge’s national

predisposition  may  prevent  parties  with  different  national  or  cultural  backgrounds  from agreeing on a suitable court to hear their disputes.

For  instance,  the  position  of  Nigerian  law     on  the  limitation  period  for   the

enforcement  of arbitration award appears to be narrow and too limited  compared  to  what

7   E. O. Ezike, Lecture Notes on Law of Arbitration 1, (Unpublished), (Enugu: Faculty of Law, University of

Nigeria, Enugu Campus).

8  E. Akpata, The Nigerian Arbitration Law in Focus, (Lagos: West African Book Publishers Ltd., 1997), p. 4.

9   In IPCO (Nig) Ltd. v. Nigerian National Petroleum Corporation, (2008), EWHC, 725 797 (comm.), the winning party had approached the English court to enforce an arbitral award given in Nigeria. The trial court

deferred to the Nigerian Court when it got wind that a set aside proceedings had been instituted in Nigeria. Strangely, the same court was taken aback when it learnt that the Nigerian court was still entertaining the

same matter for almost three years and there was no hindsight that the case was nearing any completion.

10  C. Lewyer-Thieffry & P. Thieffry, “Negotiating Settlement of Disputes Provisions in International Business

Contracts,” 45 Business Lawyers, (1990), p. 577, cited in Omogboyega, loc. cit., above at note 1.

obtains in other parts of the world especially England which in our view is a better attraction for foreign investors.  In City Engineering  Nig Ltd. v. Federal Housing  Authority,  11     the parties entered into an agreement to build housing units in Lagos. The agreement contained a

provision to submit all matters in dispute in connection with the execution of the contract to arbitration; a dispute arose in the course of the execution of the contract which resulted in the contract being terminated on 12 December 1980.  The matter was referred to arbitration and proceedings commenced in 1981 and ended in 1985 when the arbitrator made his award in favour of City Engineering. In an attempt to enforce the award in 1988, the trial court held that by virtue of section 8 of the Limitation Law of Lagos State, the action for enforcement had become statute barred, having been brought in excess of 6 (six) years after 12 December

1980 when the cause of action arose, a position the Supreme Court upheld. The  Supreme Court was urged on appeal to consider the position in England as demonstrated in Agromet Motoimport Ltd v. Maulden  Engineering  Co. (Beds) Ltd., 12     where it was held that time begins to run from the date of the breach of the implied term to perform the award, and not from the date of the accrual of the original cause of action giving rise to submission.

This position was restated in the  recent English case of IBSSL v. Minerals Trading Corp. 13  where the court held that time begins to run from the date on which the implied promise to perform  the award is  broken, not from the date  of the arbitration agreement nor

from  the  date  of  the  award  as  it  is  in  Nigeria.  The  Supreme  Court’s  decision  in  City

Engineering  represents  the  law  but  this  has  been  criticized  not  only  for  the  palpable difficulties for the contracting parties, but also for future of arbitration in Nigeria generally. 14

11  [1997] 9 NWLR (Pt. 520) 224.

12   [1985] 2 All ER 436.

13 [1996] All ER 176.

14  Olawale Akoni, “Limitation Period for the Enforcement of Arbitration Awards in Nigeria-City Engineering Nig. Ltd. v. Federal Housing Authority,” available at http;//ciarnmigeria.org/page-builder- images/pages/review-of-city-Engineering-case%531%5D.pdf (last accessed 10 September 2012).

As one writer rightly puts it “… what is the use of an arbitral award if the party seeking to enforce such an award is unable to benefit from the fruits of his victory?”15

1.2.     Statement of the Problem

Having obtained the award, the successful party would have to enforce the award against his adversary but atimes the party seeking to enforce the award is constrained  by the  issue of time  limitation.  The Arbitration  and  Conciliation  Act  is silent on limitation  periods  and accrual of the cause of action to enforce an award, leaving those issues to be determined by the various limitation laws applicable  in the States of the  Federation.  The willingness  of Nigerian courts to enforce foreign arbitration awards and the ease or difficulty of doing so and the likely timescale of the process of enforcement are issues of immense concern to any person wishing to enforce an arbitral award in Nigeria.16 This readily brings to mind the issue as to: who and what is affected under such circumstance? Why is it affected? When and how

is it affected? And what does it intend to achieve?

In an attempt to make clear the time limitation period within which a party seeking to enforce  an award  must take advantage  of, the judicial position  in Nigeria  holds  that  the arbitration proceedings and the enforcement of the award both constitute a  single cause of action that must be prosecuted and enforced within the statutory limitation period, this is so tasking considering the fact that in other jurisdictions like China, England and Hong Kong the arbitration proceedings and the enforcement of the award are treated separately.

1.3.     Research Questions

The issue set out in this noble task is the enforcement of foreign arbitral award in Nigeria and the challenge of time limitation. While trying to examine this subject, positive attempts will be made to proffer answers to the following questions:

15 Ibid.

16  N.  Onyeaso, P. Okoronkwo & C. Oguamanam, “Enforcement of Foreign Arbitral Awards in Nigeria”,

(February 2009), available at  www.blackfriars-law.com (last accessed 31 August 2012).

1.   Can foreign arbitral award be enforced in Nigeria?

2.   If the above answer is in the affirmative, is there any time limitation within  which such an award must be enforced in Nigeria?

3.   What is the role of the national courts in enforcing foreign arbitral award in Nigeria?

Assuming the courts do have any role to play on this subject, what standards should national courts utilize in enforcing an arbitral award?

4.   Are there reasonable legal instruments or mechanisms laid down to allay the fears of foreign investors in Nigeria when it bothers on enforcing foreign arbitral award?

In our attempt to x-ray the above questions, greater attention will be given to both legislative and judicial authorities, not in any way undermining opinions of great scholars and writers on this subject, also of interest will be dissenting opinions of judges generally, where need be.

1.4.     Literature Review

We do not pretend to be the first to have written on this very subject but what we are mindful of, and what is yet to be known to us is anyone who has addressed this subject in light of the above  posers  under  our  research  questions.  Nonetheless,  references  were  made  to  key authorities in this field in the course of our research. The major existing literature on the topic of research may be listed as hereunder:

1.   Gaius Ezejiofor’s The Law of Arbitration in Nigeria.17

2.   Orojo and Ajomo’s Law and Practice of Arbitration and Conciliation in Nigeria.18

3.   Ephriam Akpata’s The Nigerian Arbitration Law in Focus. 19

4.   Greg Nwakaby’s The Law and Practice of Commercial Arbitration in Nigeria.20

5.   Redfern and Hunter’s Law and Practice of International Commercial Arbitration. 21

17Above at note 4.

18  Orojo & Ajomo, Law and Practice of Arbitration and Conciliation in Nigeria, (Lagos: Mbeyi & Associates

Nig. Ltd., 2004).

19 E. Akpata, The Nigerian Arbitration Law in Focus, (Lagos: West African Publishers Ltd., 1997).

20  G. Nwakoby, The Law and Practice of Commercial Arbitration in Nigeria, (2nd edn., Enugu: SNAAP Press

Nig. Ltd., 2014).

6.   William Gill’s The Law of Arbitration.22

7.   Peter Binder’s International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions.23

8.   Gary Born’s International Commercial Arbitration.24

9.   Kenneth K. Mwenda’s Principles of Arbitration Law. 25

10. Edwin O. Ezike’s Lecture Notes on Law of Arbitration 1 (unpublished).26

11. Abe Omogboyega’s “Enforcement of  Foreign Arbitral Award in Nigeria”27

In  his  work,  G.  Ezejiofor  holds  that  Nigeria’s  attraction  derives  from  the  fact  that  its arbitration  legislation,   the  Arbitration  and  Conciliation   Act,  is  an  adaptation   of  the UNCITRAL  Model  Law  on  international  commercial  arbitration  and  the  UNCITRAL Arbitration  Rules.  That  the  provisions  of the  Model  Law  and  the  Arbitration  Rules  are informed by the concept of party autonomy to decide, by themselves, all the fundamental questions concerning their arbitration, and minimal  judicial control of the arbitral process. The learned scholar also holds the view that the  Act’s specific provision that parties to an international commercial agreement may stipulate that disputes arising from the agreement shall be referred to arbitration, in accordance with the Arbitration Rules scheduled to the Act, or in accordance  with the  UNCITRAL  Rules, or any other international  arbitration  rules shows how well adapted the Nigerian law is to the requirement of international commercial

arbitrations  and  is  also  liberal  and  flexible.  Again,  that  the  acceding  to  the  New  York

21  Redfern & Hunter, Law and Practice of International Commercial Arbitration, (London: Sweet & Maxwell,

2004).

22W. Gill, The Law of Arbitration, (London: Sweet & Maxwell, 1983).

23P. Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions

(London: Sweet & Maxwell, 2005).

24 G. Born, International Commercial Arbitration (The Hague: Kluwer Law International, 2001).

25 K. Mwenda, Principles of Arbitration Law (Parkland: Brown Walker Press, 2003). Edwin O. Ezike’s Lecture

Notes on Law of Arbitration 1 (unpublished) (Enugu: Faculty of Law, University of Nigeria, Enugu Campus,

2013).

26  E. O. Ezike, Lecture Notes on Law of Arbitration 1, (unpublished), (Enugu: Faculty of Law, University of

Nigeria, Enugu Campus, 2013).

27 LL.M Dissertation submitted to the Central European University, Budapest, Hungary March 2011, available at  www.etd.ceu/hu/2011/abe-omogboyeaga. pdf.

Convention  for the Recognition  and Enforcement  of Foreign Arbitral  Awards by Nigeria further enhances this flexibility.  Notwithstanding the above, he points out that enforcement of a foreign award in Nigeria is a more complex question since it is often governed by treaty obligations.

Orojo and Ajomo are of the opinion that section 51 of the Arbitration and Conciliation Act which bothers on recognition and enforcement of foreign arbitral award is adopted from Article 35 of the UNCITRAL Model law, and that the section has the same objective as the New York Convention,  and  it is wider  in scope in that the  award  is made binding  and enforceable irrespective of the country in which it is made.

While grappling with the above section 51, E. Akpata submits that this section is a re- enactment of a part of the contents of section 31 of the Act which deals with recognition and enforcement of awards in domestic arbitration, except that it does not, however, contain the provisions of sub-section (3) of section 31 which is to the effect that an award may by leave of a court be enforced  in the  same  manner  as  a  judgment  or order  to  the same  effect. According to him, the entire requirements of this section for recognition and enforcement are in actual fact dictated by the provision of  Article IV of the New York Convention on the Recognition  and Enforcement  of  Foreign Arbitral  Awards.  He further asserts that by the combined effect of sections 2  and 4 of the Foreign Judgments (Reciprocal Enforcements)

Act,28 a foreign  arbitral award is registrable in the High Court if at the time of the application

for registration it could be enforced  by execution  in the country of the award but that what is not clear  is whether  it follows  that  in Nigeria  before an application  for  recognition  and enforcement of a foreign arbitral award can be entertained, it is imperative that the award be registered. He quickly answers in the affirmative though acknowledging that such registration

is superfluous.

28 Cap. F53 LFN 2004.

Redfern  and  Hunter  in dealing  with  enforcement  of  the  arbitration  agreement  in chapter ten of their work Law and Practice of International Commercial Arbitration hold the view  that an agreement  to arbitrate,  like any other  agreement  must be  capable  of being enforced  at law, otherwise it will be a mere statement of intention  which, whilst morally binding, is without legal effect. According to these learned authors, it will be of little use to enforce an obligation to arbitrate in one country if it could be evaded by commencing legal proceedings in another.

Therefore, as far as possible, an agreement for international commercial  arbitration must be given effect internationally and not simply in the place where the  agreement was made. In their general approach to recognition and enforcement of arbitral awards they write that the power to enforce an award against a reluctant party, by such summary methods as the attachment of bank accounts or the sequestration of assets, is a power  that forms part of the prerogative of the State and it is not a power the State is likely  to delegate in  consequence, the  enforcement  of awards  must  take  place  through  the  national  court  at  the    place  of enforcement operating under its procedural rules.

However,  the New York Convention  has come to secure a considerable  degree  of uniformity in the recognition and enforcement of awards in most countries of the world. This they say serves to emphasize  that one of the most important  features of  an award in an international  commercial  arbitration  is that  it should  be readily  transportable.  It must be capable of being taken from the State in which it was made, under one system of law, to other States in which it is able to qualify for recognition and enforcement, under different systems of law.

Kenneth  Mwenda  in  his  book  Principles  of  Arbitration  Law  examines  a  global framework  for  arbitration   law  and  outlines   certain  advantages   and   disadvantages   of introducing  arbitration  in  a developing  country.  According  to  him  “although  a  complex

international dispute may sometimes take a great deal of time and money to resolve, even by arbitration, the limited scope for challenge against arbitral  awards, as compared with court judgments, offers a clear advantage.”

Peter  Binder  in  his  International   Commercial  Arbitration  and  Conciliation   in UNCITRAL  Model Law Jurisdictions gives us an insight in chapter one on the  number of issues  the  Model  Law  concerns,  including  the  scope  of  the  law’s  application,  certain definitions and rules of interpretation and the extent of court intervention.  In chapter two, he deals with a number of issues surrounding the arbitration agreement. Besides providing the vital definition of what constitutes an agreement under Art. 7, he also highlights the effect that a court action has in cases  where an arbitral agreement  exists as contemplated  under article 8 of the Model Law.

He  discusses   in  his  chapter   7  attempts   to  minimize   judicial  intervention   in international  commercial  arbitration,  and where such intervention  is permitted,  it is  to be scrutinized  closely. He submits that no State would allow a binding award to be  rendered within its territory without being able to review the award, or at least  without  the parties having the opportunity to address the court in the case of a violation of due process or other irregularities. And finally in chapter 8, he treats recognition and enforcement of awards under the Model Law.

G. B. Born in his work International Commercial Arbitration treats the topic in three parts.  Part  1  examines  the  international  arbitration  agreement,  which  according  to  him, provides the legal and practical foundation for almost all international arbitrations.  Part II addresses  the international  arbitral process  which stands  at the  heart  of any commercial arbitration and finally, Part III discusses international arbitral awards, which he sees as the ultimate  test  of any arbitral  process.  Throughout  all  parts,  the  focus  is on  international

standards and practices with much attention devoted to the United Nations Convention on

Recognition and Enforcement of Foreign Arbitral Awards.

1.5.     Objectives of the Study

The place of international  commercial arbitration cannot be over emphasized,  particularly with reference to the economic benefits that come from foreign investments. It is in view of this that this  research  primarily  seeks  an analysis  of the enforcement  of foreign  arbitral awards by Nigerian courts and the courts’ underlying policy consideration that the arbitration proceedings and the enforcement of the award both constitute a single cause of action that must be prosecuted  and  enforced  within the  statutory limitation  period  contrary to  what obtains in some jurisdictions like China,  England and Hong Kong where the laws provide that limitation for commencing enforcement proceedings run from the final date on which, pursuant to the award, the losing party is obliged to comply with its terms . It also seeks to show the need for the use of arbitration in international or foreign businesses which is mostly necessitated  by  the  courts  seeming  lack of promptness  in dispensing  matters  relating  to business and  investment.   This problem is more pronounced  in disputes involving foreign

investments where the courts may be ill equipped to handle its technicalities.28  It is also our

aim in this research to come up with possible solutions towards enhancing enforcement of foreign arbitral awards in Nigeria.

1.6 .     Methodology

This  being  a  doctrinal  research,  focus  is  given  on  study  of  secondary  sources  of  law. Secondary  sources  of  law  relied  upon  include  statutes,  case  law,  international  treaties, conventions,  books, journals, articles, magazines  and opinions of  commentators were also used in the course of our research. Reliance was also made extensively on materials from the

29  Foluke Olamiposi Akinmoladun, “Enforcement of Arbitral Awards in Nigeria: An Appraisal of Emerging

Trends” (n.d.), available at  http://ssrn.com.abstract=1556607, (last accessed 27 August 2012).

internet   especially considering the fact that the subject under consideration is a topical area under international commercial

1.7.   Organization of the Study

The  research  is  divided  into  seven  chapters  with  clearly  designated  headings  and  sub- headings. Chapter one deals with general introduction with preliminary issues. Chapter two examines an overview of the legal instruments applicable to the recognitions and enforcement of foreign arbitral awards in Nigeria. Chapter three focuses on  enforcement of arbitration agreement.  Chapter four is devoted to the various methods of enforcement of foreign arbitral awards in Nigeria. In Chapter five this work discusses refusal and setting aside of foreign arbitral awards, while chapter six deals with enforcement of arbitral awards and the challenge of time of time limitation in Nigeria. The end result of this work is portrayed in chapter seven which contains our conclusion and recommendations.

1.8.     Scope of the Study

This  work  examines  the  possibility  or  otherwise  of  enforcing  foreign  arbitral  award  in Nigeria. Also crucial to this work is the issue of time limitation within which a party seeking to enforce an award can do so. The work emphasizes the role of the national court and the methods and procedures open to a party who desires to enforce a foreign arbitral award in Nigeria.   The work also takes a look at the legal instruments  dealing  with the subject in question. Also covered by our research is the agreement to arbitrate, the validity or otherwise of such agreement.

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