Arbitration Reform in Nigeria

Nigeria’s Arbitration Act[1], was enacted in 1988 and is now being reviewed to bring it up to date with international best practices in arbitration and alternative dispute resolution. Since it was enacted 29 years ago, there have been several important legal developments in arbitration.

This year, the Nigerian Senate is considering a Bill to amend the Arbitration Act.  Five important changes are likely to occur if the Bill is passed into law. In no particular order, some of these changes are as follows:

1. How many arbitrators make a Tribunal?

Section 6 of the current Arbitration Act provides for a default composition of an arbitral tribunal. By this provision, where the parties fail to agree, a Tribunal will be composed of three arbitrators. In the proposed Bill, Section 6 provides that the default composition of a Tribunal will be a sole arbitrator. This change will potentially reduce costs.

2. What to do in an emergency

Sections 16 – 18 of the proposed Bill create a procedure for the appointment and challenge of an emergency arbitrator, in instances where the parties require interim relief prior to the constitution of the Tribunal. Section 19 of the proposed Bill also requires that, where an application for interim measures is made to the Court, it must be determined in 15 days. Section 28 of the proposed Bill provides that interim measures are binding and enforceable by making an application to a competent Court.

These provisions address the need for urgent interim measures in arbitration, typically required at a time when an arbitral tribunal has not been established. This had previously depended almost entirely on the intervention of the courts.

These provisions address the need for urgent interim measures in arbitration, typically required at a time when an arbitral tribunal has not been established. This had previously depended almost entirely on the intervention of the courts.

3. Statutes of Limitation

Section 34(4) of the proposed Bill provides that in computing the time within which an application to court for enforcement of an award may be made, the time between the commencement of arbitration and the delivery of the award is to be excluded.

The present position of the law is that, unless a Scott v Avery clause exists, time to enforce an arbitral award starts to run from the date the contractual cause of action itself arose, so that there is a risk that if the arbitral process is unduly protracted, the right to enforce the award may be statute barred by the time the arbitration is concluded and an award is delivered. The proposed new provision means that the statutory time-limit in relation to an action to enforce an arbitral award stops to run from the moment arbitration is commenced.

Until this proposed change is enacted into law, claimants in danger of an approaching limitation statute may need to file a “protective action” in court to preserve their rights to seek relief through the judicial system.

4. Setting aside an Award

Section 55 of the proposed Bill expressly excludes misconduct as a ground for setting aside an arbitral award. This is a positive change because under the current legislation, the concept of misconduct has been defined so broadly as to permit virtually full merit reviews of arbitral awards. The draft Bill employs various devices, including the introduction of an Award Review Tribunal to narrow the scope and expedite the timeframe for award reviews.

 

[1] Cited as the Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria, 2004

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