THE NATIONAL POLICY ON ARBITRATION AND ALTERNATIVE DISPUTE RESOLUTION (ADR), 2024: A LIGHT AT THE END OF THE TUNNEL?

INTRODUCTION

In his foreword to the National Policy on Arbitration and (ADR), 2024, the Nigeria current Honourable Attorney General of the Federation and Minister of Justice, Lateef O. Fagbemi, SAN emphasized that over the years, Nigeria’s Arbitration and Alternative Dispute Resolution (ADR) practice has been affected by several challenges which include “inadequate patronage, underdeveloped institutions and a general lack of confidence in our arbitration system by both local and international stakeholders”.

The recently introduced National Policy on Arbitration and ADR, 2024 (hereinafter referred to as “the Policy”) seemingly represents a welcome response to these longstanding issues, embodying Nigeria’s vision to transform itself into an international premier destination for arbitration and other forms of dispute resolution. This Policy aims to establish fundamental principles that will guide both the Federal and State governments’ participation in arbitration and ADR proceedings, with the ultimate goal of positioning Nigeria as “an attractive arbitration hub for domestic, regional and international commercial arbitration whilst protecting national interests.”

It goes without saying, that the need for such a Policy has become even more apparent following Nigeria’s experiences with high-profile arbitration disputes, where certain state actors have conducted arbitrations in a manner detrimental to national interests, resulting in significant financial and reputational damage as notably seen in the P&ID case. [1]

A major thrust of the Policy is to ensure uniformity in Nigeria’s approach to arbitration, particularly where the Federal Government or State Governments are parties to any such dispute where arbitration is the stipulated means of resolution. This uniformity extends to both the terms of the arbitration agreement and the adoption of a “model arbitration clause”, thus ensuring consistency and safeguarding national interests in future arbitration proceedings.

PURPOSE OF THE POLICY

The Policy aims to;

1. Promote the implementation of Nigeria treaty obligations under various international Arbitration Conventions.
2. Promote the growth and practice of Alternative Dispute Resolution (ADR) in Nigeria.

• Promote the implementation of UNCITRAL Model Arbitration Law on arbitration and UNCITRAL Model Mediation Law.

1. Encourage a judicial culture that supports arbitration and ADR.
2. Provide a framework for continuous review of arbitration legislation to ensure optimal conformity with the fundamental tenets of international arbitration as reflected in the UNCITRAL Model Arbitration Law, UNCITRAL Model Mediation Law, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention), (including party autonomy and minimal judicial intervention).
3. Build confidence in and promote the growth of Nigeria’s arbitration laws and institutions.

• Complement efforts to stimulate the Nigerian economy and attract foreign investment.

• Encourage settlement of disputes of commercial transactions emanating from Nigeria, in Nigeria.

1. Strengthen capacity of personnel that are tasked with the responsibility of managing arbitration in Nigeria.
2. Enhance infrastructure required to set up arbitration hub in Nigeria for critical stakeholders (arbitration community).
3. Encourage reciprocity for arbitration and ADR experts.

• Present a number of measures and policy direction that the Federal and State Ministries, Departments, and Agencies (MDAs) should adopt to indicate the country’s consolidated approach for negotiating arbitration and ADR agreements, and participating in arbitral proceedings, in order to avoid the pitfalls prevalent in the current unstructured process.

• Ensure that the inclusion of ambiguous agreements in Federal Government of Nigeria (FGN) contracts never recurs and the FGN is able to manage the conduct of arbitration arising from previously negotiated arbitration agreements.

Below is our review of the Policy highlighting the key innovations and implementation strategies.

KEY INNOVATIONS OF THE POLICY

Introduction of Small Claims Arbitration

The Policy introduces “Small Claims Arbitration” as an innovative judicial tool to facilitate access to justice for disadvantaged members of the Nigerian society. This initiative is to serve as a simplified, cost-effective alternative to traditional court proceedings.

The Policy further enjoins chief judges of the Federal and various State High courts to issue practice directions to establish a small claims procedure and court pending the enactment of enabling legislation. These small claims courts are to deal primarily with claims for Breach of contracts, Landlord and Tenant matters, Debt recovery and Consumer rights issues not exceeding N5,000,000 (Five Million Naira).

In this regard, the Policy also provides that a small claims judgment may be appealed by submitting an appeal form to the Small Claims Registry, which will in turn be forwarded to the fast-track registry of the Federal or State High Courts. The appeal is then assigned to a judge of the fast-track court designated to hear appeals from the Small Claims Courts.

Furthermore, the Policy stipulates that the appeal must be heard orally and based solely on the records of appeal. On the scheduled hearing date, after which judgment is delivered. The entire process, from the assignment of the appeal to the delivery of judgment, must not exceed thirty (30) days.

The Role of Courts

The Policy also underscores the court’s obligation to respect and uphold arbitration clauses in contracts. It mandates that courts refrain from entertaining matters that circumvent existing arbitration clauses without first giving effect to them. In line with this principle, courts are encouraged to stay proceedings unless there is a justifiable reason to prevent a dispute from being referred to arbitration.

Furthermore, the Policy seeks to deter attempts to undermine arbitration and alternative dispute resolution (ADR) through judicial proceedings. In certain instances, it enjoins courts to impose punitive costs on lawyers and litigants who abuse the judicial process to frustrate arbitration or ADR mechanisms.

To enhance efficiency in dispute resolution, the policy stipulates that judicial proceedings arising from arbitration or ADR must be concluded within 60 days of filing. It also calls on the respective Heads of Courts to enforce this timeline in accordance with the applicable court rules.

Notably, where an appeal arises from a court’s decision in arbitration or ADR related matters, the Policy prescribes a strict timeline of 270 days from the date of filing for its determination. In an attempt to ensure the finality of arbitration and ADR outcomes, it advocates that all such appeals should terminate at the Court of Appeal.

Nigeria as the preferred venue of arbitration

Currently, most arbitration cases involving Nigeria are conducted outside the country due to the aforementioned challenges such as inadequate infrastructure, limited international patronage and enforcement concerns. In an attempt to remedy this, encourage foreign investment and ultimately drive economic development, the Policy strongly advocates for both government and private institutions to prioritize Nigeria as the preferred arbitration venue.

Specifically, the Policy mandates that all arbitrations involving Nigerian governmental bodies be seated in Nigeria, with the Regional Centre for International Commercial Arbitration, Lagos (RCICAL) serving as the default appointing authority where necessary.

The Arbitrator Selection process

The Policy seeks to prioritize the appointment of “Nigerian Arbitrators” in the arbitrator selection process by providing that where parties agree to appoint a sole arbitrator, the appointee must be a suitably qualified and competent “Nigerian arbitrator”.

Additionally, the Policy provides that where the parties fail to agree on the appointment procedure or the appointing authority, the Attorney General of the Federation or the State, as the case may be, shall request the Regional Centre for International Commercial Arbitration (RCICAL) or another recognized arbitration center and/or institute to appoint qualified and competent Nigerian arbitrators for Federal or State MDAs.

The Policy further states that for disputes involving claims exceeding ₦50,000,000 (Fifty Million Naira), any arbitrator appointment can only proceed with the approval of the Attorney General of the Federation or the State. However, for claims below this threshold, parties may appoint arbitrators without requiring any such approval.

The Engagement of Counsel

The Policy looks to promote the engagement and development of Nigerian counsels in arbitration proceedings as it implores Federal and State MDAs to adopt a clear and transparent process in engaging Nigerian counsel in arbitration and ADR proceedings. Furthermore, in the event that a Foreign counsel is engaged on the grounds of experience and expertise, the foreign counsel must partner with a Nigerian counsel ensuring that the Nigerian counsel gains hands on experience in the course of the prosecution of the case.

Establishment of an Advisory Council

The Policy also proposes the establishment of an Advisory Council comprising arbitration and alternative dispute resolution (ADR) experts, along with the President of the Nigerian Bar Association (NBA), to provide necessary advice to the Attorney General of the Federation (AGF). The responsibilities of this Council include;

1. Monitoring and Evaluation – Overseeing the implementation of the policy and assessing its effectiveness.
2. Stakeholder Engagement – Collaborating with relevant stakeholders to ensure alignment with industry best practices.
3. Policy Review and Improvement – Advising the Attorney General of the Federation on necessary amendments and enhancements to the policy as required.
4. Regional and International Advisory – Providing insights on regional and global developments in arbitration and ADR to keep Nigeria’s dispute resolution framework competitive and up to date.

A National Arbitration and ADR Register

The Policy mandates that all Federal and State MDAs maintain a detailed register, under the supervision of the Federal or State Ministry of Justice, documenting all ongoing and pending investment and commercial arbitration cases, as well as ADR proceedings before any arbitral tribunal or court of law. Additionally, Federal and State MDAs are required to submit copies of the relevant arbitration or ADR agreements for such matters to the respective Ministry of Justice.

Repository for Bilateral Investment Treaties

The Policy further provides that the Federal Ministry of Justice shall be the repository of all Bilateral Investment Treaties (BITs) between Nigeria and other countries. Consequently, all treaties entered into by the Federation with any foreign country must be submitted to the Ministry for record-keeping. Additionally, the Ministry is tasked with maintaining an up-to-date register of these treaties, which shall be accessible to the general public for inspection at reasonable times.

Implementation of the Policy

The implementation of this policy shall be overseen by the Honourable Attorney General of the Federation and the Attorney General of the various states. Notably, the Policy further provides that in cases where a dispute involves a federal or state ministry, department or agency, adherence to the Policy shall be mandatory.

The policy is to be executed over a five-year period, with regular evaluations to ensure its effectiveness and alignment with emerging trends in arbitration and ADR. To ensure its successful implementation, the Policy provides that the Federal and State Government commit to the following;

1. Training: Enhancing ADR competencies among judicial officers and public officials through continuous education and training programs.
2. Educational Integration: Incorporating arbitration and ADR courses into the curricula of law faculties and continuing legal education programs to adequately prepare future practitioners.
3. Public-Private Partnerships: Collaborating with the private sector to promote the adoption of arbitration and ADR in commercial disputes, thereby fostering a culture of amicable dispute resolution.
4. Advisory Council: Establishing the aforementioned Advisory Council to oversee the policy’s implementation

CONCLUSION

The National Policy on Arbitration and ADR, 2024 hopefully represents a very significant milestone in Nigeria’s journey toward becoming a respected hub for dispute resolution, particularly through arbitration. By addressing the lingering challenges such as infrastructure deficiencies and lack of international confidence, the Policy lays a strong foundation for a much-needed transformation. In our humble view, this comprehensive and well thought out National Policy, presents a well-structured roadmap that if effectively implemented, could serve as a turning point for Nigeria’s arbitration/ADR dispute resolution landscapes and continuous improvement in both local and foreign investment with guaranteed economic growth.

Please note that the foregoing does not in any way constitute legal advice. Please kindly contact the key personnel for any legal advice on the subject matter

REFERENCE

[1]https://www.nortonrosefulbright.com/en/knowledge/publications/8d1c52b3/nigeria-v-pid accessed on the 23rd of February, 2025.