Setting Aside an Arbitral Award on Grounds of Misconduct

SIntroduction etting aside an arbitral award constitutes one of the remedies that may inure to an aggrieved party in challenging an award of arbitral proceedings.

The general rule is that when parties choose to submit to Arbitration in case of a dispute and agree on an Arbitrator to be the judge in the dispute they cannot when the award is not favourable on its face, object to the decision of the Arbitrator either upon law or the facts. See HODGKINSON v FERNIE 3 CB (NS) 189, 202, 140, ER 712 717.

An application to set aside an arbitral award is an invitation to the court to render the whole arbitration proceedings null and void. The general principle is that an Arbitral award is final and binding. This is covered under S. 31 of the Arbitration and Conciliation Act 1988. The rationale is obvious for two reasons, first, the parties have chosen their own judges which they trust to judge fairly and justly and, secondly, the Arbitrators will conduct the Arbitration with fairness and regularity as the parties expect. See REVENUE MOBILISATION, ALLOCATION & FISCAL COMMISSION v UNITS ENVIRONMENTAL SCIENCES LTD (2010) LPELR-CA/A/213/09

The court’s jurisdiction to interfere with the award of an arbitrator is generally circumscribed to setting aside the award of an arbitrator or remitting the matter to arbitration for reconsideration. The court has no power to determine any matter, which is a subject of an arbitration proceeding. See ARBICO (NIG.) LTD v NMT LTD (2002) 15 NWLR (pt.989) 1.

It is pertinent to observe that although, the grounds for setting aside an arbitral award are quite similar to its remission, the two concepts although akin in substance have distinct connotations. The object of remission is to return the award published to the arbitrator for an error to be corrected, as for further information and a rightful decision to be given by the arbitrator. It follows therefore, that in a situation where the Court thinks that remission will meet the justice of the case, the former proceedings in the reference will continue to be valid and the case is not started all over. See Aderemi JCA (as he then was) in BAKER MARINE (NIG) LTD v CHEVRON (NIG) LTD (2000) 12 NWLR (Pt. 681) page 393 at 404.

By section 29 (1) (a) of Arbitration and Conciliation Act, Cap. 19, Laws of the Federation of Nigeria 1990, “the Act”, a party who is aggrieved by an arbitral award may, within three months from the date of the award, file an application for setting aside and request the court to set aside the award. See B.C.C. Ltd v IMANI & SONS LTD & SHELL TRUSTEES LTD (2007) ALL FWLR (Pt. 348) 806 at 818 Paras. F – G.

Grounds for Setting Aside an Arbitral Award:

The Court may set aside an arbitral award, if the party making the application furnishes proof that the award is tainted with any of the grounds as circumscribed in Section 30 of the Act.

Section 30(1) of the "Act" stipulates two grounds for setting aside an Award. First is where there is Misconduct of the Arbitrator and secondly, an improperly procured arbitral proceedings or award. See REVENUE MOBILISATION, ALLOCATION & FISCAL COMMISSION v UNITS ENVIRONMENTAL SCIENCES LTD (supra).

Put simply, Section 30 of the Arbitration Act specifically states the 2 instances in which arbitral award may be set aside as follows:

(1) Where an arbitrator has misconducted himself, or

(2) Where the arbitral proceedings, or award, has been improperly procured.

For the purposes of this paper, only the grounds for setting aside of arbitral award on grounds of misconduct of an arbitrator will be considered.

Misconduct of an Arbitrator The Act did not define the word “Misconduct”. However, our Courts are not bereft of guidance. Section 48 of the Act sets out circumstances when to set aside an award on grounds of misconduct. These examples are not conclusive as one may have recourse to the common law or case law to determine acts not within the purview of Section 48 to ascertain what constitutes misconduct.

In TAYLOR WOODROW NIG LTD v S. E GMBH 1993 4 NWLR pt 285 SC 127 Ogundare, JSC set out what constitutes Misconduct as captioned in paragraph 622 of Halsbury’s laws of England 4th Edn Vol. 2 at pgs 330. In general, what is misconduct is a question of fact in each case. Some of the acts of the Arbitrator, which the Courts have held amounted to “misconduct”, have been enacted as law under S. 48 (a) of the Act as follows:

(i) that a party to the arbitration agreement was under some Incapacity; or

(ii) 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 laws of Nigeria; or

(iii) 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

(iv) that the award deals with a dispute not contemplated by or not falling within the terms of the submission to Arbitration: or

(v) that the award contains decisions on matters which are beyond the scope of the submission to arbitration, so however that if the decisions on matters submitted to - arbitration can be separated from those not submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside. See TOTAL ENGINEERING SERVICES TEAM INC. v CHEVRON NIGERIA LTD. (2010) LPELRCA/L/222/2006; or

(vi) that the composition of the arbitral tribunal, or the arbitral procedure, was not in accordance with the agreement of the parties unless such agreement was in conflict with a provision of this Decree from which the parties cannot derogate; or

(vii) where there is no agreement between the parties under subparagraph (vi) of this paragraph, that composition of the arbitral tribunal or the arbitral procedure was not in accordance with this Decree; or

(viii) Where there is an error of law on the face of an Arbitral award it may amount to Misconduct. In effect, where there is an error of law which appears on the face of the award on a point not specifically referred to the Arbitrator for decision then this is a Misconduct See: TAYLOR WOODROW (NIG) LTD v GMBH supra where the supreme court set out the two types of cases of errors on the face of the award that have been recognised in judicial authorities as follows:

(a) Where a specific question of law is submitted to the arbitrator, the Court cannot interfere; and

(b) Where a matter or matters in which a question of law becomes material are submitted, the Court will, interfere, if an error of law appears on the face of the award.

Conclusion The aforementioned instances have been listed for setting aside an award based on the misconduct of an arbitrator, but cannot be said to be exhaustive. Our learned jurists at the appellate courts have stated clearly that each case should be treated based on its peculiar facts and circumstances to determine whether or not an arbitrator has misconducted himself. See further the case of KANO STATE URBAN DEVELOPMENT BOARD v FANZ CONSTRUCTION COMPANY LIMITED (1986) 5 NWLR (Pt.39) 77.

The yardstick for considering whether an award ought to be set aside for misconduct is where an arbitrator had done anything either expressly or impliedly for which a reasonable by-stander would conclude that he was unfair to both parties or either party, then such an act of the arbitrator would qualify as a misconduct. See TRIANA LIMITED v UNIVERSAL TRUST BANK PLC (2009) LPELR-CA/K/69/2004.

The Courts are averse to setting aside awards. They have maintained the philosophy that parties are bound by the agreement to proceed to arbitration and the result must abide. They would only interfere in clear cases of misconduct or jurisdictional error. As a result most applications or appeals to the courts to set aside an award meet with seldom success.

Azubike Okoye ACIARB (U.K.)