What is arbitration?

Private judicial determination of a dispute between two or more parties by an independent third parties known as an arbitrator.

What is an award? At the end of the hearing the arbitrator gives a decision and this decision is known as an award

Arbitral Tribunal – where proceedings are heard. The proceedings are heard in privacy 

 

It is judicial because it has some features of litigation but because of its privacy its often considered as an alternate means of dispute resolution

Arbitration is a special type of ADR becauseusually ADR is voluntary

• Possess some attribution of litigation
• Informality and voluntariness of process
• Statutesgoverning arbitration in Nigeria

The main statutes that govern arbitration in Nigeria is the arbitration and conciliation act Cap A18 LFN 2004 which governs arbitration in all the states in Nigeria. However in 2009 Lagos state enacted its own law, Lagos state arbitration law 2009.

S 2 provides that all arbitration shall be governed by the provisions of this law except the parties have expressly agreed that another arbitration law shall apply. So,arbitration matters in Lagos stateare governed by the Lagos state arbitration law 2009.

 

Types of arbitration

1. Customary arbitration. This is usually not binding because it is not written. The decision of the arbitrator is not put into writing. The arbitrator

based on oral agreement  and proceedings not recorded. OLINE V OBOD (1958). Not governed by the ACA or LSAL.

Judgement not usually enforceable. See OHIAERI V AKABEZE (1992) – it was held in this case that judgment is usually not enforceable because the agreement and judgement are not written but however for a customary arbitration decision to be valid and binding certain conditions must met.

1. Parties must have voluntarily submitted dispute to arbitrator
2. There must be a prior agreement between the parties that the arbitral decision will be accepted as final and binding
3. None of the parties withdrew from arbitration mid-way
4. It was conducted in accordance with the custom, trade or business of the parties
5. A decision must have been reached and published as a final decision i.e. award
6. Award/decision must be accepted by the parties at the time it was made. See AGU V IKEWIBE 91991); OKEREKE V NWANKWO (2003); OHIAERI V AKABEZE
7. Domestic arbitration

• Parties are resident in the same country
• Dispute and transaction which gave rise to the dispute, must have occurred in the same countrywhere partiesreside and obligations of the parties are also to be performed in that same country

3. Institutional arbitration

• Arbitration done by bodies or institutions
• May be private or attached to courts e.g. Lagos multi-door courthouse, Abuja multi-door court house

e.g.  London court of international arbitration, chartered institute of arbitrators

4. International arbitration

• Involves parties from different countries
• Disputes involves transaction or business which are carried out in different countries

5. Adhoc arbitration

• Not done by institution or bodes
• Parties themselves are required to select arbitrators and make rules & laws to govern their proceedings

 

Not all matters can be settled by arbitration

Matters that can be settled by arbitration: breach of contract, torts, disputes arising real property transaction, issues of compensation, matrimonial causes (some subject matters are arbitrable, however they still need to go back to court to make a decree nisi, or decree absolute)

 

Disputes that cannot be settled by arbitration: election petition, criminal matters, declaratory reliefs, Injunctive remedies, Interpretation of the constitution, any dispute on illegal or immoral transactions. 

How to resort to use of Arbitration process

There must be an agreement between the parties in any of the following ways:

• Inserting an arbitration clause in their contractual agreement or by executing an independent arbitration agreement. The arbitration clause /agreement will be independent of the contract so even if the court says the contract is null and void the arbitration clause would survive.
• Agreement must be in writing and not oral. See s 3(3) LSAL
• Arbitration clause which forms part of a contract agreement is independent from the other terms of the contract. S 12(2) ACA; S. 19(2) LSAL
• Cannot be revoked except by the express or written agreement of the parties or leave of court. S. 2 ACA ; S 4 & 5 LSAL

 

• Statutory arbitration clause
• Arbitration clause can be included in the statutes creating some bodies or institutions e.g. S. 26 Nigerian Investment promotion act Cap N117, LFN , 2004

 

• Post Dispute agreement
• Where the parties did not execute arbitration agreement before a dispute arises they can execute one after dispute has arisen

 

• Court referral
• Court can refer matters to arbitration after matters are commenced before it.
• Can be done suomotu or on the application of the parties. See Or 3 R 11 Lagos; Or 17 r 1 Abuja. The court can refer to any of the multi-door court houses or to an independent arbitrator

 

Power of court to stay of proceedings

• Agreement of the parties to resort to use of arbitration is a bar to them commencing an action without first using arbitration. See scott v Avery (1856)
• Where action is commenced in court instead of submitting to arbitration, the other party can apply to the court for stay of proceedings
• When to apply for stay of proceedings. See s. 5(1) & 2 ACA ; s 6. (2) LSAL; Carlene (Nig) Ltd. V university of jos.A party must do so immediately after entering appearance in the matter but before taking any further steps in the matter. The method of applying is motion on notice supported by affidavit and written address

 

Composition of arbitral Tribunal

• A tribunal must be validly constituted before it can give a valid decision
• Determining the number of arbitrators. S 6 ACA
• Parties can agree on number of arbitrators or else statutory provisions of three (3) arbitrators will prevail

 

Appointment of arbitrators:

1. By the parties:

• Where one arbitrator is required parties must jointly agree on who to appoint as arbitrator
• Where three arbitrators are required, each party shall appoint one arbitrator and the 2 arbitrators appointed shall jointly appoint the third arbitrator. s 7(2)
• Parties can appoint holders of specific professional office

It is possible for the parties to state expressly that they want holders of specific qualification or offices to be their arbitrators

1. By the court:

- Where a party fails to appoint an arbitrator within 30 days of request form the other party …..

if the 2 arbitrators appointed by the parties

1. By the arbitrators already appointed:

• Where there are 3 arbitrators, arbitrators can be appointed by the arbitrator already appointed s 7(2)(a)ACA

1. By holder of a specific professional office or an institution:
2. – the arbitration agreement may specifically name a third party or an institution as the person to appoint the arbitrator. E,g

Appointment of an umpire

Theumpire doesn’t sit throughout the arbitral proceedings, it only sits through that area of deadlock and gives a decision on that matter

• Where 2 arbitrators cannot agree on a decision/award a 3^rd party may be appointed known as an umpire
• Gives a unilateral / sole decision which is binding.
• Not provided under ACA
• Provided for under LSAL. See s.9(1) & (2) LSAL

 

Challenge of an arbitrator

• Duty to disclose any circumstances that may give rise to any doubt as to his impartiality or independence
• Duty to disclose shall continue throughout the arbitral proceedings. S 8 (1) & (2) ACA
• Grounds for challenging an arbitrator. See s 8(3) ACA; s. 10(3) (a)-(d) LSAL
• Parties can decide on the procedure to use to challenge the arbitrator; where no procedure is agreed upon, the party who wants to challenge shall within 15 days of becoming aware of the inadequacy send a written statement to the tribunal stating reason for the challenge. s 9(2) & (3)
• Tribunal can rule on the challenge to its jurisdiction s. 9(3) ACA this is known as competence-competence
• Termination of Arbitrators mandate:
• See grounds stated in s. 10(1) ACA & s.12 (1)(a-d) LSAL
• Removal of an arbitrator: this is different from terminating his mandate
• Where he has misconducted himself
• Any party can apply for removal. S. 30(2) ACA; Schofield v Allen (1904)
• Appointment of substitute arbitrator. S.11 ACA; S.11(4) LSAL

 

Jurisdiction of arbitral tribunal

Has power to give a decision on any questions raised regarding its jurisdiction or any objections raised to the validity of an arbitration agreement. S12 (1) ACA

Grounds for challenging jurisdiction of tribunal:

1. Tribunal does not have jurisdiction to hear the dispute.
2. The tribunal has exceeded his scope of authority. See s. 12(3)(a) & (b) ACA
3. Arbitrator does not possess the necessary qualification

 

Time for raising objection on jurisdiction.

1. Ground of total lack of jurisdiction:

• Not later than the time given for the submission of the his points of defence. S. 12(3)(a) ACA; S. 19(3)(a) LSAL

1. Ground that it has exceed its scope of authority:

• As soon as the matter which is beyond the scope of authority is raised during proceedings. S 12(3)(b) ACA; s 19(3)(b) LSAL

 

Ruling on the objection

• May consider the objection raised as a preliminary issue and give his ruling before going on with the proceedings; or
• May take the objection together with the arbitral proceedings and then give his ruling on the objection in his final award.

Ruling on the objection is final and binding on the parties. S. 12(4) ACA

 

CONDUCT OF ARBITRAL PROCEEDINGS

Governed by the arbitration rule in the 1^st schedule to the ACA

• Where there is a lacuna, tribunal will conduct proceedings in such manner as it deems fit to ensure that parties are given fair hearing

 

Parties can agree on place for conducting proceedings. But in the absence of such, venue shall be fixed by the tribunal. Art. 16 AR

 

Commencement of proceedings:

• one of the parties will notify the oetrh party in writing i.e. “ declaration of dipute”
• arbitral proceedings is deemd to commence on date the other party receives notice of request to go to arbitration. S 17 ACA ; Art . 3(1) & (2) AR

 

Contents of notice of arbitration. Art 3(3) AR. They include:

• a demand that the dispute be referred for arbitration
• Names and addresses of the parties
• Reference to the arbitration clause in the agreement or independent arbitration agreement if there is one
• reference to subject matter of the dispute
• general nature of the claim and
• relief or remedy sought
• a proposal as to the number of arbitrators if there was no rpevisous agreement as to the number

There may be a preliminary meeting. The arbitrator may then decide to have a preliminary meeting with the parties, where they agree on some terms  and procedure. E.g. they can agree on time within which nay document is to be served on each other or be exchanged

Parties may agree on language to use. S. 15 ACA

 

Submission of points of claim and defence

• Claimant to file and serve point of claim on respondent within the time agreed by the parties or within time stipulated by tribunal
• Contents of point of claim. S 19(1) ACA ; Art 18(2) Arbitration rules
• Respondent to file point of defence after receipt of point of claim but within time agreed by the parties or as stipulated by tribunal. Parties are allowed to attach all the documents they want to rely on to their point if claim or point of define
• Content of a point of defence .s 19(2) ACA ; art 18(3) & 19(2) AR
• Party can amend or supplement his claim or defence but claimant may not amend to make his claim fall outside the scope of arbitration s19(3) ACA

Hearing of proceedings: proceedings will be conducted in private and in the proceedings each party must be given equal opportunity to present his case, witnesses and documentary evidence.

It is the law that the evidence act does not apply to arbitration proceedings. S 20 (5) ACA the arbitrator is allowed to apply rule of evidence to proceeding e.g. an arbitrator can issue subpoena to compel witnesses to come to the arbitral tribunal, can make an order for writ of habeas corpus to be issued s. 23 ACA, can also administer oath or affirmation on the witnesses at the arbitral tribunal.

The parties may agree on procedure to be followed in hearing evidence in the absence of which the arbitrator may decide on how the matter may be heard. S 20 (1) ACA    

 

• Parties may present their case personally or through LP’s or a third party who is knowledgeable in area of subject matter in dispute.
• Address by legalpractitioners after hearing
• Where any of the parties fail to attend hearing the tribunal shall continue hearing
• Where claimant fails to state or file his claim within time given – tribunal shall terminate proceedings unless respondent intends to present a claim. Art 41 (1)(a) LSAL
• Where respondent fails to file a defence the tribunal shall continue with the proceedings unless he shows a good cause for the default. s 21 ACA; art 28 AR
• After address tribunal fixes a date for award but can recall parties to re-open hearing in exception circumstances either suomotu or on the application of any of the parties. Art 20 (2) AR

 

Making of award

• After hearing tribunal gives its decision i.e. a written award
• Decision of tribunal shall be majority of all the members. S24 ACA
• Determine the rights of the parties with finality
• Contents of the written award. S.26 (1)-(3) ACA
• Copy of award to be given to each party. Once the award has been served proceedings is deemed terminated. S 27(1) ACA

 

Termination of arbitral proceedings

• Can be terminated before award is made
• Instances for termination. S 27(2) ACA

1. i) Where the claimant withdraws his claim or ii) where the parties agree on the termination of the arbitral proceedings or iii) where the tribunal discovers that it is unnecessary or impossible to continue with the arbitral proceedings

 

Application to set aside arbitral award

• Application is made by an aggrieved party to the high court within 3 months from the date of award
• Grounds for setting aside. S29(2) & 30 (1) ACA; SALIBA V LABABEDI (1972)

1. Acting outside the scope of ….
2. Where the arbitrator has misconducted himself

• Where the award has been improperly procured by any of the parties e.g. presence of fraud, bribery, undue influence
• Further grounds see s.55 (2) LSAL –Lagos has made further grounds of insanity, incapacity, wher the tribunal is not properly constituted , where the arbitrator has received bribe, or where the award is contrary to public policy etc.

 

Procedure for challenging award

• Originating summons or originating motion supported by affidavit together with

1. CTC of award
2. Copy of the arbitration agreement

• Copy of contract in respect of which arbitration was conducted.

 

ENFORCEMENT OF AN AWARDPROCURED IN NIGERIA

Legally binding on the parties and enforceable in court

Procedure:

• Application to the High Court by way of originating summons or originating motions supported by affidavit.

Accompanying documents:-

• Duly authenticated original copy or CTC of the award
• The original arbitration agreement or a CTC of the agreement .s 31(2) ACA
• Where the award or arbitration is not made in English, a translation in English. s 56 (2) (c)LSAL
• Upon grant of application, award can be enforced on the same manner as a judgement/ order of the court. S 31(3) ACA
• The court can refuse to enforce an ward on the application of any of the parties

Grounds for refusal to enforce an award. – same grounds as

 

CONCILIATION

What is conciliation? Whereby a this party neutral called the conciliator is used to prevail on the parties to settle their disputes out of court. It is similar to mediation but they have their differences. 

Law governing conciliation. - Arbitration & conciliation act (part II) Cap A18 Laws of fed. of Nigeria. However there is no federal act governing mediation in Nigeria. 

Interventionist in approach and the conciliator may deliver his opinion as to the merits of the case. Mediator is not interventionist, the mediator only creates options for the parties and facilitates their settlement but at the end the parties are the ones that choose their decision, whereas in conciliation the conciliator is called upon to decide on the matter for them. The conciliator heard the parties but gives the decision.   

Parties can choose to settle disputes between them by conciliation. S37 ACA.

 

Initiating conciliation

• By agreement of the parties
• A party who wishes to initiate conciliation shall send to the other party a written request to conciliate
• The request shall contain a brief statement setting out the subject of dispute. S 38 ACA

 

Conciliation proceedings shall be deemed to commence on date request to conciliate is accepted s. 39 ACA

 

Appointment of conciliators

• Consists of 1 or 3 conciliators
• Where the parties agree on suing 1 conciliator he must be jointly appointed by the parties
• Where they choose 3 , each will appoint 1 and the 3^rd shall be appointed by the parties jointly. S. 40 ACA

 

 Hearing of proceedings and terms of settlement

• Parties may appear in person or by their legal representative
• Conciliator shall examine the case of the parties and hear their evidence
• Conciliator shall submit terms of settlement to the parties. S.42(1) ACA
• Where parties accept terms of settlement, conciliator shall draw up and sign a record of settlement. S42(2) ACA . (Parties can either agree or disagree with the terms of settlement)
• Accepted terms will be binding on parties and can be enforced by an action in court
• Where the parties do not agree on terms, they have two options

1. Submit the dispute to arbitration
2. Take out an action in court .s 42 92) ACA

It must be noted that nothing done by the parties in conciliation proceedings shall affect their legal rights in arbitration or court actions. S 42(4) ACA.