Arbitration serves as the guiding light that leads conflicting parties towards the shores of resolution, nurturing an environment of harmony, equity, and righteousness in a world where conflicts frequently pose a risk of overwhelming us with disharmony. As a result, the legislation pertaining to arbitration demands the utmost attention, not only to ensure the fulfillment of its true purpose but also to establish the principles by which it must abide.
On May 26, 2023, former President Muhammadu Buhari assented to the Arbitration and Mediation Bill thereby making it an official law. This new legislation repeals and replaces the previous Arbitration and Conciliation Act[1] (“ACA”) and serves as the principal legal framework governing arbitration, arbitral tribunals, arbitral awards, and mediation in Nigeria.
The objective of this work is to analyze the recently enacted Arbitration and Mediation Act, 2023 (“AMA”) in conjunction with the repealed Arbitration and Conciliation Act, and alongside, explore the impact of the AMA on arbitration proceedings within Nigeria.
NOVEL PROVISIONS IN THE NEW ACT
Some of the key innovations of the Arbitration and Mediation Act, 2023 (“AMA”) alongside its corresponding provisions under the Arbitration and Conciliation Act (“ACA”) are as follows:
1. The Use of Accessible Electronic Communication: The repealed ACA mandates all arbitration agreement to be in writing taking the form of; “… a document signed by the parties; or in an exchange of letters, telex, telegrams or other means of communication which provide a record of the arbitration agreement; or in an
exchange of points of claim an of defence in which the existence of an arbitration agreement is alleged by one party and denied by another”[2]
The new AMA however, in addition to the above, introduces, “electronic communication” to satisfying the writing requirement. It provides that; the requirement for an arbitration agreement to be in writing can now be satisfied by an
“electronic communication” that is accessible to be usable for subsequent reference.3 Implying that, if an electronic communication is readily accessible and can be used for future reference, it fulfills the criteria that an arbitration agreement must be in writing. “Electronic communication” as used in the Act is defined as any communication that the parties make by means of data messages, that is, any information generated, sent, received, or stored by electronic, magnetic, optical, or similar means, including electronic data interchange (EDI), electronic mail, telegram, telex, or telecopy. 4 The above definition thus recognizes the use of emails, text message correspondences, social media chats etc. as means to satisfy the mandatory requirement of a written arbitration agreement.
Whilst the ACA may have presumed the inclusion of electronic means of communication under its provision for, “…other means of communication which provide a record of the arbitration agreement”,[3] it is not certain for sure what it holds to constitute, “other means of communication” – an ambiguity the AMA has by its specific provision, laid to rest.
- Third-Party Funding in Arbitration: In contrast to the repealed ACA, the new Arbitration and Mediation Act explicitly acknowledges and recognizes the concept of third-party funding. Third-party funding in arbitration refers to a practice where an entity or individual, known as a third-party funder[4], provides financial support to one of the parties involved in an arbitration proceeding. The funder’s role is to finance some, or all the costs associated with the arbitration in exchange for a share of the potential award or settlement. The terms of the third-party funding agreement[5] determine the extent of the funder’s obligations, which may include covering the counter-party’s
costs and providing security for the opponent’s costs if ordered by the Arbitral Tribunal.
The new Act provides that the torts of Maintenance and Champerty[6] do not apply in relation to Third-Party funding of arbitrations seated in Nigeria and related to proceedings in any court within Nigeria.[7] The Act also specifically provides that an arbitral tribunal shall fix the costs of arbitration in the final award and such costs include the cost of “Third-Party funding”.[8]
- Reduction in Default Number of Arbitrators: In cases where the parties do not specify the number of arbitrators in their agreement, there are different provisions in the repealed ACA and the new AMA. Under the repealed ACA, if the parties failed to specify the number of arbitrators, the default provision stated that three (3) arbitrators would be designated to hear the case.[9]
However, the new AMA has introduced a change in this regard. According to the new Act, if there is no agreement between the parties regarding the number of arbitrators, the default provision now designates a sole arbitrator to handle the arbitration proceedings.12 Having a sole arbitrator can be more cost-effective compared to multiple arbitrators. This can be particularly advantageous for parties with limited financial resources or when the dispute involves relatively lower stakes. With a single arbitrator, the arbitration process can be streamlined and expedited. Decision-making can be quicker as there is no need for deliberations or reaching a consensus among multiple arbitrators.
Whilst the inclusion of provisions for the designation of sole arbitrator may appear to simplify and streamline the process, it is crucial not to overlook the issue of justice and
fairness that a three-member panel of arbitrators is more likely to achieve compared to a single arbitrator.
Furthermore, with respect to international arbitration, the AMA provides that, if no procedure is established for the selection of an arbitrator and no appointing authority is designated or agreed upon by the parties, it shall be deemed that the Director of the Regional Centre for International Commercial Arbitration in Lagos is the appointing authority designated by the parties.[10]
- Emergency Arbitrator: This is a novel provision in the AMA. It permits the appointment of an emergency arbitrator in cases where a party seeks immediate relief. Furthermore, it allows for the conduct of emergency arbitration proceedings through various means of communication, including video conferencing, telephone, and similar methods. According to the new Act, if a party requires urgent relief in relation to a dispute, they have the option to apply for the appointment of an emergency arbitrator. This application can be made to an arbitral institution designated by the parties, or if no such designation exists, to the court. The application can be submitted either concurrently with or after the filing of a notice of arbitration, but before the formation of the arbitral tribunal.[11]
In urgent situations where maintaining the status quo is crucial to prevent irreparable harm or preserve rights, parties can seek interim measures such as injunctions or asset preservation orders. Emergency arbitrators can provide speedy decisions on such matters, allowing parties to address pressing issues before the full arbitral tribunal is constituted, which may take time due to various procedural steps.
- Clarification on Statute of Limitation to Arbitration and Mediation Proceedings: The matter concerning the computation of time in relation to the limitation period when arbitration and mediation proceedings were initially undertaken is a familiar topic within the Nigerian legal system. Nigerian courts have established that the period between the initiation of arbitration and the issuance of the final arbitral award is not considered when considering the statute of limitations.
The AMA codifies this and aligns itself with this established judicial precedent concerning the computation of time in relation to the limitation period for both arbitration and mediation proceedings. With respect to arbitration, the new Act specifically states that statutes of limitation, which are time limits set by law for initiating legal actions, will be applicable to arbitral proceedings in the same way as they apply to judicial proceedings.[12] In other words, any time limits specified in statutes of limitation that apply to a particular legal dispute will also apply to arbitral proceedings relating to that dispute. Regarding mediation, the Act explicitly states that when mediation proceedings commence, the running of the limitation period for the claim under mediation is suspended.16 Therefore, if the mediation process concludes without a settlement agreement, the limitation period resumes from the point at which the mediation ended without a settlement agreement. These provisions provide an additional statutory safeguard against the expiration of the limitation period in the context of arbitration and mediation proceedings conducted under the Act.
- Consolidation of Arbitration Proceedings: Whilst the repealed ACA does not include provisions for consolidation of arbitral proceedings, the new Act introduces this possibility. Under the new Act, parties have the option to agree that their arbitral proceedings can be consolidated with other ongoing arbitral proceedings, even if they involve different parties, if all parties concerned agree to such consolidation.17 This provision on consolidation of multiple arbitrations benefits parties by providing efficiency, cost savings, consistency, judicial economy, settlement opportunities, and increased finality. It offers a streamlined approach to resolving complex disputes involving multiple parties and related issues. The provision can also benefit the judicial system when court intervention is required. If the parties seek court assistance, consolidating multiple arbitrations can reduce the burden on the court system by consolidating related cases and avoiding duplicative proceedings. It enables the courts to allocate their resources more effectively and efficiently.
- Joinder of Additional Party(ies): Another groundbreaking change in Nigerian arbitration is a provision in the new Act that allows an arbitral tribunal to exercise discretion in including an additional party in the arbitration, provided there is prima
facie evidence that the party is bound by the arbitration agreement.[13] The term “prima facie” as used in section 40 of the new Act indicates the need for reasonable belief or evidence of the party’s obligation to the agreement. The arbitral tribunal evaluates the available evidence to establish a credible connection between the additional party and the arbitration agreement, ensuring their compliance with its terms and obligations. This provision aligns with the UNCITRAL Model Law on International Commercial Arbitration,[14] empowering the tribunal to consider factors like the legal interest of the additional party, rights of existing parties, potential conflicts of interest, and the timing of the request when deciding on joinder.[15]
- Power of Court to grant Interim Reliefs: Under the repealed ACA, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute.[16] The new Act however expands this power by allowing the court to issue interim measures of protection in relation to arbitration proceedings conducted in Nigeria or another country.22 The new Act recognizes the importance of court intervention when necessary to protect the rights of parties or preserve the effectiveness of the arbitration process. The court can provide interim relief in the form of injunctions, orders for the preservation of assets, or any other measures it deems necessary to support the arbitration process. These interim measures aim to prevent irreparable harm, maintain the status quo, or secure the effectiveness of the final arbitral award.
Although it seems that any court has the authority to grant interim relief, the Act includes a provision stating that the court may refuse to recognize or enforce an interim measure if it determines that the measure is incompatible with its conferred
powers.[17] Therefore, the power of any court to grant interim relief to an applicant is limited to the inherent powers granted by relevant statutory laws.
- Consequence of Withdrawal from Appointment: The new Act introduces a unique provision regarding the consequences of an arbitrator’s withdrawal from their appointment. This provision grants parties involved in arbitration the right to mutually agree upon the specific repercussions that will follow if an arbitrator withdraws from their appointment.[18]
This provision in the Arbitration and Mediation Act regarding the consequences of an arbitrator’s withdrawal from their appointment recognizes the importance of party autonomy and allows the parties involved in the arbitration to have a say in the outcome of such a situation. It would also help maintain the continuity of the proceedings. Instead of automatically halting the arbitration in the event of an arbitrator’s withdrawal, the parties can agree on alternative measures to ensure the smooth continuation of the process. This avoids unnecessary delays and minimizes the potential disruption to the resolution of the dispute.
- Arbitrator’s Immunity: The new Act introduces and recognizes the immunity of an arbitrator, an appointing authority, or an arbitral institution. Under the Act, an arbitrator, an appointing authority, or an arbitral institution is granted immunity in the performance of their duties; unless it can be proven that they acted in bad faith.[19] However, it’s important to note that this immunity does not exempt an arbitrator from any liabilities arising from their withdrawal.26 This provision ensures that arbitrators, similar to litigators, are now safeguarded by law while carrying out their responsibilities, alleviating concerns about potential liability.
This is a novel provision that is not contained in the ACA. Indeed, this provision encourages impartial decision-making by shielding arbitrators from the fear of personal liability; the provision enables them to make decisions based solely on the merits of the case. It fosters an environment where arbitrators can exercise
independent judgment without the concern of facing legal consequences for their decisions.
- Mediation and Other Forms of Alternative Dispute Resolutions – Unlike the repealed ACA which has no specific provision for mediation as a frequently utilized alternative dispute resolution mechanism in Nigeria, the Arbitration and Mediation Act recognizes and codifies Mediation as a dispute resolution mechanism for the first time[20]. Prior to this Act there were no extant legal provisions on Mediation and this Act is a federal law that codifies explicit guidelines to govern the practice mediation in Nigeria which is a major development for growing the practice and popularity of mediation.
Summarily, the Act defines “mediation,” as the process where parties seek the assistance of a neutral third party or parties to help them in reaching a mutually agreeable resolution for their dispute arising from a contractual or legal relationship. This definition covers various terms like mediation, conciliation, or other similar expressions.[21]
Consequently, if parties mutually decide to resolve their dispute through mediation, conciliation, or similar alternative dispute resolution methods, the relevant provisions within the Act that pertain to mediation will be applicable. This implementation establishes an integrated procedural pathway for enforcing alternative dispute resolution clauses specified in agreements. In essence, it creates a cohesive and structured approach that facilitates the resolution of disputes through mediation or similar methods, offering parties an efficient means to address conflicts outside of traditional litigation.
Some key provisions of the Act on Mediation are:
- There shall be one mediator unless the parties agree otherwise.[22]
- A time frame of 30days for a party to receive the acceptance of the invitation to mediate. Failure to respond may be treated as a rejection to mediate.
- Mediation sessions can be conducted using electronic means, such as video conferencing or other similar methods of digitally transmitting voice and/or image.
However, it is crucial to ensure the identification of the involved parties and adhere to the principles of mediation that have been established.
- The court or arbitral tribunal will enforce the commitment of the parties to engage in mediation and refrain from initiating any other arbitration or judicial proceedings during the specified period. This ensures that the parties actively participate in the mediation process and explore the potential for amicable resolution before resorting to formal legal proceedings.
- Admissibility of evidence – The provision regarding the admissibility of evidence states that certain statements and admissions made by a party, as well as proposals made by the mediator during mediation proceedings, cannot be used as evidence in other arbitral or judicial proceedings.[23] This provision aims to maintain the confidentiality and privacy of the mediation process, ensuring that information shared during mediation is protected and not used against parties in subsequent legal or arbitration proceedings.
- Immunity for mediators and mediation providers- Under the new Act, mediators and mediation providers are not liable for any act done or omitted in the discharge or purported discharge of their functions, unless the act or omission is shown to have been done in bad faith.31
- Furthermore, settlement agreements that result from successful mediation are now legally binding on the parties. These agreements can be enforced in court as a contract, consent judgment, or consent award, depending on the applicable legal framework. This provision strengthens the enforceability of settlement agreements reached through mediation, providing parties with a reliable and recognized mechanism to ensure compliance with the terms and conditions agreed upon during the mediation process.
- This Arbitration and Mediation Act aims to enforce international mediation settlement agreements. It states that the Singapore Convention will be applicable to international settlement agreements made in states other than Nigeria, under certain conditions. These conditions include the State being a party to the
Singapore Convention and the dispute arising from a legal relationship considered commercial under Nigerian laws.[24] The Act applies when parties have agreed in writing, and it covers various types of mediation, including international and domestic commercial mediation, domestic civil mediation, and both domestic and international settlement agreements resulting from mediation.33
In conclusion, the enactment of the Arbitration and Mediation Act marks a significant shift in the landscape of alternative dispute resolution in our jurisdiction. Whilst the former Act laid a foundation for arbitration, the new Act introduces innovative provisions that recognize the growing importance of mediation as a means of resolving disputes. The Arbitration and Mediation Act addresses key gaps and shortcomings of its predecessor, offering enhanced clarity, flexibility, and procedural frameworks for both arbitration and mediation processes. By incorporating provisions for the enforceability of mediation settlements, allowing for electronic mediation, and providing a comprehensive approach to international mediation, the new Act reflects a progressive and inclusive approach to dispute resolution. As legal practitioners and stakeholders adapt to the new legal framework, it is expected that the Arbitration and Mediation Act will contribute to more efficient, effective, and amicable resolutions, fostering a culture of alternative dispute resolution in our legal system.
[1] Arbitration and Conciliation Act CAP A18 Laws of the Federation of Nigeria (LFN), 2004 (“the ACA”)
[2] Section 1(1) (a-c) of the Arbitration and Conciliation Act. 3 Section 1(4) of the AMA, 2023 4 Section 91 Ibid.
[3] Section 1(1)(c) of the Arbitration and Conciliation Act.
[4] Section 91(1) of the AMA, 2023
[5] See, Section 91(1) of the AMA, 2023 for the definition of “Third-Party Funding Agreement.”
[6] The torts of maintenance and champerty are legal doctrines that limit third-party involvement and financial support in legal disputes. The historical purpose behind the doctrines of maintenance and champerty was to prevent abuse of the legal system and discourage unscrupulous individuals from interfering in disputes for personal gain. However, in many jurisdictions, including various common law jurisdictions, the strict application of maintenance and champerty has been relaxed or abolished to some extent. Many jurisdictions now permit third-party funding in litigation and arbitration under specific regulations and ethical guidelines. These developments aim to facilitate access to justice, particularly for parties with limited financial means, while still safeguarding against abusive and exploitative practices.
[7] Section 61 Ibid.
[8] Section 50(1) (g) Ibid.
[9] Section 6 of the Arbitration and Conciliation Act. 12 Section 6(2) of the AMA, 2023
[10] Section 59 of the AMA, 2023.
[11] Sections 16 of the AMA, 2023 and Articles 16 and 17 of the First Schedule to the same Act.
[12] Section 34(1 & 2) of the AMA, 2023 16 Section 71(1 & 2) Ibid. 17 Section 39 ibid
[13] Section 40 ibid
[14] The UNCITRAL Model Law on International Commercial Arbitration is a legal framework developed by the United Nations Commission on International Trade Law (UNCITRAL). It serves as a guide for countries in creating or updating their domestic arbitration laws to provide a modern and harmonized approach to international commercial arbitration. While the Model Law provides a recommended framework, each country may make certain modifications or adaptations to fit its legal system and specific needs. Therefore, the exact content and application of the Model Law can vary from one jurisdiction to another.
[15] Article 17 of the UNCITRAL Rules
[16] Section 13 of the Arbitration and Conciliation Act and Article 26 to the First Schedule of the same Act. 22 Section 19 of the AMA, 2023
[17] Section 29 ibid
[18] Section 12 Ibid.
[19] Section 13(1) Ibid. 26 Section 13(3) ibid.
[20] See, Part II, Sections 67-87 ibid.
[21] Section 91(1) ibid.
[22] Section 72(1) of the AMA, 2023
[23] Section 77(1) Ibid. 31 Section 81 Ibid.
[24] Section 87(a & b) of the AMA, 2023 33 Section 67(1) ibid.
Authors
