Alternative Dispute Resolution Regulatory Commission will limit party autonomy in arbitration, says Lawrence-Nemi
Alice Lawrence-Nemi is a lawyer and renowned international arbitrator. In this interview with JOSEPH ONYEKWERE, she speaks on the merits, challenges and the future of commercial arbitration in Nigeria.
Many say that obsolete laws have been one of the factors limiting the development of arbitration in Nigeria. How are arbitrators engaging with the National Assembly to reform some of these laws?
Laws are said to be obsolete when they no longer meet the needs of society. A good law is expected to be an instrument of social engineering. In other words, where law no longer provides for a better way of regulating the activities in society, it is said to be obsolete.
The question of how arbitrators are engaging with the National Assembly on the reform of obsolete arbitration laws in Nigeria implies that it is the National Assembly that has the constitutional duty to amend obsolete arbitration laws. By way of an addition, it must be noted that it is not only the National Assembly that has legislative competence over the arbitration. The respective State Houses of Assembly also have legislative competence to legislate for their respective states on arbitration. So, the issue of engagement as indicated in your question ought to extend to the respective State Houses of Assembly of the 36 states of Nigeria. The legislative competence of a State House of Assembly to make laws on arbitration has been exemplified by the Lagos State House of Assembly in its enactment of the Lagos State Arbitration Law 2009 (LSAL), which is now applying side by side with the Arbitration and Conciliation Act of 1988.
The statement that obsolete laws have been one of the factors limiting the development of arbitration in Nigeria is partially correct.
There are basically two jurisdictions in Nigeria as regards arbitration: all the states in Nigeria and the Federal Capital Territory, except Lagos State, are under one jurisdiction regulated by the Arbitration and Conciliation Act of 1988; the second jurisdiction is Lagos State, which is regulated by the Lagos State Arbitration Law 2009 (LSAL). The Arbitration and Conciliation Act of 1988 is obsolete, whilst LSAL is in line with UNCITRAL Model Law of 2006, which carries modern arbitration practices.
The issue of obsolete laws of arbitration, therefore, does not apply to Lagos State but the other 35 states and the Federal Capital Territory. The Arbitration and Conciliation Act of 1988 is said to be obsolete because it is not in line with modern arbitration practices. There are several instances that show that the Arbitration and Conciliation Act of 1988 is obsolete. For instance, the default number of arbitrators under the Arbitration and Conciliation Act of 1988 is three, whilst LSAL is one. Default number of arbitrators arises where parties do not stipulate the number of arbitrators. Having three arbitrators can unnecessarily make arbitration to be expensive.
The ways arbitrators have engaged the National Assembly to reform the obsolete laws of arbitration is through calls for the amendment of the Arbitration and Conciliation Act of 1988. This has led to the bill for the amendment of the Arbitration and Conciliation Act of 1988, which was passed by the Nigerian Senate on February 1, 2018, but has not been passed by the House of Representatives.
There has been a clamour for the review of the extant 1988 Arbitration and Conciliation Act in Nigeria. We understand that this bill when passed into law will repeal and replace the Arbitration and Conciliation Act of 1988 with a new Act that will be more in tune with the UNCITRAL Model Law of 2006. Is there enough push by arbitrators to ensure that this bill is passed into law as quickly as possible?
There is not enough push by practitioners. Arbitrators are expected to have public lectures advocating the passage of the bill into an Act. Arbitrators are expected to have a serious engagement with the House of Representatives. Nigerian Senate passed the bill on February 1, 2018, and to date, it has not been passed by the House of the Representatives for Presidential assent, hence the need for serious engagement with the House of Representatives.
The National Assembly sometimes, nursed a plan to pass a bill seeking to establish in Nigeria an Alternative Dispute Resolution Regulatory Commission, which seeks to regulate the practice of arbitration. This bill is to regulate and control those who are eligible to practice arbitration in Nigeria. What are your thoughts about that?
My thoughts are that setting a standard of eligibility for arbitrators may not be advantageous in promoting arbitration. It will make arbitration lose its advantage of being less formal in comparison with litigation. It will make arbitration a profession, which would be purely profit-oriented and expensive. Parties in the present regime are at liberty to choose any person as an arbitrator, though it is advisable to choose somebody that has a good knowledge of arbitration. Arbitration by its nature is consensual, enjoys party autonomy and is less formal. The formation of an Alternative Dispute Resolution Regulatory Commission may limit party autonomy, make arbitration to be too formal and lose its consensual nature.
Frontline arbitrators are promoting Nigeria as an arbitration-friendly jurisdiction. Where is the country today with the advancement of commercial arbitration and how is this impacting our economic growth?
With respect to legal framework and facilities, Lagos State is closely at par with other leading arbitration jurisdictions. Lagos State has an up to date arbitration law: The LSAL as well as a functional Multi-Door Court House. It is the Arbitration and Conciliation Act of 1988 that is obsolete, which requires an amendment. But for this, Nigeria is moving at a high pace to be at par with other leading jurisdictions on arbitration. There are now well-trained international arbitrators in Nigeria who have engaged in international arbitrations outside the shores of Nigeria with very impressive performances.
There is also more awareness for the use of arbitration in resolving commercial disputes as against litigation. There is now more regular training for arbitrators and judges. Arbitration is now gradually being viewed as specialised area of commercial dispute resolution. The advancement of Nigeria in arbitration is also shown in the setting up of the Multi-Door Court Houses as an alternative to litigation. Lagos State and Rivers State have functional Multi-Door Court Houses. Other states are enjoined to follow suit. To further show the advancement of arbitration in Nigeria, statutory bodies have also started to set up arbitration units within their parastatals. For instance, the Department of Petroleum Resource (DPR), this year, set up an arbitration centre for the petroleum industry in Nigeria. The Federal Government in 2020 also set up the Arbitration Policy Development Committee to fashion out an arbitration policy that would guide arbitration in Nigeria as it relates to government contracts. Dr. Olisa Agbakoba (SAN), heads the committee.
The advancement of arbitration has led to the economic growth of the nation as it provides a faster and more convenient alternative to litigation. In any industrial society, there is bound to be commercial disputes. The way and manner such commercial disputes are resolved in a particular jurisdiction is a factor highly considered by investors. For instance, a jurisdiction that is known to settle a commercial dispute for over 20 years from the court of the first instance to the Supreme Court may not attract investors.
Do you think judges are beginning to show more commitment to the promotion of ADR in the country?
The Courts in Nigeria have the power to intervene in arbitration in deserving circumstances as is applicable in other jurisdictions. The intervention of the courts is expected to create some form of checks in arbitration and in other instances, give effect to arbitration. For instance, the enforcement of awards and appointment of arbitrators give effect to arbitration clauses. The way and manner the courts intervene and the quality of decisions made by the courts as reflected in judicial pronouncements determine if the courts are promoting arbitration in Nigeria or not.
The courts in Nigeria can be said to be arbitration-friendly, especially with the setting up of Multi-Door Court House as part of the judiciary manned by trained arbitrators and judges. Recently, in Mekwunye V Imoukhuede (2019) 13 NWLR (PT1690) 439, the Supreme Court upheld what may sound to be a pathological clause. The clause stated that the appointing authority for the arbitration to be the President, Chartered Institute of Arbitration London, Nigeria Chapter, instead of the Chairman Chartered Institute of Arbitrators (UK) Nigerian Branch. The courts are also very willing to stay proceedings in the enforcement of an arbitration clause.
In your opinion, what are some of the unresolved issues between federal arbitration regimes and sub-national arbitration regimes in Nigeria?
The unresolved issue between Federal Arbitration regimes and sub-national arbitration regimes in Nigeria is that of uniformity of laws and establishment of Multi-Door Court House in all the states of the federation and not the present state of affairs where some states have Multi-Door Court House, whilst others do not. There is expected to be a uniform law for all the states and not the present regime where there are two laws running side by side. Uniformity in the law will enhance fast growth in the jurisprudence of arbitration law in Nigeria and create certainty in the arbitration principles.
What new frontiers can arbitrators in Nigeria explore at this time, to improve the speed of resolving arbitral disputes, taking into consideration the convenience of parties?
Regular training of arbitrators who may either be counsel or members of an arbitral panel as the case may be as to avoid the importation of the practice of litigation into arbitration proceedings. The quick passage of the amendment of the Arbitration and Conciliation Act of 1988 will also bring to bear its provisions. All states should endeavour to have Multi-Door Court Houses.
Do you think the enforcement of arbitral awards is still a major setback to the development of arbitration in Nigeria?
Yes, I think enforcement of arbitral is a major setback to the development of arbitration in Nigeria. In one of our publications, we have identified the problems of enforcement of international arbitral awards to be that of delay, undue technicalities and lack of training of arbitrators. This problem also applies to domestic arbitration. They form a setback in the development of arbitration in Nigeria because an award that is unenforceable is as good as no award. The solution to this is not farfetched – it is to give cases on arbitration a special status, which includes enforcement of arbitral awards as in the cases of fundamental human rights, election matters and arrest of ship cases in admiralty matters. These classes of cases are treated expeditiously and with timelines. To achieve this, special rules should be enacted for arbitration that is similar to the one of Fundamental Human Rights and election petition cases.
Some believe the cost of arbitration is discouraging, irrespective of its merits against traditional litigation. Do you share the view that it should be reviewed to accommodate low-income earners in business?
Yes, I share the same view that the cost of arbitration is discouraging, irrespective of the merits of arbitration. The problem is sometimes caused by the parties who whilst creating an arbitration clause choose a seat that will be expensive to conduct the arbitration. For instance, in a transaction between a Nigerian company and multinationals operating in Nigeria – choosing a jurisdiction outside Nigeria as the seat of arbitration may create an avoidable expense.
Parties sometimes unnecessarily create a large panel. Minor disputes that can be resolved by a sole arbitrator oftentimes, parties provide for three arbitrators. This will certainly increase the cost of arbitration. On the other hand, the arbitrators ought to be reasonable in charging fees. Cost of venue also sometimes lead to the high cost of arbitration. The government should provide arbitration centres within the Multi-Door Court Houses that will provide spaces with facilities for arbitration at a very low cost.
Nigeria aspires to join leading arbitration-friendly countries like the UK and Singapore. How will you rate our effort at providing the needed infrastructure and enabling environment, which will make Nigeria more attractive as a destination?
I score Nigeria high. The reason is that Nigerians are now increasingly involved in international arbitrations as arbitrators. There is also now the conscious effort of bringing our arbitration laws in line with modern arbitration practice. The infrastructures are already at top gear.
Various arbitration bodies are increasingly creating ADR centres and training arbitrators. Multi-Door Court Houses are also now being established. The Federal Government is also articulating a national policy for arbitration in Nigeria as earlier mentioned. Government parastatals are also setting up arbitration centres as we had earlier mentioned.
Do you think Arbitration and ADR have been effectively used as a catalyst for economic growth in African countries? If yes, how can this be improved upon?
Yes, I think Arbitration and ADR have been effectively used as a catalyst for economic growth in African countries. The reason for this is that it gives investors the assurance that if there be any dispute in their transactions, there is good legal framework that would settle their dispute. For instance, the arbitration centres set up by the DPR can now concentrate on oil and gas cases, which eventually will lead to expertise within that area and will eventually lead to quick resolution of matters.