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RETHINKING THE VIABILITY OF INTERNATIONAL COMMERCIAL ARBITRATION IN NIGERIA

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TABLE OF CONTENTS

TITLE PAGE.. ii

CERTIFICATION.. iii

DEDICATION.. iv

ACKNOWLEDGEMENTS. v

TABLE OF CONTENTS. vi

TABLE OF CASES. ix

TABLE OF STATUTES. xii

TABLE OF ABBREVIATIONS. xv

ABSTRACT. xvi

CHAPTER ONE: GENERAL INTRODUCTION.. 1

1.1      Background to the Study. 1

1.2      Statement of the Problems. 3

1.3      Research Questions. 4

1.4      Aim and Objectives of the Study. 4

1.5      Significance of the Study. 5

1.6.     Research Methodology. 5

1.7      Literature Review.. 5

CHAPTER TWO: LEGAL AND INSTITUTIONAL FRAMEWORKS FOR ARBITRATION IN NIGERIA   13

2.1 Treaty Regimes for Arbitration and ADR in Nigeria. 13

2.1.1   The Hague Convention for the Pacific Settlement of International Disputes 1899 and 1907  14

2.1.2 The Geneva Protocol 1923 and Convention 1927. 14

2.1.3   The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (The New York Convention) 1958. 16

2.1.4 UNCITRAL Model Law on International Commercial Arbitration, 1985. 18

2.1.5 UNCITRAL Arbitration Rules. 23

2.2      Statutory Regime for Arbitration in Nigeria. 23

2.2.1 Arbitration Ordinance 1914. 25

2.2.2 Trade Union Disputes (Arbitration and Inquiry) Ordinance 1941. 25

2.2.3 The Arbitration and Conciliation Act, Cap. 13, Laws of the Federation of Nigeria, 1958  26

2.2.4 Arbitration and Conciliation Decree, 1988, Cap. A18, Laws of the Federation of Nigeria (LFN) 2004  27

2.2.5 Lagos State Arbitration Law 2009. 29

2.2.6 International Centre for Settlement of Investment Disputes (Enforcement of Awards) Act Cap. I20, Laws of the Federation of Nigeria 2004. 29

2.2.7 Nigerian Investment Promotion Commission (NIPC) Act 31

2.3 Institutional Frameworks for Arbitration in Nigeria. 32

2.3.1 Regional Centre for Arbitration. 32

2.3.2 Lagos Court of Arbitration. 34

2.3.3 The Judicial: State High Court (Civil Procedure) Rules. 34

2.3.4 Multi-Door Courthouses. 35

CHAPTER THREE: ENFORCEMENT AND CHALLENGES OF ARBITRATION IN NIGERIA   37

3.1 Enforceability of Arbitration Awards. 37

3.1.1 Enforcement by action upon the Award. 38

3.1.2 Enforcement under the Reciprocal Enforcement of Judgment Ordinance 1958  39

3.1.3 Enforcement under the Arbitration and Conciliation Act (ACA), 1988. 42

3.1.4 Enforcement under the International Centre for the Settlement of Investment Disputes (ICSID) Convention. 46

3.2 Challenges of Arbitration in Nigeria. 47

3.2.1 Unrestricted appeals against orders enforcing arbitral awards. 48

3.2.2 Jurisdiction of the Enforcing Court 48

3.2.3 Statutory Limitation Periods. 50

3.2.4 Out-dated National Arbitration Statute. 52

3.2.5 Other Challenges. 52

CHAPTER FOUR: VIABILIY OF INTERNATIONAL COMMERCIAL ARBITRATION IN NIGERIA   55

4.1 Viability of International Commercial Arbitration in Nigeria. 55

4.2      Comparative Analysis of International Commercial Arbitration Viability in Different Jurisdictions  61

4.2.1 Hong Kong. 61

4.2.2 China. 72

4.2.3 Viability of International Commercial Arbitration in Canada. 88

4.2.4 Viability of International Commercial Arbitration in Germany. 93

CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION   96

5.1 Summary of Findings. 96

5.2 Recommendations. 97

5.3 Conclusion. 99

BIBLIOGRAPHY.. 100

 

 

 

TABLE OF CASES

A v R, (2009) 3 HKLRD 389.                                                                                     51

Access Bank v Erastus Akingbola (Suit No. M/563/2013)                                          46

 

Andrew Mark Macaulay v. Raiffeisen Zentral Bank (RZB) Austria

(2003) 18 NWLR (Part 852) 282                                                                                37

 

Agromet Motoimport Ltd v. Maulden Engineering Co. (Beds) Ltd. (1985) 2

All ER 436                                                                                                                  48

 

Belship Navigation, Inc. v. Sealift, Inc., No. 1:95-CV-02748, 1995 WL 447656,

(S.D.N.Y. July 28, 1995)                                                                                            13

 

City Engineering Nigeria Limited v. Federal Housing Authority (1997) 9 NWLR (520) 244                                                                                                                        48

 

C.G. de Geophysique v. Etuk (2004) 1 NWLR (Pt. 853) 20 CA                                25

 

Corporacion Transnacional de Inversiones, S.A. de C.V. v. STET

International, S.p.A. et al., (Ont. S.CJ,),  (1999) 45 O_R. (3d) 183                           67

 

Corporacion Transnacional de Inversiones, S.A. de C.V. v. STET

International, S.p.A. et al. (2000) 49 O.R. (3d) 414 (Ont. C.A.).                               67

 

Dale Power Systems Plc v. Witt & Busch Ltd (2001) 8 NWLR (Pt. 716)                   36

 

Dunhill Personnel System Inc. v. Dunhill Temps Edmonton Ltd. (19931 A.J. No, 716,13 Alta Lit (3d) 241 (Alta {Q.$.)                                                                         67

 

Dufercos S.A v Nngbo Arts & Crafts Import & Export Co. Ltd (2009)                      57

Ebokam v. Ekwenibe & Sons Trading Company [2001] 2 NWLR (Pt. 696) 32        43

 

Fritz Scherk v. Alberto Culver Co. (1974) 417 US 506                                              15

 

Gao Haiyan v Keeneye Holdings Ltd 120111 3 HKC 157                                         48

Grand Pacific Holdings Ltd. v Pacific China Holdings Ltd. [2012] 4#

HKLRD 1(CA)                                                                                                          49

 

Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (No. 1)                            52

Gen. Sani Abacha & 3 Ors. v. Chief Gani Fawehinmi(2000) 4 SC (pt. 1) 1.             10

Guadalupe Gas Products Corporation v. Nigeria ICSID Case No. ARB/78/1         28

 

Halaoui v. Grosvenor Casinos Ltd (2002) 17 NWLR (Pt. 795)                                 36

 

Hebei Import & Export Corp v Polytek Engineering Co. Ltd., (2014] HKCFI 894   51

Imani & Sons Ltd. v. BIL Construction Co. Ltd [1999] 12 NWLR [Pt. 630]

253 at p. 263                                                                                                               40

 

Jati Erat Sdn Bhd v. City Land Sdn Bhd [2002] 1 CLJ 346                                        61

 

KB v S (HCCT 13/2015)                                                                                             40

L.A.C v. A.A. Ltd (2006) 2 NWLR (Pt 963) 49                                                          7

 

M.V. Lupex v. Nigerian Overseas Chartering and Shipping Limited (2003) 15

NWLR (Part 844) 469                                                                                                            54

 

Macaulay v. R.Z.B of Austria (2003) 18 NWLR (Pt. 852) 282                                  38

 

Marine and General Assurance Co Plc v. Overseas Union & 7 Others

(2006) 4 NWLR (Part 971) 622                                                                                  37

 

Murmansk State Steamship Line v Kano Oil Millers Limited (1974) All

N.L.R 893                                                                                                                   47

 

Niger Progress Ltd. v. N.E.I. Corp. (1989) 3 NWLR (Part 107) 68                           54

 

Nwanezie v. Idris (1999) 3 N.W.L.R. (pt.279) 1 at 16 paras B-C                              41

 

Nwadiogbu v. Nnadozie, (2002) 12 NWLR (Pt.727) 318                                          6

 

Nonhal Shipping Co v Hong Kong United Dockyards Ltd 119961 2 HKC 639        46

Onogoruwa v. Akinremi (2001) 13 NWLR (Pt.729) 38                                             6

 

Paquito Limo Buton v Rainbow Joy Shipping Ltd Inc. (2008) 11 HKCFAR 464      44

Quintette Coal Ltd. v. Nippon Steel Corp. Court of Appeal (1990) 50 B.C.L.R. (2d) 207, (1991) 1 NA/M.R. 219 (B.C.C.A.)                                                                  67

 

Quintette Coal Ltd. v. Nippon Steel Corp. (1990), 50 B.C.L.R. (2d)

xxviii (S.C.C.)                                                                                                             67

 

Quintette Coal Ltd. v. Nippon Steel Corp., (1990) 47 B.C.L.R. (2d) 201, 48

B.L.R- 32 (B.C.S.C.),                                                                                                 67

 

Sarawak Shell Bhd v. PPES Oil & Gas Sdn Bhd [1997] 2 MLJ 280, [1998] 2

MLJ 20                                                                                                                        61

 

Saudi Arabia v Arabian American Oil Co. (ARAMCO). 27 ILR 117 (1963)             70

 

Schreter v. Gasrnac Inc., (1992) 7 0. R. (3d) 608, 89 D.L.R. (4th) 365

(Ont. Gen. Div.).                                                                                                   68, 69

 

Shell Petroleum Development Company of Nigeria Limited v Federal Board of Internal Revenue(1996) 8 NWLR (Pt.466)256                                                     6

Threlkeld & Co. v. Metallgesellschaft Ltd., 923 F.2d 245, 248, 250

(2d Cir. 1991)                                                                                                             13

 

Topher Inc of New York v Edokpolor (Trading as John Edokpolor & Sons)

(1965) All NLR 307                                                                                                   35

 

Tulip (Nig.) Ltd. v. Noleggioe Transport Maritime S.A.S 2011] 4

NWLR (Pt.1237)254                                                                                                  38

 

Willesford v. Watson (1873) 8 Ch. App.473                                                               54

 

 

 

 

TABLE OF STATUTES

 

NIGERIAN

Arbitration and Conciliation Act Cap. 19, Laws of the Federation of Nigeria, 1988

Arbitration and Conciliation Act, Cap. 19, Laws of the Federation of Nigeria, 1990

Arbitration and Conciliation Act, Cap. A18, LFN, 2004

International Centre for Settlement of Investment Disputes

(Enforcement of Awards) Act Cap. I20, Laws of the Federation of Nigeria 2004

Oil Pipelines Act, Cap. O7, Laws of the Federation of Nigeria, 2004,

  1. 17(5)

Petroleum Act, Cap. P10, Laws of the Federation of Nigeria, 2004,

s.11,

Regional Centre for International Commercial Arbitration, Cap. R5, LFN, 2004

United Nations Centre for International Trade Law (UNCITRAL)

Model Arbitration Rules, 1976

United Nations Centre for International Trade Law (UNCITRAL) Model Law, 1985

United Nations Centre for International Trade Law (UNCITRAL)

Model Law on International Commercial Arbitration, 1958

Lagos State (Civil Procedure) Rules Order 26

 

High Court of the Federal Capital Territory (Civil Procedure) Rules

Order 30.

 

Lagos State (Civil Procedure) Rules 2012

Order 25 Rule 6 of the

 

Federal High Court (Civil Procedure) Rules 2009

Order 18

 

Lagos State (Civil Procedure) Rules 2012

Order 3 Rule 11

 

High Court of Lagos State (Civil Procedure) Rules 2012

Order 25 of the

 

Federal High Court (Civil Procedure) Rules 2009

 

Arbitration and Conciliation Act Cap A28 LFN 2004

 

Foreign Judgment (Reciprocal Enforcement) Act Cap 35 LFN 2004

Section 2

Section 3(1) of the Reciprocal Enforcement of Judgments Ordinance, 1922.

 

Interpretation Act, Cap 123, Laws of the Federation of Nigeria 2004,

section 18;

 

Legal Practitioners Act, Cap L11. Laws of the Federation of Nigeria 2004,

section 24.

 

Regional Centre for International Commercial Arbitration Act No 39 of 1999, Laws of the Federation of Nigeria 2004.

Arbitration and Conciliation Act (ACA), Cap. A18, Laws of the Federation of Nigeria (LFN) 2004.

 

FOREIGN

African Charter on Human and Peoples’ Rights (Ratification and  Enforcement) Act, Cap. A9 of the Laws of the Federation of  Nigeria, 2004.

 

Convention on the Settlement of Investment Disputes, 1965.

International Convention on the Recognition and Enforcement of

Foreign Arbitral Awards, 1959

Convention on the Settlement of Investment Disputes Act 1966

 

Commercial Arbitration Act, R.S.C. 1985, (2nd Supp.) (hereinafter `federal Commercial Arbitration Act’).

  1. 17

 

Arbitration Act No. 4 of 1995, laws of Kenya is modelled along the UNCITRAL Model law, of 1985.

 

Constitution of Kenya

Section 159

 

Nairobi International Arbitration Centre Act No. 26 of 2013, Laws of Kenya

 

International Commercial Arbitration Act, S.A. 1986, (hereinafter `Alberta International Commercial Arbitration Act’)

  1. I- 6.6

 

International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (hereinafter `British Columbia International Commercial Arbitration Act’),

 

International Commercial Arbitration Act, S.M. 1986-87,

  1. 32, Chap. 0151;

 

International Commercial Arbitration Act, S.N.B. 1986,

  1. 1-12.2;

 

International Commercial Arbitration Act, R.S.N. 1990,

  1. I-I5;

 

International Commercial Arbitration Act, R.S.N.W.T. 1988,

  1. I-6;

 

International Commercial Arbitration Act, R.S.N.S. 1989,

  1. 234;

 

International Commercial Arbitration Act, R.S.P.E.l. 1988,

  1. I-5;

 

International Commercial Arbitration Act, S.S. 1988$9,

  1. 1-10.2;

 

International Commercial Arbitration Act, R.S.O. 1990, c. 1,9 (hereinafter `Ontario International Commercial Arbitration Act’);

 

International Commercial Arbitration Act, S.Y. 1987,

  1. 14;

 

Civil Code and the Code of Civil Procedure in Respect of Arbitration, S.Q. 1986, (hereinafter `Quebec Act to Amend the Civil Code and the Code of Civil Procedure’).

 

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958

 

UNCITRAL Model Law on International Commercial Arbitration, 1985

 

TABLE OF ABBREVIATIONS

A.C.                            Appeal Cases

A.C.A.                                    Arbitration and Conciliation Act

A.C.D.                                    Arbitration and Conciliation Decree

A.D.R.                                    Alternative Dispute Resolution

C.F.R.N.                     Constitution of the Federal Republic of Nigeria

E.C.O.S.O.C.              United Nations Economic and Social Council

F.S.C.                          Selected Judgments of the Federal Supreme Court

F.W.L.R.                     Federal Weekly Law Reports

H.L.                             House of Lords (United Kingdom)

I.C.C                           International Chamber of Commerce

I.C.J                            International Court of Justice

I.C.S.I.D.                    International Centre for the Settlement of Investment Disputes

M.S.C.                         Mediated Settlement Agreement

N.I.C.N.                      National Industrial Court of Nigeria

Nig. L.J.                      Nigerian Law Journal

N.I.M.A.S.A.              Nigerian Maritime Administration and Safety Agency

O.D.R.                                    Online Dispute Resolution

UNCITRAL               United Nations Centre for International Trade Law

W.A.C.A.                    West African Court of Appeal Reports

 

ABSTRACT

International commercial arbitration is a means of resolving disputes arising under international commercial contracts. The complications associated with international commercial transaction make the growth of arbitration necessary. The necessity arises from the fact that the participants in international commercial transactions are from different jurisdictions and enforcement of right through litigation will involve the possibility of conflict of laws. With current issues relating to industrialisation and globalization, different conflict areas have emerged and will surely continue to emerge. From the foregoing therefore, International Commercial Transactions are widely used in oil exploitation and exploration in Nigeria and is surrounded by conflicts, grievances and controversies that need to be resolved for peaceful and harmonious existence in the country. The initial inroad into arbitration of international commercial transaction came from New York Convention, 1958. This incorporates the UNCITRAL Rules and Model law. The UNCITRAL Arbitration Rules provide set of procedural rules upon which parties may agree for the conduct of arbitral proceedings. The Model law made provision for uniformity and modernizing the national laws on arbitration of member countries by recognizing the need to curtail judicial intervention to the formation of the arbitration agreement. In Nigeria, the Arbitration and Conciliation Act provided for the adoption of the New York Convention and a unified legislation for arbitration in Nigeria. This work expounds on the viability of International Commercial Arbitration in Nigeria. It aims at ascertaining the options that can encourage International Commercial Arbitration in Nigeria. The work discusses the legal and Institutional frameworks for arbitration in Nigeria and the viability of International Commercial Arbitration in other jurisdiction around the world; Enforcement and challenges of Arbitration in Nigeria and factors that can encourage International Commercial Arbitration in Nigeria. The work adopted the doctrinal method of research; placing reliance on both primary source materials like legislation and secondary materials like case-law, textbooks, journals, conference papers, articles, reports and internet materials. The work found that the use of arbitration in modern dispute settlement in Nigeria is still faced with the challenges and scepticism surrounding the presumed unenforceability of such foreign clauses. Nigerian courts are reluctant to enforce these clauses, resulting from the apparent divergent legislative and judicial policies and the issues of whether foreign arbitration clauses are void as being Ouster clauses. The work recommends that the Judiciary must adopt a pro-enforcement stance when dealing with enforcement of arbitration agreement and awards; Nigerian judges must be wary of granting anti-arbitration injunctions, except in exceptional cases; the security situation and perception of corruption must both be addressed; several state governments are encouraged to enact arbitration statutes to aid arbitration within their jurisdiction. The work concludes that arbitration will enhance the viability of international commercial transactions and is recommended in Nigeria.

 

 

CHAPTER ONE

GENERAL INTRODUCTION

 

1.1       Background to the Study

Trade or commercial transactions are usually associated with the possibility of disputes arising and the complications associated with international commercial transactions makes the growth of arbitration both necessary and important. The necessity and importance arises from the fact that the participants in international commercial transactions are from different jurisdictions. Also, the enforcement of rights through litigation will involve the possibility of conflict of laws, high cost and delay in the process of dispute resolution.

 

The initial inroad into arbitration of international commercial transactions came from the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards also known as the New York Convention, 1958. The United Nations Commission on International Trade Law (UNCITRAL) was established by the United Nations General Assembly by its Resolution 2205 (xxi) of 17 December 1966 ‘ ‘‘to promote the progressive harmonization and Unification of International trade law’’.

 

When world trade began to expand dramatically in the 1960’s, national government began to realize the need for a global set of standards and rules to harmonize national and regional regulations, which until then governed international trade. UCITRAL Arbitration Rules provide a comprehensive set of procedural rules upon which parties may agree for the conduct of arbitral proceedings arising out of their commercial relationship and are widely used in ad hoc arbitrations as well as administered arbitrations.[1] The Rules cover all aspects of the arbitral process, providing a model arbitration clause, setting out procedural rules regarding the appointment of arbitrators and the conduct of arbitral proceedings, and establishing rules in relation to the form, effect and interpretation of the award.[2] At present, there exist three different versions of the Arbitration Rules: (i) the 1976 version; (ii) the 2010 revised version; and (iii) the 2013 version which incorporates the UNCITRAL Rules on Transparency for Treaty-based Investor-State Arbitration.[3]

 

A model law is a legislative text that is recommended to states enactment as part of their national law. Model laws are generally finalized and adapted by UNCITRAL at its session. The Model Law provides a set of rules which would facilitate the settlement of international commercial disputes by bringing about uniformity and modernizing the national laws on arbitration of member countries. It aimed at recognising the need to curtail judicial intervention to the formation of the arbitration agreement, the appointment of the arbitral tribunal, any challenges to such appointment that may arise, the basic rules of conduct of arbitration proceedings to the termination of proceedings by the making of the arbitral award, the finality of such award and the grounds on which the arbitral award may be challenged before the national courts.[4]

 

In Nigeria, the Arbitration and Conciliation Act (ACA), 1988[5] provided for the adoption of the New York Convention and also provided a unified legislation for arbitration in Nigeria. The 1988 ACA replaced the Arbitration and Conciliation Act, 1958.[6] In Nigeria, adjudication by the traditional courts seems unable to meet the challenges of dispute resolution, and in particular international commercial disputes. Therefore, arbitration became an option geared towards creating opportunity for effective service and justice delivery to promote harmonious relationship between disputants. It aims at avoiding or reducing the bickering in industry or organization and avoiding the floodgate of litigations.

 

The need for the enforcement of decisions arising from relevant statutes resulted in the setting up of International Centre for Settlement of Investment Disputes (ICSID). Nigeria enacted the International Centre for Settlement of Investment Disputes (Enforcement of Awards) Act,[7] which provides for the enforcement in Nigeria of an award by the ICSID in Nigeria.

 

Arbitration intends that dispute resolution will be achieved within a reasonable time rather than unreasonable length of period and that justice delayed is justice denied, and to avoid the litigation process where the wheels of justice grind very slowly. The litigation process involves enormous amounts of cost that bothers on time, energy, and money. The use of arbitration in modern dispute settlement in Nigeria is still faced with the challenges and scepticism surrounding the presumed unenforceability of such foreign clauses via Nigeria’s national courts resulting from the apparent divergent legislative and judicial policies and the issue of whether foreign arbitration clauses are void as being ouster clauses. Thus, the need to rethink its viability of international commercial transactions with respect to their extent, benefit and perceived limits or drawbacks in Nigeria.

 

1.2       Statement of the Problems

The problem which arbitration is designed to overcome still persists as dispute resolution is not achieved within a reasonable time. Thus, putting Nigerian disputants to great cost and expense going abroad, when in fact most of the disputes can be arbitrated under Nigeria’s arbitration laws, or within Nigeria.[8] Nigeria is still rarely preferred as a jurisdiction of choice (either as lex arbitri[9]or as locus arbitri[10]) or seldom selected as an arbitral body. With dispute resolution are conducted outside Nigeria mostly in London or Singapore.

 

With current issues relating to industrialisation and globalization, different conflict areas have emerged and will surely continue to emerge, especially with international commercial transactions. The activities of government, multi-nationals and individuals bring about conflict. In the instance in Nigeria, oil exploitation and exploration which involves international commercial transactions is increasingly associated with conflicts and controversies. For a developing nation like Nigeria that is craving for foreign direct investments, there has to be an established high level of confidence in resolution of disputes so as to encourage investors.

 

The use of arbitration in modern dispute settlement in Nigeria is still faced with the challenges and scepticism surrounding the presumed unenforceability of such foreign clauses via Nigeria’s national courts resulting from the apparent divergent legislative and judicial policies and the issue of whether foreign arbitration clauses are void as being ouster clauses. Thus, the need to rethink its viability of international commercial transactions with respect to their extent, benefit and perceived limits or drawbacks in Nigeria.

 

The research would go about in breaking down these problems that have inhibited the viability and growth of International Commercial Arbitration in Nigeria viz, the exposition of the challenges, the causal elements of these challenges and the potential solutions of these challenges. The research would specifically find answers to the questions relating to the advantages cum benefits of arbitration as a means of settlement of disputes, exposing some of the drawbacks to International Commercial Arbitration in Nigeria, and running a comparative analysis on the viability of International Commercial Arbitration in other jurisdictions around the world.

 

1.3       Research Questions

This research project will address three research questions:

  1. What are the legal and institutional frameworks for arbitration in Nigeria?
  2. What makes International Commercial arbitration viable in other jurisdiction around the world?
  3. What factors can encourage International commercial Arbitration in Nigeria?

 

1.4       Aim and Objectives of the Study

The aim of this study is to present a rethink on the viability of international commercial arbitration in conflict resolution and dispute settlement of international commercial arbitration in Nigeria. The specific objectives of the study include:

  1. To determine the legal and institutional frameworks of arbitration in Nigeria.
  2. To analyse the viability of International Commercial Arbitration in other jurisdictions around the world.
  3. To ascertain factors that can encourage International commercial Arbitration in Nigeria.

 

1.5       Significance of the Study

The need for disputes arising from commercial transactions to be settled expediently has been accepted by all, including the courts. This support has continued because the courts cannot cope with the volume of cases before them and parties are encouraged to use ADR and arbitration to settle matters that may arise.

 

The significance of this study on international commercial arbitration will show the cost implications on the disputants. Equally, it will set out what might encourage more referral of international arbitration cases to Nigeria and identify the challenges facing Arbitration in Nigeria. This will serve the interest of judicial officers, legal practitioners, policy formulators, and the Law Reforms Commissions at Federal and State levels in bringing out the viability of international commercial arbitration in Nigeria so that steps can be taken to improve on it.

 

1.6.      Research Methodology

This research adopted a doctrinal methodology. Reliance was placed on arbitration statutes, international conventions and treaties, as primary source of data, while, secondary sources of data include textbooks, journals, newspapers, law reviews, and case law. The study made use of descriptive and comparative designs in analysing the data for the research.

 

1.7       Literature Review

The viability of arbitration for dispute resolution of international commercial transactions in Nigeria has been strongly recommended. Supporting this recommendation on the viability of arbitration as a dispute resolution mechanism over litigation, Peters noted that:

Arbitration as a dispute resolution mechanism has several advantages and attractions over Litigation. It is, for instance, convenient and expeditious. It is cost effective, helps in building and maintaining relationship of the parties especially business relationship. Yet, Arbitration affords parties the benefit of having experts in the relevant fields resolve their dispute: again, informal nature of arbitration proceedings saves the parties from the rancorous tendencies and consequences often associated with Litigation. It should be noted further that Arbitration, in contrast to Litigation, is private and is well concerned with fair treatment of parties. It is apt to say the arbitral process is sourced in the market place where commercial principles of fairness and justice are expected rather than the strict application of Law.[11]

 

Bennett maintains that arbitration is a form of ADR which like other forms is used for private dispute resolution method and chosen by parties as alternative to the conventional litigation and is fashioned to fit the purpose or particular need.[12]In litigation, the “winner takes all” is the position, its result may surprise either of the parties because it is the decision of an independent third party which definitely takes away the opportunity of the disputing parties devising a win-win situation or taking part in the resolution of their dispute.

 

Resort to other means of dispute settlement has now been widely accepted and used in most international commercial transactions and also supported by some legislations for example in the Oil and Gas Sector.[13] Most of these sectors now long for the benefit of an efficient and effective dispute resolution provided by arbitration and ADR. The need for re-thinking their viability and applicability in dispute resolution involving international commercial transactions is the focus in Nigeria.

 

If one considered the injustice surrounding the lifespan of cases that have moved from the trial High Court to the Supreme Court in Nigeria, and in the instance, the case of Nwadiogbu v. Nnadozie which lasted for 23 years,[14] Shell Petroleum Development Company of Nigeria Limited v Federal Board of Internal Revenue[15] which lasted for 27 years then the saying that justice delayed is one denied, is made manifest. In this regard, Professor Ephiphany Azinge and Adejoke O. Odediran noted that the conclusion of cases by superior courts is not encouraging in any way, as they noted thus:

Research shows that courts of superior record throughout the country hardly ever dispose of up to half of cases allocated to them. In 2008, the Court of Appeal disposed of 11.4% of the cases allocated to it. While in 2009, the Court of Appeal disposed of 10.3% cases, the Federal High Court disposed of 14.8% and the National Industrial Court disposed of 1.9%. In 2010, the Court of Appeal disposed of 12.6%; the Federal High Court disposed of 10.6% while the National Industrial Court disposed 3.3%. In 2011, the Court of Appeal disposed of 24.3% and the National Industrial Court had 8.4%.[16]

 

The above factual research outcome makes it necessary for arbitration and other ADRs to top the needs of international commercial transaction and a toast for business viability  in Nigeria. But the view of domestic courts in construing a foreign arbitration clause is highly dependent on whether or not the domestic court views such a foreign clause as an ouster clause. In determining the validity of contract clauses, domestic courts would enforce their own domestic laws as against the foreign arbitration clauses.[17]

 

The courts usually adopt various modes of judicial construction, aimed at arriving at the same result, which is to jettison the foreign arbitration clauses, thereby making the foreign arbitration clauses inherently unenforceable. In Nigeria, reliance is placed on section 20 of Nigeria’s Admiralty Jurisdiction Act, 1991.[18] While, section 4 of Nigeria’s Arbitration and Conciliation Act gives Nigerian courts discretion as whether or not to stay proceedings pending reference to arbitration in a foreign country. Also, by virtue of section 5 of the same Act does give the courts such wide discretion. Thus raising policy conflicts over the enforceability of such clauses, as the main reason why Nigeria is in most cases not selected as locus arbitri or lex arbitri in most standard form contracts, resulting to loss of briefs to international counterparts.[19]

 

On the issue of viability of arbitration in Nigeria, Badejo-Okusanya asserted that:

 

 

“Not only do I think Nigeria is a viable destination, it is a natural destination and, increasingly importantly, it is neutral destination.”[20] She went ahead to state that many Nigerian judges currently are willing to be trained as arbitrators and that the era when the courts saw arbitration as a mover to ouster their jurisdictions as this is now evident in progressive judgements been delivered.[21] Adesanya also postulated that Nigeria sits in a region with globally identified investment opportunities albeit with a tad of wariness.[22] She also stated that as international arbitration thrives on commercial activity, chances are that there would be consistent increase in the number of international arbitration involving African parties.[23]

 

Ogundipe asserted that efforts to make Nigeria a venue in which potential users of the arbitral process would readily accept, have met with very little success, and one continues to find arbitral provisions in commercial agreements, which seek to have arbitrations take place elsewhere, albeit that any dispute that might arise from the agreement would be a Nigerian dispute.[24] McQueen stated that in order for an arbitration seat to be chosen as a place in which to conduct arbitration, it must be attractive to commercial parties, having a combination features.[25] That combination of features are its arbitration legislation, its courts, its arbitration practitioners and its facilities and its support services.[26]

 

Muigua opined that irrespective of the fact that there are individuals who have acquired the requisite expertise and experience necessary for international dispute resolution and the institutions, which specialize in, or are devoted to, facilitating alternative dispute resolution (ADR), there has been a general tendency by parties to a dispute doing business in Africa to go back to their home countries to appoint arbitrators.[27] This is further complicated by the fact that most disputants prefer to appoint their non-nationals as arbitrators in international disputes, thus resulting in instances where even some Africans go for non-Africans to be arbitrators.[28]

 

Azikiwe stated that arbitration as an alternative dispute resolution mechanism has gained widespread acceptance in Nigeria, largely due to increased commercial activity and the inflow of foreign direct investment.[29] International Bar Association (IBA) asserted that the reason for the increased use of arbitration across sub-Saharan Africa as a whole lies not only with the parties’ control over the process but also primarily with their ownership of the pace of the proceedings and the confidentiality afforded by arbitration.[30]

 

Under the Arbitration and Conciliation Act, the right and jurisdiction of the court to stay proceedings exist where a party in breach of the arbitration agreement commences an action in court instead of first going into arbitration of the dispute that has arisen. Section 4 and 5 of the Arbitration and Conciliation Act provide for a stay of proceedings. Section 4(1) of the Act provides that;

 

a court before which an action which is the subject of an arbitration agreement is brought shall, if any party so requests not later than when submitting his first statement on the substance of the dispute order stay of proceedings and refer the parties to arbitration.

 

Section 4(2) of the Act provides that:

Where an action referred to in subsection (1) of this section has been brought before a court, arbitral proceedings may nevertheless be commenced or continued and an award may be made by the arbitral tribunal while the matter is pending before the court.

 

5(1) and (2) of the Act provides that:

  • If any party to an arbitration agreement commences any action in court in respect to any matter which is the subject matter of an arbitration agreement, any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other step in the proceedings apply to the court to stay the proceedings.
  • A court to which an application is made under subsection (1) of this section may, if it is satisfied.
  • That there is no sufficient reason why the matter should not be referred to arbitration in accordance with the arbitration agreement; and
  • That the applicant was at the time when the action was commenced and still remains ready and willing to do all things necessary to the proper conduct of the arbitration, make an order staying the proceedings.

 

In section 5 of the Act, the court has discretion to order a stay of proceeding and refer the parties to an arbitral tribunal. Section 4 failed to give the court any discretion in determination of the application for stay of proceedings. A careful interpretation of section 4 shows that once an application for a stay of proceedings is good on the fact of it, the court shall do only the thing and that is to grant a stay of proceedings in that regard. Sub-section 2 of the section gives the impression that the action in court can go on concurrently with arbitral proceedings. This means that where the court refuse to grant an application for stay of proceedings the aggrieved party can still insist an arbitration and go on with same irrespective of the action in court. This seems unconstitutional as it constitutes a challenge to the inherent jurisdiction of the court to grant or refuse an application made before it.

 

Section 4(2) of the Act failed to state what will be the position of an award made during the pendency of an action. In court on the same subject matter or, in the alternative, what will be the position of a judgement rendered by the court after an award had been made by an appointed arbitrator. Section 4(2) is most unsatisfactory as it is contrary to the basic philosophy of arbitration. Arbitration is not an attack on the court. Constitutionally, courts have jurisdiction to entertain matters within the areas of their jurisdiction as provided by the constitution. To give the impression that arbitrators could disobey the order of the court and go on with arbitral proceedings contrary to the order of court is unacceptable for arbitration is not antagonistic to the court.

 

Section 5 of the Act confers on the court the discretion to grant or refuse an application for stay of proceedings. it did not stop at that, rather it goes on in section 5(2) to set out some of the issue which the court may consider before granting or refusing the application for stay of proceedings. it seems that section 5 is preferred to section 4. It is however wrong to have these two conflicting sections on the same subject matter in the same legislation. To deny the High Court the Indirect Ouster of the jurisdiction of court whereas arbitration agreement in the realistic sense of it is not an ouster of court jurisdiction. In all the court has discretion either to grant or refuse an application for stay of proceedings made before it1. In M. V Lupex v. Noc Ltd[31], His Lordship Mohammed JSC had this to say:

 

Judges and courts exercise their discretion in accordance with rules of law and justice and not according to private opinion. An exercise of discretion ;is a liberty or privilege to decide and act in accordance with what is fair and equitable under the peculiar circumstances of the particular case, guided by the spirit and principles of law. Where parties have chosen to determine for themselves that they would refer any of their dispute to arbitration instead of resorting to regular courts, la prima facie duty is cast upon the Court to act upon their agreement.  

 

From the above literatures relating to the subject matter of this research, there has not been any which assesses the viability of international commercial arbitrations in Nigeria. Thus, the topic of this research work was formed to fill the existing gap.

 

 

 

[1] United Nations Commission on International Trade Law, UNCITRAL Arbitration Rules, International Commercial Arbitration and Conciliation, http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/2010Arbitration_rules.html, accessed 30/08/17, 12:16am.

[2] Ibid

[3] Ibid

[4] M. Taly, Arbitration Law-A Primer, (Lucknow: EBC Publishing Ltd; 2011), p. 8.

[5] Arbitration and Conciliation Act (ACA), Cap. A18, Laws of the Federation of Nigeria (LFN) 2004.

[6] Cap. 13, Laws of the Federation of Nigeria, 1958

[7] Cap. I20, Laws of the Federation of Nigeria 2004

[8] Doyin Rhodes-Vivour, “Maritime Arbitration in Lagos”, Paper delivered at the International Bar Association Conference “Arbitration in Maritime and Transport Disputes” held in Hamburg Germany on the 26th-28th day of April 2007; p.14.

[9]The law of the place or seat of arbitration, which often governs the arbitration.

[10] The place of arbitration

[11]     D. Peters, Arbitration & Conciliation Act Companion, Including Customary Arbitration(With Cases From 1958-2005), (Lagos: Dee-Sage Nigeria Limited, 2006), pp. 18 – 19.

[12]     S. C. Bennett, Arbitration Essential Concepts, (New York: ALM Publishing, 2002), p. 4.

[13]     The Petroleum Act, Cap. P10, Laws of the Federation of Nigeria (LFN), 2004, s.11, and Oil Pipelines Act, Cap. O7, LFN, 2004, s. 17(5) both requiring settlement of dispute arising from oil exploitation between the oil companies and local community by arbitration.

[14]     (2002) 12 NWLR (Pt.727) 318. Another of such cases is Onogoruwa v. Akinremi (2001) 13 NWLR (Pt.729) 38.

[15]    (1996) 8 NWLR (Pt.466)256

[16]E. Azinge and A. O. Odediran, Traditional Administration of Justice in Nigeria, (Abuja, Nigeria, Institute of Advanced Legal Studies: NAILS Press, 2012), pp. 46 – 47.

[17]  L.A.C v.A.A. Ltd (2006) 2 NWLR (Pt 963) 49. See also Fidelis Oditah, QC, SAN, “Emerging Trends In The Enforcement Of Maritime Arbitration, Awards And ADR Settlements”, being a paper presented at the NIMASA/MAAN Seminar on Promoting Maritime Administration and Alternative Dispute Resolution in the West and Central African Sub-Region held at the Federal Palace Hotel, Victoria Island, Lagos on 28 April 2010.

[18] Cap. A18, LFN, 2004

[19]A.A. Olawoyin “The Impact of Foreign Arbitration and Foreign Jurisdiction Clauses on the Development of Maritime Arbitration in the Sub-Region – Nigeria as a Case Study”, being a Paper presented at a seminar on Promoting Maritime Arbitration and Alternative Dispute Resolution in the West and Central African Sub-Region on 28th April 2010 at the Federal Palace Hotel, Victoria Island, Lagos; p.18

[20] J. Onyekwere, ‘Nigeria is a viable destination for international commercial arbitration,’ Interview with Oyinkansola Badejo-Okusanya, chair of the 2016 yearly Conference of the Chartered Institute of Arbitrators, (CIArb), Nigeria branch, The Guardian, 08 November 2016, https://guardian.ng/features/law/nigeria-is-a-viable-destination-for-international-commercial-arbitration/, accessed 30/08/2017, 8:06am.

[21] Ibid

[22] O. Adesanya, What can be Done to Make Nigeria a Popular Seat for International Commercial Arbitration? University of New South Wales, Australia.

[23] Ibid

[24] B.O. Ogundipe, Developing Nigeria into an International Arbitration Centre, Paper delivered at the 2nd Business Law Conference of the NBA, Section on Business Law on March 13, 2007.

[25] P. McQueen, Are Australian Seats Attractive for Conducting International Arbitration, as cited in Adesanya, ibid.

[26] Ibid

[27] K. Muigua, Promoting International Commercial Arbitration in Africa, Paper Presented at the East Africa International Arbitration Conference, held on 28-29 July 2014, at Fairmont the Norfolk, Nairobi. p.4

[28] Ibid

[29] J. Manning, The Lawyer, Nigeria report: focus on arbitration, Interview with U. Azikiwe, 6 June 2016, https://www.templars-law.com/wp-content/uploads/2016/06/The-Lawyer_Nigeria-report-focus-on-arbitration_2016.pdf, accessed 30/08/2017, 8:37am.

[30] International Bar Association, The Current State and Future of International Arbitration: Regional Perspectives IBA Arb 40 Subcommittee, August 2015, p.20.

[31] (2003) 15 NWLR (pt. 844) 469 at 484. See also Wilesford v. Watson (1873) 8 Ch App 473



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