On 10 May 2022, the Nigerian Senate passed the Arbitration and Mediation Bill 2022 (the “Bill”) which seeks to repeal the Arbitration and Conciliation Act 1988 (the “ACA”). The Bill provides a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and mediation by setting out substantive and procedural provisions. It contains several novel provisions that are not in the ACA.
Indeed, the Bill presents a positive restructuring of arbitration and mediation proceedings in Nigeria. This note briefly highlights some of the novel provisions sought to be introduced by the Bill which significantly modifies the existing legislative framework on arbitration while introducing, for the first time, a new framework for mediation. Though some provisions of the Bill leave more to be desired, (such as the provision of immunity for arbitrators and lack of any penalty provision for non-expedient delivery of an emergency decision), overall, the passage of the Bill is a quantum leap for the projection of Nigeria as one of the major arbitration hubs in Africa. Some of the novel provisions in the Bill are discussed below.
- Third-party funding
Third-party funding crystallises when a person or an entity that is not a party to an arbitration agreement or proceedings (i.e., the third-party funder) agrees to provide financial assistance to a party to arbitration proceedings in exchange for a return—usually a fraction of the damages awarded to the funded party. Subject to the terms of a third-party funding agreement, a third-party funder may agree to pay the counter-party’s costs and provide security for the opponent’s costs if the funded party is so ordered by an arbitral tribunal.
Unlike the ACA, the Bill expressly recognises third-party funding and provides that the torts of maintenance and champerty do not apply in relation to third-party funding of arbitration proceedings seated in Nigeria and related to proceedings in any court within Nigeria. The Bill also specifically provides that an arbitral tribunal shall fix the costs of arbitration in the final award and such costs include the cost of third-party funding. These provisions could encourage parties to a dispute to expend resources and engage the services of a third-party funder given that there is scope for such expenses to be repaid by a counter party as may be directed in the final award.
- Electronic communication as a form of an arbitration agreement
The Bill provides that if electronic communication is accessible to be useable for subsequent reference, then it satisfies the requirement that an arbitration agreement must be in writing. While “electronic communication” is defined as any communication that the parties make by means of data messages, “data messages” is defined as information generated, sent, received or stored by electronic, magnetic, optical or similar means.
Although the extant ACA contains a similar provision, it is unclear whether electronic communication falls within “other means of communication” as contemplated by the ACA. Indeed, the Bill expressly recognises e-mail correspondence and other mediums of electronic communication referring to an agreement by both parties to submit disputes to arbitration. This clears any ambiguity as to what qualifies as a legally binding arbitration agreement under Nigerian law.
- Emergency arbitration
The Bill provides that a party that needs an urgent relief pursuant to a dispute may apply for the appointment of an emergency arbitrator to an arbitral institution designated by the parties or failing such designation, to the court, either along with or following the filing of a notice of arbitration, but before the constitution of the arbitral tribunal. Thus, in an instance where a party needs an urgent interim relief before the constitution of an arbitral tribunal, an emergency arbitration would aid that party to obtain a valid and legally binding decision which will serve as a conservatory and urgent relief pending the final decision of the arbitral tribunal.
This is a novel provision that is not contained in the ACA and could improve the speedy resolution of disputes where a subject matter is of such nature that expedient decision-making would be required to protect the interest of a party, pending the final determination of the dispute.
- Interim reliefs
Under the ACA, parties may make an application to the arbitral tribunal for an interim measure of protection (“Interim Relief”). However, the Bill extends this power to grant Interim Reliefs to the court as it provides that a court shall have the power to issue interim measures of protection for the purposes of and in relation to arbitration proceedings whose seat is Nigeria or another country as it has for the purpose of and in relation to proceedings in the courts. It further states that the court must exercise the power to grant Interim Reliefs within fifteen (15) days of any application. This would grant parties to arbitral proceedings access to the courts where they seek Interim Reliefs and would also mitigate against the time lags that may occur during litigation, as a court’s decision-making in this regard is time-bound.
While it appears that any court may grant Interim Reliefs, the Bill provides that the recognition or enforcement of an interim measure may be refused if the court finds that the interim measure is incompatible with the powers conferred upon the court. Thus, the power of any court to grant Interim Reliefs to an applicant is subject to the limits of the inherent powers granted by a statutory enactment to the court.
- The default number of arbitrators
The Bill provides that if there is no agreement as to the number of arbitrators, the arbitral tribunal shall consist of a sole arbitrator. This is not provided for in the ACA and has the potential of improving the cost and time expended in arbitral proceedings. Additionally, with respect to international arbitration, where no procedure is agreed for the appointment of an arbitrator, and no appointing authority is designated or agreed to be designated by the parties, the Director of the Regional Centre for International Commercial Arbitration in Lagos shall be deemed to be the appointing authority designated by the parties.
- Consolidation and joinder of parties
Contractual relationships between distinct but related parties create complementary rights and obligations such that a dispute arising out of one contract may initiate separate but correlated actions for enforcement of rights and obligations which may involve other contracting parties. Assuming binding arbitration clauses exist in all the relevant contracts, there is a significant risk of inconsistent findings and duplicative proceedings if the disputes are adjudicated separately. In such a scenario, the need to consolidate arbitral proceedings and join the parties in one proceeding becomes necessary.
Although this is not provided for in the ACA, the Bill provides that parties may agree that the arbitral proceedings should be consolidated with other arbitral proceedings, including arbitral proceedings involving a different party or parties with the agreement of that party or parties. The arbitral tribunal is also empowered to allow an additional party to be joined to the arbitration, provided that the additional party is bound by the arbitration agreement giving rise to the arbitration.
These provisions could enhance procedural efficiency by ensuring that all necessary parties to a dispute are present in the same proceeding. As such, it seeks to alleviate the time, costs, and other inefficiencies of multiple and/or parallel proceedings among which may increase the risk of inconsistent awards, thereby improving the efficiency of arbitral proceedings.
- Recognising mediation, conciliation, and other similar modes of alternative dispute resolution
The Bill recognises and defines “mediation” as the process whereby parties request a third person or persons to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship, whether referred to by the expression mediation, conciliation or an expression of similar import. This means that where parties agree to subject their dispute to mediation, conciliation or similar modes of alternative dispute resolution, the provisions of the Bill pertaining to mediation will apply, thus providing an integrated procedural channel for enforcing other alternative dispute resolution clauses in an agreement.
- Application of statute of limitation to arbitration and mediation proceedings
While the Nigerian courts have held that the time between the commencement of an arbitration and the final arbitral award is not reckoned in considering statutes of limitation, the Bill reflects this judicial precedent with respect to both arbitration and mediation proceedings. It provides that when a mediation proceeding commences, the running of the limitation period regarding the claim that is the subject matter of the mediation is suspended, and where the mediation proceedings have terminated without a settlement agreement, the limitation period resumes running from the time the mediation ended without a settlement agreement. Indeed, these provisions offer additional statutory protection from a limitation period with respect to arbitration and mediation proceedings conducted pursuant to the Bill.
Conclusion
The Bill, which now awaits the assent of the President before it becomes law as of the date of this note, significantly remodels the administration of arbitral proceedings under Nigerian law and provides for a more efficient and innovative means of administering and enforcing arbitration and mediation agreements and proceedings which could improve the choice of Nigeria as a seat of arbitration.