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Judicial Support for Arbitration in Nigeria: On Interpretation of Aspects of Nigeria's Arbitration and Conciliation Act

Published online by Cambridge University Press:  12 April 2018

’Gbenga Bamodu Open the ORCID record for ’Gbenga Bamodu [Opens in a new window]
’Gbenga Bamodu*
Affiliation:
University of Essex
*
[email protected]
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Abstract

The quality of judicial support and respect for the principle of minimum intervention are crucial factors in assessing whether a jurisdiction is attractive for arbitration. While there have been efforts to present Nigeria as an arbitration-friendly jurisdiction and an attractive arbitration venue, questions remain about the adequacy, effectiveness and certainty of legal rules concerning arbitration in Nigeria. There are also questions about the quality and efficiency of judicial support for arbitration in light of some judicial decisions affecting arbitration that have generated controversy. Through a careful analysis of key statutory provisions and judicial decisions, this article analyses support for arbitration in Nigeria in respect of selected topics, including party autonomy, upholding arbitration agreements (especially concerning the stay of judicial proceedings), the stay of arbitration proceedings and third party intervention. The article identifies scope for improvement in statutory and judicial approaches. It makes suggestions concerning both judicial approaches and reform of the statutory regimes.

Keywords

Judicial supportarbitrationNigeria
Type
Research Article
Information
Journal of African Law , Volume 62 , Issue 2 , June 2018 , pp. 255 - 279
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Copyright
Copyright © SOAS, University of London 2018 

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Footnotes

*

LLM, PhD. Barrister and solicitor (Nigeria). Professor of common law, British University in Egypt; member of the School of Law, University of Essex, Colchester, UK.

References

1 J Wilson and O Grazebrook “Nigerian Court of Appeal allows third party to challenge arbitration award” (17 February 2015), available at: <https://www.insideenergyandenvironment.com/2015/02/nigerian-court-of-appeal-allows-third-party-to-challenge-arbitration-award/> (last accessed 6 February 2018); A Ross “Nigerian judgment paves way for third-party challenges to awards?” (6 January 2015) Global Arbitration Review, available at: <http://globalarbitrationreview.com/news/article/33282/nigerian-judgment-paves-third-party-challenges-awards> (last accessed 6 February 2018).

2 It is generally accepted that the quality of judicial support and respect for the principle of minimum intervention are crucial factors in assessing whether a particular jurisdiction is attractive for arbitration. See for example, Justice J Allsop “Judicial support of arbitration” (paper presented at the APRAG 10th anniversary conference, Melbourne, 28 March 2014), available at: <http://www.austlii.edu.au/au/journals/FedJSchol/2014/5.html> (last accessed 6 February 2018).

3 Other aspects of judicial support for arbitration outside the scope of this article include, for example, the appointment of arbitrators, interim measures and the enforcement of awards. See also E Onyema (ed) “Rethinking the role of courts and judges in supporting arbitration in Africa” (paper delivered at School of Oriental and African Studies Arbitration in Africa conference, Lagos, 22–24 June 2016), available at: <http://eprints.soas.ac.uk/22727/> (last accessed 6 February 2018).

4 The Arbitration and Conciliation Act 1988 (a federal law applicable throughout Nigeria) remains the principal piece of Nigerian arbitration legislation. It is now considered dated but efforts to replace it are currently stultified in the legislative process. One constituent state, Lagos, has enacted more modern arbitration legislation, but there is ongoing controversy as to whether state arbitration legislation can be validly invoked in respect of international commercial arbitration.

5 The act has not been updated to take account of subsequent revisions to the Model Law.

6 Concerns typically expressed in the past that an arbitration agreement amounts to an attempt to “ouster” the courts’ jurisdiction now seem outdated. See for example, R Goode “The role of the lex loci arbitri in international commercial arbitration” (2001) Arbitration International 19 at 20.

7 It has been noted that even “delocalized arbitration” is not independent of any legal order: Paulsson, J “Arbitration in three dimensions” (2011) 60/2 International and Comparative Law Quarterly 291 at 298CrossRefGoogle Scholar; Goode, id at 29.

8 This is also sometimes referred to as the “governing” or “curial” law.

9 Technically, it is possible to separate the law of the place of arbitration (lex loci arbitri) from the law governing arbitration (lex arbitri) to the extent that it is acceptable for the governing law of arbitration to be different, or arbitration proceedings “delocalized”, from the law of the “seat” of the arbitration.

10 ACA, preamble.

11 Lagos State Arbitration Law No 18, 2009.

12 [2004] 1 NWLR (pt 853) 20.

13 [2014] 12 NWLR (pt 1420) 134.

14 ’Bamodu, G “Legislative competence over arbitration in Nigeria: Towards resolving the constitutional controversy” (2016) 19/1 International Arbitration Law Review 1Google Scholar.

15 Ibid. See also ’Bamodu, G “A field not covered: Arbitration and the Nigerian Constitution” (2016) 2 Gravitas Review of Business and Property Law 36Google Scholar.

16 Compare with Lagos State Law, sec 2.

17 See the old Arbitration Ordinance 1914, later cap 13 Laws of the Federation of Nigeria and Lagos 1958.

18 ACA, sec 57.

19 Part I of the act contains provisions concerning arbitration generally, while part III contains additional provisions concerning international commercial arbitration.

20 Although some commentators have expressed reservations about the appropriateness of the use of the term “arbitration” for forms of traditional indigenous dispute resolution in Africa, the expression “customary arbitration” is used widely in both literature and judicial decisions. On the appropriateness of the appellation “arbitration”, which may carry particular common law or modern connotations, in relation to customary forms of dispute settlement, see Allott, AN “Customary ‘arbitration’ in Nigeria: A comment on Agu v Ikewibe” (1998) 42 Journal of African Law 231CrossRefGoogle Scholar.

21 Akanbi, MM, Abdulrauf, LA and Daibu, AA “Customary arbitration in Nigeria: A review of extant judicial parameters and the need for paradigm shift” (2015) 6/1 Afe Babalola University Journal of Sustainable Development Law and Policy 199 at 199Google Scholar.

22 Agu v Ikewibe [1991] 3 NWLR (pt 180) 385.

23 See Akanbi et al “Customary arbitration”, above at note 21; Allott “Customary ‘arbitration’”, above at note 20.

24 ACA, sec 1.

25 Id, sec 57(1).

26 Ibid.

27 Agu v Ikewibe, above at note 22. On whether it is accurate to hold that parties to “customary arbitration” can resile from an unfavourable conclusion, see Igbokwe, VC “The law and practice of customary arbitration in Nigeria: Agu v Ikewibe and applicable law issues revisited” (1997) 41 Journal of African Law 201CrossRefGoogle Scholar. Compare with Allott “Customary ‘arbitration’”, above at note 20.

28 [2014] 15 NWLR (pt 1430) 213.

29 The dispute related to the estate of the late FRA Williams, who was one of Nigeria's most senior and best known lawyers.

30 ACA, sec 2. See for example Williams v Williams, above at note 28.

31 Id, sec 12.

32 Id, preamble.

33 A notorious example is Panormos Bay v Olam, discussed later in this article; see note 62 below.

34 (2003) 15 NWLR (pt 844) 469.

35 Id at 488.

36 Id at 490–91.

37 Ifezue v Mbadugha (1984) 5 SC 79.

38 ACA, sec 4(1) is similar though not identical to the Model Law, art 8(1); and ACA, sec 4(2) is almost identical to the Model Law, art 8(2), except for the substitution of “subsection” and “section” for “paragraph” and “article” respectively and the addition of a few words of clarification.

39 Although the ACA also makes the New York Convention applicable in Nigeria, this is done by incorporating the convention as a schedule to the act and providing that it “shall apply to any award made in Nigeria or in any contracting state”: ACA, sec 54.

40 In comparison, English courts consider the English Arbitration Act 1996, sec 9(1) and (4), which reflects the New York Convention, art II.3, to require a mandatory stay of proceedings unless the case falls within the exceptions. See Joint Stock Company “Aeroflot Russian Airlines” v Berezovsky and Others [2013] EWCA Civ 784; Capital Trust Investment Ltd v Radio Design AB [2002] EWCA Civ 135.

41 Under sec 4 it is the action that is required to be the subject of an arbitration agreement; this is atypical as it is more usual to limit similar provisions to matters that are the subject of an arbitration agreement. Compare with ACA, sec 5, Lagos State Arbitration Law, sec 6, and the draft Federal Arbitration and Conciliation Bill 2009, sec 5. See also note 44 below.

42 On similar provisions in the English Arbitration Act 1996, sec 9(1), see Albon v Naza Motors [2007] EWHC 665 (Ch).

43 Logically, the burden of establishing the threshold for the court to entertain an application for a stay lies on the applicant: Albon v Naza Motors, id, para 14. However, the burden of establishing that an arbitration agreement is null and void, as under the Model Law and convention exceptions, falls on the claimant resisting the application: Downing v Al Tameer [2002] EWCA Civ 721.

44 Arguably, the contemplated end result is the same as that intended under sec 4, despite the difference in drafting; in other words, judicial proceedings could be stayed if, and possibly to the extent that, the proceedings concern a matter agreed to be referred to arbitration. Compare with Fulham Football Club (1987) Ltd v Richards and Another [2011] EWCA Civ 855 and Lombard North Central plc and Another v GATX Corporation [2012] EWHC 1067 (Comm).

45 There is a difference, perhaps cosmetic, between secs 4 and 5 in that, while sec 5 requires a party desiring reference to arbitration to “apply to the court” for a stay of proceedings, sec 4 only requires him to “request” a stay of proceedings.

46 Arguably, the timeframe in sec 5 for making an application for a stay of proceedings is less generous than that provided in sec 4. In sec 4 the applicant must make the request “not later than when submitting his first statement on the substance of the dispute”; thus he would be entitled to make the request at the same time as filing a statement of defence. Conversely, an application made under sec 5 at the same time as when filing a statement of defence might be too late as the timeframe is “any time after appearance and before delivering any pleadings or taking any other steps in the proceedings”.

47 However, compare with notes 73 and 74 below.

48 ACA, sec 5(2).

49 See for example Arbitration Ordinance 1914, sec 5, and Arbitration Law of Cross River State 1981, sec 5.

50 The distinction between the mandatory standard of the 1975 act and the discretionary standard of the 1950 act was acknowledged in Halki Shipping Corporation v Sopex Oils Ltd [1997] EWCA Civ 3062.

51 See sec 57(2), which reproduces with enhancement the definition of “international commercial arbitration” from the Model Law.

52 Iguh JSC expressly acknowledged that the case concerned international commercial arbitration within the meaning of ACA, sec 57(1) and (2): MV Lupex, above at note 34 at 490.

53 (1942) AC 356.

54 MV Lupex, above at note 34 at 484.

55 Id at 487.

56 Akpata, E The Nigerian Arbitration Law in Focus (1997, West African Book Publishers)Google Scholar.

57 MV Lupex, above at note 34 at 491.

58 Id at 491.

59 Id at 490.

60 Ibid.

61 Ibid.

62 [2004] 5 NWLR (pt 865) 1.

63 Id at 15, lead judgment of Galadima JCA, Ogebe and Muhammad JJCA concurring. The court said that ACA, sec 2 is similarly controlled and limited by sec 5(2).

64 This part of the decision was based on the controversial Administration of Justice Act 1991, sec 20.

65 There are examples in Nigerian case law where, consistent with the suggestions here, the courts indicated that a deposition in an affidavit of readiness to facilitate arbitration would be sufficient. See NPA v Cogefa (1971) 2 NCLR 44 at 50–51; Ginscon Construction Company v Amu suit no FCT/HC/CV/4046/11, Federal Capital Territory (Abuja) High Court ruling of 26 July 2011.

66 Neither sec 4 nor sec 5 of the ACA expressly requires that a request or application to the court to stay proceedings pending arbitration should be made in writing, unlike sec 1, which expressly requires an arbitration agreement to be in writing. Nevertheless, a request or application for a stay of proceedings will invariably be in writing, as it will typically be in the form of a formal motion before the court. However, compare with Merkin, RM and Flannery, L Arbitration Act 1996 (2008, Informa) at 40Google Scholar.

67 Compare with UK Supreme Court in Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, para 23: “A stay is not made conditional upon arbitration being on foot, proposed or brought.”

68 The obligation of the applicant to show readiness and willingness relates to the proper conduct of the arbitration. The applicant should not necessarily have to forego his right to challenge questionable aspects of the conduct of the arbitration, for example if the tribunal goes beyond its remit under the terms of the reference. The applicant's duty should be confined to demonstrating readiness to do such things enabling the lawful establishment of the tribunal and undertaking to participate in its lawful processes.

69 Sino-Afric Agricultural & Industrial Co Ltd v Ministry of Finance Incorporation and Another [2014] 10 NWLR (pt 1416) 515 at 538.

70 Compare with Nissan (Nigeria) Ltd v Yaganathan [2010] 4 NWLR (pt 1183) 135.

71 UBA v Trident Consulting Ltd (2013) 4 CLRN 119.

72 See F Abbas “Stay of proceedings pending arbitration: A critique of the decision of the Court of Appeal in UBA v Trident Consulting Ltd”, available at:  <http://www.academia.edu/6000412/Stay_of_Proceedings_Pending_Arbitration_A_Critique_of_the_decision_in_UBA_v._Trident_Consulting_Ltd._2013_4_CLRN_119> (last accessed 6 February 2018); O Shasore “Nigeria: Injunctions and protective orders”, available at:  <https://www.cdr-news.com/categories/nigeria/nigeria:-injunctions-and-protective-orders> (last accessed 6 February 2018).

73 Above at note 69.

74 [2016] UKPC 1.

75 Above at note 69 at 538.

76 [2010] 2 NWLR (pt 1179) 530.

77 Abbas “Stay of proceedings”, above at note 72.

78 The draft Federal Arbitration and Conciliation Bill 2009 omits the discretionary provisions of ACA, sec 5. Compare also with the Lagos State Arbitration Law, sec 6.

79 One commentator described the strategy as “a wholly undesirable practice”: O Shasore “Injunctions and protective orders: Commercial arbitration in Nigeria”, available at: <http://www.ajumogobiaokeke.com/assets/media/5345aee63d7a47d24601b1d5e6236df0.pdf> (last accessed 22 February 2018).

80 Part of the blame for this ethically questionable strategy has been attributed to approaches adopted by counsel; see A Akinbote “Arbitration in Africa: The state of arbitration in Nigeria” (paper presented at the 2008 Colloquium of the Association for the Promotion of Arbitration in Africa, Yaoundé, 14–15 January 2008).

81 [2014] 14 NWLR (pt 1373) 1.

82 Court of Appeal no CA/A/628/2011, 25 February 2014.

83 See UH Azikiwe and F Onyia “A review of recent Nigerian Court of Appeal decisions” (16 October 2014) Global Arbitration Review, available at: <https://globalarbitrationreview.com/insight/the-european-middle-eastern-and-african-arbitration-review-2015/1036886/nigeria> (last accessed 22 February 2018); BJ Fagbohunlu et al “The principle of limited court intervention survives in Nigeria … But how far will the courts go?” (2 August 2013) Kluwer Arbitration Blog, available at: <http://kluwerarbitrationblog.com/blog/2013/08/02/the-principle-of-limited-court-intervention-survives-in-nigeria-but-how-far-will-the-courts-go/> (last accessed 6 February 2018).

84 See for example Shell Petroleum Development Company of Nigeria Limited v Crestar Integrated Natural Resources Limited Court of Appeal no CA/L/331M/2015, delivered 21 December 2015.

85 Downing v Al Tameer, above at note 43, para 34: “it is open to the court to decide that there is no arbitration agreement for whatever reason and therefore to dismiss the application to stay”.

86 (2014) LPELR-23144.

87 F Adekoya “Third party rights: Arbitrability, locus standi and precipate [sic] action in arbitration proceedings in Nigeria” (10 December 2014) African International Legal Awareness Blog, available at: <http://blogaila.com/2014/12/10/third-party-rights-arbitrability-locus-standi-and-precipate-action-in-arbitration-proceedings-in-nigeria-by-funke-adekoya-san/> (last accessed 6 February 2018); Wilson and Grazebrook “Nigerian Court of Appeal”, above at note 1. Compare with “Third party challenge of arbitration agreement in Nigeria” Phillipsons Consultancy Blog, available at: <http://phillipsonsconsultancy.com/blog/challenge-arbitration-agreement-in-nigeria/> (last accessed 6 February 2018).

88 Specifically Federal High Court (Civil Procedure) Rules, 2009, order 3 rules 6–7.

89 See also “Third party challenge”, above at note 87.

90 Albon v Naza Motors, above at note 42, para 20.

91 Ibid.

92 From this perspective, the court's decision is not a challenge to the “Kompetenz-Kompetenz” concept recognized in ACA, sec 12, although concern might arise about the impact of a case like this on the privacy and confidentiality of arbitration. More generally, the decision is somewhat comparable to the situation where one party claims the existence of an arbitration agreement that is denied by the other. In such a case it is understandable that a court might rule that it and not the arbitral tribunal would decide the issue: Albon v Naza Motors, id; Fiona Trust v Privalov [2007] EWCA 20, para 36.

93 See Nigerian Ports Authority v Panalpina World Transport (Nigeria) Ltd (1973) 1 All NLR (pt 1) 486Google Scholar; compare with the English decision in Clyde & Co LLP v Bates Van Winkelhof  [2011] EWHC 668 (QB), which held that an employee's statutory right to have a dispute heard by an employment tribunal made it impossible to submit the dispute exclusively to arbitration.

94 Compare with Carvill America Incorporated v Camperdown UK Ltd [2005] EWCA Civ 645, para 53.

95 See Reichhold Norway ASA v Goldman Sachs International [1999] EWCA Civ 1703 (UK); Casaceli v Natuzzi SpA [2012] FCA 691 (Australia); Shanghai Construction (Group) General Co Singapore Branch v Tan Poo Seng [2012] SGHCR 10 (Singapore); D Chan “Stay of proceedings in favour of arbitration under the court's inherent jurisdiction” (15 August 2012) Kluwer Arbitration Blog, available at: <http://arbitrationblog.kluwerarbitration.com/2012/08/15/stay-of-proceedings-in-favour-of-arbitration-under-the-courts-inherent-jurisdiction/?print=pdf> (last accessed 6 February 2018).

96 The court rejected a claim of collusion between FIRS and NNPC, which was a party to the arbitration agreement and proceedings.

97 Compare with Assaubayev v Michael Wilson & Partners Ltd [2012] EWHC 90223 (costs).

98 Lord Thomas LCJ “Developing commercial law through the courts: Rebalancing the relationship between the courts and arbitration” (the Bailii Lecture 2016, 9 March 2016), para 22, available at: <https://www.judiciary.gov.uk/wp-content/uploads/2016/03/lcj-speech-bailli-lecture-20160309.pdf> (last accessed 6 February 2018).