Why Arbitration In Dispute Resolution In Nigeria?

By Amb. Hameed Ajibola Jimoh, Esq.

ACArb (Chartered Arbitrator), FIGPCM, CGArb. (Certified Global Arbitrator), LPC (Licensed Peace and Conflict Resolution and Management Specialist), PC-WCM (Certified Specialist in ‘Workplace Conflict Management’), FIMC, CMC (Certified Management Consultant), CMS (Certified Management Specialist (with distinction in time Management), London) and Notary Public for Nigeria.

As human beings exist on earth, they are bound to have some disputes arising from some of their relationships or obligations. The focus of this paper is on the civil disputes that may arise among or between persons (though, criminal disputes may arise between or among individuals). It is no doubt that from time immemorial, there were means through which individuals or disputing parties resolve their disputes; for instance, by means of ‘Traditional or Customary Alternative Dispute Resolution’. The issue of court-room/litigation dispute resolution or adversarial dispute resolution became more pronounced after the colonial rule in Nigeria. Hence, one of the means as an alternative of settling or resolving disputes in Nigeria has been ‘ARBITRATION’. The important question is ‘why arbitration in dispute resolution in Nigeria?’ ‘or why is arbitration being encouraged rather than the traditional or customary means of resolving disputes in Nigeria?’ This paper seeks to proffer answer to this question, hence, this paper.

The Nigerian law has made a law termed ‘Arbitration and Mediation Act, 2023- herein after referred to as AMA­. Under AMA, the ‘Preamble’ provides thus ‘This Act repeals Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria, 20024 and enacts the Arbitration and Mediation Act, 2023, to provide a unified legal framework for the fair and efficient settlement of commercial disputes by Arbitration and Mediation, and make applicable, the Convention on the recognition and enforcement of foreign arbitral awards (New York Convention) to any award made in Nigeria or in any contracting State arising out of International Commercial Arbitration’ (underlining is mine for emphasis). In my respectful observation and submission, it is clear from the Preamble to the AMA (supra) that the focus of the AMA is ‘Commercial Disputes’ rather than general disputes or disputes as they exist between or among parties. The word ‘Commercial’ which is the focus of the AMA is defined in section 91 of the AMA as ‘includes matters arising from all relationships of a commercial nature whether contractual or not, such as any trade transaction for the supply or exchange factoring, leasing, construction works, consulting, engineering, licensing, investment, financing, baking, insurance, exploitation agreement or concession, joint venture and other forms of industrial or business co-operation, carriage of goods or passengers by air, sea, rail or road’ (the word ‘include’ used in this definition shows that the lists are indefinite in regard to the commercial disputes to which AMA is applicable, thereby making AMA applicable to all commercial disputes as may be agreed upon by the disputing parties). The Court of Appeal of Nigeria explained the implication of the use of the word ‘include’ in a statute in the case of Nwosu v. State (1990) 7 NWLR (Pt. 162) 322, thus ‘The word ‘include’ is used in a statute in order to enlarge the meaning of words or phrases occurring in the body of the statute: and when it is so used, those words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. Thus where a statutes defines a word simply as ‘means sound so’, the definition is meant to be explanatory and prima facie restrictive, but where the word is so defined to ‘include so and so’, then the definition is clearly intended to be extensive. [Rabiu v. State (1981) 2 N.C.L.R.293 at 303 referred to]. (P.332, paras. F-G)’.

Furthermore, in my humble submission, notwithstanding that AMA is an Act of the National Assembly, its provisions do not override the ‘agreement’ made by parties in regard to their disputes. Even section 1(2) of AMA provides thus ‘Parties to a dispute are at liberty to decide the means by which their disputes may be resolved, provided they adhere to measures that are necessary to promote peaceful existence and protect public interest’. This in my humble submission, means that the parties to dispute have the ‘personal freedom’ or ‘personal right’ to agree in a ‘written agreement’ either before the dispute or during the dispute that AMA shall govern their dispute or apply to their dispute, else, they may decide to what means by which their disputes may or shall be settled and they are so bound to such agreement. Section 1(5) and (6) of AMA even lays some limitations to the application of AMA. Also, Section 91 of AMA (supra) defines what amounts to or what is ‘arbitration’, thus ‘arbitration means a commercial arbitration whether or not administered by a permanent arbitral institution’. In my humble submission, the AMA has not proffered a clear definition of what is ‘arbitration’; it rather defines ‘arbitration agreement’ in section 91 of the AMA (supra) thus ‘is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not’. Section 1 of the Part I of the AMA defines the objectives of the Act thus ‘The objective of this part is to promote fair resolution of disputes by an impartial tribunal without unnecessary delay or expense’. Notwithstanding that AMA mentions or focuses on ‘commercial disputes’ to which arbitration shall apply, in my humble submission, disputes go beyond commercial as there are non-commercial disputes to which AMA is not applicable or which are not the focus of AMA. Hence, in my humble submission, ‘arbitration’ becomes a tool for disputes resolution whether commercial or non-commercial disputes as an alternative dispute resolution. For instance, one of the tools for settling ‘disputes’ in ‘Peace and Conflict Resolution and Management (non-commercial disputes) such as: communal disputes; marital and family disputes; etc. is ‘arbitration’, to which AMA may not apply (that is to say, except the disputing parties agree in writing to apply AMA to their disputes).

Like I stated above that there is no clear definition of what is ‘arbitration’ in the AMA, the Supreme Court of Nigeria, in the case of Nigerian National Petroleum Corporation v Lutin Investments Limited (2006) 2 NWLR (pt. 965) 506, p. 542-543, paras. G-A, made efforts to proffer a definition thus ‘An arbitration is the reference of a dispute or differences between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction. The arbitrator who is not an umpire, has the jurisdiction to decide only what has been submitted to him by the parties for determination. If he decides something else, he will be acting outside his authority and consequently the whole proceedings will be null and void and of no effect. This will include any award he may subsequently make’. Harlsbury’s Laws of England, Third Edition, Vol. 1 at 180, defines ‘arbitration’ thus ‘Arbitration is the reference of a dispute or difference between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than in court of competent jurisdiction’. Bemstein Handbook of Arbitration Practice, 1988, page 9, defines ‘arbitration’ thus ‘… a mechanism for the resolution of disputes which takes place, usually in private pursuant to an agreement between two or more parties under which the parties agree to be bound by the decision to be given by the arbitrator according to law or if so agreed, other considerations, after a fair hearing, such decision being enforceable at law…’. See: Arbitration Law: Practice and Procedure, First Edition, 2024, by Hargler Okorie Princeton & Associates Publishing Co. Ltd., Lagos.

The fact, in my humble submission, notwithstanding that there is no generally accepted definition of what arbitration is, is that ‘arbitration’ is one of the tools in resolving disputes as alternatives to litigation in the court of law. There is also a rising trend of a number of commercial, industrial, contractual and other relationship agreement such as: communal agreements; marital/family agreements; friendship agreements; etc., where two parties have obligations to perform to themselves or each other that the resort to ‘arbitration’ is utilized rather than resorting to litigation in the court of law, perhaps because of the numerous advantages of ‘arbitration’ to litigation.

In arbitration, the proceedings are confidential rather than being held in public. Arbitration saves parties’ costs and time (that is to say, delay is avoided); arbitration is majorly based on parties’ discretions (as to, for instance: the practice and procedure to guide the arbitration proceedings; the choice of law and venue; flexibility of practice and procedures; choice of appointment of who shall be the arbitration tribunal to settle such dispute; parties still have the right to choose who represent their respective interest (s) in the dispute before the arbitration tribunal as legal practitioners; etc.); the award made by the arbitration tribunal is final; the award is made in arbitration within the shortest possible time; arbitrators are experts who must have acquired special skills in dispute resolution by arbitration; parties still have a high number of opportunities to continue their relationship or businesses (notwithstanding the arbitration proceedings either ongoing or concluded) where required in their subsequent relationship or transactions; parties have much more trust in the fair treatment and or resolution of their disputes different from some corruption allegations accustomed to a court of law in litigation (whether private persons are involved or a government body is involved). Also, business-oriented persons do not have all the time to quarrel for ages in the court of law.

Therefore, and finally, the above advantages come to mind whenever one enquires about ‘why arbitration in dispute resolution in Nigeria’ rather than resort to litigation’. Disputes referred to litigation are reducing on a daily basis while disputes referred to ‘Alternative Dispute Resolution (ADR)’ such as Arbitration are increasing. Also, in my humble submission, notwithstanding what others may list as disadvantages of arbitration, arbitration still stands out as one of the best means of settling civil disputes, especially commercial disputes, as an ‘Alternative Dispute Resolution (ADR)’. More so, business-oriented persons do not have all the time to quarrel for ages in the court of law, such a long litigation causes drawback to businesses and relationship rather than progress. I therefore humbly recommend ‘Alternative Dispute Resolution (ADR)’ mechanisms to every Nigerian in resolving their disputes for their peaceful coexistence.

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