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National arbitration laws
What legislation applies to arbitration in your jurisdiction?
The Arbitration and Conciliation Act (Chapter A18, Laws of the Federation of Nigeria 2004) is the national arbitration law. Some states have also enacted their own arbitration laws. In Lagos, the Lagos State Arbitration Law 2009 applies to all arbitrations that have not specified another law.
Are there any mandatory laws?
The Arbitration and Conciliation Act mandatorily applies to all domestic arbitrations where parties have not chosen another law to govern their proceedings.
New York Convention
Is your country a signatory to the New York Convention? If so, what is the date of entry into force?
Yes, Nigeria is a signatory to the New York Convention. Nigeria acceded to the convention on March 17 1970 and it came into force on June 15 1970. The convention is set out in the Schedule 2 to the Arbitration and Conciliation Act, pursuant to Section 54(1) of the act.
Are there any reservations to the general obligations of the convention?
Yes. In accordance with Article I(3) of the convention, the federal government declared that it would apply the convention on the basis of reciprocity to the recognition and enforcement of awards made only in the territory of a member state to the convention and to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under Nigerian law.
Treaties and conventions
What other treaties and conventions in relation to arbitration is your jurisdiction party to?
Nigeria is a party to:
- the Convention on Settlement of Investment Disputes;
- the UNCITRAL Model Law; and
- the Economic Community of West African States Energy Protocol.
Nigeria has also entered into bilateral investment treaties with Finland, France, Germany, Italy, South Korea, the Netherlands, Romania, Serbia, Spain, Sweden, Switzerland, Taiwan and the United Kingdom.
Further, Nigeria has entered into investment promotion and protection agreements (IPPAs) with France, the United Kingdom, the Netherlands, Romania, Switzerland, Spain and South Africa. The purpose of these IPPAs is to protect investments and settle investment disputes through arbitration.
Nigeria entered into a treaty with the Asian African Legal Consultative Organisation on April 26 1999, guaranteeing the continued operation of the Regional Centre for International Commercial Arbitration, which was established in Lagos in 1989.
Has your jurisdiction adopted the UNCITRAL Model Law?
Yes. The Arbitration and Conciliation Act, which came into force on March 14 1988, enacted the UNCITRAL Model Law 1985 with some minor modifications. Section 53 of the Arbitration and Conciliation Act refers to the adoption of the UNCITRAL Arbitration Rules in international arbitration agreements.
Are there any impending plans to reform the arbitration laws in your jurisdiction?
Some states have enacted their own arbitration laws to govern arbitration within their respective states. For example, the Lagos government enacted its own arbitration law, which came into force on May 18 2009. The Lagos State Arbitration Law is also a re-enactment of the UNICITRAL Model Law, incorporating the 2006 amendments. The law provides that unless the parties to a dispute subject to arbitration have agreed that another arbitration law will apply, all arbitration in Lagos will be governed by the law.
These changes seek to amend some aspects of the Arbitration and Conciliation Act in order to incorporate recent amendments to the UNCITRAL Model Law.
What are the validity requirements for an arbitration agreement?
To be valid, an arbitration agreement must be in writing or otherwise evidenced in writing. Further, both parties must have mutually agreed or consented to the agreement. Further, the parties must have legal capacity to enter into the agreement. Finally, the arbitration agreement must be in respect of a commercial relationship.
Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?
Nigerian courts tend to uphold arbitration agreements. Arbitration agreements are enforced by a successful application for a stay of proceedings and a reference of the dispute to arbitration. The courts will readily grant stays once the applicant has shown that it is ready, able and willing to arbitrate the dispute.
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?
The Arbitration and Conciliation Act does not expressly empower an arbitral tribunal to consolidate separate arbitral proceedings. However, Section 40 of the Lagos Arbitration Law states that parties are free to agree to consolidate arbitral proceedings with other proceedings or that concurrent hearings be held on agreed terms. The Lagos law further provides that a party that was not originally a party to the proceedings may be joined with the consent of the other parties.
Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?
The substantive law of the dispute is determined by the parties’ agreement. In the absence of an agreement, Nigerian law will apply in cases of domestic arbitration. In cases of international arbitration, the conflict of law rules applied by the tribunal will determine the law to be applied.
Are there any provisions on the separability of arbitration agreements?
Yes. Section 12(2) of the Arbitration and Conciliation Act.
Are multiparty agreements recognised?
There are no limitations on multiparty agreements. The parties have autonomy to agree on how to organise their claims therein.
Criteria for arbitrators
Are there any restrictions?
No. However, the arbitrator is expected to be independent and impartial. The parties may expressly require certain qualifications for arbitrators in their arbitration agreement.
What can be stipulated about the tribunal in the agreement?
The following can be stipulated about the tribunal in the agreement:
- the appointing authority, number of arbitrators and required qualifications for arbitrators;
- the seat or place of arbitration;
- the rules governing the arbitration proceeding; and
- the timeframe for delivery of an award.
Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?
Where the Arbitration and Conciliation Act applies and the number of arbitrators is not agreed by the parties, the default number will be three (Section 6 of the act). Under the Lagos State Arbitration Law, the default number of arbitrators is one. Where the arbitration is international in nature and the nationality of the arbitrator(s) is not stated, it is advisable to appoint an arbitrator of a nationality other than the nationality of the parties (Section 44(4) of the act).
Challenging the appointment of an arbitrator
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?
Yes, the appointment of an arbitrator can be challenged if he or she:
- fails to disclose circumstances likely to give rise to any justifiable doubts as to his or her impartiality and independence; or
- does not possess the qualifications agreed by the parties.
The parties are free to determine the procedure to be followed when challenging an arbitrator. Under the Arbitration and Conciliation Act, where no procedure has been agreed, the party intending to challenge the arbitrator must forward a written statement of the reasons for the challenge to the arbitral tribunal within 15 days of becoming aware of the constitution of the arbitral tribunal or the circumstances for the challenge. Unless the challenged arbitrator withdraws or the other party agrees to the challenge, the arbitral tribunal will decide on the challenge. Under Lagos state law, either the arbitral tribunal or the appointing authority (if there is one) will determine the challenge.
How should an objection to jurisdiction be raised?
Jurisdictional objections must be raised no later than the date on which the objecting party submits its points of defence. This can be achieved by way of a separate notice of preliminary objection or be raised in the points of defence.
If the jurisdictional objection is that the arbitral tribunal has exceeded the scope of its authority, this must be raised as soon as the matter alleged to be beyond the scope of its authority occurs. Such challenges must also be made by way of an application to the arbitral tribunal.
Replacement of an arbitrator
Why and how can an arbitrator be replaced?
In the event that the appointment of an arbitrator is terminated by the parties, or the arbitrator dies or resigns during the course of the arbitral proceedings, fails to act or is unable to perform his or her functions, a substitute arbitrator will be appointed or chosen in accordance with the rules and procedure by which the replaced arbitrator was appointed. Under Lagos law, an application to remove an arbitrator can also be made to the national court on any of the above grounds; however, the court will not act until the arbitral tribunal has exercised its powers to resolve the issue.
Powers and obligations
What powers and obligations do arbitrators have?
Arbitral tribunals have power to determine their own jurisdiction and rule on the existence or validity of an arbitration agreement.
Arbitrators have a continuing obligation to disclose anything that may give rise to doubts as to their independence or impartiality and must ensure that the parties are accorded equal treatment and given a full opportunity to present their cases.
Arbitrators also have the power to determine the admissibility, relevance, materiality and weight of evidence submitted by the parties (Section 15(3) of the Arbitration and Conciliation Act). Again, where the law contains no provision in respect of a matter related to or connected with a particular arbitral proceeding, the arbitral tribunal may conduct the arbitral proceedings in whatever manner it considers appropriate (Section 15(2)).
Arbitrators also have discretion to appoint experts to give advice on specific technical matters. Arbitrators need not consult the parties beforehand regarding the questions that will be submitted to the expert (Section 22). However, where the parties disagree on the appointment of an expert, the arbitral tribunal should not proceed (Section 22(1)).
The law allows arbitrators to issue whatever interim protections considered necessary.
In international arbitration, the arbitrators must decide the dispute in accordance with the rules of the country whose laws the parties have chosen to apply to the substance of the dispute.
Liability of arbitrators
Are arbitrators immune from liability?
Unlike judges, who enjoy statutory immunity from suits while acting in a judicial capacity, arbitrators receive no statutory immunity under the Arbitration and Conciliation Act. However, the Lagos Arbitration Law grants arbitrators statutory immunity unless they act in bad faith.
Communicating with the tribunal
How do the parties communicate with the tribunal?
In determining its procedure, the arbitral tribunal will agree to a mode of communication with the parties. In accordance with the mandatory rules that apply to domestic arbitrations, all documents and information supplied to the arbitrator by one party must be communicated to the other party (Article 15(3) of the Arbitration Rules).
Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?
In an arbitral tribunal comprising more than one arbitrator, any tribunal decision must be made by a majority of all its members (Section 24(1) of the Arbitration and Conciliation Act).
In the case of questions of procedure, if no majority can be reached or when so authorised by the arbitral tribunal, the presiding arbitrator may issue a sole decision, subject to revision (Section 24(2)).
Are there any disputes incapable of being referred to arbitration?
Yes. Section 57 of the Arbitration and Conciliation Act defines ‘arbitration’ as encompassing commercial arbitration, and ‘commercial’ as all relationships of a commercial nature.
Generally, disputes arising out of tax matters, criminal matters, illegal and void contracts or matters leading to a change of the status of the parties are not arbitrable. The test is whether the dispute can be compromised lawfully by way of accord and satisfaction (United World Ltd Inc v MTS (1998) 10 NWLR (Pt 568)106).
However, an exception was made in Statoil (Nig) Ltd v Nigerian National Petroleum Corporation ((2013) 14 NWLR (Pt. 1373) 1 at 29), where the Court of Appeal held that an arbitral tribunal’s jurisdiction is derived from the parties’ consent. The decision implies that regardless of whether the dispute relates to taxation matters, if the parties agree to refer it to arbitration, the arbitral tribunal has jurisdiction.
Can the arbitrability of a dispute be challenged?
Yes. By virtue of Section 12 of the Arbitration and Conciliation Act, a plea that the arbitral tribunal does not have jurisdiction may be raised no later than the date on which the points of defence were submitted.
Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?
In accordance with Section 12(1) of the Arbitration and Conciliation Act, a tribunal is competent to rule on its own jurisdiction. Although the Arbitration and Conciliation Act does not specifically state that a court can determine the issue of a tribunal’s jurisdiction, it is not precluded from doing so based on a party’s application to that effect. This is particularly so where an arbitrator proceeds with arbitration even where circumstances exist that could give rise to justifiable doubts as to his or her impartiality or independence (Section 8(3)(a) of the Arbitration and Conciliation Act).
In addition, the court can address the issue of jurisdiction and competence of an arbitral tribunal after the award has been made and proceedings have been instituted for setting aside or refusing recognition and enforcement of the award. Although lack of jurisdiction is not expressly stated as a ground for setting aside or refusing recognition and enforcement of an award under the Arbitration and Conciliation Act, it has been held to constitute misconduct on the part of the tribunal, for which an award may be set aside under Section 30 of the Arbitration and Conciliation Act (see Taylor Woodrow Ltd v GMBH (1991) 2 NWLR (Part 175) 604).
Starting an arbitration proceeding
What is needed to commence arbitration?
To commence arbitration, the claimant must serve a notice of arbitration on the respondent. The arbitral proceedings commence on the date on which notice of arbitration was received by the respondent, unless otherwise agreed by the parties.
Are there any limitation periods for the commencement of arbitration?
The Arbitration and Conciliation Act does not provide limitation periods for the commencement of arbitration. However, under Nigerian law, limitation periods generally exist for commencement of contractual actions, depending on the state where the action is to be instituted.
Are there any procedural rules that arbitrators must follow?
Generally, under the Arbitration and Conciliation Act, the parties have the autonomy to determine the conduct of the arbitral proceedings. However, for domestic arbitration, the rules in the schedule to the Arbitration and Conciliation Act are mandatory, including as follows:
- The arbitral tribunal must give adequate advance notice of the date, time and place of the hearings (Article 25 of the rules).
- The award or any decision made by a tribunal consisting of three members must be made by the majority (Article 31 of the rules).
- The award must be made in writing and, unless otherwise agreed by the parties, state the reasons on which the decision is based (Article 32 of the rules).
Are dissenting opinions permitted under the law of your jurisdiction?
There are no provisions in the Arbitration and Conciliation Act regarding dissenting opinions. It is sufficient for any decision made by a tribunal consisting of three members to be made by the majority (Section 24 of the Arbitration and Conciliation Act). In domestic arbitration, if one out of three arbitrators fails to sign the award, the award must state the reason for the absence of the signature (Article 32(4) of the Arbitration and Conciliation Act).
Can local courts intervene in proceedings?
A high court can intervene in arbitral proceedings governed by the Arbitration and Conciliation Act only where specifically provided for under the act (Section 34 of the Arbitration and Conciliation Act).
Can the local courts assist in choosing arbitrators?
Yes, the high courts can assist in choosing arbitrators. In domestic arbitration, if the parties fail to appoint arbitrators, the high court is the default appointing authority (Section 7 of the Arbitration and Conciliation Act).
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?
Where a respondent fails to state its defence as required under the Arbitration and Conciliation Act, the arbitral tribunal can continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations (Section 21(b) of the Arbitration and Conciliation Act). While the court cannot compel the parties to arbitrate, it may stay proceedings and direct the parties to arbitrate where a party to the agreement has commenced litigation instead of arbitration. The court may subpoena third parties within Nigeria to appear as witnesses or produce evidence (Section 23 of the Arbitration and Conciliation Act).
In what instances can third parties be bound by an arbitration agreement or award?
Under the Arbitration and Conciliation Act, a third party cannot be bound by an arbitration agreement.
Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?
There is no default language for arbitration. The place of arbitration will be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.
How is evidence obtained by the tribunal?
Subject to any agreement to the contrary, the arbitral tribunal will decide whether the arbitral proceedings will be conducted:
- by holding oral hearings for the presentation of evidence or oral arguments;
- on the basis of documents and other materials; or
- by both holding oral hearings and on the basis of documents.
The tribunal has the power to determine the admissibility, relevance, materiality and weight of any evidence placed before it.
What kinds of evidence are acceptable?
The tribunal determines the type of evidence that is acceptable by ensuring that the parties are accorded equal treatment in the presentation and acceptability of their evidence.
Is confidentiality ensured?
No provisions relate to confidentiality under the Arbitration and Conciliation Act. However, the arbitration rules in the schedule to the act make provision for proceedings to be held on camera, except where the parties agree otherwise. There is also an implied obligation on arbitrators and the parties to keep private and confidential all information regarding the proceedings.
Can information in arbitral proceedings be disclosed in subsequent proceedings?
The Arbitration and Conciliation Act does not prevent information in arbitration proceedings from being disclosed in subsequent proceedings.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
Nigerian lawyers conducting proceedings as counsel or arbitrators are bound by the Rules of Professional Conduct in the Legal Profession.
Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?
The costs in arbitration are fixed by the arbitral tribunal in its award. These costs include:
- the arbitral tribunal’s fees;
- the travel and other expenses incurred by the arbitrators;
- the cost of expert advice and other assistance required by the arbitral tribunal;
- the travel and other expenses of witnesses to the extent that such expenses are approved by the arbitral tribunal; and
- the reasonable costs for legal representation and assistance.
Costs generally follow the event. This means that the costs of the arbitration will, in principle, be borne by the unsuccessful party, except where the parties agree otherwise. However, the tribunal may exercise its discretion to apportion costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.
No additional fees may be charged by an arbitral tribunal for interpretation, correction or completion of the award.
Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?
Yes. When granting interim measures of relief, the arbitral tribunal may request a party to provide security for the costs of such measures. National courts have similar powers.
What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?
The award must be in writing and signed by the arbitrators. Where the tribunal comprises of more than one arbitrator, the majority’s signature will suffice if the reason for the absence of any signature is stated.
The award must contain the reasons on which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms.
The award must also contain the date it was made and state the place of the arbitration, as agreed by the parties or determined by the tribunal.
A copy of the award signed by the arbitrators must be delivered to each party.
The arbitral award need not be reviewed by any other body.
Timeframe for delivery
Are there any time limits on delivery of the award?
There are no time limits on delivery of an award. However, time limits exist for correcting and interpreting an award and making an additional award. The tribunal may extend the time limit within which it must do any of the above if it deems this necessary.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
No. All of the remedies recognised under the relevant laws are enforceable by the courts.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
Interim measures include measures for the conservation of goods forming the subject matter of the dispute and for the security of costs. The high courts can issue interim measures pending constitution of the tribunal.
Can interest be awarded?
Interest can be awarded based on the parties’ agreements in this regard.
At what rate?
Interest can be awarded at a rate agreed by the parties or proved before the arbitral tribunal.
Is the award final and binding?
Yes. Arbitral awards are final and binding on the parties to the arbitration.
What if there are any mistakes?
Mistakes in awards can be corrected on the request of one of the parties within an agreed timeframe or within 30 days of the receipt of the award. The party applying for the correction must notify the other party when requesting the correction. A correction can be in respect of any:
- errors in computation;
- clerical or typographical errors; or
- errors of a similar nature.
Where the tribunal considers the request justified, it will make the correction and provide an interpretation, and the correction or interpretation will form part of the award.
Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
The parties are bound by the strict terms of their agreement and may exclude their right to recourse against an award in the agreement. However, such agreements may be unenforceable if challenged, as the courts have held in other circumstances that access to the judicial system is a public right which cannot be waived.
What is the procedure for challenging awards?
A party that is aggrieved by an arbitral award can apply to the high court to set aside the award within three months of the date of the award or after the correction of the award. The high court may set aside the award or part of the award if the party making the application proves that the award or a part of it contains decisions on matters which were beyond the scope of the submission to arbitration.
Where an application to set aside an award is brought, the high court may, at the request of a party, suspend its proceedings for a period that it deems appropriate so that the arbitral tribunal can resume the arbitral proceedings or take other actions to eliminate the grounds for the setting aside of the award.
On what grounds can parties appeal an award?
There are no grounds to appeal against an arbitral award under Nigerian law. However, a party to a domestic arbitration may apply to the high court to have an award set aside on grounds that:
- the tribunal exceeded its jurisdiction;
- the tribunal was guilty of misconduct; or
- the award was fraudulently procured.
Regarding awards in international arbitration, the court may set aside an award if the party making the application can prove that:
- a party to the arbitration agreement was under some legal incapacity;
- the arbitration agreement is invalid under the law chosen by the parties, or failing such an indication, that the arbitration agreement is invalid under Nigerian law;
- the aggrieved party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case;
- the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration;
- the award addresses matters which are beyond the scope of the submission to arbitration;
- the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties’ agreement;
- where there is no agreement between the parties as to the arbitral tribunal or the arbitral procedure, the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the Arbitration and Conciliation Act;
- the subject matter of the dispute is incapable of settlement by arbitration under Nigerian law; or
- the award is against Nigerian public policy.
The award or part of it will be rendered unenforceable where the court sets aside the award or part of it based on any the above grounds.
What steps can be taken to enforce the award if there is a failure to comply?
If there is a failure to comply, a party can file an application for enforcement of the award in the manner prescribed by the Arbitration and Conciliation Act and the rules of the court. The party relying on the award or applying for its enforcement must supply the duly authenticated original or a duly certified copy of the award and the original arbitration agreement or a duly certified copy.
Can awards be enforced in local courts?
Awards can be enforced in local courts in the same manner as a court judgment.
How enforceable is the award internationally?
Local arbitral awards are enforceable internationally, subject to compliance with the municipal laws of the country where enforcement is to be made.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
Nigeria is likely to be able to raise a successful defence of sovereign immunity where the assets against which enforcement is sought can be shown to be non-commercial assets.
Are there any other bases on which an award may be challenged, and if so, by what?
Generally, there are no other grounds on which an arbitral award may be challenged. However, challenges regarding the misconduct of the tribunal or an arbitrator are open to a wide range of interpretations and parties are generally able to allege several grounds of challenge.
In addition, in the recent case of Statoil v FIRS ((2014) LPELR-23144(CA)), a first-instance court held that a third party that is likely to be affected by the outcome of the award can challenge an arbitral award on that basis.
How enforceable are foreign arbitral awards in your jurisdiction?
Foreign arbitral awards are commonly recognised and enforced in Nigeria through the following means:
- by an action on the award;
- by registration under the Foreign Judgment (Reciprocal Enforcement) Act 1990;
- under Section 51 of the Arbitration and Conciliation Act 1990;
- under the New York Convention 1958; and
- under the International Centre for Settlement of Investment Disputes Convention.
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
No. Under the Arbitration and Conciliation Act, an award that has been set aside by the court in the seat of arbitration cannot be enforced in Nigeria.
Rules and restrictions
Are there rules or restrictions on third-party funders?
There are no rules or restriction for third-party funding or funders.
Class-action or group arbitration
Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?
There are no specific provisions for class-action arbitration or group arbitration in Nigeria. However, the Trade Disputes Act (Chapter T8, Laws of the Federation of Nigeria 2004) provides that trade disputes may be referred to the Industrial Arbitration Panel for resolution. Trade disputes in Nigeria typically involve large numbers of employees (members of a trade union) within an industry and may be classified as group arbitration.
Are there any hot topics or trends emerging in arbitration in your jurisdiction?
The arbitrability of tax claims within energy industry production sharing contracts is being litigated in light of the first-instance decision in Statoil v FIRS ((2014) LPELR-23144(CA)), which effectively restricts parties from enforcing an arbitration award after a challenge to the award has been filed by the tax authority.
Challenges to foreign legal counsels’ ability to appear as counsel in domestic arbitration proceedings on the grounds that this is in breach of local legislation are increasing and are being addressed by the appellate courts.
The purpose-built building for the Lagos Court of Arbitration was commissioned in March 2015. The well-equipped Lagos Court of Arbitration is poised to be the foremost arbitration institute in Nigeria and Africa, and it is hoped that it will encourage the resolution of disputes locally without recourse to foreign arbitral institutions.