ADR SEMINAR PAPER.

1.00 INTRODUCTION

1.01 Once men begin to live and trade together, inevitably various

forms of adjudication emerge. It follows from the above that the

submission of disputes to independent adjudication is a form of

ordering human society as old as society itself.1 One nagging

question that still receives attention is why did arbitration develop

as a means of alternative dispute resolution? In order to answer this

question, one needs look at the history and growth of arbitration

not only in Nigeria but also in different jurisdictions across the

world.

1.02 There are many misconceptions about arbitration. One of those

misconceptions regards the evolution of arbitration, especially in

the developed and developing countries.2 The purpose of this paper

is to review the history of arbitration, (which will clear up some

of those misunderstandings), growth and development of arbitration

as an alternative to litigation i.e. this paper will effectively

discuss the growth of arbitration (not only in Nigeria) and the

advantages of arbitration over litigation. As a Lawyer, I have

often had the opportunity to discuss arbitration with workers,

management and union of the Adekunle Ajasin University, Akungba

Akoko. One of the things that often surprise me is that I talk to

workers, both management and union, who think that arbitration is

1 Noussia K. “Confidentiality in International Commercial Arbitration” Springer Verlag Berlin Heidelberg, 2010 Chapter 2.2 Robert V. M. “History of Arbitration and Grievance in United States” West Virginia University Extension Service Institute for Labor Studies and Research (2005) Chapter 2 pg. 2.

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a phenomenon of the 1970’s. Many times in my short career, workers

have expressed to me that arbitration is something that got its

start in the late 1960’s to early 1970’s. Nothing could be farther

from the truth.

1.03 One has to look at the history of arbitration to find out

where arbitration came from, where it has gone in the Western

Countries, its growth and development through reforms and passage

of bills in Nigeria and finally it advantages over litigation.

2.00 Definition of Arbitration

2.01 There is no universally accepted definition of arbitration or

ADR as a whole and a broad range of procedures may be categorized

as such. Arbitration can be defined by it procedure. At its

broadest, arbitration or alternative dispute resolution

encompasses any method of resolving a dispute other than by a

binding dispositive decision imposed by a judge or arbitrator,

generally involves the intercession and assistance of a neutral

third party who helps the parties to reach a settlement.3 It is

important to give some definitions of the term arbitration.

2.02 In Halsbury’s Laws of England, arbitration is defined as;

“The process of resolving disputes between people or groups by

referring them to a third party either agreed on by them or provided by

law, who makes a judgment.”4

3 The Encyclopedia of forms and precedents Vol. 3 (1) paragraph 38 (71).4 Halsbury’s Laws of England 4th Edition Vol. 2.

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Also in the case of NNPC v Lutin Investment Ltd.5 The Supreme Court

defined arbitration as

“… the reference of a disputes or difference between not less than two

parties for determination after hearing both sides in a judicial manner, by

a person or persons other than a court of competent jurisdiction. The

arbitrator who is not an umpire has the dispute submitted to him by the

parties for determination. If he decides something else he will be acting

outside his authority and consequently, the whole of the arbitration

proceedings will be null and void and of no effect. This will include any

award he may subsequently make.”

2.03 Arbitration which is a form of alternative dispute resolution

(ADR), is a technique for the resolution of disputes outside the

courts. The parties to a dispute refer it to arbitration by one or

more persons (the "arbitrators", "arbiters" or "arbitral

tribunal"), and agree to be bound by the arbitration decision (the

"award"). A third party reviews the evidence in the case and

imposes a decision that is legally binding on both sides and

enforceable in the courts.6 In other words, arbitration is a

proceeding in which a dispute is resolved by an impartial

adjudicator whose decision the parties to the dispute have agreed,

or legislation has decreed, will be final and binding. There are

limited rights of review and appeal of arbitration awards.

2.04 Arbitration can either be voluntary or mandatory (although

mandatory arbitration can only come from a statute or from a

5 (2006) 25 NSCQR 77.6 The Encyclopedia of forms and precedents Vol. 3 (1) paragraph 33 (14).

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http://en.wikipedia.org/wiki/Arbitral_award

http://en.wikipedia.org/wiki/Arbitral_tribunal

http://en.wikipedia.org/wiki/Arbitral_tribunal

http://en.wikipedia.org/wiki/Court

http://en.wikipedia.org/wiki/Alternative_dispute_resolution

contract that is voluntarily entered into, where the parties agree

to hold all existing or future disputes to arbitration, without

necessarily knowing, specifically, what disputes will ever occur)

and can be either binding or non-binding. Non-binding arbitration

is similar to mediation in that a decision cannot be imposed on

the parties.

2.05 J. K. Gadzama SAN,7 defined arbitration as a process of

Alternative Dispute Resolution (“ADR”) in which a neutral third

party (Arbitrator) renders a decision after a hearing at which

both parties have an opportunity to be heard. Where Arbitration

is voluntary, the disputing parties select the Arbitrators who

have the power to render a binding decision. A person who

resolves disputes by arbitration is called an “Arbitrator” or a

“Neutral”. Thus, arbitration is a simplified version of a trial

involving no discovery (except in special circumstances) but

simplified Rules of Evidence. Generally the parties decide how

the arbitrators will be appointed and if they fail, there is

usually a default provision in the law or arbitral rules. Thus it

can be a sole arbitrator or a tribunal of three arbitrators. In

the case of a sole arbitrator, the appointment is jointly made by

the parties and if they fail, the court, a third party or an

appointing authority, as the case may be, does the appointment.

Where there are three arbitrators, each party will appoint one

7 Senior Advocate of Nigeria, Member CIArb. and a frontline scholar ofArbitration in Nigeria.

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http://en.wikipedia.org/wiki/Non-binding_arbitration

arbitrator each and the two so appointed will appoint the third

who usually acts as the Chairman or the presiding Arbitrator.8

2.06 It is noteworthy that whether they are one or two or more

arbitrators, they are called arbitral tribunal. All these are

determined by the applicable law and arbitral rules. The important

point to note therefore is that the arbitrator is in the status of

a Quasi-Judge. After hearing presentations including evidence,

from the parties or their legal representatives, the Arbitrator

makes a decision, which is called an Award and which is binding on

the parties. The courts would therefore enforce any award made by

an arbitrator.9

3.00 HISTORY OF ARBITRATION

3.01 No one knows exactly when arbitration got started but it was

long before the twentieth century as many people wrongly

believe.10 King Solomon was an arbitrator,11 Philip the Second, the

father of Alexander the Great used arbitration as a means to

settle territorial disputes arriving from a peace treaty he had

negotiated with the southern states of Greece as far back as 337

B.C.12 In England, arbitration is older than the common law

8 Gadzama J.K. :Inception of ADR and Arbitration in Nigeria” a paper presented atNBA conference Abuja (2004). See also Eunice R. O. “Alternative DisputeResolution” (2004) and Dele P. What is Alternative Dispute Resolution? Dee SegeNigeria Limited Lagos (2005), page 11.

9 Gadzama J.K.: Inception of ADR and Arbitration in Nigeria” a paper presented atNBA conference Abuja, (2004).

10 Xavier G. “Evolution of Arbitration as a Legal Institutional and the inherentpower of the court, ASLI working paper series No. 009, Feb. 2010, Pg. 1.

11 King James Version of the Holy Bible, 1st Kings 3 v 16-18.12 Elkouri & Elkouri “How Arbitration works” Bureau of National Affairs, 2003. See

also Robert V. M. “History of Arbitration and Grievance in United States” West5

system, which the United States courts and Nigeria courts later

inherited. In fact, England used arbitration as a common means of

commercial dispute resolution as far back as 1224.13

3.02 In ancient Rome arbitration was one of the preferred methods of

settling disputes and was the preferred method of settling

commercial disputes in the Middle Ages.14 The Babylonians using

the code of Hammurabi which dates back to 2100 BC., the Greeks

influence by their Egyptian ancestry and ancient arbitration

procedures all used arbitration to resolve most of their

commercial disputes.15

3.03 In America, the arbitration had been in existence for a long time.

George Washington16 had an arbitration clause in his will that

basically stated that if any dispute should arise over the wording

of his will, a panel of three arbitrators should be implemented to

render a binding decision to resolve the dispute. George

Washington stated that he considered any arbitration decisions

rendered from his will to be as final and binding decision and can

only be set aside by the Supreme Court of the United States.17 The

Virginia University Extension Service Institute for Labor Studies and Research(2005) Chapter 2 pg. 2.

13 Hill M. F. and Anthony V. “Improving the Arbitration System: A Primer forAdvocacy” 1991. www.llrx.com/features/adr 14 Robert V. M. “History of Arbitration and Grievance in United States” West


15 “History of Arbitration, importance and modern use of Arbitration” Online:www.springer.com/cda/content/document.

16 The 1st elected President of the United States; April 30, 1789-March 4, 1797.17 Bales R. “Compulsory Arbitration: The grand Experiment in Employment”Cornell University Press 1997 pg. 7

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Journeymen Cabinet-Makers from Philadelphia actually had an

arbitration clause written into their union constitution back in

1829. This clause was more of an interest arbitration clause than

a grievance arbitration clause but it was still the first time in

United States history that an arbitration clause was used in a

labor management document.18 Interest arbitration is more common

in the public sector as an alternative to a legal strike at the

expiration of a contract before or after impasse has been reached

by the parties during negotiation whereas grievance arbitration is

basically a tool used by impartial arbitrators interpreting the

language of a contractual dispute between the parties.19

3.04 In England merchants have resorted to adjudication outside the

Royal Courts from the first development of national and

international trade. Already in the later middle ages, a solid

connection between finance and commerce existed. Commercial

transactions were commonly done on credit terms, such as bills of

exchange, widely accepted at the seasonal fairs which brought

together the trading community and provided the basis of this

credit system. The character of the Royal Courts was not adapted

initially to serve the needs of this trade and traders, firstly

because the early courts were primarily interested in disputes

over land and conduct detrimental to the King’s peace, secondly

because contracts, commercial credits and debts incurred abroad

and owed by and to foreigners were almost wholly unenforceable,18 Re Nellse. The First American Labor Case. 41 Yale L. J. I65, 1931. 19 Robert V. M. “History of Arbitration and Grievance in United States” West


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thirdly because the traditional court procedure lacked the much

needed expedition that merchants, passing from fair to fair and so

often changing jurisdiction, needed and fourthly because

jurisdiction was ousted by the necessity of proving venue in

England.20

3.05 Thus, the trading communities relied on special tribunals, i.e.

the Courts of the Boroughs, of the Fair and of the Staple, in

order to solve the controversies arising in the world of local and

international trade. These courts were the predecessors of today’s

modern arbitral tribunals in that a predominant feature of their

character was that law should be speedily administered in

commercial causes, which in effect led also to a relaxation of the

strict procedure in these Courts, and in that, according also to

the nature of the dispute, commercial men were also elected to

form part of the tribunal. Thus, the middle Ages saw a diverse

system of tribunals dealing with commercial disputes, where it was

already acknowledged that people with special knowledge to the

related trade would be on some disputes better assessors to

arbitrate on it and that the settlement of the commercial cases

should be speedy.21

4.00 THE HISTORY OF ARBITRATION IN NIGERIA

4.01 In Nigeria, long before the advent of the white man ever arrived in

what is now Nigeria, early Native tribes used arbitration as not

20 Noussia K. “Confidentiality in International Commercial Arbitration” SpringerVerlag Berlin Heidelberg, 2010 Chapter 2.


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only a means to resolve disputes within the tribe but also as a

means to resolve disputes between different tribes. One could

safely say that arbitration is as old as monarch rules in Nigeria

tracing its origin back to the old Oyo Empire where the Oyomesi

(Alafin of Oyo in Council) sits as Arbitrators over disputes

relating to lands, Chieftaincies, trades etc. Appeals from the

Oyomesi lie directly to the Alafin of Oyo who is the Supreme Head

of the old Oyo Empire. His decisions and awards are final over any

issue.22

4.02 It is worthy to note that arbitration is not an imported

mechanism in Nigeria unlike litigation which was is an imported

mechanism from the English Legal system. Traditionally in Nigeria

like most of Africa, disputes were traditionally resolved through

arbitration and other means of ADR.

4.1.0 Customary Arbitration in Nigeria

4.1.1 Subjectively, It will be out of place to discuss the history of

arbitration in Nigeria without discussing the concept of

customary arbitration in Nigeria. Customary law in Nigeria

include Native Law and custom administered in the Southern part

of Nigeria as well as Islamic law administered in the Northern

parts of Nigeria which is predominantly Muslim community.23 For

the purpose of this paper, I shall however restrict myself to the

customary law administered in the Southern part of Nigeria.

22 Ibrahim I. “The Legal Regime of Customary Arbitration in Nigeria” 2004.www.unilorin.edu.ng, www.Academia.edu.ng 23 Ibrahim I. “The Legal Regime of Customary Arbitration in Nigeria” 2004 pg. 2.www.unilorin.edu.ng, www.Academia.edu.ng

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http://www.unilorin.edu.ng/

http://www.unilorin.edu.ng/

4.1.2 Indeed customary arbitration and ADR remains part of the

Nigerian Legal System. In the case of Oparaji vs. Ohanu,24 Hon.

Justice Iguh (JSC) stated thus: -

“Where two parties to a dispute voluntarily submit the issue in

controversy between them to an arbitration according to customary law

and agree expressly or by implication that the decision of such

arbitration would be accepted as final and binding, then once the

arbitrators reach a decision, it would no longer be open to either party to

subsequently back out or resile from the decision so pronounced”

4.1.3 In the case of Okpuruwu vs. Okpokam,25 Hon. Justice Oguntade JCA

(as he then was) observed thus: -

“In the pre-colonial times and before the advent of the regular courts, our

people (Nigerians) certainly had a simple and inexpensive way of

adjudicating over disputes between them. They referred them to elders or

a body set up for that purpose. The practice has over the years become

strongly embedded in the system that they survive today as custom.”

4.1.4 Customary arbitration and alternative dispute methods of

resolving disputes recognize practices such as oath taking before

shrines. In the case of John Onyenge & Ors vs. Chief Love day

Ebere & Ors,26 Hon. Justice Niki Tobi delivering the lead Judgment

said

24 (1999) NWLR (Pt. 618) 290 @ 304. See also the case of Onyenge & Ors V. Ebere &Ors (2004) 11 MJSC 184 at 19925 (1988) 4 NWLR (Pt. 90) 554 at 586.26 (2004) 11 MJSC 184 at 199-200.

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“Learned Senior Advocate does not seem to like the tradition or custom of

oath taking. He cited a number of cases including Nwoke Vs Okere, supra.

This Court recognizes oath-taking as a valid process under customary law

arbitration. It is my view that where parties decide to be bound by

traditional arbitration resulting in oath taking, common law principles in

respect of proof to title of land no longer apply. In such a situation the

proof of ownership or title to land will be based on the rules set out by the

traditional arbitration resulting in oath taking. It is in this regard that I

find it difficult to go along with counsel in his submissions bordering on

the common law.”

4.1.5 The Supreme Court in the case of Ohiaeri vs. Akabeze27 defined

customary Arbitration as:

“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.”

4.1.6 In Larbi v Kwasi 28, the Privy Council held that a customary

arbitration was valid and binding and that it was repugnant to

good sense for a losing party to reject the decision of the

arbitrator to which he had previously agreed. Similarly in

27 (1992) 2 NWLR (Pt 221) Pg 1 at 7 Para. 1228 (1952) 13 WACA 76.

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Mensah v Takyiampong & Ors29, the West African Court of Appeal

held, inter alia, that:

“… in customary arbitration, when a decision is made, it is binding upon the

parties, as such decisions upon arbitration in accordance with native law

and custom have always been that the unsuccessful party is barred from

reopening the question decided and that if he tries to do so in the Courts, the

decision may be successfully pleaded by way of estoppels.”

4.1.7 One distinguishing feature of customary arbitration is that it

is usually oral. This takes it outside the ambit of statutory

arbitration. From a long line of decided cases, it is obvious

that arbitration is not alien to customary jurisprudence. This

principle was stated in the following cases: Ofomata & Ors v Anoka

& Ors,30 Assampong v Amuaku,31 Inyang & Ors v Essien & Ors,32 and Foli v

Akese33

4.1.8 Accordingly, arbitration had been with us from time immemorial.

This is because conflicts and controversies are normal

occurrences in the daily life of the society. This is primarily

a result of the different interests of persons in communal

matters, personal claims, family affairs, labour relations,

property interests, neighborhood relationships and activities of

the Government, inter alia. To manage these conflicts and

controversies, which ultimately result in disputes, the law of

29 (1940) 6 WACA 118.30 (1974) 4 EC.S.L.R 251.31 (1932) 1 WACA 192.32 (1957) 2 F.S.C. 39.33 (1930) 1 WACA 1.

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the land recognizes the rights of individuals, groups and the

Government to go to Court. However, failure of the Court system

(which is adversarial in Nigeria), has led to the growing search

for ALTERNATIVES to it (i.e. litigation). This fact is a major

factor for the growth of arbitration globally.34

4.1.9 From the above, it is obvious that customary arbitration and

ADR had been in existence in this part of the world long before

the advent of the colonialists and colonialism and they are both

still in existence. Indeed, we see the advent of arbitration as

a re-statement of customary jurisprudence. This is so because

the focus of arbitration – interests and needs of the parties –

is the focus of customary jurisprudence.

5.00 SOURCES OF NIGERIAN LAW OF ARBITRATION

5.01 The primary sources of the Nigerian law of arbitration are the

English Common Law, the Nigerian Customary Law and Nigerian

Statutes. The Local Enactments on arbitration in Nigeria

incorporated the English Common Law, Doctrine of Equity, together

with the English Statutes of general application, into the

country during the period of the Colonial Administration of the

country. Consequently, English Common Law rules on arbitration

are part of our Law. However, the Arbitration Ordinance, of 1914

which was an adaptation of the 1889 English Arbitration Act, was

the first legislative enactment on arbitration in Nigeria. This

was later re-enacted as Arbitration Act, Cap 13, Laws of the

34 Gadzama J.K. :Inception of ADR and Arbitration in Nigeria” a paper presentedat NBA conference Abuja (2004).

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Federation of Nigeria, 1958. It will also be recalled that

Nigeria was a unitary state till 1954.35

5.02 At the time of political independence in 1960, the Arbitration

Act was applicable to Lagos, the then Federal Capital Territory

while the Regions (now States) had their Arbitration Laws. These

are found in the Arbitration Law of Northern Nigeria 1963,

Arbitration Law of Western Nigeria 1959 and Arbitration Law of

Eastern Nigeria 1963. States that were eventually created out of

these older ones adopted the laws applicable to their mother

states.

5.03 This was the position until 1988 when the Federal Government of

Nigeria adopted the United Nations Commission on International

Trade Law (UNCITRAL) Model Law on International Commercial

Arbitration vide the promulgation of the Arbitration and

Conciliation Decree No. 11 of 1988. In 1990, it became the

Arbitration and Conciliation Act Cap 19 Vol.1 Laws of the

Federation of Nigeria, 1990.36 Today, this Act regulates

arbitrations arising from written and voluntary agreements to

arbitrate. It is also noteworthy that all High Court (Civil

Procedure) Rules have provisions on reference to arbitration while

some statutes provide for statutory arbitration. Thus arbitration

can arise voluntarily as provided for in the Arbitration and

Conciliation Act, by order of court as provided in the Rules of

35 Icke D. “Sources and Development of Arbitration in Nigeria” 2012. www.afsia.org/news/nigeria.36 Icke D. “Sources and Development of Arbitration in Nigeria” 2012. www.afsia.org/news/nigeria

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http://www.afsia.org/news/nigeria


Court and by statutes as found in the Trade Disputes Act, Cap 432,

Laws of the Federation of Nigeria, 1990, the Nigerian Investment

Promotion Council Act of 1995, and the Privatization and

Commercialization Act of 1999. Indeed the Nigerian Communications

Act of 2003 provide for arbitration.37

5.05 One major feature of the Arbitration and Conciliation Act is

that it covers both arbitration and conciliation. Similarly, the

three Schedules to the Act deal with Arbitration Rules,

Conciliation Rules and the 1958 New York Convention on the

Recognition and Enforcement of Foreign Arbitral Awards. Although

customary arbitration is recognized under the Nigerian legal

system it cannot meet the needs of modern business

relationships.

6.00 THE GROWTH AND DEVELOPMENT

The international legal framework

6.01 The United Nations Commission on International Trade Law

(UNCITRAL) Model Law on International Commercial Arbitration

(“UNCITRAL Model Law”)/(UNCITRAL Arbitration Rules) and the New

York Convention on the Recognition and Enforcement of Foreign

Arbitral Awards of 1958 (“the New York Convention”) are regarded

as the two pillars of international commercial arbitration.38

6.02 The Model Law is the result of the comprehensive study by

UNCITRAL into arbitration laws throughout the world with a view to37 Icke D. “Sources and Development of Arbitration in Nigeria” 2012. www.afsia.org/news/nigeria38 Rhodes Vivour A. “Arbitration and ADR as Instrument of Economic Reform” 2006.www.nigerianlawguru.com/articles.

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providing a Model law on arbitration which would lead to

uniformity/harmonization of the laws relating to International

commercial arbitration.39 The Law was adopted on the 21st day of

June 1985 by the United Nations General Assembly. The perception

in the international business world is that agreeing to arbitrate

in a model law jurisdiction secures a minimum of rights in

arbitral proceedings and reduces surprises. Indeed Model Law

conformity is advertisement to attract international business .The

Model law limits judicial intervention in arbitral proceedings

generally referred to as the principle of non intervention.

Article 5 of the Model Law states thus

“In matters governed by this Law no court shall intervene except where so

provided in this law”40

6.03 The intent of Article 5 was to exclude any general or residual

powers given to the courts within the domestic system and which

are not listed in the Model Law .Foreign parties were therefore

protected from surprises. It was also intended that Article 5

would accelerate the arbitral process by disallowing delays caused

by intentional tactics associated with the court system. The

adoption of the model law worldwide signified a new era in

international commercial arbitration. In recognition of the

39 The General Assembly of United States in it resolution of 11th December, 1985recommended “that all states give consideration to the Model Law on InternationalCommercial Arbitration in view of the desirability of uniformity of law ofArbitration procedures and the special need for international commercialarbitration practice.”

40 Generally referred to as the principle of non-intervention which has also beenadopted into various national laws including the English Arbitration Act, 1996.

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growing use of arbitration and the enactment of laws by states to

meet the demands of practice, UNCITRAL adopted a Model Law on

International Commercial Conciliation at its 35th session in 2002.

UNCITRAL continues its mission to improve the legal framework of

international dispute settlement and its recent work includes the

review of the provisions of the Model Law on the form in which

interim measures and preliminary orders should be presented by

arbitral tribunals and the recognition and enforcement of interim

orders.

6.04 The New York Convention made in New York in June 1958 obliges the

courts of signatory states to defer to the arbitral jurisdiction

when an action is brought under a contract containing an

arbitration clause and to recognize and enforce a foreign award

without any review of the arbitrator’s decision subject to limited

exceptions.41 Alan Redfern and Martin Hunter describe the

recognition and enforcement procedures under the New York

Convention as simple and effective.42 The New York Convention has

been described as “the single most important pillar on which the

edifice of international arbitration rests” and as a Convention

which “perhaps could lay claim to be the most effective instance

of international legislation in the entire history of commercial

law”43

41 See Article II and V of the New York Convention.42 Redfern A. and Hunter M. “Law and Practice of International Commercial Arbitration”1991 Sweet and Maxwell Pg 455.43 Mustill “Arbitration: History and Background” (1989) 6 Journal of InternationalArbitration at Pg. 4.

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7.00 GROWTH AND DEVELOPMENT OF ARBITRATION IN EUROPE

7.01 Arguably, the United States and Great Britain could be said to be

the pioneers of the use of present day arbitration to resolve

differences. It was first used in the Jay Treaty of 1795, and

played a major role in the Alabama Claims case of 1872 whereby

major tensions regarding British support for the Confederacy

during the American Civil War were resolved. At the First

International Conference of American States in 1890, a plan for

systematic arbitration was developed. The Hague Peace Conference

of 1899, saw the major world powers agreed to a system of

arbitration and the creation of a Permanent Court of Arbitration.

President William Howard Taft was a major advocate.

7.02 One important use came in the Newfoundland fisheries dispute

between the United States and Britain in 1910. In 1911 the United

States signed arbitration treaties with France and Britain. (44) (45)

Arbitration was widely discussed among diplomats and elites in the

1890-1914 era. The 1895 dispute between the United States and

Britain over Venezuela was peacefully resolved through

arbitration. Both nations realized that a mechanism was desirable

to avoid possible future conflicts. The Olney-Pauncefote Treaty of

1897 was a proposed treaty between the United States and Britain

in 1897 that required arbitration of major disputes. The treaty

was rejected by the U.S. Senate and never went into effect.46

44 Campbell J. ‘Taff Rossevelt and the Arbitration Treaties of 1911” Journal of America History (1966) Pp. 279-298.45 Jentleson B. and Paterson T. “Encyclopedia of U. S. Foreign Relations” (1997) 1: Pp. 87-88.46 Blake N. “The Olney-Pauncefote treaty of 1897” America Historical Review (1945) 50 Pp. 228-243.

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American Secretary of State William Jennings Bryan (1913-1915)

worked energetically to promote international arbitration

agreements, but his efforts were frustrated by the outbreak of

World War I. Bryan negotiated Twenty-Eight treaties that promised

arbitration of disputes before war broke out between the signatory

countries and the United States. He made several attempts to

negotiate a treaty with Germany, but ultimately was never able to

succeed. The agreements, known officially as "Treaties for the

Advancement of Peace," set up procedures for conciliation rather

than for arbitration.47 Arbitration treaties were negotiated after

the war, but attracted much less attention than the negotiation

mechanism created by the League of Nations.

7.03 In England for example, following the discovery of the New World,

the international society of the middle Ages dissolved into nation

states and, in this new age, men of commerce begun to look for new

institutions to refer their disputes outside the regular courts.

However, although the habit for arbitration and the desire for its

use continued to exist, nevertheless the adjudication of

commercial disputes were not anymore exclusively reserved to it

for reasons such as the fact that the common law courts developed

by the mid sixteenth century became a general remedy in contract

and thus gave themselves also jurisdiction over causes involving

foreign elements by recognizing a national venue in England, and

47 Herrick J. and Herrick J. “The life of Williams Jennings Bryan” spring-well(1925, reprinted 2005) Pg. 30.

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because at the same time the Admiralty court expanded a

jurisdiction over cases in which a foreign merchant was a party.48

7.04 However, the role of the traditional courts in the settlement of

business disputes was not entirely good to the commercial

community, who liked the idea of tribunals in which they also had

some share and impact and the predominant notion was that Lawyers

did not understand commercial problems as well as the notion that

the technical and time-consuming character of litigation did not

accord with their desire for speedy resolution of their disputes.

In effect, a solution was found in that charters and laws were

drafted which tended to incorporate the privilege for company

merchants to settle potential disputes between themselves.49 By

the eighteenth century arbitration was solidly entrenched as a

means of alternative dispute resolution within which judicial

intervention now extensively occurs because of the natural desire

of the courts to keep all adjudications within their sphere, or

the fear of the growth of a new system of law, but most

importantly due to the fact that litigants in arbitrations needed

the assistance of the courts who in turn exacted a price for the

assistance offered.50

48 Lord Parker of Waddington (1959) Pp. 5-12. REF: Noussia K. “Confidentiality inInternational Commercial Arbitration” Springer Verlag Berlin Heidelberg, 2010Chapter 2.

49 Lord Parker of Waddington (1959) Pp. 12. REF: Noussia K. “Confidentiality inInternational Commercial Arbitration” Springer Verlag Berlin Heidelberg, 2010Chapter 2.


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7.05 In the nineteenth century comes the final fruition in the growth

of satisfactory judicial and arbitral modes of resolving

commercial disputes. The zenith of the work of absorption and

growth which transmuted the practice of commerce into an effective

part of the ordinary law and brought the commercial arbitral

tribunal under the control of the ordinary courts, was the Common

Law Procedure Act 1854 which, for the first time, the courts were

given the power to stay proceedings whenever a person, having

agreed that a person’s dispute should be referred to arbitration,

nevertheless commenced an action in respect of the matters

referred. Secondly, statutory provisions as to the appointment of

arbitrators and umpires were formulated to solve difficulties

arising on default and, thirdly, the courts were given power to

remit an award back to the arbitrator, who was able to state a

question of law for the determination of the court.

7.06 Commercial arbitrations were made subject to a systematic code

of law by the Arbitration Act 1889 which amended and consolidated

all previous practices. Since 1900, the general position has been

that a commercial dispute can be speedily and efficiently

determined in the courts as well as by arbitration, depending on

its nature and what common practice in the particular sector

requires, and that the two systems ought indeed to be properly

regarded as coordinate rather than rival.51 The English

Arbitration Acts 1950, 1975, 1979 and 1996 all encapsulate the


21

need for party autonomy as opposed to the previous tradition of

judicial intervention. More specifically, the English Arbitration

Act 1979 was the first legislative instrument to abolish the long-

established case stated procedure, whereby the courts were free to

review an award if an error of law or fact appeared on the face of

the award, and in its place established a structure under which

errors of fact could not be the subject of an appeal and errors of

law could be appealed only under stringent conditions.

7.07 The Arbitration Act 1996 is a combination of consolidation and

reform of the legal principles enshrined in the previous

Arbitration Acts and the common law. It is the closest thing to a

definitive code of arbitration law which has ever been enacted in

England, although both the common law and decisions on earlier

legislation still remain significant, not least as a guide to the

interpretation of its provisions. It has managed to move English

law far closer to the United Nations Commission on International

Trade Law (UNCITRAL) Model Law than it was originally anticipated

to do.52

7.08 In America, already from the time of the American colonies,

arbitration among merchants was common, since it proved more

efficient and effective than the courts during that period. The

first US president George Washington himself also served as an

arbiter of private disputes before the Revolution.53 However, in

the late nineteenth and early twentieth century, arbitration

enjoyed a not particularly favourable position, as there was some52 Merkin (2000) Pp. 1-10.53 Folbergetal (2005) P. 454.

22

mistrust by the legal establishment on arbitration’s capacity to

produce fair results. Moreover it was feared that arbitration, if

it proved too successful, could jeopardise the livelihood of all

those who relied on the court system. Nowadays the scenery is

totally different and arbitration is embraced as a viable

alternative to litigating disputes. The tide of hostility towards

arbitration began to turn in America with the enactment of modern

state and federal arbitration acts and the creation of the

American Arbitration Association. 54

7.09 In 1920, New York reformed its arbitration law so as to enforce

agreements to arbitrate future disputes. The American Bar

Association in 1921 developed a draft of a Federal Arbitration Act

patterned on the then-existing New York law. The American Bar

Association draft was introduced in the United States Congress the

following year and, with minor revisions, became law in 1925.

During the same decade, the American Arbitration Association was

also instrumental in advancing arbitration, as it sought to

promote the arbitral process via the development of uniform rules

and it also secured qualified individuals to act as arbitrators.

However, there was still some negativity towards state level

arbitration which was eradicated by the late twentieth century via

the adoption of arbitration statutes in all 50 states, as well as

by broad federal court jurisdictional interpretations of

“interstate commerce” under the Federal Arbitration Act.55

54 Noussia K. “Confidentiality in International Commercial Arbitration” Springer Verlag Berlin Heidelberg, 2010 Chapter 2.55 Brunner and O’ connor Jnr. 3rd Edition (2002) Chapter 20, Para 20:2.

23

7.10 In France, arbitration had always played an important role.

Already from the sixteenth century, the Decree of the Moulins of

1566 made arbitration the sole and obligatory means of dispute

resolution for commercial disputes. Not least, there was in France

a notable mistrust of the capacity of the state’s courts to

resolve such disputes with the same effectiveness as arbitration.

This trend is reflected in article 1 of the Decree of August 1790

which stated that arbitration was to be considered the most

reasonable means of dispute resolution between citizens.56

7.11 In the nineteenth century, arbitration in France declined and

only really revived in the 1960s. The establishment of

institutions such as the Chambre de Commerce Internationale (CCI) was

important to the rebirth and development of arbitration in France.

In the modern era, the French law of arbitration is characterised

by the existence of both a domestic and an international

procedural system, with domestic arbitrations being regulated by

the Civil Code.57

7.12 In Germany, arbitration was early on practised and recognised as

an effective means of alternative dispute resolution. Prior to the

enactment of the German Arbitration Act 1998, the arbitration laws

were considered obsolete and anachronistic. The German Arbitration

Act 1998, which came into force on 1 January 1998, was therefore

adopted to better facilitate domestic and international

arbitration proceedings in Germany.58 It is codified in the German

Code of Civil Procedure (Zivilprozessordnung or ZPO) and applies56 Guyon (1995) Pp. 7-8.57 Devolve (1982) Pp. 12.

24

on all agreements to arbitrate concluded on or after 1 January

1998. The German Arbitration Act 1998 was modeled after the United

Nations Commission on International Trade Law (UNCITRAL) Model Law

on International Commercial Arbitration in order to create an

arbitration friendly jurisdiction that would be also attractive to

foreign practitioners. The rationale of the German legislation was

to favour the creation of a legal structure that would be familiar

to the arbitration community as an already accepted international

standard.59

8.00 International Laws promulgated as a result of growth in

Arbitration

8.01 By far, the most important international instrument on

arbitration law is the 1958 New York Convention on Recognition and

Enforcement of Foreign Arbitral Awards. Some other relevant

international instruments include:

The Geneva Protocol of 1923

The Geneva Convention of 1927

The European Convention of 1961

The Washington Convention of 1965 (governing settlement of

international investment disputes)

The UNCITRAL Model Law (providing a model for a national law

of arbitration)


59 Rutzel et al. (2005) pg. 110. REF: Noussia K. “Confidentiality in InternationalCommercial Arbitration” Springer Verlag Berlin Heidelberg, 2010 Chapter 2.

25

The UNCITRAL Arbitration Rules (providing a set of rules for

an ad hoc arbitration)

9.00 GROWTH AND DEVELOPMENT OF ARBITRATION IN NIGERIA

9.01 In Nigeria, the first statute on arbitration was the Arbitration

Ordinance of 1914. The ordinance came into force on the 31st day

of December 1914 after the amalgamation of the northern and

southern parts of Nigeria. The Law was based on the English

Arbitration Act of 1889 and was applicable to the whole country

which was then being governed as a unitary state. When Nigeria

became regionalized in 1954, the Federal ordinance became the

respective laws of the regions and appeared as Chapter 13 of the

1958 Revised Laws of Nigeria and Lagos. The Regions in Nigeria

formally adopted the Arbitration Ordinance of 1958 into their own

laws. For example, the Ordinance was in the western region enacted

as the Western Region Arbitration Law, Chapter 18, Laws of the

Western Region of Nigeria, 1959 and subsequently by Lagos State as

the Arbitration Law Chapter 10, Laws of Lagos State 1973.60

9.02 The above legal frame work for arbitration continued in force

until the 14th of March, 1988 when the Arbitration and

Conciliation Decree No. 11 of the 1988 (ACD) was enacted by the

Federal Military Government of Nigeria. There were three

significant features of the new regime of the Arbitration and

Conciliation Decree (ACD). These features are:

60 The recommendation paper of the “National Committee on the Reform and Harmonization ofArbitration and ADR Laws in Nigeria” 2005, headed by Hon (Dr.) Orojo O. Pg. 2-4.

26

The Arbitration and Conciliation Decree applied as a federal

enactment throughout the territory of the Federation and

superseded all State Arbitration Laws. This was possible

because the then Military Government operated a unitary

legislative government empowering the military government to

legislate on any subject for the entire country including

the States.

The Arbitration and Conciliation Decree included for the

first time the history of arbitration legislation in

Nigeria, provisions on the international commercial

arbitration, the overall framework of the Arbitration and

Conciliation Decree consisted of a mix of provisions which

existed for domestic arbitration under the previous

arbitration legislation and provisions which were applicable

to the international commercial arbitration, which was

inspires by the United Nations Commission on International

Trade Law (UNCITRAL) Model Law on International commercial

Arbitration and the New York Convention on the Recognition

and enforcement of Foreign Arbitration Awards of 1958

and

The Arbitration and Conciliation Decree contained

provisions on Conciliation, a form of Alternative Dispute

Resolution for which there had been abini tio no legislative

framework.61

61 The recommendation paper of the “National Committee on the Reform and Harmonization of Arbitration and ADR Laws in Nigeria “2005, headed by Hon (Dr.) Orojo O. Pg. 2-4.

27

9.03 Following the birth of a democratic regime on the 29th of May,

1999, a new democratic system was found in Nigeria which was

evidenced by the enactment of the Constitution of the Federal

Republic of Nigeria 1999. An important aspect of the new

constitutional arrangement was the distribution of legislative

powers to both the Federal and States Government. While the

Federal Government had exclusive competence to makes laws on

matters itemized in the Exclusive Legislative List, the State

Governments had legislative concurrent legislative competence in

respect of matters in the Concurrent List and exclusive

legislative competence in respect of matters that were not in the

Exclusive or Concurrent Lists. Although arbitration is not in the

Exclusive or Concurrent Lists, section 315 (1) of the 1999

Constitution preserves the validity of the ACD as an existing law

and further provided that ACD remains valid as a law enacted by

the Federal and State legislatures to the extent of their

respective legislative competence. 62

9.04 It is however important to note that Nigeria was the first

country in Africa to adopt the UNCITRAL Model Law on International

Commercial Arbitration Nigeria acceded to the United Nations

Convention on the Recognition and Enforcement of Foreign Arbitral

Awards (generally referred to as the New York Convention.) on the

17th day of March 1970. The Arbitration and Conciliation Act Cap

19 1990 Laws of Nigeria (hereinafter referred to as the Act) is

essentially based on the Model Law albeit with some modifications.62 The recommendation paper of the “National Committee on the Reform and Harmonization of

Arbitration and ADR Laws in Nigeria “ 2005, headed by Hon (Dr.) Orojo O. Pg. 2-4 28

It also reflects the domestication of Nigeria’s treaty obligation

under the New-York Convention.63

9.05 Nigeria having adopted the UNCITRAL Model Law and domesticated

the New York Convention, Nigeria could be regarded as having a

favorable legal framework governing the conduct of arbitral

proceedings and the enforcement of arbitral awards which had in

the past contributed to the growth and development of arbitration

in Nigeria.

9.1.0 GROWTH OF ARBITRATION: THE NEED FOR REFORM (THE CHIEF BAYO OJO REFORM)

9.1.1 In the quest for growth and formidable arbitration laws in

Nigeria, there have been reforms which had helped in the

development of arbitration system in Nigeria. One of the major

attempts to reform the arbitration law of Nigeria was the

inauguration of the “National Committee on the Reform and Harmonization

of Arbitration and ADR Laws in Nigeria” by the then Attorney General of

the Federation, Chief Bayo Ojo on the 23rd of September, 2005. The

committee which was a 15 man committee was headed by the late

Hon. (Dr.) J. O. Olakunle Orojo.

9.1.2 It was one of the findings of the Committee that the

Arbitration and Conciliation Act was passed into law on the 4th of

March, 1988 and sadly, Eighteen years after the Arbitration and

Conciliation Act was passed, the law had not achieved the

objectives that inspired its enactment.64 In a number of

63 Rhodes Vivour A. “Arbitration and ADR as Instrument of Economic Reform”2006, Pg. 9.64 The recommendation paper of the “National Committee on the Reform and Harmonization

of Arbitration and ADR Laws in Nigeria “ 2005, headed by Hon (Dr.) Orojo O. Pg. 2-4 29

significant respects, the standard for recognition and the

enforcement of international arbitration agreements and the

arbitral awards fall short of the standards prescribed by the

UNICITRAL Model Law. Further to the above, inelegantly drafted

provisions have created confusion and generated conflicting or

retrogressive judicial decisions. Obsolete concepts and

definitions have prevented the arbitral process from keeping pace

with contemporary trends in the international trade and commerce

sectors.65

9.1.3 Above all, experience has also shown that the ACA has failed to

achieve one of the underlying philosophies of the UNCITRAL Model

Law and most of national arbitration legislations. In Nigeria,

arbitration is often perceived as the first step to litigation

and the arbitral process often becomes entangled in the extremely

protracted and cumbersome process of Nigerian litigation. The

judicial process itself lacks the capacity to give efficient life

to the arbitral process; most Nigerian Judges did not encourage

settlement of dispute via arbitration. The factors highlighted

above inspired the Federal Attorney-General and the Minister of

Justice, Chief Bayo Ojo to inaugurate the Reform Committee.

9.1.4 The Lagos State Government followed suit in 2007. The recently

enacted laws are the result of the work of the Lagos State Reform

Committee, which Committee drew largely from the work of the

National Committee, which had proposed a Uniform States bill on

arbitration to be recommended to States for adoption. On the 18th

65 The recommendation paper of the “National Committee on the Reform and Harmonization ofArbitration and ADR Laws in Nigeria “ 2005, headed by Hon (Dr.) Orojo O. Pg. 2-4.

30

day of May, 2009, Lagos State one of the commercial nerve centre

of Arbitration, enacted two arbitration related laws. Law No.8

establishes the Lagos Court of Arbitration while Law No.10

provides for the resolution of disputes by arbitration in Lagos

State.66

10.00 PROGRESS MADE SO FAR TOWARDS THE DEVELOPMENT AND PRACTICE OFARBITRATION IN NIGERIA.

10.01 As earlier pointed out, the main arbitration law is the

Arbitration and Conciliation Act. It borrows heavily from the

UNCITRAL Model Law of International Commercial Arbitration which

was adopted by the United Nations General Assembly in 1985 and

the Arbitration Act of 1914 that it replaced. The awareness to

arbitrate or adopt any other ADR mechanism in the resolution of

disputes in Nigeria is waxing stronger and stronger on the

passage of each day. Most Agreements in commerce today have a

clause referring parties to arbitrate or mediate. 67

10.02 Similarly, parties can by consent agree to adopt arbitration

even if such a clause is lacking in an agreement. The healthy

development today in the realm of arbitration in Nigeria is the

sudden upsurge of arbitrating or arbitral bodies and ADR

centers. As of today, we have in existence among others, the

following Arbitration bodies in Nigeria:-

1.The Nigerian Branch of The Chartered Institute of

Arbitrators (UK);

66 Rhodes Vivour A. “Arbitration and ADR as Instrument of Economic Reform” 2006.67 Gadzama J.K. :Inception of ADR and Arbitration in Nigeria” a paperpresented at NBA conference Abuja (2004).

31

2. The Chartered Institute of Arbitrators (Nigeria);

3. The Institute of Dispute Resolution, Ekpan in Delta State;

4.Negotiation and Conflict Management Group (NCMG);

and

5.Abuja Arbitration Forum.68

10.03 It may not be out of place to commend the good works being done

by the NCMG which is more or less an NGO. It has so far

championed the establishment of the Lagos Multi-Door Courthouse,

the Abuja Multi-Door Courthouse and has the intention of

duplicating such Courthouses in all other States of the

Federation. Of recent the NCMG was able to let us have a first

hand Mediation course in both Lagos and Abuja by some Faculties

from the Centre for Effective Dispute Resolution (CEDR) in

London. The attendance at this International Course on

arbitration and mediation was very rich. Members of the Bar and

Bench are encouraged to give them a helping hand to embrace the

scheme in the overall interest of the justice delivery system in

Nigeria.

10.04 In addition to these Court connected arbitration and ADR centers,

there is also the Lagos Regional Centre for International

Commercial Arbitration at No. 1 Alfred Rewane Road, Falomo, Ikoyi

Lagos. This center has been there since 1989 and it caters for the

whole of the West African Sub-region. The centre was established

68 Gadzama J.K. :Inception of ADR and Arbitration in Nigeria” a paper presentedat NBA conference Abuja (2004).

32

under the Lagos Regional Centre for International Commercial

Arbitration Act of 1999. It is to the advantage of parties that

deal in trade, commerce and investment within the region covered

by the said centre. Parties need not resort to arbitration outside

the region if the investment was made there or the place of

performance is within the region. The rules of the centre were

fashioned after the UNCITRAL Arbitration and Conciliation Rules

and the centre also assists in the enforcement of Awards and other

matters incidental or pursuant to

same

.69

10.05 There are also a number of other bodies that participate in

encouraging the activities of Arbitration and ADR in Nigeria.

They include our Bar Association, the various branches of

chambers of Commerce, Industries, Labour unions, Mines and

Agriculture, The Nigerian branch of International Chambers of

Commerce etc. At the Nigerian Law School, arbitration and ADR at

large is now taught and in some Universities, Arbitration is

taught.

11.00 The Growth of Institutional Arbitration

11.01 Although, institutional arbitration was slow to take root in the

common law world there have been some instances of long standing,

of which the Liverpool Cotton Association is one of the oldest.69 Gadzama J.K. :Inception of ADR and Arbitration in Nigeria” a paper presented at NBA conference Abuja (2004).

33

More recently there has been a rapid increase in the number of

centres offering facilities and encouragement for commercial

arbitrations. These bodies differ widely in the extent of their

participation in the actual proceedings on the individual case,

and also in the reasons why they were called into existence.70

11.02 Thus, we have at one end of the spectrum the trade body which

simply offers the parties a means of calling into existence an

arbitration at the place stipulated in the contract, with

assistance in the constitution or completion of a tribunal, but

leaving it to the arbitrators to conduct the reference in

whatever way they may think appropriate, in the light of the

wishes expressed by the parties and the demands of the local law.

These are essentially ad hoc arbitrations, under the general

auspices of the association. At the other extreme are the

institutions which engage themselves at every stage of the

reference: with the nominating of chairmen or members of the

tribunal; deciding upon the venue; directing the venue; laying

down the procedures; fixing and collecting the fees; providing

accommodation and facilities; and even scrutinising the award for

mistakes. All these at a substantial charge. Here, both the

parties and the arbitrators yield some of their autonomy to the

institution, which also takes upon itself some of the functions

which, under systems such as the English and Nigerian systems,

would be performed by the court. 71

70 Mustill “Arbitration: History and Background” (1989) 6 Journal of International Arbitration at Pg. 6.71 Mustill “Arbitration: History and Background” (1989) 6 Journal of International Arbitration at Pg. 6-7.

34

11.03 Between these extremes there are many different structures for

institutional arbitration. It is pointless to argue about which

is the best. Some practitioners are accustomed to one system,

others to another. Some types are suitable for one kind of

dispute, but less so for a different kind. What is important is

not so much the mesh of the individual mechanism, but rather that

the businessmen should have at their disposal a repertory of

bodies from which they can choose the one which can decide their

disputes in the way in which they will feel most comfortable. The

following may be identified as the reasons for the remarkable

proliferation arbitral institutions in recent times. They are not

mutually exclusive.

1. Many trade associations publish standard forms of contract.

These often contain arbitration clauses stipulating for

arbitration under the rules of the association. Here, the

provisions for arbitration form part of the structure within

which it is contemplated that business in that trade will be

conducted. The orderly resolution of disputes by that

mechanism will benefit the trade, because it keeps the

dispute within the trade, and will benefit the parties

because they can be confident that the selected arbitrators

will know the practicalities of the trade and will be in

tune with the common understanding of what the standard

forms imply.

35

2. Some groupings of arbitrators have been formed with the

object of providing an orderly structure for what are

essentially ad hoc arbitrations. These groupings have

accredited members, books of rules, and so on, and they are

confined to a particular trade. But they are not adjuncts of

a trade association, and do not aim to furnish an inclusive

service. To a greater or lesser degree, the parties and the

arbitrators are allowed to get on with the arbitration as

they think best. Nor is it the object of these groupings, of

which the maritime arbitration associations in America and

London are the examples which come most readily to mind, to

promote or attract arbitrations. The arbitrations are

already there, and the motive is to ensure that they are

more effectively carried through.

3. Some bodies are motivated by the twin assumptions that what

is good for international trade is good for the world as a

whole, and that what is good for arbitration is good for

international trade. The ambitions of these bodies may be

worldwide, or they may simply spring up because it is

recognised that there is in a particular part of the world

an arbitration gap the filling of which will be in the

general interests of those trading. Ultimately, the motive

is disinterested, even if the conduct of the arbitration

business may involve a substantial incidental profit.

4. Other associations have more local interests in view. A

trading nation may wish to be seen to offer what on a

36

national scale might be called an inclusive service to those

with whom it has trade relations. This service may include a

dispute resolution system which is visibly independent of

the local courts, and which provides a mechanism for having

disputes decided locally according to internationally

accepted norms, and with the kind of facilities which have

by now come to be expected. Such a system not only has

macro-economic advantages, but it also brings tangible

monetary gains, since arbitration is now big business, and

may be a substantial invisible export for the home forum-a

factor which the promoters of the English Arbitration Act,

1979 did not shrink from making explicit. 72

12.00 ARBITRATION AS AN ALTERNATIVE TO LITIGATION

12.01 In this aspect of my paper, I shall consider and discuss the

advantages of Arbitration over that of litigation. These

advantages of arbitration are the deficiencies of litigation that

created the need for arbitration. The following (amongst others)

are the advantages of arbitration over litigation:

a. Avoids hostility. Because the parties in an arbitration

are usually encouraged to participate fully and sometimes even

to help structure the resolution, they are often more likely to

work together peaceably rather than escalate their hostility

toward one another, as is often the case in litigation. Often,

the arbitration process is less adversarial than litigation

which helps to maintain business relationships between the72 Mustill “Arbitration: History and Background” (1989) 6 Journal of International Arbitration at Pg. 7.

37

parties. Arbitration is conciliatory in nature unlike

litigation, which has the connotation of a battle between the

litigants.73

b. Usually cheaper than litigation. Arbitration is becoming

more costly as more entrenched and more experienced lawyers

take up the cause. It is not unusual, for example, for a well-

known arbitrator to charge N500, 000. 00 (Five Hundred Thousand

Naira) per day for his or her services. And most parties in

arbitrations will also hire Lawyers to help them through the

process, adding to their costs. Still on the long run,

resolving a case through arbitration is usually far less costly

than proceeding through litigation because the process is

quicker and generally less complicated than a court

proceeding.74

c. Faster than litigation. According to a recent study by the

Federal Mediation and Conciliation Services in the United

States, the average time from filing an arbitration process to

the time of the decision of the tribunal is about 475 days in

an arbitrated case, while a similar case took from 18 months to

three years to wend its way through the courts.75

d. Flexible. Unlike litigation, which must be worked into

overcrowded court calendars and no choice of dates, arbitration

hearings can usually be scheduled around the needs and

73 Barbara K. “Pros and Cons of Arbitration” Online: http://www.nolo.com/law-authors/barbara-repa.html74 Barbara K. “Pros and Cons of Arbitration” Online: http://www.nolo.com/law-authors/barbara-repa.html75 Mazirow A. “The Advantages and Disadvantages of Arbitration as Compared toLitigation” (2008). www.Mazirow.com

38

availabilities of those involved, including weekends and

evenings. Arbitration takes care of the convenience of the

parties and their witnesses in fixing the date, time and place

of hearing.76

e. Simplified rules of evidence and procedure. The often

convoluted rules of evidence and procedure in litigation do not

apply in arbitration proceedings making arbitration less

stilted and more easily adapted to the needs of those involved.

Importantly, arbitration dispenses with the procedure called

discovery that involves taking and answering interrogatories,

depositions, and requests to produce documents often seen as a

delaying and game-playing tactic of litigation. In

arbitrations, most matters, such as who will be called as a

witness and what documents must be produced, are handled with a

simple phone call.

f. Private and confidential. Arbitration proceedings are

generally held in private. And parties sometimes agree to keep

the proceedings and terms of the final resolution confidential.

Both of these safeguards can be a boon if the subject matter of

the dispute might cause some embarrassment or reveal private

information, such as a company's client list.77

g. Use of Experts: Unlike litigation, arbitration allows for

the selection of experts to look into disputes on matters in

which they are proficient. In litigation, a trial Judge who has

76 Barbara K. “Pros and Cons of Arbitration” Online: http://www.nolo.com/law-authors/barbara-repa.html77 Barbara K. “Pros and Cons of Arbitration” Online: http://www.nolo.com/law-authors/barbara-repa.html

39

no prior knowledge of law of insurance or maritime law may seat

on insurance and maritime cases thereby affecting quality of

judgments delivered at the end of the entire suit.

h. Enforceability: Because of the provisions of the New York

Convention 1958 and UNCITRAL Model Law which have been

domesticated, arbitration awards are generally easier to

enforce in other nations unlike the execution of court

judgments obtain in litigation against an international

organization which is cumbersome.

i. Finality of Award: In most legal systems, there are very

limited avenues for appeal of an arbitral award. The finality

of the arbitration award and the fact that normally there is no

right of appeal to the courts to change the award is an

advantage of arbitration over litigation. 78

13.00 DISADVANTAGES OF ARBITRATION

13.00 From the foregoing, one would reasonably come to a safe

conclusion that arbitration is by far a good alternative to

litigation and as such both private and public sectors should

encourage the use of arbitration over litigation. But as beautiful

as the concept and practice of arbitration my sound, one must also

bear in mind the lacunas in the practice of arbitration not only

in Nigeria but the world at large which still gives litigation a

edge over arbitration. These lacunas include:

a. Limited recourse to appeal: A final decision is hard to

shake. If the arbitrator's award is unfair or illogical or78 Mazirow A. “The Advantages and Disadvantages of Arbitration as Compared toLitigation” (2008). www.Mazirow.com

40

makes a mistake, a party may well be stuck with it and barred

forever from airing the underlying claim in court.

b. Lack of transparency. As mentioned, the fact that arbitration

hearings are generally held in private rather than in an open

courtroom, and decisions are usually not publicly accessible,

is considered a benefit by some people in some situations.

Others, however, lament that this lack of transparency makes

the process more likely to be tainted or biased, which is

especially troublesome because arbitration decisions are so

infrequently reviewed by the courts.79 Unlike litigation, a

bias or bad decision is not subject to public outcry.

c. Rising costs and time: The arbitration process may not be

fast and it may sometimes be expensive, particularly where

there is a panel of arbitrators and the subject matter of

proceeding is complex.80 While most still claim that

arbitration is less costly than litigation, its costs are

increasing on daily basis depending on the complexity of the

subject matter of arbitration. According to a recent survey

by Public Citizen, a consumer watchdog group in United

States, the cost of initiating arbitration is significantly

higher than the cost of filing a lawsuit: $6,650 to $11,625

to initiate a claim to arbitrate a party’s claim worth

$80,000 versus $221 to file that action in a particular

county court. Add to that, the arbitrator's fees --

79 Barbara K. “Pros and Cons of Arbitration” Online: http://www.nolo.com/law-authors/barbara-repa.html.80 Mazirow A. “The Advantages and Disadvantages of Arbitration as Compared to

Litigation” (2008). www.Mazirow.com41

multiplied by three if a panel is involved -- in addition to

administrative costs, and the process appears to be less of a

bargain.

d. No recovery of Attorney’s fees: Unlike litigation, in some

arbitration agreements and systems, the recovery of

attorneys' fees is unavailable, making it difficult or

impossible for consumers or employees to get legal

representation however most arbitration codes and agreements

provide for the same relief that could be granted in court.

e. Interlocutory applications: Arbitrators are generally unable

to enforce interlocutory measures against a party, making it

easier for a party to take steps to avoid enforcement of

interlocutory order.

f. Limited in scope: The scope of arbitration is only limited to

some civil cases unlike litigation which has jurisdiction

over both civil and criminal matters. Arbitration cannot be

used to resolve serious offences, violation of human rights,

discrimination etc.

RECOMMENDATION AND CONCLUSION

JUDGES SHOULD BE ADVICED TO ENCOURAGE ARBITRATION: In spite of

the continual training of Judges on the role of arbitration in

dispute resolution, some Judges are still hesitant in referring

matters to arbitration as a result of their fear that

arbitration may gradually usurp their roles and the powers of

the Courts. This ingrained culture of litigation is a major

problem to the growth of arbitration in Nigeria.

42

AWEARNESS OF THE PRACTICE OF ARBITRATION: Apart from elites in

the society, an average Nigerian is only aware of remedies and

recourse available to him through litigation. He is either mis-

informed of the concept of arbitration or totally ignorant of

the practice of arbitration which may at the end achieve even a

better result compare to litigation. In efforts to enlighten

the society on the practice of arbitration, symposia,

conferences, seminars, courses and workshops on arbitration

should be held to enhance the knowledge of Nigerians in

arbitration.

CREATION OF LAWS TO ENCOURAGE A CONDUCIVE ATMOSPHERE FOR THE

PRACTICE OF ARBITRATION: For any principle or practice to

flourish in any society, there must be conducive atmosphere for

such principle or concept to flourish and in achieving this;

the concept must be backed up by the law of the land.

Government must appreciate the need to effect necessary reform

and bring our arbitration and ADR laws in conformity with

international developments because for arbitration to flourish

in Nigeria and to meet up with international standards, there

must be periodic update of our laws to suit arbitration in

Nigeria.

TECHNICALITIES SHOULD BE DISCOURAGED: One of the major

disadvantages of litigation is that it gives room for

technicalities which at the long run leads to delay in justice.

Lawyers must by all means avoid importing legal technicalities

associated with litigation into the process and practice of

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arbitration to avoid adverse impact on the investment climate

of our country.

GOVERNMENT SHOULD ENCOURAGE REFORMS: One of the major problems

affecting the practice of arbitration in Nigeria is the lack of

period reforms of the arbitration laws which lead to the slow

pace of the practice of arbitration in Nigeria. Governments at

all levels must encourage reforms of arbitration for the

benefit of not only the justice system of the country but also

for the economic sector of the country. Reforms are very

important in any setting.81 The effects and benefits of reforms

in Arbitration in Nigeria shall amongst others include:

a. Confidence in the Nigeria’s arbitration laws and

institutions and stem capital flight arising from the

fact that business managers prefer to arbitrate

commercial transactions;

b. Reforms will promote the reputation of Nigeria’s

arbitration laws and institutions. It will position

Nigeria as a hub for the arbitral resolution of

commercial disputes in and beyond the West Africa region.

c. Reform in arbitration will enable Nigeria to take

advantage of its position in ECOWAS and its affiliations

with the Asain-African Legal Consultative Organisation to

position itself for more international arbitration work.

81 The recommendation paper of the “National Committee on the Reform and Harmonization of Arbitration and ADR Laws in Nigeria “ 2005, headed by Hon (Dr.) Orojo O. Pg. 2-4

44

d. Reforms in arbitration will complement government’s

efforts to re-energize the Nigerian economy and attract

foreign investment.

e. Arbitration is an integral part of any justice system.

Reforms in arbitration will have a positive effect on the

justice delivery system because as more business managers

have confidence in the arbitration process in Nigeria,

fewer disputes will be litigated and on the long run,

there will be an overall reduction in caseload.82

Finally, from the foregoing, it is more beneficial for parties to

resolve their civil disputes by negotiated agreement rather than

through contentious court proceedings. I am one of the legal

practitioners who share the belief that parties using abritration

processes tend to arrive at settlements that are more creative,

satisfactory and longer lasting than those imposed by the Court.

However, arbitration can be used simply to establish a deal that

eludes the parties in bilateral negotiations, either personally or

through their lawyers. Accordingly, all hands must be on deck to

continue to encourage the growth and further awareness of

Arbitration and other forms of ADR. This is because of the

numerous advantages, most of which have been outlined in this

paper.

82 The recommendation paper of the “National Committee on the Reform and Harmonization of Arbitration and ADR Laws in Nigeria “ 2005, headed by Hon (Dr.) Orojo O. Pg. 2-4

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ADR SEMINAR PAPER.

Documents

Transcript of ADR SEMINAR PAPER.