Arbitration Regulatory Framework and the Role of Government
Excerpts of the Keynote Address delivered by Senator Michael Opeyemi Bamidele, Chairman, Senate Committee on Judiciary, Human Rights and Legal Matters, at the Nigerian Institute of Chartered Arbitrators 2019 Annual Conference, in commemoration of its 40th Anniversary
Arbitration, is an alternative means of resolving disputes. It comes under one of the classes of alternative dispute resolution (ADR) mechanisms, such as Conciliation, Mediation etc. In Nigeria, Section 57 (1) of the Arbitration and Conciliation Act, provides that: “Arbitration means a commercial arbitration whether or not administered by a permanent arbitral institution”; the Act made emphasis on the commercial nature of arbitration, and further defined the term as follows: “commercial means all relationship of a commercial nature, including any trade transaction for the supply or exchange of goods or services, distribution agreement, commercial representation or agency, factoring, leasing, construction works, consulting, engineering, licensing, investment, financing, banking, insurance, exploitation agreement or concession, joint venture and other forms of industrial or business co-operation, carriage of goods or passengers by air, sea, rail, or road”.
Though, the aforementioned legislation attempted to do a list of commercial and trade transactions, they can never be exhaustive without the inclusion or introduction of a general term, to cover the field, and to duly capture the intentions of the Legislature. These are also part of the roles of the Government, in creating an enabling environment, which as much as possible, would prevent approach to the regular courts. There are also several judicial interpretations of Arbitration, and I make reference to the Supreme Court decision in NNPC v Lutin
Invest. Ltd, where Hon. Justice Ogbuagu, JSC, defined Arbitration in the following manner: “... an arbitration is the reference of a dispute 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 jurisdiction to decide only what has been submitted to him by the parties for determination...”.
Regulatory Framework
First and foremost, as a thriving society, we need laws to regulate the conduct of our affairs. Therefore, there is no gainsaying the fact that, the need for regulatory frameworks in arbitration cannot be overstated, and the groundswell of a variety opinions lend credence to this fact. Thus, Arbitration is conducted based on existing laws, conventions and Rules, which regulate the Arbitral Tribunal’s existence/appointment, composition, proceedings, award and enforcement of same. Obviously, there cannot be conduct of arbitration, without the regulatory framework upon which the Tribunal or Institute can exercise jurisdiction or powers to act. This is similar to the establishment of the regular courts by laws, and the conduct of its proceedings by Rules established pursuant to powers given to the various heads of the Court by Law or the Constitution. Reference is made to Sections 230 to 284 of the Constitution of the Federal Republic of Nigeria 1999 (as amended). When we talk about Arbitration, we must basically make reference to three main regulatory frameworks to wit: UNCITRAL Model Law on International Commercial Arbitration of 1985 (amended in 2006), UNCITRAL Arbitration Rules of 1976 (revised in 2010), and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958. It is important to note that, there are other Arbitration conventions like the Geneva Conventions 1923 and 1927, Washington Convention on Settlement of Investment Disputes between States and Nationals of other States of 1965, European Convention on International Commercial Arbitration 1961, the Convention on Settlement by Arbitration of Civil Law Disputes resulting from economic scientific and technical cooperation of 1972, the Moscow Convention of 1972, the Ohada Treaty of 1993, amongst others.
Suffice to also state that, various States enact national laws, which regulate conduct of arbitral proceedings, but in West Africa, Nigeria is the only country taking the leading role with the enactment of the Arbitration and Conciliation Act, which is modelled according to the UNCITRAL Model Law, Lagos State Arbitration Law 2009, Lagos Court of Arbitration Law 2009, establishment of various institutions, such as the Lagos Court of Arbitration (LCA), Lagos Multi-Door Court House, etc; you would now agree with me when I said in the beginning of this address, that Lagos is considered first. It is important to state that, reports have shown that Ghana has also established the Alternative Dispute Resolution Act 2010, and the Ghana Arbitration Centre.
Role of Government
The role of the Government is essential, in the strengthening of the arbitral legal frameworks. It has earlier been mentioned that Arbitration is anchored on the law, notwithstanding the role played by parties in the appointment and conduct of the arbitral proceedings. One of the essences of governance, is to ensure peaceful co- existence amongst individuals. While arbitration is fast growing in the private sector, it is pertinent to encourage Government support. In this connection, it is inherent on the Government to participate as a stakeholder in the development of the process, by enacting necessary laws, which would go a long way in reducing the hardship and challenges facing Arbitration. Even though, law making is the exclusive preserve of the Legislature, the process of enacting laws, as adopted by the 9th Senate in its Legislative Agenda, has made it open and an all-inclusive affair. In this regard, we would enjoin you to participate in all the law making processes, to enable us pass laws that will stand the test of time, and are in line with best practices.
According to African Legal Solutions publication of 17th April, 2019, there are not less than 72 Arbitration Institutions in Africa, though mostly private. This is a wakeup call for the Government to get more involved in
Arbitration, to enable it achieve the desired legal framework, and to gradually reduce the need to approach the regular courts for one reason or the other. And in some instances, cases stay in court for many years only to achieve a particular purpose, for instance, an application for grant of stay of proceedings and to refer parties to arbitration (Section 4 (1) and (2)) of the Arbitration and Conciliation Act; appointment of Arbitrators where the parties are unable to do so (Section 7 of the Act); during the conduct of the proceedings (Section 23 of the Act) and the recognition and enforcement of awards, (Sections 31, 32, 51, 52, 29 (2), 30 and 48 of the Act).
It is reported that in Egypt, there is a Government supported arbitral institution known as, the Cairo Regional Centre for International Commercial Arbitration (CRCICA). Upon its establishment, it was made independent, and given all privileges to ensure its smooth running. It is therefore, necessary for the Government to make efforts to support arbitration, as this will, in the long run, assist in the de-clogging of the dockets of the regular courts, thereby also giving the public a sense of confidence in the Arbitral process. It is recommended for the judiciary, to accord a sense of dispatch to all arbitral related matters, in order not to defeat the essence of opting for Arbitration.
The Government can be more supportive, by providing necessary facilities for Arbitral Proceedings in the same manner facilities are provided for the Courts in Nigeria, but with some minimal cost, payable to Government, for the management and running of the facility. In the end, this would reduce the cost of Arbitration, which requires the parties to also pay cost for the venue other than the Arbitrators fees for the conduct of the proceedings. Though, I am not unmindful of the fact that Arbitration is privately driven and its proceedings, confidential.
It is a common saying that, the cost of getting justice through regular courts is quite expensive, and one of the advantages of arbitration to litigation is reduced cost, but it would be a misgiving if at the end of the day, parties are made to part with so much cost as fees in Arbitration. Therefore, the Government would in turn have reduced the work load on our Judges, when the enabling environment is created for Arbitration.
There is also the need for proper sensitisation of the public, as to the advantages of Arbitration as a means of resolving disputes. If we are to carry out statistics of public awareness, we may be shocked to know that 70% of the public who are into commercial transactions, know little or nothing about Arbitration. This, certainly does not augur well. for the desire to tilt towards arbitration.
I would commend Lagos State Government again, for its leading role and being at the forefront in fostering the growth of Arbitration. The enactment of the Lagos Court of Arbitration Law No. 8 of 2009 led to the building of the Lagos Court of Arbitration (LCA), and this has enhanced Arbitration in the State. Because of these commendable feats, hearings and other activities are now conducted in the various hearing rooms of the LCA, as against the norm of using hotels and private offices for arbitral proceedings. This has given Arbitration a face in the State which is worthy of emulation, and we shall encourage such growth in other States across the country, and indeed, the West African sub-region.
While it is a welcome development for the Government to support the growth of Arbitration, it is also a known concern that Arbitral Institutions are wary about interference of the Government one way or the other, especially, when the Government is a party to an Arbitral proceeding. In my view, this concern should be secondary, while we achieve the primary purpose of developing Arbitration in West Africa, and ensuring its acceptability to the larger society. I believe this is where we are heading to, in the nearest future. Therefore, we, in the legislative arm of the Government, will continue to strive to see to it that we have an Arbitration friendly environment, and to ultimately make west Africa, an Arbitration Hub.
In this vein, inclusion of Arbitration clauses in contracts signed on behalf of the Government and the submission to Arbitration, would play a key role in giving Arbitration a sense of belonging in the scheme of things. It is however, advised that where the Government is a party to Arbitration Agreement, it should choose Africa as the seat of the Arbitration and Africans as Arbitrators, rather than an inclination or preference for Europe.
Recently, the Nigerian Government had tried to negotiate the Final Award against the Federal Republic of Nigeria and the Ministry of Petroleum Resources issued in London, England on the 31st of January, 2017 between P & ID v FRN & Anor, wherein the Claimant approached the United States District Court to enforce the award. In the contract entered between the parties, the venue of the Arbitration was London, England or as otherwise agreed by the parties. It was very easy for the Claimant to approach the District Court in the United States, relying inter alia on the New York Convention for its recognition and enforcement. Due to the English Court’s supervi
“......IN WEST AFRICA, NIGERIA IS THE ONLY COUNTRY TAKING THE LEADING ROLE WITH THE ENACTMENT OF THE ARBITRATION AND CONCILIATION ACT, WHICH IS MODELLED ACCORDING TO THE UNCITRAL MODEL LAW, LAGOS STATE ARBITRATION LAW 2009, LAGOS COURT OF ARBITRATION LAW 2009, ESTABLISHMENT OF VARIOUS INSTITUTIONS, SUCH AS THE LAGOS COURT OF ARBITRATION (LCA), LAGOS MULTI-DOOR COURT HOUSE”
sory jurisdiction over the UK seated arbitration by virtue of the United Kingdom’s Arbitration Act 1996, Nigeria had to file the application to set aside the liability award in the UK, and which application was refused. Other attempts to get the Federal High Court in Nigeria to set aside the liability award by contending that the seat was Nigeria, though granted by the Court in Nigeria, was overruled by the Tribunal, in London. These issues would have been better handled, if we encourage African participation, and pay less attention to the European patronage.
Is Regulation the Way Forward?
Ladies and Gentlemen, the answer is YES, Regulation is the way forward. I say this without equivocation that man’s continued co-existence in life is regulated by law, therefore, Arbitration without regulations would lead to stagnation, and hinder the needed impetus that would propel development in the sector. There is the need for contemporary Arbitration laws, which would meet the current needs of the African society and our foreign counterparts. The erstwhile proposed repeal to the Arbitration and Conciliation Act CAP A18 LFN 2004 Bill 2017, was passed at the Senate and transmitted to the House of Representatives for concurrence, but, unfortunately, legislative action was not concluded before the dissolution of the 8th Assembly, whereby it lapsed and therefore, by the rules of the Senate, it has to be re-presented again in the 9th Assembly for consideration. However, that should not deter efforts to achieve the proposed repeal to the Act, as the comprehensive repeal Bill had a lot of good provisions, that would address some of the seeming challenges in arbitral proceedings.
It is important to note that, the present Act was based on the 1985 UNCITRAL Model Law and the 1976 Arbitration Rules, whereas there is in existence, the 2006 UNCITRAL Model Law and the 2010 UNCITRAL Arbitration Rules which is most recent. We commend Lagos State for already styling its Arbitration law, according to the 2006 UNCITRAL Model law.
The situation is not different with some other West African Countries, for instance, in Benin, Burkina Faso, Cameroon, Chad, Guinea, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo where the applicable legislation is the Ohada Uniform Act on Arbitration of 11th March, 1999, though they have adopted the New York Convention, but there are no domestic legislations styled according to the UNCITRAL Model law. For the likes of Cape Verde, there is the Arbitration Law No. 76/VI/2005, of 16th August, 2005, Gambia enacted the 005 Alternative Dispute Resolution Act Chapter 6.08 Laws of Gambia Volume 2, Ghana enacted the Alternative Dispute Resolution Act, 2010 ACT 798, Liberia enacted the Liberia Commercial Code Title 7 Ch 7 (2010), Sao Tome and Principe enacted Arbitration Law No. 9/2006 of 6 November 2006, and Sierra Leone enacted Arbitration Act, Chapter 25 of the Laws of Sierra Leone 1960 (CAP 25). It is important to note that, the aforementioned West African States failed to subscribe to the UNCITRAL Model law save for Cameroon and Ghana, with partial recognition of same. However, it is commendable to note that, Nigeria has adopted both the Model Law and is also a party to the New York Convention.
As Africans, the way forward is the enactment of contemporary legislative frameworks of international standards, in order to bring in investors and boost confidence in the system. By building and establishing institutions, such as the London Court of International Arbitration (LCIA), International Chamber of Commerce (ICC), International Centre for Dispute Resolution (ICDR), and the London Maritime Arbitrators Association etc. It is not enough to chant the need for Africans to resolve their disputes within the African shores and also to patronise African Arbitrators, without taking proactive steps in championing the desired amendments to existing legislation, in order to develop the Arbitral Institutions in the West Africa region. We are all stakeholders, and we must collectively bring growth in this evolving area of alternative dispute resolution.