Authored By: Abiola Rachael Kikelomo
AJAYI CROWTHER UNIVERSITY
Introduction
The global world is increasingly daily, different institutions such as the commercial environment, businesses and investors among others now seek a better and faster way of resolving dispute that aside from traditional court litigation.[1] Over the years now, arbitration has been considered to be the seeking methods to resolve disputes regardless of jurisdiction.[2]
United Kingdom, with respect, has been recognised as one of the leading jurisdictions through the Arbitration Act 1996 (as amended),[3] while Nigeria as well empowered its arbitration with the enactment of the Arbitration and Mediation Act 2023,[4] which aligns with international best practices.[5]
A comparative analysis is essential inorder to evaluate their respective strengths, identify areas for reformation, and draw lessons that may help and enhance better arbitration practices, especially in Nigeria.[6]
This article encompasses a comparative analysis of the legal and institutional frameworks governing arbitration in the United Kingdom and Nigeria.[7] It entails and examines the similarities, differences, identifies lessons that Nigeria may draw from the UK’s more established legal framework and as well consider the future prospects for strengthening arbitration as both effective means of dispute resolution.[8]
This article begins by understanding first the concept and nature of arbitration, then to discuss legal frameworks governing arbitration in Nigeria and the United Kingdom. It will compare the two jurisdictions by analysing their procedural and institutional approaches, highlighting the lessons from compilation, explores the prospect for the development continuation of arbitration, and concludes with recommendations.
The Existing Legal Framework Of Arbitration In Nigeria
Arbitration and Mediation Act 2023 (Nigeria)
The enactment of the Arbitration and Mediation Act 2023 marked a significant reform of Nigeria’s arbitration regime. The Act repealed and replaced the Arbitration and Conciliation Act, Cap. A18, Laws of the Federation of Nigeria 2004, and now serves as the principal legislation governing arbitration and mediation in Nigeria. Its objectives include ensuring the fair, efficient, and effective resolution of disputes by recognising party autonomy, allowing parties the freedom to choose the procedure for resolving their disputes, and limiting unnecessary court intervention in arbitral proceedings. The Act also contains comprehensive provisions relating to arbitration agreements, the appointment of arbitrators, arbitral proceedings, arbitral awards, recognition and enforcement of awards, and the setting aside of awards.[9]
International Treaties Adopted by Nigeria
UNCITRAL Model Law on International Commercial Arbitration
As it became increasingly recognised that there should be a uniform legal framework governing international commercial arbitration irrespective of jurisdiction, the UNCITRAL Model Law on International Commercial Arbitration was adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985. The Model Law was designed to harmonise national arbitration laws by promoting party autonomy, limiting judicial intervention, ensuring equal treatment of parties during arbitral proceedings, and facilitating the recognition and enforcement of arbitral awards. Nigeria’s Arbitration and Mediation Act 2023 substantially adopts the principles of the UNCITRAL Model Law, thereby strengthening Nigeria’s arbitration framework and making it more attractive to foreign investors and participants in international commercial transactions.[10]
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention, 1958)
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, commonly referred to as the New York Convention, is the principal international treaty governing the recognition and enforcement of foreign arbitral awards. It facilitates the enforcement of arbitral awards across national borders and is widely regarded as the cornerstone of international commercial arbitration. Nigeria is a contracting State to the Convention and has incorporated its principles into the Arbitration and Mediation Act 2023. Consequently, Nigerian courts generally recognise and enforce foreign arbitral awards, subject to the limited grounds for refusal prescribed under both the Convention and the Act.[11]
Although the law strongly promotes the recognition and enforcement of arbitral awards in order to facilitate international trade, recognition or enforcement may be refused on certain limited grounds. These include where the arbitration agreement is invalid, where a party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, where the arbitral tribunal exceeded the scope of the arbitration agreement, or where enforcement would be contrary to public policy. These grounds are provided under the Arbitration and Mediation Act 2023 and are substantially consistent with Article V of the New York Convention.[12]
Nigeria Relevant Cases
MV Lupex v Nigerian Overseas Chartering and Shipping Ltd
One of the leading Nigerian authorities on arbitration is MV Lupex v Nigerian Overseas Chartering and Shipping Ltd. The dispute arose from a commercial contract containing an arbitration clause. Despite the parties’ agreement to resolve disputes through arbitration, one of the parties instituted court proceedings instead.
The Supreme Court held that where parties have voluntarily agreed to submit disputes to arbitration, such agreement is binding and should ordinarily be respected by the courts. The Court reaffirmed the doctrine of party autonomy, recognising arbitration as an effective alternative dispute resolution mechanism that promotes the speedy settlement of disputes, reduces delays associated with litigation, and preserves commercial relationships.[13]
Statoil (Nigeria) Ltd & Anor v Nigerian National Petroleum Corporation (NNPC) & Ors
Another significant authority is Statoil (Nigeria) Ltd & Anor v Nigerian National Petroleum Corporation (NNPC) & Ors. The dispute arose from contractual obligations between the parties under an agreement containing an arbitration clause.
The Court of Appeal affirmed that where parties have agreed to arbitration as the method of resolving disputes, the courts must ordinarily give effect to that agreement unless one of the recognised statutory grounds justifies judicial intervention. The Court reiterated the principle that judicial intervention in arbitral proceedings should be limited, consistent with Section 34 of the Arbitration and Conciliation Act 2004, which reflected Article 5 of the UNCITRAL Model Law. It further held that there was no provision under the Act empowering the High Court to grant an ex parte injunction restraining arbitral proceedings. The decision also reaffirmed the principle of pacta sunt servanda, emphasising that agreements freely entered into by parties must be honoured.[14]
The Existing Legal Framework
Principal Legislation: Arbitration Act 1996
The Arbitration Act 1996 is the principal legislation governing arbitration in England, Wales and Northern Ireland. The enactment of this Act was aimed at modernising arbitration law, providing a comprehensive legal framework for arbitral proceedings, and promoting London’s position as one of the leading international arbitration centres.[15]
The major principles of party autonomy, limited court intervention, and the fair resolution of disputes without unnecessary delay are clearly stated under section 1 of the Act.[16]
Sections 57 of the Act emphasise arbitration agreements. For such an agreement to be binding and valid, it must be in writing. Where a valid arbitration agreement exists, the courts generally stay court proceedings and refer the parties to arbitration.[17]
Sections 1527 provide that parties are at liberty to determine the number of arbitrators and the procedure for their appointment. Where the parties fail to reach an agreement, the court may assist in making the appointment. Arbitrators are expected to remain independent and impartial, and the Act also provides the procedure for their removal.[18]
Sections 3041 deal with the powers of the arbitral tribunal. The tribunal is empowered to apply the doctrine of competence-competence, which enables it to determine its own jurisdiction. The tribunal also has the power to determine procedural matters, receive evidence, give procedural directions, and appoint experts where necessary.[19]
The role of the courts is to support arbitration and not to control it. Consequently, the courts may only intervene where expressly authorised by the Act, such as in the appointment of arbitrators, the granting of interim measures, the enforcement of arbitral awards, and limited challenges to arbitral proceedings.[20]
Sections 4658 deal with arbitral awards. An arbitral award must comply with the statutory requirements, and once made, it is final and binding on the parties. The tribunal may correct clerical or accidental errors, while parties may request an additional award in limited circumstances provided under the Act.[21]
Sections 6769 provide the grounds upon which an arbitral award may be challenged. These include lack of substantive jurisdiction, serious procedural irregularity, or an appeal on a point of law, which is permitted only in limited circumstances.[22]
Under Section 66, an arbitral award may be enforced in the same manner as a court judgment. The courts generally enforce arbitral awards except where recognised grounds for refusal exist. The United Kingdom also recognises and enforces foreign arbitral awards under the New York Convention 1958.[23]
International Treaties Adopted by The United Kingdom
UNCITRAL Model Law on International Commercial Arbitration
The UNCITRAL Model Law on International Commercial Arbitration, adopted in 1985 and amended in 2006, reinforces the harmonisation of international arbitration law across jurisdictions.[24] It is noteworthy that the United Kingdom’s Arbitration Act 1996 is not a direct adoption of the Model Law. Nevertheless, the Act reflects many of its fundamental principles and objectives, particularly those relating to party autonomy, fairness, impartiality, and limited court intervention.[25]
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention, 1958)
It is noteworthy that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) is the principal international treaty governing the recognition and enforcement of foreign arbitral awards.[26] The United Kingdom is a contracting State and has incorporated the Convention into its arbitration framework through the Arbitration Act 1996.[27]
The acceptance of the Convention guarantees that arbitral awards made in one contracting State are generally recognised and enforced in another contracting State, except where recognised grounds for refusal exist. Such grounds include where the arbitration agreement is invalid, where a party was denied a fair opportunity to present its case, where the arbitral tribunal exceeded its jurisdiction, where the arbitral procedure did not comply with the parties’ agreement or the applicable law, where the award has been set aside in the country in which it was made, or where enforcement would be contrary to public policy.[28]
United Kingdom Relevant Cases
Fiona Trust & Holding Corporation v Privalov
In Fiona Trust & Holding Corporation v Privalov, the House of Lords held that arbitration clauses should be treated as independent agreements and interpreted broadly and commercially.⁶ The Court presumed that where parties agreed to arbitrate, disputes arising from their commercial relationship should ordinarily be resolved through arbitration unless the agreement clearly provided otherwise.
The Court reasoned that parties ordinarily intend to resolve all disputes in one forum. A narrow interpretation of arbitration clauses could result in procedural fragmentation, increased costs, and inconsistent decisions. Consequently, arbitration agreements should receive a broad and commercially sensible interpretation.[29]
Lesotho Highlands Development Authority v Impregilo SpA
In Lesotho Highlands Development Authority v Impregilo SpA, the House of Lords established that an arbitral award should not be set aside merely because the tribunal is alleged to have made an error of law or fact.⁷
The decision emphasised the importance of the enforcement and finality of arbitral awards and reaffirmed the principle of limited judicial intervention, except where the grounds expressly provided under the Arbitration Act 1996 are established. The Court further observed that arbitration is intended to provide a final resolution of disputes.[30]
COMPARATIVE PERSPECTIVES ON ARBITRATION IN NIGERIA AND UNITED KINGDOM
Arbitration Agreement
Nigeria and the United Kingdom both recognise that an arbitration agreement must generally be in writing. Arbitration clauses are respected by the courts in both jurisdictions, and the principle of party autonomy is upheld through the stay of court proceedings in favour of arbitration where a valid arbitration agreement exists.
Appointment of Arbitrators
Both jurisdictions give parties the liberty to determine the procedure for appointing arbitrators. Where the parties are unable to agree, the courts may intervene in accordance with the applicable legislation. However, the United Kingdom benefits from greater institutional support through well-established arbitral institutions.
Independence and Impartiality of Arbitrators
In both jurisdictions, arbitrators are expected to remain independent and impartial and must disclose any circumstances that may give rise to doubts regarding their impartiality. The United Kingdom courts maintain a particularly high standard in enforcing this principle.
Court Intervention and Conduct of Proceedings
Courts in both jurisdictions intervene only where authorised by statute. The principal difference lies in the greater judicial experience and consistency of the United Kingdom courts in arbitration matters. In both jurisdictions, parties are free to determine the arbitral procedure, while the tribunal controls the conduct of proceedings.
Interim Measures and Confidentiality
Both jurisdictions empower arbitral tribunals to grant interim measures, while the courts may provide assistance where necessary. The United Kingdom courts generally provide stronger support in urgent situations. Confidentiality is recognised in both jurisdictions, although its legal basis differs.
Enforcement of Awards
Both Nigeria and the United Kingdom strongly support the enforcement of arbitral awards. Enforcement is governed by the Arbitration and Mediation Act 2023 in Nigeria and the Arbitration Act 1996 in the United Kingdom. Foreign arbitral awards are recognised and enforced under the New York Convention of 1958.
Setting Aside and Challenging Awards
The grounds for setting aside or challenging arbitral awards are limited in both jurisdictions. The United Kingdom courts discourage unnecessary challenges, thereby reinforcing the principle of finality, which is equally recognised under Nigerian arbitration law.
Recognition of Foreign Awards
Both jurisdictions support international commercial arbitration through the recognition and enforcement of foreign arbitral awards in accordance with the New York Convention.
This comparative analysis demonstrates that Nigeria and the United Kingdom share many of the fundamental principles of modern arbitration, including party autonomy, limited judicial intervention, the impartiality of arbitrators, and the enforceability of arbitral awards. However, the United Kingdom has a more mature arbitration system, supported by decades of judicial precedent, established arbitral institutions, and extensive experience in international commercial arbitration.
LESSONS THAT NIGERIA CAN LEARN FROM FROM THE UNITED KINGDOM ARBITRATION SYSTEM
Based on the comparative analysis above, Nigeria can draw several important lessons from the United Kingdom’s arbitration system.
Firstly, the United Kingdom has developed a strong pro-arbitration judicial culture, where the English courts consistently uphold arbitration agreements and support the arbitral process. Therefore, Nigeria should encourage greater judicial consistency in the application of the Arbitration and Mediation Act 2023 so that arbitration continues to serve as an effective alternative to litigation.[31]
The United Kingdom accords significant respect to the principle of party autonomy, allowing parties substantial freedom to determine how their disputes are resolved. Nigeria should continue to uphold this principle while ensuring that its arbitral laws are consistently respected and effectively implemented.[32]
Finally among others, they benefits from internationally recognised arbitral institutions such as the London Court of International Arbitration (LCIA), which has enhanced London’s reputation as one of the world’s leading arbitration centres. Nigeria should continue to strengthen institutions such as the Lagos Court of Arbitration (LCA) and encourage greater institutional arbitration.[33]
PROSPECT OF ARBITRATION IN NIGERIA
The future of arbitration in Nigeria appears promising for a number of reasons.
Firstly, the Arbitration and Mediation Act 2023 provides a modern legal framework capable of supporting both domestic and international commercial arbitration.[34]
Also, as businesses increasingly prefer jurisdictions where commercial disputes can be resolved efficiently, the adoption of a party-oriented arbitration system is capable of increasing investors’ confidence in Nigeria’s dispute resolution framework.[35]
Wth the increasing regional and international trade, particularly under the African Continental Free Trade Area (AfCFTA), arbitration in Nigeria is likely to play a more significant role in resolving cross-border commercial disputes.[36]
Moreso, it is important that there should be an increase in the number of trained arbitrators, arbitration institutions, and specialised professionals in order to promote the continuous growth of arbitration in Nigeria.[37]
Finally, technological innovations should be embraced to facilitate online hearings, electronic filing of documents, and virtual arbitration proceedings, thereby improving the efficiency of arbitration in Nigeria.[38]
RECOMMENDATIONS
Having considered the comparative analysis, the following recommendations are proposed.
Nigeria should continue to promote a pro-arbitration judicial approach by ensuring limited judicial intervention except where expressly authorised by law.[39]
Greater awareness should be created among businesses and legal practitioners regarding the importance and benefits of arbitration as an alternative dispute resolution mechanism.[40]
The government should continue to promote arbitration through legislative reforms and policy development that encourage the use of arbitration in commercial disputes.[41]
Finally, continuous training and professional development in international commercial arbitration should be provided for judges, arbitrators, and legal practitioners in order to keep them updated with international best practices.[42]
CONCLUSION
The adoption of arbitration in both Nigeria and the United Kingdom has provided a more efficient method of resolving disputes outside the traditional court system.
This comparative analysis has demonstrated that both jurisdictions share common fundamental principles, including party autonomy, limited judicial intervention, and the recognition and enforcement of arbitral awards.
The United Kingdom, however, possesses a more mature and well-established arbitration system. Nevertheless, Nigeria has made significant progress through the enactment of the Arbitration and Mediation Act 2023.
While Nigeria is moving in the right direction, further efforts should be made to strengthen its arbitration regime by ensuring judicial consistency, improving institutional capacity, and adopting international best practices.
If these recommended measures are consistently implemented, Nigeria is well positioned to become one of the leading arbitration destinations in Africa.
Reference(S):
[1] Gary B Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2021)
[2] Julian DM Lew, Loukas A Mistelis and Stefan Kröll, Comparative International Commercial Arbitration (Kluwer Law International 2003)
[3] Arbitration Act 1996, s 1.
[4] Arbitration and Mediation Act 2023, s 1.
[5] UNCITRAL Model Law on International Commercial Arbitration 1985 (as amended in 2006).
[6] Emilia Onyema, International Commercial Arbitration and the Arbitrator’s Contract (Routledge 2010)
[7] Julian DM Lew, Loukas A Mistelis and Stefan Kröll, Comparative International Commercial Arbitration (Kluwer Law International 2003)
[8] Gary B Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2021)
[9] Arbitration and Mediation Act 2023, ss 191.
[10] United Nations Commission on International Trade Law, UNCITRAL Model Law on International Commercial Arbitration 1985 (with amendments as adopted in 2006) arts 5, 18, 19, 3536.
[11] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (adopted 10 June 1958, entered into force 7 June 1959) 330 UNTS 3 (New York Convention) arts IIIV.
[12] Arbitration and Mediation Act 2023, ss 5758; Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) art V.
[13] MV Lupex v Nigerian Overseas Chartering and Shipping Ltd [2003] 15 NWLR (Pt 844) 469
[14] Statoil (Nigeria) Ltd & Anor v Nigerian National Petroleum Corporation (NNPC) & 2 Ors [2013] 14 NWLR (Pt 1373) 1
[15] Arbitration Act 1996.
[16] Arbitration Act 1996, s 1.
[17] Arbitration Act 1996, ss 57.
[18] Arbitration Act 1996, ss 1527.
[19] Arbitration Act 1996, ss 3041.
[20] Arbitration Act 1996, ss 4245.
[21]Arbitration Act 1996, ss 4658.
[22] Arbitration Act 1996, ss 6769.
[23] Arbitration Act 1996, s 66; Convention on the Recognition and Enforcement of Foreign Arbitral Awards (adopted 10 June 1958, entered into force 7 June 1959) 330 UNTS 3 (New York Convention).
[24] UNCITRAL Model Law on International Commercial Arbitration 1985 (as amended in 2006).
[25] Arbitration Act 1996, s 1.
[26] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (adopted 10 June 1958, entered into force 7 June 1959) 330 UNTS 3.
[27] Arbitration Act 1996, pt III.
[28] New York Convention, art V.
[29] Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, [2007] 4 All ER 951, [2007] 2 Lloyd’s Rep 267
[30] Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, [2006] 1 AC 221
[31] Arbitration and Mediation Act 2023.
[32] Arbitration Act 1996, s 1; Arbitration and Mediation Act 2023.
[33] London Court of International Arbitration (LCIA); Lagos Court of Arbitration (LCA).
[34] Arbitration and Mediation Act 2023.
[35] Gary B Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2021)
[36] Agreement Establishing the African Continental Free Trade Area (AfCFTA).
[37] Arbitration and Mediation Act 2023.
[38] Ibid
[39] Ibid
[40] Emilia Onyema, International Commercial Arbitration and the Arbitrator’s Contract (Routledge 2010)
[41] Arbitration and Mediation Act 2023.
[42] Gary B Born, International Commercial Arbitration (3rd edn, Kluwer Law International 2021)
