Appellate Arbitration, Emergency Procedures and Third Party Funding – Significant Features in the Reform of Nigerian Arbitration Law

The Arbitration and Conciliation Act (Repeal and Re-enactment) Bill (The Bill) has successfully passed through the Senate and awaits the concurrence of the House of Representatives and the assent of the Presidential to become law. The purpose of this reform is to modernize Nigeria’s arbitration law and tackle problems that have been a disincentive to arbitrating in Nigeria.

Under the present framework, guerrilla tactics have usually been employed in arbitral proceedings, often in the form of incessant “interlocutory appeals” to court complaining of arbitrator “misconduct” and often accompanied by injunctions to restrain arbitral proceedings. The Bill has removed the concept of “misconduct” and aligned the grounds on which awards may be challenged with the more limited “due process” and “jurisdictional” grounds contained in the UNCITRAL Model Law and the New Your Convention.

When an arbitration proceeding eventually comes to a conclusion, enforcement can be quite problematic if the losing party decides to challenge the arbitral award. Under the present framework, the scope for courts to review arbitral awards is very wide and is, in effect, almost comparable to the full merits review that applies to first instance court decisions. The Bill recently passed by the Nigerian Senate has taken a bold step to address this issue by considerably reducing the wide scope for judicial review that currently exists and, in its place, providing for an appellate level arbitral process that will review the award of first instance arbitral tribunals.

The creation of the award review tribunal is an innovative step which will go a long way in ensuring the finality and preservation of arbitral awards. Parties are given the option to refer their awards to the tribunal for review instead of going to court in the first instance to have an award set aside. The award review tribunal is expected to conclude the review within three months and either uphold or set aside the award in whole or in part.  An award that has been upheld by the award review tribunal can only be set aside by a court on ground of arbitrability and/or public policy.

Also, the Bill provides for the appointment of an emergency arbitrator, again limiting the involvement of the court in situations where a party requires urgent relief before the constitution of the arbitral tribunal or appointment of the sole arbitrator. The option to appoint an emergency arbitrator as provided in the Bill gives parties the option to seek interim relief from the arbitrator instead of recourse to court.

Another innovative provision in the Bill is the expansion of the definition of ‘Costs of Arbitration’ to now include the arbitral institution’s cost and the cost of third party funding. While the effect of the inclusion of the cost of the arbitral institution in calculating the cost of the arbitration will probably not be significant  because most institutions already have their cost included in their Rules which the tribunal and the parties are obligated to comply with, the opposite is the case for the provision relating to third party funding.

Nigeria currently does not have legislation that expressly prohibits third party funding. However the common law doctrine of champerty and maintenance apply in Nigeria as part of received English Law. This raises significant doubt about the enforceability of third-party funding agreements. The express reference to the use of third party funding signals legislative acceptance of this mechanism which most business managers will find a useful strategy for keeping litigation costs off their balance sheet.

The Nigerian arbitration community eagerly awaits the enactment of what promises to be a major development in the evolution of commercial disputes resolution in Nigeria.