As anyone who has experienced the traffic in Lagos knows, Nigeria is undergoing a process of urbanization with the growing population in urban centres leading to the creation of mega-cities. As urbanization increases and the size, value and complexity of infrastructure projects and real estate developments, the potential for disputes also increases. Substantial infrastructure and development projects involve many parties including investors, lenders, construction firms, materials suppliers and the ultimate purchasers who may be businesses or individuals. They also increasingly include provision of key services such as power, water and roads.
Arbitration provides a means for resolving these increasing complex and high-value disputes in a fast, efficient, cost effective and confidential manner.
One key advantage of arbitration is that the parties can choose arbitrators with experience in the infrastructure and development sector. This means that the parties' dispute will be determined by someone who can bring to bear their expertise in understanding and deciding the matters in dispute. This can lead to a more efficient process and be helpful particularly regarding issues that are technical or relate to industry practice.
Another advantage of arbitration is that the parties can determine to a large extent how they want the proceedings to be handled whereas court proceedings are conducted strictly in accordance with court rules. In the context of an ongoing infrastructure or development project, it may be necessary for a dispute to be resolved quickly so that work on the project can continue. Arbitration enables the parties to agree to put in place procedures to ensure that an award is made quickly in order to prevent a dispute from derailing the overall project.
Arbitration results in an award which the parties agree is final and binding, subject to any rights of appeal provided for by law. Courts will usually enforce arbitration awards provided that the arbitration was conducted fairly and in compliance with the parties' agreement to arbitrate.
Another alternative, which can be used to facilitate resolution of disputes on major projects is mediation. Unlike in court or an arbitration, in mediation there is no final and binding judgment. Instead, the mediator's role is to seek to facilitate the parties reaching agreement on a final settlement. The mediator's role is to help show the parties how they can reach a win-win solution by helping them evaluate the strength and weaknesses of their cases to reach a fair and mutually acceptable outcome. A key advantage of mediation is that it is faster and cheaper than litigation or arbitration.
There are many leading arbitration lawyers in Nigeria. Many of these lawyers have experience of arbitrations in the Oil & Gas sector, where arbitration is the preferred means for resolving disputes. There is sometimes a false perception within Nigeria that arbitration is only used in resolving Oil & Gas disputes, this is however not the case, as arbitration is constantly evolving and is increasingly common in other sectors, including infrastructure and real estate.
The recent creation of the Association of Young Arbitrators (AYA) Nigeria, also shows that Nigeria is investing in promoting arbitration among young, up-and-coming lawyers. AYA is an organization established by young Nigerian lawyers to facilitate mentoring, knowledge sharing and training of the next generation of arbitration lawyers in Nigeria. The Lagos Court of Arbitration has also offered arbitration training to Nigerian lawyers for a number of years.
If the parties do not wish to use mediation or arbitration to resolve infrastructure and real estate disputes then these would usually end up in court litigation. Court litigation can be expensive and it can take a long time get to a final judgment, particularly if case goes all the way through the appeals process.
Adoption of arbitration to resolve infrastructure and real estate disputes is a great opportunity in Nigeria.
This article was adapted from an interview given to The Nation newspaper in Nigeria which appeared in that paper on 2 February 2017.