Including a radical review procedure by an arbitral panel taking a significant role in challenges to awards
Nigeria is one of the leading economies in Africa.
In recent decades, dispute resolution in Africa has advanced in leaps and bounds. All of the major economies have developed arbitral institutions which operate on rules and principles which are designed to offer reassurance and predictability for parties from anywhere in the world, and the ability to handle large and complex cases.
The expertise available on the continent in international arbitration has also grown radically. Nigeria has several arbitral institutions which are managed by senior and respected international arbitration professionals, and which routinely appoint senior arbitrators from around the world, including many based in Nigeria, some of whom are in the top tier of arbitrators globally.
The area in which Nigeria has not always impressed with its progress is in relation to its legislation governing international arbitration, and in relation to the handling of international arbitration matters by its Courts.
On 26 May 2023, the Federal Republic took a major step in addressing these issues when the President signed the Arbitration and Mediation Bill into law. The Arbitration and Mediation Act 2023 (the “Act”) will apply to domestic and international arbitrations in Nigeria.
The act contains a series of modernising measures, amounting to a wholesale renewal of the law on the subject. Let's identify the key measures in the Act, and examine in a little more detail one of the most interesting of them.
Summary of key measures
Enforcement of the agreement to arbitrate: Section 5 requires that Nigerian courts stay proceedings commenced in breach of the arbitration agreement unless the court finds that the agreement is “void, inoperative or incapable of being performed”.
Enforcement of and challenge to arbitral awards: Under section 55, arbitral awards may be challenged on grounds which mirror those in the UNCITRAL Model Law (2006 edition). There is no general ground for challenging awards based on arbitrator misconduct. Under section 57, enforcement of an arbitral award may be refused only on grounds which are like those in the Model Law.
Emergency arbitrator procedure: Section 16 provides for the appointment of an Emergency Arbitrator, even where the parties have not agreed to arbitral rules which provide for this. The appointment is made by the Court or institution within two days of an application being made.
Enforcement of interim measures: Sections 28 and 29 provide that the Court shall enforce interim measures ordered by an arbitral tribunal, and may only refuse to do so on grounds which are broadly similar to the New York Convention grounds for refusal of enforcement.
Third party funding: Sections 61 and 62 abolish the torts of maintenance and champerty in the arbitration context, and thus allow parties to an arbitration to be funded through third-party funding whereby the funder will receive payment from the proceeds of the claim. However, the funded party must disclose the name and address of the funder to the other parties, the arbitral tribunal and, the arbitral institution (if applicable) (Section 62).
Mediation: Part II of the Act makes detailed provision for mediations in international dispute matters, including how mediations are conducted, the status of matters disclosed in mediations and the enforcement of agreements made after a relevant mediation.
The Award Review Tribunal
We understand that the provisions in the Act for an Award Review Tribunal ("ART") were the brainchild of a panel of experts including celebrated Nigerian international arbitration lawyer, Babatunde Fagbohunlu SAN.
Under section 56, the parties to any arbitration agreement may opt-in to a mechanism whereby, after the arbitral award is issued, a dissatisfied party may, within a short period, challenge the award before the ART, which is a further arbitral tribunal, constituted in the same manner as the tribunal which issued the award. The Act provides that opting into this mechanism is done by agreeing that "an application to review an arbitral award on any of the grounds set out in section 55(3) of this Act shall be made to an Award Review Tribunal."
Having agreed this, any challenge to an arbitral award, on any of the grounds in section 55, must be made within three months and must be made to the ART.
The ART should give its decision within 60 days. It may either set aside the award, in whole or in part, or it may affirm the award. Following that decision, a party may apply to the Court to set aside the award of the arbitral tribunal or the ART (depending upon what result that party is seeking). A time limit for that application does not seem to be expressly provided in the Act at this stage.
Upon an application to the Court following an ART decision, the Court's approach will depend on what the ART has done:
If the ART has affirmed the award: the Court may only consider an application to set aside under section 55(3)(b) (i) or (ii), namely on the grounds either that the subject matter of the dispute is not capable of settlement by arbitration under Nigerian law, or that the award is against the public policy of Nigeria.
If the ART has set aside the award in whole or in part: the Court may review the decision of the ART and if the Court is satisfied that the decision of the ART is "unsupportable having regard to the ground on which the ART set aside the award", the Court may reinstate the award insofar as set aside by the ART.
Comment
The innovative and creative provision for an ART has the effect, where the parties agree to it, of reducing the scope of the Court's intervention in arbitration awards seated in Nigeria.
At first, any challenge to an award must be made to the ART. Following the ART's decision, the Court can only review the ART's decision to set aside if the Court feels the decision is unsupportable. I expect that this may be interpreted as something akin to "manifestly wrong". This would go beyond a situation where the Court feels it would have reached a different decision if considering the matter separately, and indicates a situation where the Court feels that the decision reached by the ART is one which could not properly be justified on the material before the ART, within the range of acceptable decisions. In English law, this type of appeal is sometimes called a "perversity" appeal.
If the ART affirms the award, then the Court's scope to intervene is radically reduced, and its ability to review the procedure in the arbitration, or the Tribunal's jurisdiction, is eliminated.
It seems likely that parties entering into arbitration agreements providing for a Nigerian seat will want to include an agreement to opt-in to the ART procedure, so as to streamline the process of challenge and limit the time spent in any court proceedings following the award.
No doubt parties seeking to agree to opt-in to this provision will also want to use the exact words used in the Act (quoted above) so as to avoid any suggestion that the agreement is ineffective.
This provision might also be of interest to the Law Commission of England and Wales, who are currently reviewing the English Arbitration Act 1996, and considering amending section 67 so that the Court reviews the tribunal's decision on jurisdiction rather than making a fresh decision on the issue. Whilst it seems unlikely that England and Wales would adopt an ART-type procedure, the Nigerian provision on the standard of review of ART decisions is interesting.
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