Review of problems with enforcing international arbitral awards in Nigeria
Arbitration is the most common and most preferred means of resolving international commercial disputes. The benefits of arbitration include relative speed, privacy, and party autonomy in selection of their umpire.
The beneficiary of an Arbitration Award expects that it should be complied with; in the event that it is not, there is resort to the legal mechanisms of the State to enforce the Award. The resort to these mechanisms is fraught with legal technicalities that must be navigated to a successful outcome.
In 2019 Nigeria was ranked as Africa’s largest economy, and one of the world’s largest exporter of crude oil. Nigeria also produces a large proportion of the goods and services for the West African sub-continent. To realize the economic potential of Nigeria as an investment destination, the enforcement of International Arbitral Awards must be streamlined for greater efficacy. This essay is an attempt to review relevant laws and structures for enforcement of International Arbitral Awards, identify the areas where improvement is needed, and proffer possible solutions. Some of the solutions suggested require constitutional amendment; others suggest more uniformity and clarity to Court rules.
The author proffers solutions that if implemented would make Nigeria an even more attractive investment destination in the years to come.
“Interestingly, ‘greater certainty and enforceability of awards” was selected as the second most likely factor to have a significant impact on international arbitration in the future. It should be noted here that “enforceability of awards” was consistently ranked the most valuable characteristic of international arbitration both in the 2015 survey and in the current survey… The fact that 43 per cent of respondents take the view that greater certainty and enforceability of awards is likely to have a significant impact on the future of international arbitration may be indicative of a perceived gap between the theoretical ease of award enforcement promoted by the provisions of the New York Convention and potentially less successful practical experiences of respondents seeking to enforce arbitral awards in various jurisdictions.” – 2018 International Arbitration Survey: The Evolution of International Arbitration.
Arbitration is the most preferred and common form of resolving commercial disputes. Its advantages include flexibility, relative speed, privacy and party autonomy. However, there is no point to undertaking Arbitration if the Award will not be complied with; if compliance is not voluntary, there must be effective means of enforcing the Award.
It is the practical difficulties with the enforcement of International Arbitral Awards that is the subject of this work.
Arbitration laws and bodies in Nigeria
The concept of Arbitration is an ancient one in Africa. In Nigeria, Arbitration formed the bedrock of community living. Parties would refer their disputes to an elder or a council of elders who ‘mediated’ the dispute not just to determine right and wrong, but to restore harmony to the community by making ‘decisions’ binding on the parties. The features of the Traditional Conflict Resolution Systems included faith in the neutrality, impartiality, and capacity of the elders or neutrals, tasked with resolving the dispute. Witnesses were also heard and evidence evaluated before the final decision taken.
In modern times the modern concepts of Alternative Dispute Resolution (ADR) have been added as means to resolve disputes, with a system of laws and procedures enacted to harmonize practices. As the colonial judicial system took over dispute resolution, parties to traditional or customary arbitrations began to refuse to adhere to decisions they considered unfavorable and would resort to litigation. While the Privy Council in 1952 held that it was repugnant and unacceptable for a losing party to reject the judgment or decision of a customary arbitration panel he had agreed to submit his dispute to, 40 years later the definition of Customary Arbitration by the Supreme Court of Nigeria tells a different story: “An arbitration in dispute founded on the voluntary submission of the parties to the decision of the arbitrators who are either the chiefs or elders of their community, and the agreement to be bound by such decision or freedom to resile where unfavourable”.
However, this detour into denigrating Customary Arbitration (which reached its zenith in the case of Okpuruwu v Okpokam, where the Court of Appeal suggested that there was no concept of Customary or Native Arbitration in Nigerian Jurisprudence), was abandoned in favour of a more auspicious view of Customary Arbitration in the Supreme Court decisions of Agu v Ikewibe, and Nwuka v Nwaeche. Those decisions are of the view that the decision of a Customary Arbitration panel (howsoever called) is binding on parties who submit to Customary Arbitration, and the Arbitration is conducted in line with custom and fair hearing. Again, in the most recent case of Umeadi v Chibunze the Supreme Court held (demonstrating an acceptance of Traditional Arbitration as binding on parties such as to make the decisions final as to the substance of the dispute) that “…where parties decide to be bound by traditional arbitration resulting in oath taking, common law principles in respect of proof of title to land no longer apply. In such situation, the proof of ownership or title to land will be based on the rules set by traditional arbitration….”
“Arbitration”, as a reference to the modern practice of Commercial Arbitration has been defined as ‘a procedure for the settlement of disputes under which the parties agree to be bound by the decisions of an arbitrator whose decision is, in general, final and legally binding in both parties. The process derives its force principally from the agreement of the parties, and in addition, from the state as the supervisor and enforcer of the legal process.”
Legislative enactments on Arbitration in Nigeria
The first legislative enactment on Arbitration in Nigeria was the Arbitration Ordinance, Number 16 of 1914 modelled after the 1889 English Arbitration Act. This ordinance was re-enacted as Arbitration Act, Cap 13, LOFN, 1958.
In 1960, the Arbitration Act was applicable to the Federal Territory of Lagos, and the Regional Governments of Nigeria had their Arbitration laws: Arbitration Law of Northern Nigeria 1963, Arbitration Law of Western Nigeria 1959 and Arbitration Law of Eastern Nigeria 1963. Out of these Regions were created several states, which continued to apply those laws till 1988.
To understand the status of the various Arbitration Laws in Nigeria, it is necessary to understand the constitutional history of Nigeria. Nigeria was from 1914 administered as a Crown Colony with a unitary system of Government and largely unified system of laws, till 1946 when the colony was re-organised with a Federal Parliamentary system of government. The Federal Parliamentary system recognised three regional governments of the Northern Region of Nigeria, Eastern Region of Nigeria and the Western Region of Nigeria, and Lagos as a Federal Capital territory, with regional parliaments enacting laws for the regions and a National Assembly making laws for the nation.
In 1979 a new constitution remodelled Nigeria as an American style Federal Republic; in 1967 the regions were subdivided into 11 states with the Federal Territory of Lagos becoming the 12th state; these 12 states were further subdivided into 19 states in 1976. State creation by subdivision continued till 1996 when the total number of states created out of the regions and succeeding states totalled 36 states. At creation, a state inherited all the laws applicable to the territory of the region and/or or state it was created till such laws were repealed by more recent enactments.
Unfortunately, possibly as a result of the unitary style Military Governments attempting to run a Federation of States from 1966 – 1976, and from 1983-1999, the legislative enactments of in Nigeria (State and Federal) have not been as comprehensive as it should, creating a web of sometimes contradicting and sometimes opaque legislative enactments.
In 1988 the Federal Government of Nigeria adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Arbitration by the promulgation of the Arbitration and Conciliation Decree Number 11 of 1988 by the Federal Military Government. In 1990, that Decree became the Arbitration and Conciliation Act Cap 19 Vol1 LOFN, 1990, and is now CAP A1 LOFN 2004. However, that Act did not repeal the 1959 Arbitration Law of Western Nigeria and 1963 Arbitration Laws of the Eastern and Northern Nigeria (applicable to the states created out of those regions). Because the Federal Military Government was the legislating body for Nigeria at the time and all Houses of Assembly (State and Federal) were suspended at the time, the fact that in 1988 Arbitration was not on the Federal Legislative list was not appreciated at the time.
The Arbitration and Conciliation Act regulates arbitrations arising from written and voluntary agreements to arbitrate. In addition to the Act, the Civil Procedure Rules of the High Courts of the States have provisions on reference to arbitration as a means of dispute resolution.
There are also statutes, which provide that disputes under certain circumstances must be referred to mandatory arbitration. Some of these statutes are the Nigerian Communications Commission Act, Nigerian Investment Promotion Council Act, the Trade Disputes Act, and the Public Enterprises (Privatisation and Commercialisation) Act.
In 2009 the Lagos State House of Assembly enacted into law the Court of Arbitration Law Number 17 of Lagos State and the Arbitration Law Number 18 of Lagos State. These legislations continue to generate considerable debate among legal scholars, as the 1999 Constitution of the Federal Republic of Nigeria appears to reserve the topic of Arbitration to Federal jurisdiction under the Exclusive Legislative List. However, there has been no legislative activity at the Federal National Assembly on Arbitration after 1988 to update the Federal Arbitration and Conciliation Act.
The effects of the non-repeal of the Arbitration Laws of the states inherited from their respective regions and the promulgation of the Arbitration and Conciliation of 1988, and the provisions of the 1999 Constitution on Arbitration as a topic for Exclusive Federal Legislative competence shall be subsequently examined in this essay.
Domestication of International Arbitration Treaties to Nigeria
Nigeria is signatory to several international Arbitration Treaties, as follows: 1. In October 1966 Nigeria ratified the Convention on Settlement of Disputes Between States and Nationals of Other States (referred to as the 1965 Washington Convention). 2. Nigeria is signatory to over 22 Bilateral Investment Treaties vesting jurisdiction on the International Center for Settlement of International Disputes (ICSID) over disputes connected with said treaties. 3. In 1970 Nigeria acceded to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. 4. The Foreign Judgment (Reciprocal Enforcement) Act enacted in 1960 makes provisions that Foreign Arbitral Awards could be enforced if registered as a Judgment of the High Court in Nigeria in the jurisdiction where enforcement is sought. 5. The Economic Community of West African States Energy Protocol of 31 January 2003 (which Nigeria is a signatory to) provides that disputes between an investor in the energy sector of a state acceding to the protocol, on the one part, and the state, may, at the investing party’s discretion, be submitted to International Arbitration or Conciliation. The dispute may be submitted to The International Centre for Settlement of Investment Disputes (ICSID), or the Organization for the Harmonization of Trade Laws in Africa (OHADA), or the Arbitration Institute of the Stockholm Chamber of Commerce, or a sole arbitrator or ad hoc arbitration tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law.
The Protocol also has provisions for states as ‘Contracting Parties’ to resolve disputes by diplomatic channels and where that fails, by Arbitration before an ad hoc tribunal constituted in accord with the Protocol.
Arbitration Bodies In Nigeria
Arbitration bodies and institutions in Nigeria include the following: 1. The Regional Center for International Commercial Arbitration, established in 1989. 2. Maritime Arbitrators’ Association of Nigeria. 3. The ADR Center of the National Industrial Court of Nigeria, established to facilitate Mediation and Arbitration over Trade Union and Industrial Relation Disputes. 4. The ADR Center of the Federal High Court of Nigeria. 5. The Multi Door Court House of Lagos State. 6. The Multi Door Court House of Ogun State. 7. The Multi Door Court House of Cross River State. 8. The Multi Door Court House of Enugu State. 9. The Multi Door Court House of Edo State. 10. The Chartered Institute of Arbitrators, UK (Nigeria Branch). 11. Chartered Institute of Arbitrators Nigeria (formerly Arbitrators Association of Nigeria). 12. The Lagos Court of Arbitration.
Several other states of Nigeria have enacted Multi-Door Court House Laws, but the Multi Door Court Houses are yet to commence operations in any meaningful manner. Only the states with operational Multi-Door Court House arrangements are mentioned here.
These bodies act as appointing authorities, recommending and appointing arbitrators to arbitrate disputes when called upon to do so. The High Courts of Nigeria (State and Federal) also have appointing authority under the provisions of the Arbitration and Conciliation Act.
Enforcement of arbitral award in Nigeria
The outcome of a successful arbitration is an Arbitral Award. Arbitral Awards may declare the responsibilities of the parties within the context of their business relations; they may (and usually) make orders directing the parties what to do, as well as impose costs and damages to be paid.
Where a party fails or refuses to comply with an Arbitral Award, the Award has to be enforced by state mechanisms, as the Arbitration institutions are generally lacking in enforcement mechanisms. The Award has to be elevated to the status of a Judgment or Order of Court and enforced like every other Judgment of the Court. It is how the conversion mechanisms work in Nigeria that we seek to examine in this section.
There have been arguments in the Nigerian Courts seeking to split hairs over technicalities of whether the Award is converted into a Judgment or enforced like a Judgment of Court. Agbaje JSC said that the Award is not a Judgment; Muntaka Coomassie JCA said an Award may by the leave of Court be enforced like a Judgment or in the same manner as a Judgment of the Court, without becoming a Judgment of the Court.
This is an important distinction, as the Constitution of Nigeria gives right to every party before a High Court in Nigeria to appeal the Judgment of the High Courts as of right. Any other law or act limiting that right would be inconsistent with that right and to the extent of the inconsistency be null and void. ‘Converting’ an Award into a Judgment would theoretically open the Award (now Judgment) to appeal on grounds of facts and law that an Arbitration Award would ordinarily not be open to.
It is now commonplace for Arbitral Awards to have international flavor, span national boundaries and parties seek their enforcement in jurisdictions outside the seat of the tribunal.
The Arbitration and Conciliation Act (hereinafter referred to as the Act) makes provisions for the Enforcement of Domestic Arbitration Awards and International Arbitration Awards. The distinction between International and Domestic Arbitrations in Nigeria is an important one as the legal requirements for enforcements of the resultant awards are not identical, and have slightly different technical requirements.
As has been earlier expressed in Chapter 1, there was no express repeal of the Arbitration Laws of the States inherited from the arbitration laws of the regional governments from which the various states emerged. Technically those state laws still exist, but are in some quarters considered spent and overtaken by the combined effects of the promulgation of the then Military Government of Nigerian in 1988 of the Arbitration and Conciliation Decree, now the Arbitration and Conciliation Act, and the Constitution (Suspension and Modification) Decree Number 107 of 1993, which provides that Military Decrees supersede all conflicting legislation in existence at the time of promulgation. The 1999 Constitution, which returned democratic government to Nigeria adopted the Arbitration and Conciliation Decree as an Act of the National Assembly.
However the question of whether those state laws are revived by the repeal of the Constitution (Suspension and Modification) Decree Number 107 of 1993 which had suspended the legislative arm of Government and consolidated executive and legislative functions in the Supreme Military Council and the fact that Arbitration does not appear on the Exclusive Legislative list of the National Assembly or the Concurrent Lists, (suggesting that Arbitration is an issue that the states can legislate on) leaves the status of the law open to various interpretations. One view is that Federal legislation on the issue has left no room for states to make arbitration law in Nigeria, and the Federal law effectively overrides State law. Another view is that the subject matter of arbitration is contractual in nature, and the efficacy contractual dispute resolution in any legal territory depends on state adjectival laws (upon which the states have exclusive autonomy to make laws and regulations).
A third view is that the Arbitration and Conciliation Act covers only commercial arbitration, while the Arbitration laws of the states cover both commercial and non- commercial arbitration; in effect, Commercial Arbitration is governed by the Act, and the State Laws are still extant in regards non-commercial arbitration.
However, as the bedrock of commercial arbitration is the choice of the parties to decide what rules and procedure they apply, and non-commercial arbitration has not taken off in any appreciable manner, the issue has not been considered to be a pressing issue. In practice the Courts of Nigeria by default, with the exception of Lagos State, apply the provisions of the Arbitration and Conciliation Act. The Arbitration Law of Lagos is not substantially inconsistent with the Act in regards Commercial Arbitration and enforcement of Awards, and for the purposes of this work need not be further examined.
Procedure for Enforcement of Arbitration Awards in Nigeria
Domestic Arbitration is not defined by the Arbitration and Conciliation Act; what is defined is International Arbitration, and what is not International Arbitration is by necessity Domestic Arbitration. An understanding of the legal requirements for enforcement of Domestic Awards is necessary in order to understand and examine the requirements for enforcement of
Foreign Awards in Nigeria.
Section 57 (2) of the Act provides: (2) An Arbitration is international if –
(a) the parties to an arbitration agreement have, at the time of the conclusion of the agreement, their places of business in different countries, or
(b) one of the following places is situated outside the country in which the parties have their place of business:
(i) the place of arbitration if such place is determined in, or pursuant to the arbitration agreement
(ii) any place where a substantial part of the obligation of the commercial relationship is to be performed or the place with which the subject matter of the dispute is more closely connected; or
(c) the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country; or
(d) the parties, despite the nature of the contract, expressly agree that any dispute arising from the commercial transaction shall be treated as an international arbitration.
Domestic Arbitrations are therefore arbitrations conducted in Nigeria between Nigerian parties, and where the subject matter of the arbitration or performance of the commercial agreement is most closely connected with Nigeria, and applying Nigerian law.
Enforcement of Domestic Arbitration Awards is regulated by Section 31 of the Act which provides as follows:
(1) An Arbitral Award shall be recognized as binding and subject to this Section and Section 32 of this Act, shall, upon application in writing to the Court be enforced by the Court.
(2) The Party relying on an Award or applying for its enforcement shall supply-
a. The duly authenticated original Award or a duly certified true copy thereof;
b. The original arbitration agreement or a duly certified true copy thereof;
(3) An Award may by leave of Court or a judge be enforced in the same manner as a judgment or order of the same effect.
The Act does not stipulate what manner of application (other than the implication that the application be in writing) is envisaged by Section 31. The formalities of the application for enforcement are therefore decided by the Rules of the various High Courts of Nigeria; some of which are the Federal High Court, the National Industrial Court, and the High Courts of the states of Nigeria.
Typically, the application is by way of Originating Motion on Notice to the defaulting party, with the documents required by Section 31 of the Act attached to the affidavit in support of the Motion. The Nigerian Courts have also by case law stipulated that the application must also be accompanied by statement that the Award has not been fully complied with, and the name and last place of business of the person against whom enforcement is sought. There is no provision in the Act that the Motion or the Application be on notice to the defaulting party, and in States or Courts where there are no specific provisions that the Application be on notice, there is no express reason why the Motion cannot be taken ex parte: however the general reasoning now is that in such Nigerian Courts where there are no express provisions directing the application be on notice, or even where the rules allow that the application be heard ex parte, the application ought to be on Notice to the defaulting party in deference to the Constitutional provision that fair hearing be observed in all Court proceedings.
Enforcement Of International Arbitration Awards under the Arbitration and Conciliation Act
International Arbitration Awards are enforceable in Nigeria (in practical terms) under the Arbitration and Conciliation Act in substantially the same manner as Domestic Awards. However, as we shall see, they may also be enforced under the Foreign Judgments (Reciprocal Enforcements) Act.
Sections 51 and 54 of the Arbitration and Conciliation Act make provisions for enforcement and recognition of International Awards.
(1) An Arbitral Award shall irrespective of the country in which it so made, be recognized as binding, and subject to this Section and Section 3 2 of this Act, shall upon application in writing the Court, be enforced by the Court.
(2) The Party relying on an Award or applying for its enforcement shall supply-
a. The duly authenticated Original Award or a duly certified copy thereof; and
b. The Original Arbitration Agreement or a duly certified copy thereof; and
c. Where the award or arbitration agreement is not made in English language, a duly certified translation thereof into English language.
Section 54: Without prejudice to Sections 51 and 52 of this Act, where the recognition and enforcement of any Award arising out of an international commercial arbitration is sought, the Convention on the Recognition and Enforcement of Foreign Awards (hereinafter referred to as the Convention’) set out in the second schedule to this Act shall apply to any Award made in Nigeria or any contracting state;
a. Provided that such contracting state has reciprocal legislation recognizing the enforcement of Arbitral Awards made in Nigeria in accordance with the provisions of the Convention;
b. That the Convention shall apply only to differences arising out of the legal relationship, which is contractual.
The Convention referred to above is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10 1958 (also known as the New York Convention).
Nigeria acceded to this Convention in 1970, declaring that it would apply the Convention to enforcement of Awards made in states party to the convention and where the relationships of the parties would be considered commercial under the laws of the Federal Republic of Nigeria.
In effect, Awards emanating from states not party to the New York Convention may not be enforced under Section 54 of the Act, and Awards so emanating from such states may only be enforced if the relationships between the parties would have been considered a commercial relationship in accordance with Nigerian Law. An Award that fails to satisfy criteria set forth by Section 51 of the Act may however be enforced under Section 51. One benefit to enforcement under Section 54 is that the costs of enforcement under the New York Convention are required to be the same with enforcement of Domestic Arbitration Awards. The technical requirements of the Application for recognition and enforcement of the Award (with regard to manner of application and accompanying documents to be presented to the Court) are identical to Section 51.
Setting aside or refusing recognition of an Award under the Arbitration and Conciliation Act
It appears that the courts take the view that the Award sought to be enforced is prima facie correct on its face, and would, in the absence of opposition by the defaulting party, grant leave to enforce the Award. However, the defaulting party upon service of the application for leave to enforce the award may file a counter affidavit stating reasons why the award should not be enforced, and may also file a request asking the Court to refuse to recognize or enforce the award.
The grounds of such an application to refuse enforcement or opposition to the application for enforcement are not specified in Section 32 of the Act; however Sections 48 and 52 of the Act make general provisions for the grounds under which a party to an Arbitration agreement may request the Court to refuse recognition or enforcement of the award. These grounds apply generally to both domestic and international arbitrations.
Sections 48 and 52 of the Act are identical and provide that a Court may refuse enforcement or recognition of an Award where:
i. If the party against whom the Award is invoked provides proof-
a. That a party to the arbitration agreement was under some incapacity; or
b. That the arbitration agreement is not valid under the law which the parties have indicated should be applied, or failing such indication, that the arbitration agreement is not valid under the law of the country where the Award was made; or
c. That he was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise not able to present his case; or
d. That the Award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration; or
e. That the Award contains decisions on matters which are beyond the scope of the submission to arbitration, (but if decision on matters submitted can be separated from decision on matters not submitted, only the decisions on matters submitted may be enforced); or
f. That the composition of the Arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties; or
g. Where there is no agreement between the parties as stated above, that the composition of the tribunal or the procedure adopted was not in accord with the law of the country where the arbitration took place; or
h. That the Award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which or under the law of which the Award was made; or
ii. If the court finds-
a. That the subject matter of the dispute is not capable of settlement by arbitration under the laws of Nigeria; or
b. That the recognition or enforcement of the Award is against the public policy of Nigeria
Section 29 of the Act also allows an aggrieved party to apply to set aside an Award on the grounds that the Award contains decisions on matters not submitted to the arbitrator (Howsoever that where the decisions on matters not submitted can be separated from matters submitted, only the decision on the matters not submitted shall be set aside). However, this application must be brought within three months of the making of the award in question.
Section 30 of the Act also allows an aggrieved party to apply to set aside an Award on the ground that the Arbitrator misconducted himself, or that the Award was improperly procured. It is however unclear if an application under Section 30 needs to be brought within three months of the Award as the Section states no limitation on time to apply as Section 29 does.
Effect of the order of Court granting or refusing recognition of Award
Where the Court makes an order granting or refusing the recognition of the award, that order operates as a bar to any other application brought to a High Court in Nigeria to seek the relief, as that would be an abuse of Court process. The parties may however appeal the Order or the terms of the Order as made by the High Court to the Court of Appeal, and thence to the Supreme Court of Nigeria as occasion demands, on the grounds that the Order ought to have been or ought not to have been granted having regard to Sections 29, 31, 48, 51, 52 and 54 as the case may be.
Enforcement of International Arbitration Awards under the Foreign Judgments (Reciprocal Enforcements) Act
The Foreign Judgments (Reciprocal Enforcements) Act is an act of the National Assembly of Nigeria; so is the Arbitration and Conciliation Act. None of the provisions of these Acts are made subject to the other, so where they make provisions on the same subject matter of enforcement of Arbitration Awards, they offer alternative means of securing the same objectives, each as valid at law as the other.
The objective of the Foreign Judgments (Reciprocal Enforcements) Act is to make provisions for the enforcement in Nigeria of Judgments given in foreign countries, which accord reciprocal treatment to Judgments given in Nigeria. Section 2 of the aforesaid Act interprets Judgment to which the Act applies to include “…an award in proceedings in an arbitration if the award has in pursuance of the law in place where it was made become enforceable in the same manner as a judgment given by a Court in that place…”
However, only judgments of the Superior Courts of the country making the judgment may be enforced in Nigeria under this Act. By the combined effect of Section 2 and Section 3(2), awards to be enforced in Nigeria under this Act must have become enforceable by the Superior Court of the Country where the award was made in order to be enforced under this Act.
It would therefore appear that where, by the Laws of the Venue of arbitration, the award is entitled to be enforced as a Judgment of the court of that country, without further registration as a Judgment of the court of that country, such an Award would be enforceable in Nigeria upon satisfaction of the rules of Court in Nigeria prescribing what matters the application for enforcement is required to satisfy under Section 5 of this Act.
However, where the Award would have been required to be registered as a Judgment under the laws of the Venue, in order to become enforceable as a Judgment of the court of the country of Venue of Arbitration, the Award would have to be registered in that country before being registered (not as an Award, but now as a Judgment of that Foreign Court) in Nigeria for purposes of enforcement (in effect, Registration has to be effected in the Court of that foreign country to make the Award enforceable as a Judgment, before application to enforce would commence in Nigeria).
It is worthy of note that the provisions of this Act under consideration specify Venue of Arbitration and not Seat of Arbitration as the determining factor in evaluating Arbitral Awards. This shall be further considered in subsequent chapters of this essay.
An Award to be enforced under this Act shall be enforced further to application made to the High Court or Federal High Court of Nigeria (and to no other Court as the interpretation section of the Act under consideration defines Court to mean these two Courts, and does not mention the National Industrial Court which was not in existence at the time).
The fact that the Nigerian Court would have been precluded from making such a judgment on particular terms or subject matter in an action commenced before said Court is not a bar to enforcing such terms in a foreign award or judgment.
Generally, the application to enforce the award would be accompanied by a Certified Copy of the Award, a Certified Copy of the Order of the Court entitling the Award to enforcement in the Venue of the Award (where applicable), and a statement that the Award/Judgment was wholly or partially unsatisfied.
A registered judgment may be set aside or registration refused under Section 6 of this Act where the party against whom the judgment is sought to be enforced can satisfy the Court that:
i. The Judgment emanates from a country where the Minister of Justice (Nigeria) has made an order refusing enforcement arrangements to that country.
ii. That the Judgment was registered contrary to the provisions of the Foreign Judgment (Reciprocal Enforcements) Act.
iii. That the court of the country of Original Venue had no jurisdiction in the circumstances of the case.
iv. That the party against whom enforcement is sought was not sufficiently notified of the proceedings in order to afford him opportunity to present his case.
v. That the Judgment was obtained by fraud.
vi. That the enforcement of the Judgment would be contrary to public policy in Nigeria.
vii. That the rights under the Judgment do not vest in the party seeking to enforce the judgment.
An Order of Court made under these provisions to enforce or refusing to enforce an award, may be appealed to the Court of Appeal and thence to the Supreme Court of Nigeria.
Enforcement of International Arbitration Awards under the International Center for Settlement of Investment Disputes (Enforcement of Awards) Act
Nigeria is a signatory to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (also known as the ICSID Convention or the ‘Washington Convention’. Domestic provisions to give effect to Awards pursuant to the Convention are provided in the International Center for Settlement of Investment Disputes (Enforcement of Awards) Act.
Section 6, Article 53 of the Convention provides that Awards shall be binding on the parties and shall not be subject to appeal or review save as provided by the Convention. Article 54 (1) obliges the contracting state to recognize the award as a final judgment of that country enforceable in that country.
Section 1 of the International Center for Settlement of Investment Disputes (Enforcement of Awards) Act provides that copies of awards certified by the ICSID Secretary General to be enforced in Nigeria shall be registered administratively in the Supreme Court of Nigeria and upon registration shall be enforced as a Judgment of the Supreme Court of Nigeria. Upon registration, the Award is not subject to appeal or review, and the registration by the Supreme Court is also not subject to any review.
Enforcement of Arbitral Award by instituting civil proceedings
A requirement of the Arbitration and Conciliation Act is that for an Award to be enforced as a Judgment of Court, the application must be accompanied by the Arbitration agreement.
However where there is no written arbitration agreement (Parol Agreement), and the other modes of enforcement are not available, it has been suggested that the successful party may bring action to enforce the rights recognized by the Award; the Award would be conclusive on the issues it has resolved as res judicata.
A Certified or Original Copy of the Award would have to be entered in evidence before the Trial Court. Judgment by the Trial Court would be ordinarily enforceable as a Judgment of that court, but is also subject to appeal to the Court of Appeals and the Supreme Court.
Problems with enforcement of international arbitral award in Nigeria
Where a Judgment Debtor fails to comply with the terms of an Award against him, the victorious party engages the machinery of state to enforce the Award. However, this is often where the promise of arbitration fails, as the speed and relative lack of technicality or arbitration runs into technical quagmires in the enforcement of Awards.
The problems with enforcement of Arbitration Awards in Nigeria will be discussed under the following headings:
2. Undue and Inconsistent Technicalities
3. Legislative Inaction
4. Lack of Training in Arbitration
This chapter is an attempt to examine these problems and reflect on the present state of affairs in Nigeria and suggest solutions in the next chapter.
The litigation process in Nigeria is plagued with delay, particularly in the commercial cities of Nigeria (Lagos, Port Harcourt and Abuja, are the most affected cities). These are the locations where parties are likely to seek enforcement, as the jurisdiction of the courts is geographically limited to specific states (and even within the states, to specific judicial divisions).
The causes of delay are:
The judicial systems in the commercial centers are congested with a huge backlog of cases arising from the boisterous commercial activity in those geographical areas. This congestion is caused by structural issues in the judicial system, weak case management practices, corruption, and deficient technology. Judges record proceedings in long hand, rely on personal libraries for research, and do not enjoy financial autonomy from the Executive branch. As a result, Nigerian judges in the commercial cities are burdened with heavy caseloads and insufficient facilities; the result of which is delay and more congestion.
The structural issues that cause congestion include frequent movement of Judges between divisions, and elevation of judges to Appellate Courts with insufficient lead time to conclude trial cases; these trials are required to be retried de novo before another judge. In the case of Ogbunyiya v Okudo, an action filed in 1958 came up for judgment in 1977, after 19 years in court. The Trial Judge, Nnaemeka J., as he then was, was elevated to the Court of Appeal after the Judgment was reserved; he however delivered his judgment after he was sworn as a Justice of the Court of Appeal. The Court of Appeal upheld the correctness of the decision, which was later set aside by the Supreme Court in 1979 and remitted to the High Court for retrial before another judge on the grounds that on the date the Judgment was delivered, the learned Trial Judge was no longer a Judge of that Court and therefore technically was not competent to deliver the Judgment. The saving provisions should such a situation arise in the Court of Appeal or Supreme Court, allowing a Justice to deliver the written and signed opinion of another absent Justice of the Court (said opinion written and signed while the Justice was in office, in the event that the Justice is not available on the date of delivery of Judgment) does not extend to the High Courts. The legal provisions underpinning this decision have not changed since 1977, and the decision represents the state of the law till date.
Insufficiently Regulated Appeal Process: The Appellate Process in Nigeria allows appeals on almost any issue to the Court of Appeal and thence to the Supreme Court , with orders of stay of proceedings stalling the case for years in many instances. Interlocutory appeals cause needless delay in the litigation process; a problem that the Nigerian legal system continues to grapple with. With insufficient penalties for frivolous appeals and applications brought to stall proceedings, litigants are often frustrated by lengthy delays in litigation proceedings, with actions sometimes lasting as long as three decades in court.
The penalties provided for frivolous actions and appeals have not kept pace with the economic realities of the day as they provide no disincentive for a litigant with deep pockets to frustrate the enforcement of an unfavorable judgment or award. A prime example is the penchant of the Nigerian costs to refuse claims for solicitors’ fees as costs of the action or damages; it is suggested that till this stance is reconsidered, frivolous actions and delays would continue mar Nigerian judicial efforts.
Applications to enforce Awards are subjected to the same delays that other cases have to navigate, defeating the commercial reasons that led to arbitration in the first place. Examples of this phenomenon are exemplified in the cases of IPCO (Nigeria) Limited v Nigerian National Petroleum Corporation, and Sundersons Limited & Milan Nigeria Limited v Cruiser Shipping PTE Limited & Universal Navigation PTE Limited.
In the IPCO case, the English Court of Appeal had to decide on the propriety of an application to enforce an Arbitration Award, despite a challenge pending in Nigerian Courts seeking Orders of Court to set aside the Award. In that case the Court of Appeal (England), appalled at the delay of over three years in the Nigerian courts, ruled in favour of enforcing the Award.
In the Sundersons’ case, where the judgment of the Nigerian Court of Appeal was delivered in 2015 on an Award entered in 2010, the appellant’s appeal was on a technicality: whether the application was properly constituted as the arbitration agreement attached to the application was a faxed copy and not a certified copy. There was no dispute that the content of the copy was accurate; the dispute was as to the form of the document. There is no preventing the judgment debtor from further appealing to the Supreme Court after his appeal was dismissed and there were no penalties assessed for the clearly frivolous appeal.
Undue and Inconsistent Technicalities and Laws
The legislative requirements for enforcement of Awards are inconsistent as can be seen from the preceding chapter. Coupled with unfamiliarity with arbitration by judicial officers, Judges fall into error in making decisions in regard to enforcement; requiring appeals to correct those errors.
Also, these are areas in need of clarification in the technicalities to enforce Awards:
i. No legislative definition of Arbitrator Misconduct in Nigerian Law.
ii. No definition of the mode of application to apply to the Court for enforcement in the provisions. Judges and Courts therefore allow or disallow various modes of application, creating inconsistency in procedure and difficulty in relevance of appellate decisions across board.
iii. No standard direction or enforcement procedure guidelines.
iv. By the Rules of Court a defendant must be within territorial jurisdiction for Court to have jurisdiction over it or a claim against that defendant. A Judgment Debtor to an Award may operate through a subsidiary company in Nigeria having separate legal personality, effectively shielding the Judgment Debtor from enforcement against it through its subsidiaries.
v. The enforcement of International Award includes the requirement that the Award must have attained status of judgment in the country where the Award was made, and the composition or procedure adopted must accord with the statutory provisions of the country of Venue of the Arbitration. However, the modern approach to arbitration is to view the arbitration in accordance with the law of the Seat of Arbitration and not the Venue; where the Seat and the Venue are not the same. Nigerian law specifies the Venue and that may have unfortunate consequences and complications in the enforcement of an Award.
There has been no review, amendment or update to the Arbitration & Conciliation Act since 1988. Developments in Arbitration captured by the Scottish Arbitration Act and the Arbitration Act of England 2010 are non-existent in Nigerian law. The following areas are clearly in need of review and legislative intervention:
i. As stated above, enforcement laws assess the Award through the lens of Venue of Award and not Seat of Award; the Seat is not known to Nigerian Law.
ii. Also, rules and procedures for Judicial Assistance in the Arbitration Process are undeveloped.
iii. The place of arbitration as a matter for the Legislative lists is presently unresolved, creating the potential for conflicting Federal and State laws to be enacted.
iv. Limitation period for setting aside award for misconduct under Section 30 of the Arbitration and Conciliation Act is not stated in the law. The Supreme Court attempted to answer the question in the case of Araka v Ereagwu, where the Court applied the three-month period stated in Section 29 of the Act (for application to set aside Award on the ground that the Award is in excess of the jurisdiction of the Arbitrator) which had nothing to do with application to set aside for misconduct under Section 30 (Section 30 specifies no time limit). The Court was of the view that the limitation period specified in Section 29 specifically for applications brought under Section 29, must be read to apply to every application to set aside as there was no other specified limitation period in the Act. It is submitted by this writer that this is clearly unsatisfactory, and the Legislature would do well to settle the question and keep pace with recent developments in Arbitration, by legislative action, and not leave it to judges to engage in judicial legislation.
v. Issues of Limitation Law and its effect have also given rise to some difficult decisions. In the case of City Engineering Nigeria Ltd. v Federal Housing Authority the Supreme Court followed its decision in Murmansk State Steamship Line v Kano Oil Millers Ltd, that the limitation period within which to apply to enforce Award begins to run from the date cause of action arose and not the from the date of Award. The Court relied on Section 63 of the Limitation Law of Lagos State which provides:
“…Notwithstanding any term in a submission to the effect that no cause of action shall accrue in respect of any matter required by the submission to be referred until an award is made under the submission, the cause of action shall for the purposes of this law and any other limitation enactment (whether in their application to arbitration or to other proceedings) be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term of submission”
The Court held that Scott v Avery Clauses are no longer effective in Nigeria by virtue of this section and therefore any application to enforce an Award longer than six years after the cause of action accrued, is incompetent.
Lagos State in an attempt to set things on a more effective footing in Section 35 (5) Arbitration Law of Lagos provided that the period between commencement of Arbitration and Award being rendered shall not be computed for the purposes of calculating limitation period within which to bring application for enforcement of award. By this provision the principle propounded in the decision of City Engineering v Federal Housing Authority is sought to be avoided; however, this applies only to Lagos, and the law itself may be set aside for inconsistency with the Arbitration and Conciliation Act or for exceeding legislative competence of Lagos State legislature. However, other states still have identical provisions to Section 63 of the Lagos Limitation Law.
The position in Halsbury’s Laws of England that calculation of time within which to apply to enforce begins from the date of the award is to be preferred as being in keeping with commercial common sense, rather than from the date cause of action arose, lest a protracted arbitration end up being for naught.
It is worthy of note that the Supreme Court has also declared that where parties resolve a dispute by an agreement to terms, the cause of action in the original dispute is extinguished and a new cause of action is created on the agreement, which may then be enforced by specific performance or other action. It does appear to this writer that the position in City Engineering is incongruous with modern thought on limitation period and requires revision.
Lack of Institutionalized and Mandatory Training in Arbitration
Arbitration does not appear in the curriculum for training Nigerian lawyers in the Universities; it is also not part of the Nigerian Law School training. It is however offered under private arrangements by the CIARB to students for associate level training.
Judicial officers confronted with applications to enforce or set aside Awards may not have any experience in arbitration and may respond to arbitration proceedings by sitting on appeal over the Award, and fail to appreciate the need for dispatch. They also fail to appreciate the standard expected of the arbitrator, and that Arbitration is driven by party autonomy.
An example of the last point is the position of the then Chief Justice of Nigeria whose directives to Heads of State Courts resulted in practice directions forbidding the High Courts from any participation in litigation where an arbitration clause is mentioned. It is the position of this writer that this extreme position is borne out of inadequate understanding of arbitration and the role of the court in assisting arbitration, as contained in Section 34 of the Arbitration and Conciliation Act. That such an extreme position has now become a practice of the courts in every state of the Federation and the Federal High Court without any modification or push back, shows the dearth of understanding of the role the judiciary is to play in assisting arbitration, and is partially responsible for the quality of decisions in regard to the enforcement of Award and the lengthy appeals that follow.
Suggested reforms and solutions to problems with enforcement of arbitral award in Nigeria
In the preceding chapter, we examined some of the problems encountered in the process of Enforcement of Arbitral Awards in Nigeria. This chapter is dedicated to suggesting reforms and solutions.
Granting Special Classification to Arbitration Assistance
Despite the delay of actions in the courts, some applications are given accelerated hearing by virtue of the Rules of Court and legislative instrument. Examples are Fundamental Rights Proceedings and Maritime Claims. Some proceedings are assigned to special courts (for example Juvenile Courts to handle Family Law issues arising from the Child Rights Act). These actions are heard on fast track, delays are met with punitive action and judgment is quickly rendered.
Presently Arbitration Assistance by the courts does not have such classification, and arbitrations in need of Judicial Assistance get bogged down in intractable delays. There is no clear procedure for the Arbitration Assistance contemplated by the Arbitration and Conciliation Act.
It suggested that Arbitration Proceedings generally be classified as special accelerated proceedings. This classification would provide the judicial impetus to effectively discourage delay by the parties, grant judges power to impose stiff fines for tardiness, and effectively fast track the process of Arbitration generally.
It is also suggested that the saving provisions of the Supreme Court Act and the Court of Appeal Act allowing the decisions of a Justice to be read in his absence by his brother Judges could be extended by legislative instrument to apply to actions concerned with Arbitration assistance and enforcement of Awards.
Enactment of Specialized Rules of Court for Arbitration
As has been stated earlier in this work, there are no unified specialist rules in relation to Applications to enforce or set aside Arbitration Awards. There are also no specialist rules for Arbitration Assistance applicable throughout Nigeria.
It is submitted that Specialist Rules in this regard would be a welcome development to streamline and standardize the manner and technical requirements of application to enforce or set aside Arbitration Awards, and also deal with the technical issues of Judicial Assistance to the Arbitration process. The benefits of this are to create a uniform standard across the Courts, and clarify expectations to applicants and to Judges. With a uniform set of rules, training Judges and legal counsel would also be an easier task. The decisions of the Appellate Courts could also be streamlined to avoid confusion.
The specialized rules could also expedite hearing by specifying timelines and fines for delay, leading to quicker outcomes.
Restricting Appeals Process
In the preceding chapter we identified the appeal process as a factor working against the enforcement of awards in Nigeria. Appeals take too long to conclude due to the congestion of the appeal system, with appeals on every technicality and orders to stay proceedings keeping proceedings in stasis for years.
It is suggested that constitutional amendments are in order (as the right of appeal is governed by the Constitution of the Federal Republic) as follows:
i. The Right of Appeal to the Federal Court of Appeal after an Award is refused or granted recognition should be preserved, with the Court of Appeal as the final appellate court for such proceedings. This would require constitutional amendments.
ii. That the right to appeal arising out of enforcement proceedings should be limited to appeal against the final decision of the High Court; interlocutory orders may only be appealed after the final order is granted, where the appellant has to demonstrate that the interlocutory order occasioned a miscarriage of justice in the final order.
iii. Appeals against such orders made by the High Court must be filed within fourteen days (presently an aggrieved party has three months to file an appeal).
Other reforms suggested (which only require amendment to rules of Court) include:
iv. Appeals in regard of enforcement of Award once struck out may not be relisted.
v. Appeals must be heard and determined within ninety days of filing the Appeal.
vi. Stiff penalties and costs should be recovered from the losing party where the Appeal is adjudged frivolous.
Legislative Action would help clear up some of the issues militating against effective enforcement of Awards in the following areas:
i. Clarify between the Federal Government and the State Government on which Parliamentary list (Federal or State) Arbitration should feature, and to what end. It is suggested that issues concerning International Arbitration, Enforcement of Awards, Limitation Law as Concerning Enforcement of Awards, and the Procedure for Judicial Assistance should feature on the Exclusive Federal List. It is also suggested that Domestic Arbitrations and Non-Contractual Arbitrations within the State should remain within the purview of State Legislature. This would require Constitutional amendments to the Fourth Schedule of the 1999 Federal Constitution.
ii. Amendments to the Limitation Laws of the States to bring them in harmony with practical realities of International Arbitration are required. It is desirable to stipulate that an Award creates a new cause of action, and the limitation period begins to run from the date of the Award.
iii. The Arbitration and Conciliation Act and the Foreign Judgments (Reciprocal Enforcements) Act are in need of revision, to bring them up to date with recent developments in Arbitration practice. A glaring example is separating the Seat of Arbitration from the Venue of Arbitration. Presently, the Award shall be enforced as a Judgment of the country of Venue, even where the Seat of the Arbitration is another country. Another glaring example is that there is no definition of Arbitrator Misconduct in the Act, and the lacuna in stating a limitation period to bring action to set aside for Misconduct has led to inelegant judicial law making, as earlier postulated by this writer.
Mandatory Arbitration Training
COVID-19 has necessitated structural changes all over the world. Arbitration is very likely to be increasingly adopted as a means of dispute resolution as public litigation would have to be minimized for practical reasons. This makes it even more imperative that Arbitration training be made mandatory at the Nigerian Law School and at the Nigerian Institute of Advanced Legal Studies in its training program for Judicial Officers. The training curriculum would be updated from time to time to keep up with developments in Arbitration best practices. It is believed that this would result in improved decisions about Arbitration procedures, improved quality of Awards, and more effective enforcement of Awards.
If Nigeria is to realize its potential as the investment capital of Africa, changes need to be made to the legal framework for enforcement of International Arbitration Awards to avoid the frustration of the commercial intention of the parties in making their investments and undertaking business relations. As the government seeks to diversify the economy and move away from an addiction to oil revenues at the expense of other sectors of the economy, access to enforcement of Awards is a key cog in the economic machine that we hope should be roaring out of the West African coast over the course of the next decade.
Lawrence, a lawyer is a Fellow of the Institute of Chartered Arbitrators, UK; and also of the Institute of Chartered Mediators and Conciliators. She writes from Port Harcourt, Rivers State.