THE INNOVATIVE PROVISIONS OF THE ARBITRATION AND MEDIATION BILL 2022 AND NIGERIA AS AN INTERNATIONAL ARBITRATION HAVEN: NEED FOR PRESIDENTIAL ASSENT

It is important to understand that International commercial arbitration can only work effectively in a State where it is supported by appropriate and functional legal system. In Nigeria Arbitration is currently governed by the Arbitration and Conciliation Act (Chapter 18, Laws of the Federation of Nigeria 2004) (the “ACA”), which incorporated the 1985 UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”).  However, it is also to be noted that States of Nigeria are constitutionally empowered to legislate within the space of arbitration, and consequently Lagos State enacted the 2009 Lagos State Arbitration Law.

Arbitration proceeding in Nigeria is currently described as pricy and lengthy and the Nigerian courts have also been criticized for their unwelcome intervention in arbitration proceedings, notwithstanding their pro-arbitration stance evidenced in the Practice Directions from the Chief Justice of Nigeria encouraging the judiciary to embrace Arbitration as a means of dispute resolution. Unfortunately, the ACA has not kept pace with UNCITRAL Model Law advancements in world trends and innovations. The ACA is a 34-year-old legislation and has not been able to measure up with various developments within the business space. This has given rise to the need to amend the ACA.

Consequently, in May 10, 2022, the Senate arm of the Nigerian National Assembly passed the Arbitration and Mediation (repeal and re-enactment) Bill, being an Act to repeal the Arbitration and Conciliation Act, CAP A18, Laws of the Federation of Nigeria, 2004 and enact the Arbitration and Mediation Act to provide a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and mediation; make 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 convention on the international settlement agreements resulting from mediation (the Singapore convention)and for related matters.

One of the core objectives of the reforms brought by the Bill, is to bring the arbitration law in Nigeria more in line with certain global advancements and best practices as well as make it more attractive to users. The Bill further takes into considerable account, the peculiarities of the Nigerian environment for the enforcement of contracts and enforcement of contractual obligations.

The Bill contains numerous provisions that will be of interest to parties seeking to arbitrate in Nigeria, including clauses on third-party funding (“TPF“), emergency arbitrators and the recognition and enforcement of interim measures.

Fundamentally, the Bill presents a positive restructuring of the arbitral and mediation proceedings in Nigeria by including novel provisions not contained in the ACA. Some of which are discussed below:

1.    Third-Party Funding: Sections 61 & 62 of the bill make elaborate provisions for third-party funding in arbitration. Within international arbitration, Third-Party Funding (TPF) is a non-recourse funding arrangement where typically an independent commercial fund, with no prior connection to a dispute, provides funding to a party to the proceedings, in return for a share of any potential damages awarded.  Whilst TPF is accepted in many jurisdictions, the Bill makes Nigeria only the third jurisdiction to directly adopt such express legislation, following Singapore and Hong Kong in 2017.

2.    Emergency Arbitral Proceedings: Another way the Bill has responded to the changing needs and desires of its citizens is through the introduction of emergency arbitral proceedings[1]. Emergency arbitration procedures have proven to be an effective means of obtaining urgent relief and ultimately provide another flexible tool that can be wielded by parties and counsel alike in arbitration proceedings (for example, in settlement discussions). The Bill introduces a clear set of rules governing the process for appointing and challenging the appointment of an emergency arbitrator. Consistent with global best practices, the process is designed to be swift to achieve the desired outcome. For instance, if the arbitral institution or court accepts a request for the appointment of an emergency arbitrator, the appointment must be made within two business days and a challenge decision must be made within three business days where a party requires an urgent relief, such an emergency arbitration meeting can be conducted through video conferencing, telephone, and other similar means of communication. This provision allows for arbitrators to fasten proceedings as required in a plethora of disputes like in Construction disputes.

3.    Enforcement of Interim Measures: The Bill expressly reserves the right for parties to seek urgent interim measures directly from the courts, rather than the using the emergency arbitrator option offered by the Bill. An “interim measure” is defined under the Bill as any “temporary measure” that orders a party to: (a) maintain or restore the status quo pending determination of the dispute; (b) take action that would prevent harm or prejudice to the arbitral process; (c) provide a means of preserving assets; or (d) preserve evidence. The Bill additionally provides that tribunal-issued interim measures awarded in any jurisdiction are binding and can be enforced before Nigerian courts. In allowing its enforcement, the court may request that the party seeking enforcement provides appropriate security where none had originally been ordered by the arbitral tribunal.  This guarantees that there are options available for dispute resolution should the need arise during an international transaction or otherwise.

4.    Award Review Tribunal: The Bill also introduces the concept of an award review tribunal, giving parties the option to specify in their arbitration agreement that awards made in arbitrations seated in Nigeria may be reviewed by a second arbitral tribunal. This novel option provides dissatisfied parties a second chance at their own definition of Justice before ultimately resorting to the courts. Parties may agree to a review of the final arbitral award by an award review tribunal, which shall endeavor to render its decision as an award within 60 days from the date on which it is constituted. In other words, this new bill is a new development in the dispute resolution community as it clarifies certain issues presented by the Arbitration and Conciliation Act LFN 2004.

5.    Computation of Limitation Period: The limitation period for enforcement of awards now excludes the period when the arbitration was ongoing[2]. This bill clarifies the computation of the limitation period as it excludes the commencement of proceedings and the date of the order. It specifies the period to enforce an arbitral award and excludes the commencement of the arbitration and the date of the award. The application of a statute of limitation equally applies to mediation proceedings.[3]

6.    Electronic Agreement: the requirement that an arbitration agreement must be in writing can now be satisfied by electronic communication that is accessible to be usable for subsequent reference[4]. The bill acknowledges electronic communication and conduct of electronic proceedings in Nigeria. It is worthy to note that “electronic communication” is defined as any     communication that the parties make by means of data messages. While     “data      messages” means information generated, sent, received, or stored by electronic, magnetic, optical, or similar means. Thus, Nigeria has moved closer to global best practices by adopting electronic communication as a valid means of Agreement. The bill no doubt partly resolves reliability and admissibility of computer records, reliability, and admissibility of forensically analyzed and located data. With the use of electronic communication, the pace of proceedings will become faster, if enforced.

7.    Number of Arbitrators and Appointment in Default: By virtue of Section 6 of the Bill, the default number of arbitrators where unspecified is now one (1) arbitrator. The arbitral tribunal shall consist of a sole arbitrator and such arbitrator shall not be precluded by reason of his nationality unless agreed upon by the parties. The bill in section 12 also provides that the parties to arbitration may agree on consequences of the withdrawal of an arbitrator from appointment. The bill provides that under an international arbitration where parties have not appointed an arbitrator or appointing authority, the Director of the Regional Center for International Commercial Arbitration Lagos shall be deemed to be the appointing authority designated by the parties[5].

8.    Continuity of proceedings: By virtue of section 4 of the Bill, the authority of an Arbitrator to act in an arbitration proceeding shall not be revoked by the death or bankruptcy of any party who appoints the arbitrator. The authority of an Arbitrator to act is only revoked on the death of the arbitrator. This provision encourages continuity of proceedings.

9.    Immunity: Section 13 of the bill states that an arbitrator has immunity in its discharge of functions unless it is shown to be in bad faith although this liability does not affect any liability incurred by reason of the Arbitrators withdrawal. Arbitrators just like litigators are now protected by law in the discharge of their duties without the fear of any imminent liability.

10. Consolidated Hearing and Joinder of Parties: The Bill provides for improvement in the hearing of arbitration proceedings. By section 39 of the bill, upon the agreement of the parties, there can be a consolidated and concurrent hearing. The bill also gives the arbitral tribunal the power to allow an additional party to be joined to the arbitration, provided that the additional party is bound by the arbitration agreement giving rise to the arbitration[6].

11. Application of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards: Section 60 provides that without prejudice to Sections 57 and 58 of the bill (which addresses recognition and enforcement of award), where the recognition and enforcement of any award made in an arbitration in a Country other than Nigeria is sought, the New York Convention on the Recognition and Enforcement of Foreign Awards set out in the Second Schedule to the bill shall apply to any award, provided that: (a) the Country is a party to the New York Convention; and (b) that the differences arise out of a legal relationship, whether contractual or not, considered commercial under the laws of Nigeria.

12. Application of the Convention on International Settlement Agreements Resulting from Mediation: The Bill provides for situations where the enforcement of any international settlement agreement made in a State other than the Federal Republic of Nigeria is sought, the Convention on International Settlement Agreements Resulting Mediation set out in the Fourth Schedule to the Bill (“the Singapore Convention”) shall apply to any such international settlement agreement, subject to (a) the State is a party to the Singapore Convention; and (b) that the differences arises out of a legal relationship, whether contractual or not, considered commercial under the laws of Nigeria.

CONCLUSION

It is our considered opinion that the Bill is timely and a welcome development towards making Nigeria a truly international arbitration haven that effectively will add to GDP numbers. Most of the new provisions reflect key developments in international arbitration and global best practices adopted in many leading arbitral institutions and countries.

While the amendments introduced by the Bill may not answer all questions that agitate the minds of users, it is a working document, and it is expected that it will urgently receive presidential assent to give it the force of law.