INTRODUCTION

In May 2023, thanks to the collaborative endeavours of the Nigerian Arbitration Community, the Arbitration and Conciliation Act, 1988 (“the ACA”) was repealed and replaced with the Arbitration and Mediation Act, 2023 (“the AMA”).[1]

The AMA, though yet to be gazetted, is divided into three parts namely:

  • Part I – Arbitration (sections 1-66)
  • Part II – Mediation (sections 67- 87)
  • Part III – Miscellaneous Provisions (sections 88- 92)

With three Schedules:

  • 1st Schedule – Arbitration Rules
  • 2nd Schedule – Convention on the Recognition and Enforcement of Foreign Arbitral Awards June 10, 1958
  • 3rd Schedule – Arbitration proceedings.

The AMA makes the following substantive changes to arbitration law in Nigeria:

  1. Scope of Application: The scope of application of the AMA seems to have delineated [2] Interstate Commercial Arbitration within the Federal Republic of Nigeria. It is the view of the authors that interstate commercial arbitration was subsumed under the domestic regime of the ACA which had two regimes: domestic arbitration and international arbitration. Regarding Mediation, the AMA’s scope of application[3] is well aligned with the UNCITRAL Model Law on International Commercial Mediation.[4]
  2. Form of Arbitration Agreement: As anticipated, the AMA provides for electronic communication of arbitration agreements[5].
  3. Continuity of Proceedings: The AMA provides that an arbitration agreement shall not be invalid by reason of the death of any of the parties neither shall the authority of the Arbitrator to act in arbitration proceedings be revoked by the death or bankruptcy of the party by whom he was appointed.[6] This provision therefore encourages continuity of proceedings since it is only on the death of the Arbitrator that his authority is revoked unlike in the case of the ACA where the death of the appointing party revoked the authority of the Arbitrator.   
  4. Jurisdiction: The AMA has addressed the confusion created by sections 4 and 5 of the ACA in the multiplicity of provisions regarding the issue of stay of proceedings by eliminating section 4 and retaining section 5. This is a welcome development as it addresses the mischief inherent in having two similar but different provisions.
  5. Default Number of Arbitrators: Unlike the ACA which provided for three Arbitrators where parties failed to agree on the number of arbitrators in their agreement to arbitrate, the AMA provides that in such circumstances, the Arbitral Tribunal shall consist of a sole Arbitrator.[7]
  6. Immunity: The AMA introduces immunity for the Arbitrator, appointing authority, or arbitral institution.[8] This is a welcome development as it allows for the free discharge of the duties and responsibilities of Arbitrators and arbitral institutions without fear of litigation unless the action or omission was done in bad faith.
  7. Emergency Arbitrator proceedings: The AMA introduces a new concept which allows parties to apply to their designated arbitral institution or the court for the appointment of an Emergency Arbitrator when seeking interim reliefs before an Arbitral Tribunal is constituted.[9] If granted, the Emergency Arbitrator is appointed within two business days from receipt of the application by the arbitral institution or court. The objective of this provision is to cater for instances where urgent decision-making is required to safeguard the interest of a party pending the final decision of the dispute. The parties are mandated to abide by the decision of the Emergency Arbitrator, failing which the decision is enforceable.
  8. Interim Measures: The AMA has provided a clear framework for the enforcement of the interim measures by defining interim measures and conditions which must be satisfied before an arbitral tribunal can grant interim measures.
  9. Limitation Period: Under the existing limitation law in Nigeria, an action to enforce an arbitration award has a six-year limitation period, calculated from the date the cause of action accrued. Contrary opinions have been expressed on the calculation of the limitation period. While some calculate the limitation period from the date of the breach of the arbitration agreement (failure to honour the resulting award), the position of the law is as expounded by the Supreme Court in the case of City Engineering Nigeria Ltd v Federal Housing Authority.[10] Here, the Supreme Court held that the limitation period is calculated from the date that the cause of action accrued being the date of the event that necessitated the arbitration proceedings. Thankfully, the AMA addresses this concern by expressly providing that when calculating the timeframe for initiating proceedings to enforce an arbitral award, the duration from the commencement of the arbitration to the date of the award are to be excluded.[11] The AMA has also established the statutory time limits for mediation proceedings. If mediation proceedings conclude without reaching a Settlement Agreement, the limitation period will begin from the moment the proceedings end without a Settlement Agreement.[12]
  10. Grounds for Setting Aside an Award: Similar to the UNCITRAL Model Law 2006, the AMA explicitly outlines the criteria under which a party can seek to set aside an award.[13] By virtue of this provision, recourse to a court against an arbitral award may be made only by an application for setting aside under any of the following grounds:
  • Legal incapacity.
  • Invalid arbitration agreement.
  • Lack of due process.
  • The award contains decisions on matters beyond the scope of the submission to arbitration.

Section 30 of the ACA provided that a party could seek to set aside an award in cases of arbitrator misconduct or if the arbitral proceedings, or award, had been obtained through improper means.  The ACA however failed to provide any guidance on what amounts to “misconduct” or “improper procurement”, thus leaving the courts with a wide discretion.

It is comforting that the AMA has adequately addressed the arbitrariness associated with the absence of guidance regarding what constitutes “misconduct” or “improper procurement” under the ACA.[14]

11. Award Review Tribunal: The AMA introduces an Award Review Tribunal (“ART”).[15] It is an opt-in mechanism that allows parties to seek a review or an annulment of an arbitral award before a second arbitral tribunal constituted in the same manner as the initial tribunal. The ART is mandated to render its decision within sixty (60) days of its constitution. If the ART annuls an award, either in whole or part, the court may reinstate the award upon a party’s application, if it considers that the ART’s decision is “unsupportable”. If the ART upholds the validity of an award, the court can only annul the award on grounds of non-arbitrability and public policy. The award of the ART is still subject to review by the courts on the application of a party to the arbitration.

It may be argued that the introduction of the ART introduces some level of efficacy to the arbitration process, it however introduces an additional layer of review without leaving out the courts. Considering the current challenges with the delay in the enforcement proceedings of arbitral awards in the Country, it is likely to be prone to abuse and thereby result in further delay of the enforcement of arbitral awards. Being an opt-in mechanism, parties who desire to avoid this additional layer have the option of leaving out any reference to the ART.

12. Consolidation, Concurrent hearings, and Joinder of party Unlike the ACA, the AMA provides for consolidation and concurrent hearings as well as joinder of parties.[16] The arbitral tribunal’s power can only be exercised with the consent of the parties in accordance with the principle of party autonomy. Furthermore, the arbitral tribunal’s power to join a party to the arbitration is premised on the additional party being bound by the underlying arbitration agreement before the arbitral tribunal.[17]

13. Lien on an award: An encouraging addition in the AMA is the power granted to the Arbitrator to exercise a lien on the award in cases where arbitration fees remain unpaid.[18]

14. Third-Party Funding Agreement: The AMA acknowledges the concept of third-party funding.[19]

    Third-party funding in arbitration refers to the financing of a claim by a party known as a “Third-party Funder” who is unconnected to the dispute and provides the funding in return for financial gain or a share of the potential award or settlement. The terms of the Third-party Funding Agreement determine the extent of the Funder’s obligations, which may include covering the costs of the counterparty (the party being funded) and providing security for the opponent’s costs, if so ordered by the Arbitral Tribunal.

    CONCLUSION

    The AMA is an obvious step in the right direction as it intends to make arbitration proceedings seated in Nigeria more efficient. Also, the AMA’s replacement of Conciliation with Mediation is a welcome development seeing that Mediation has gained more popularity over the years.

    The authors hold the view that the AMA has a few drawbacks. One such concern is the introduction of the Arbitral Review Tribunal (ART), which entails subjecting an award to further review. Though it is an opt-in mechanism so that only parties that voluntarily agree on it will be subject to the further review, given the existing delays in the enforcement of awards and the fact that this additional layer does not eliminate judicial intervention, it may not offer a substantial benefit to arbitration.

    Another point of concern pertains to the insufficient guidance regarding the arbitrability of tax matters. Clarity on distinguishing between tax disputes and tax related disputes as demonstrated by the court in Esso v FIRS[20]would have been beneficial.

    Thirdly, the Act incorporates provisions for Mediation aligning with the 2018 UNCITRAL Amendment transitioning from the Model Law on International Commercial Conciliation to the Model Law on International Commercial Mediation. It is noteworthy that while Nigeria adopted the United Nations Convention on International Settlement Agreement Resulting from Mediation in August 2019, this Convention was not integrated into the AMA.

    The AMA appears to have omitted section 46 which is titled “Award of Interest” in the Arrangement of Sections. This will be corrected in the gazetted copy.

    Overall, the AMA is a most welcome statute which can be said to be long overdue.

    REFERENCES

    1. Arbitration And Conciliation Act Cap A18 Laws of the Federation of Nigeria, 2004 (“The ACA”)
    2. Arbitration And Mediation Act, 2023 (“The AMA”)
    3. City Engineering Nigeria Ltd vs Federal Housing Authority SC 204/1992
    4. The Sun Newspaper: mediation agreements now enforceable internationally: https://sunnewsonline.com/mediation-agreements-now-enforceable-internationally/ 10th August 2019.
    5. Obosa Akpata & Olusola Adegbonmire: The Nigerian Arbitration Law in Focus- 2nd Ed. (West African Book Publishers Limited) 2019.
    6. Social Science Research Network – Third- Party funding in Nigeria.

    Author(s)

    Mrs. Obosa Akpata LLM (LONDON), C.Arb (UK) is the Principal Partner of Patreli Partners, Legal Practitioners and Arbitrators.

    Joy K. Augustine is an Associate with Patreli Partners and a member of the Litigation and ADR practice.

    [1] Explanatory Memorandum of the Arbitration and Mediation Act, 2023 (‘’AMA’’)

    [2] Section 1(5) of the AMA. This section is similar to Article 1 of the UNICTRAL Model Law on International Commercial Arbitration, 2016.

    [3]. Section 67 of the AMA

    [4] Article 1 paragraph 1 UNCITRAL Model Law on International Commercial Mediation and International Settlement agreements resulting from Mediation, 2018.

    [5] Section 2(4) of the AMA. Similar to Article 7 paragraph 4, UNCITRAL Model Law on International Commercial Arbitration, 2016.

    [6] Section 4 of the AMA

    [7] Section 6 of the AMA

    [8] Section 13 of the AMA

    [9] Section 16 of the AMA

    [10] SC 204/92

    [11] Section 34(4) of the AMA

    [12] Section 71(1)(2) of the AMA

    [13] Section 55 of the AMA

    [14] Section 55 of the AMA

    [15] Section 56 of the AMA

    [16] Sections 39 and 40 of the AMA

    [17] Section 40 of the AMA

    [18]. section 54 of the AMA

    [19] Section 91(1) of the AMA

    [20] [2017] LPELR-51618(CA)