LAWAL ABUBAKAR, ESQ

17th Sep, 2023 : 9;16am

Introduction

On May 26, 2023, Nigeria made a big improvement in how it deals with legal problems by creating a new law called the Arbitration and Mediation Act (AMA) of 2023. This new law replaced the old Arbitration and Conciliation Act of 1988 and brought in a fresh way of handling disputes using arbitration, mediation, and other alternative methods. The AMA is quite detailed, with 92 sections that are organized into three main parts. These sections cover the rules for arbitration, mediation, and the things related to deciding who wins in a dispute. Think of the AMA as a big, complex puzzle, and the schedule attached to it helps explain how all the pieces fit together. As we explore what the AMA means for Nigeria, our goal is to explain its significant impact in a way that's easy to understand. We won't get lost in the complicated legal language and rules; instead, we'll focus on how this new law can change not only how we solve legal problems but also how it can make our society and economy better.

What Is Arbitration?

Arbitration is like having your own private courtroom, but with more control and less hassle. It's a formal process where both sides present their arguments and evidence to a neutral third party, called an arbitrator. This arbitrator acts like a judge but with a crucial difference – the decision they make is legally binding, just like a court judgment.

The Arbitration Process: How It Works

Arbitration follows a structured process that's generally faster and more straightforward than going to court:

i.  Agreement to Arbitrate: Typically, arbitration happens because both parties agree to it, either before a dispute arises (through a contract clause) or after a disagreement has started.

ii. Choosing an Arbitrator: The parties select an arbitrator or use an arbitration organization to appoint one. The arbitrator should have expertise in the area of the dispute, ensuring they understand the issues at hand.

iii. Evidence and Arguments: Each side presents its case, including evidence, witnesses, and legal arguments. This can happen in person or through written submissions, depending on the rules chosen.

iv.  Arbitration Hearing: The arbitrator conducts a hearing, similar to a court trial, where both parties present their evidence and make their case.

v.  Arbitration Award: After considering all the evidence and arguments, the arbitrator makes a final decision, called an arbitration award. This decision is legally binding, meaning both parties must follow it.

vi. Enforcement: If one party doesn't comply with the arbitration award, the other can go to court to enforce it, ensuring that the decision is carried out.

In the business world, arbitration is often used to resolve disagreements between companies or with employees. For instance, if two businesses have a dispute over a contract, they might choose arbitration to get a quicker and more specialized resolution. This keeps their business relationship intact and their reputation intact.

The Benefits of Alternative Dispute Resolution to us all

Before we talk about the improvements of the new act let me tell you about the general benefits of arbitration. Imagine you have a disagreement with someone – maybe it's a business partner, a neighbor, or even your landlord. In the past, you might have thought your only option was to go to court and endure a lengthy and expensive legal battle. But there's another way, a better way – it's called arbitration. In this article, we're going to explore the amazing benefits of arbitration, a method of resolving conflicts that's faster, cheaper, and often more satisfying than going to court.

a.   Swift Justice: No More Waiting Years for a Resolution

One of the fantastic things about arbitration is how quickly it can solve disputes. In a court, cases can drag on for years, leaving you stressed and drained. But in arbitration, the process is streamlined, and you can often get a resolution in months, not years. This means you can get back to focusing on your life, your business, or whatever matters most to you, without the burden of a long legal battle this is because in arbitration, the formalities for the dispute resolution are agreed by you and your partner who agreed to take your dispute to arbitration allowing you to stipulate timeline arrangements and ensure that the matter is resolved as swiftly as you intend it to be.

b.   Saving Money: Keep Your Wallet Happy

Arbitration can also be a money-saver. In a court case, legal fees can pile up, making it a financial nightmare. In arbitration, the costs are generally lower. You won't need to pay for lengthy court proceedings, and you can often choose a more affordable arbitrator(judge). Plus, you'll spend less time away from work, which means less income lost. It's a win-win for your wallet.

c.   Experts in the Field: Getting the Right Help

Imagine you have a dispute about a complex technical issue, like a construction project gone wrong. In court, you might get a judge who doesn't fully grasp the intricacies of your problem. But in arbitration, you can choose an arbitrator who specializes in construction disputes. This means you'll get a decision from someone who understands your unique situation. It's like having a doctor for your specific ailment rather than a general practitioner.

d.   Privacy and Confidentiality: Your Matters Stay Your Own

Sometimes, disputes involve sensitive information or private matters. If you go to court, your business secrets or personal issues might become public knowledge. But in arbitration, the process is confidential. Your matters stay between you, the other party, and the arbitrator. Your privacy is protected, and you can resolve your issues discreetly.

e.   Tailored Solutions: Arbitration Is All About You

Arbitration allows for flexibility. You and the other party can agree on how to conduct the process. You can choose the rules, the place, and even the language for the arbitration. This customization ensures that the process fits your needs perfectly.

f.        Legally Binding Decisions: Ensuring Follow-Through

Arbitration awards are legally binding. This means that once a decision is made, both parties must abide by it. If one party doesn't comply, the other can go to court to enforce the award. So, you can trust that the resolution you get will be followed through.

Think about how arbitration is used in the sports world. When athletes have contract disputes, they often turn to arbitration instead of going to court. It's faster, keeps the details out of the headlines, and the arbitrators understand the intricacies of sports contracts. This approach keeps the games going and the fans happy.

In essence, arbitration is like having a friendly referee in a game – someone who knows the rules, plays fair, and helps both sides reach a fair result. It's a game-changer in dispute resolution, offering speed, savings, expertise, privacy, flexibility, and enforceability. In the next part of this article, we'll explore how Nigeria's new Arbitration and Mediation Act (AMA) of 2023 is set to make this method even better for its citizens.

Arbitration under the Arbitration and Mediation Act of 2023

In this analysis, we'll focus on the arbitration provisions within the AMA, shedding light on how this act is poised to reshape the landscape of dispute resolution in Nigeria. The Arbitration and Mediation Act of 2023 introduces several innovative provisions that enhance the efficiency, transparency, and flexibility of the arbitration process in Nigeria. From emergency arbitrator appointments to third-party funding and enhanced immunity for arbitrators, these provisions underscore Nigeria's commitment to promoting arbitration as a preferred method of dispute resolution. While some questions and potential clarifications remain, the AMA 2023 represents a significant step forward in shaping Nigeria's future of dispute resolution.

a.   Emergency Arbitrator Appointment: Swift Resolution in Urgent Matters

Section 16(2)-(4) of the AMA introduces a significant procedural mechanism for addressing urgent disputes – the appointment of an emergency arbitrator. When time is of the essence, parties can apply for the appointment of an emergency arbitrator, either through an agreed-upon arbitration institution or, if no institution is designated, through the Court as defined in section 91. Challenges to the appointed emergency arbitrator must be lodged within three days of receiving the appointment, ensuring that the process remains efficient. Moreover, if the emergency arbitrator becomes unavailable, the AMA mandates the appointment of a substitute within two business days by the arbitral institution or Court. This provision highlights the AMA's commitment to expeditious dispute resolution.

b.   Appointment of Emergency Arbitrator: Streamlining Emergency Relief Proceedings

Article 27(1 - 15) of the Arbitration Rules under the AMA provides a comprehensive framework for the appointment and conduct of emergency arbitrators. This provision ensures that parties facing urgent matters can navigate the arbitration process swiftly and effectively, emphasizing the AMA's dedication to efficiency and timeliness in dispute resolution.

c.   Award Review Tribunal: Addressing Challenges to Awards

A noteworthy addition within the AMA is the establishment of an "Award Review Tribunal" as outlined in section 56. This tribunal is designed to address challenges to awards within a specified timeframe. Parties are given the option to stipulate in their arbitration agreement that an application to review an award based on the grounds specified in section 55(3) should be made to this specialized tribunal. The Tribunal is under strict timelines, mandated to render its decision within 60 days of its formation. If the Tribunal annuls an award, the Court may reinstate it upon application by the party, but only if the Tribunal's decision is deemed "unsupportable" concerning the grounds for annulment. Conversely, if the Tribunal affirms an award, an application to set it aside can only be made to the Court based on specific grounds related to non-arbitrability or public policy, as outlined in section 55(3)(b)(i) or section 55(3)(b)(ii) of the Act. This innovative addition enhances the clarity and transparency of the arbitration process.

d.   Consolidation, Concurrent Hearings, and Joinder of Parties: Flexibility and Efficiency

The AMA of 2023 introduces provisions regarding consolidation and concurrent hearings, creating a more adaptable arbitration process. Section 39(1)(a) allows parties to agree to consolidate arbitral proceedings, even if they involve different parties. Concurrent hearings can also be held under agreed terms, with an order for consolidation or concurrent hearings requiring party consent. Additionally, the arbitral tribunal, as per section 40(1), can permit the joining of an additional party to arbitration, provided they are bound by the agreement underlying the arbitration. This does not limit the tribunal's authority to decide jurisdictional issues related to this decision. Thus, when a contract involves interconnected rights and obligations among multiple parties and includes an arbitration agreement, the AMA allows for the consolidation of these arbitration proceedings. This increased flexibility empowers parties to adapt the arbitration process to their unique needs.

e.   Award of Interest: An Oversight in Section 46

While section 46 regarding the award of interest appears to be omitted in the AMA, it is essential to recognize that it was present in the Arbitration and Mediation Bill. The section allows parties to agree on the tribunal's authority to award interest. The tribunal can award simple or compound interest from specific dates and at rates it deems just. This includes interest on the outstanding award amount, even under subsection (2) or any award related to costs. Although seemingly absent in the AMA, this provision highlights the importance of parties' autonomy in arbitration proceedings.

f.        Third-Party Funding: A Welcome Addition

A notable departure from the previous Arbitration and Conciliation Act (ACA) is the introduction of the concept of third-party funding for arbitration-related matters in Nigeria. This innovation is defined in section 91 and involves financing arbitration proceedings by a third party. Costs, including Third-Party Funding, are addressed in section 50(1)(g). Furthermore, section 61 clarifies that the torts of maintenance and champerty do not apply to third-party funding in arbitration. Parties benefiting from such agreements are required to disclose the funder's identity to the other parties, the arbitral tribunal, and the arbitration institution, where applicable. This ensures transparency and avoids conflicts of interest. If a respondent seeks security for costs based on Third-Party Funding disclosure, the tribunal may consider whether the funder agreed to cover adverse costs, impacting its decision on granting security for costs. The inclusion of third-party funding in the AMA enhances the accessibility of arbitration for a broader range of participants.

g.   Immunity of an Arbitrator: Balancing Protection and Accountability

Section 13 of the AMA introduces immunity for arbitrators, arbitral institutions, appointing authorities, or their employees in their functions as defined by the Act. However, this immunity does not apply if actions or omissions are proven to be mala fide (done in bad faith). This provision strikes a balance between protecting those involved in the arbitration process and ensuring accountability when bad faith actions occur. Importantly, arbitrators' withdrawal under section 12 remains unaffected by this immunity, emphasizing the importance of transparency and fairness in arbitration proceedings.

h.   Costs: Empowering the Arbitral Tribunal

Section 50(1) empowers the arbitral tribunal to determine arbitration costs, which now include administrative costs and Third-Party Funding costs. The tribunal can also order a party claiming or counterclaiming costs to provide security, such as a bank guarantee, ensuring that costs are managed efficiently. Joint and several liability for paying the arbitrator's fees is established under section 53(1), enhancing the enforceability of awards related to costs. This clarity in cost allocation fosters fairness and transparency in the arbitration process.

i.        Statute of Limitation: Aligning with Judicial Proceedings

Section 34 of the AMA aligns the statute of limitation for arbitration proceedings with that of judicial proceedings. This alignment ensures consistency and clarity when parties transition from arbitration to litigation or vice versa. Importantly, the AMA disregards any provision requiring an award as a condition precedent for initiating legal proceedings, emphasizing its commitment to accessibility and the enforceability of awards.

Conclusion

In the ever-evolving landscape of dispute resolution, Nigeria has taken a monumental step forward with the enactment of the Arbitration and Mediation Act (AMA) of 2023. This transformative legislation has ushered in a new era of arbitration, introducing innovative provisions that promise to reshape how disputes are settled within the nation.

Arbitration, at its core, is a method of resolving conflicts that offers numerous benefits to all involved parties. It's like having a trusted referee in a game, someone who understands the rules, plays fair, and helps both sides reach a fair result. With these benefits in mind, Nigeria's new Arbitration and Mediation Act of 2023 takes arbitration to new heights. The Act introduces innovative provisions that enhance efficiency, transparency, and flexibility within the arbitration process. From emergency arbitrator appointments to third-party funding and enhanced immunity for arbitrators, these provisions demonstrate Nigeria's commitment to promoting arbitration as a preferred method of dispute resolution.

While questions and potential clarifications may linger, the AMA 2023 represents a significant stride toward shaping Nigeria's future of dispute resolution. It offers not just a legal framework but a promise of a brighter and more efficient future for resolving conflicts, ultimately benefiting society, businesses, and individuals alike. As Nigeria unlocks the potential of the AMA, the nation stands poised to reap the rewards of a more accessible, efficient, and equitable system of dispute resolution. The future has never looked more promising.

N/B: Please note that this information is not a comprehensive overview of the topic and one would need tailored advice from a legal professional in respect to their particular situation. You can reach out to the author.