Sources and Development of Arbitration in Nigeria

Arbitration and ADR in its modern form are only a recent phenomenon in Nigeria and in other African countries. However, the impression that the use of arbitration itself is a recent development in Africa is erroneous, considering the existence of “customary” arbitration. This term refers to arbitration based on an oral agreement, and was defined by the Nigerian Supreme Court of Nigeria as “an arbitration in dispute founded on the voluntary submission of the parties to the decision of the arbitrators who are either the chiefs or elders of their community, and the agreement to be bound by such decision or freedom to resile where unfavourable” (Ohiaeri v Akabeze (1992) 2NWLR (Pt 221), p. 1 at 7, para 12). Arbitration is therefore not a new form of jurisprudence: indeed, in land disputes, customary arbitration was a common feature and recognized as binding on the parties, as acknowledged by the courts that considered it being repugnant to good sense for a losing party to reject the decision of the arbitrator to which he had previously agreed (Larbi v Kwasi (1952) Privy Council 13 WACA 76). Furthermore, the courts affirmed that in “customary arbitration, when a decision is made, it is binding upon the parties, as such decisions upon arbitration in accordance with native law and custom have always been that the unsuccessful party is barred from reopening the question decided and that if he tries to do so in the Courts, the decision may be successfully pleaded by way of estoppels” (Mensah v Takyiampong & Ors (1940) 6 WACA 118).

Still, the pertinent question is when Arbitration and ADR began to be formalized and endorsed in statutes in Nigeria. The primary sources of the Nigerian law of Arbitration are the English Common Law, the Nigerian Customary Law and Nigerian Statutes.  The various local enactments on Arbitration and ADR in Nigeria incorporated the English Common Law, Doctrine of Equity, together with the English Statutes of general application, into the country during the period of the Colonial Administration of the country. Consequently, English Common Law rules on Arbitration are part of Nigerian Law. However, the Arbitration Ordinance, Ordinance 16 of 1914, which was an adaptation of the 1889 English Arbitration Act, was the first legislative enactment on Arbitration in Nigeria.  This was later re-enacted as Arbitration Act, Cap 13, Laws of the Federation of Nigeria, 1958.  It will also be recalled that Nigeria was a unitary state until 1954. At the time of political independence in 1960, the Arbitration Act was applicable to Lagos, the then federal capital territory, while the Regions (now States) had their own Arbitration Laws.  These are found in the Arbitration Law of Northern Nigeria 1963, Arbitration Law of Western Nigeria 1959 and Arbitration Law of Eastern Nigeria 1963. These laws were adopted by the States that were eventually created out of these regions. This was the position until 1988, when the Federal Government of Nigeria adopted the UNCITRAL Model Law on International Commercial Arbitration with the promulgation of the Arbitration and Conciliation Decree No. 11 of 1988.  In 1990, it became the Arbitration and Conciliation Act, Cap 19, Vol.1 Laws of the Federation of Nigeria 1990. While on the one hand the principles of written agreement and consensus to arbitrate are the foundation of arbitration, it is noteworthy that all High Court (Civil Procedure) Rules have provisions concerning referral to arbitration (while some statutes provide for statutory arbitration), thus recognizing the existence of an arbitration generated by order of court (as provided e.g. in the Rules of Court and by statutes such as the Trade Disputes Act, Cap 432, Laws of the Federation of Nigeria, 1990, the Nigerian Investment Promotion Council Act of 1995, and the Privatization and Commercialization Act of 1999). Because of the aforementioned genesis of the arbitral law, some scholars have argued that Common Law and the Doctrine of Equity are still sources of Arbitration Law in Nigeria, thus permitting recourse to Common Law and Equity to fill the “blank spaces”.  However, the English Arbitration Act 1996 is not applicable in Nigeria.

The awareness to arbitrate or adopt any other ADR mechanism in the resolution of disputes in Nigeria is waxing stronger and stronger on the passage of each day. Most agreements in commerce today have a clause referring parties to arbitration or mediation.  A healthy development today in Nigeria in the realm of ADR is the sudden upsurge of Arbitrating or Arbitral bodies and ADR centers such as the Nigerian Branch of The Chartered Institute of Arbitrators; The Institute of Dispute Resolution, (Ekpan, in Delta State); The Negotiation and Conflict Management Group (NCMG); The Abuja Arbitration Forum (although this is still in its embryonic stage); and the Lagos Regional Centre for International Commercial Arbitration (established under the Lagos Regional Centre for International Commercial Arbitration Act of 1999). Specifically, it is noteworthy the work done by the NCMG (which is more or less an NGO), that has so far championed the establishment of the Lagos Multi-Door Courthouse, The Abuja Multi-Door Courthouse and is aimed at duplicating such Courthouses in all other States of the Federation.  Recently the NCMG was able to offer a first-hand Mediation course in both Lagos and Abuja in cooperation with the Centre for Effective Dispute Resolution (CEDR) in London.

Despite the growing awareness surrounding arbitration and the efforts undertaken by the mentioned institutions, skepticism still surrounds arbitration in Nigeria on certain points, mostly concerning aspects pertaining e.g. oral submission or enforcement. First, absence of written documents is likely to lead to a disagreement as to what the exact terms of the agreement are. Moreover, oral submissions are relevant only in respect of existing disputes, whereas a written agreement can be in respect of both present and future disputes.  While under customary arbitration an arbitration agreement can be oral, under the Arbitration and Conciliation Act, the agreement must be in writing. Second, as the award of an arbitral tribunal is not a judicial decision, an exequatur is required for its enforcement.  If the award-debtor refuses to honor the award, the winning party has to commence judicial process in order to compel compliance, and this may take a considerable amount of time and money. However, if the arbitration is regulated by the Arbitration and Conciliation Act, the award can be enforced under summary and expeditious procedure set out in Section 31(3) of the Act.  In the case of Ras Pal Gazi Construction Company Limited v Federal Capital Development Authority (2001) 10 NWLR (Pt 722) p. 559 at 562 para. 3, the Supreme Court held inter alia, that: “…An award made pursuant to Arbitration proceedings constitutes a final judgment on all matters referred to the arbitrator. It has a binding effect and it shall upon application in writing to the court, be enforced by the court…”.

All ADR Practitioners accept the proposition that it is more beneficial for parties to resolve their differences by negotiated agreement rather than through contentious court proceedings.  It was a fundamental precept of Roman law that it was in the interest of the State to see an end to litigation.  Most Practitioners share the belief that parties using ADR processes tend to arrive at settlements that are more creative, satisfactory and longer lasting than those imposed by the Court.  However, ADR can be used simply to establish a deal that eludes the parties in bilateral negotiations, either personally or through their lawyers. Accordingly, all hands must be on deck to continue to encourage the growth and further awareness of Arbitration and other forms of ADR for the immediate benefit of international trade and business in the region.

The Nigerian National Committee of AFSIA was established to group a rising group of arbitration practitioners in the country, many of whom are SIA graduates. The National Committee further aims at establishing a close cooperation with the local judiciary and legislators for promoting a better understanding of Arbitration as an alternative to litigation.


Posted on 31/01/2012 by by David Ike, Member of the Nigerian National Committee