The primary arbitration legislation in Nigeria is the Arbitration and Conciliation Act, 1988 (ACA). Based on the 1985 UNCITRAL Model Law on International Commercial Arbitration (Model Law), with some amendments, the ACA is an imperfect and dated piece of legislation. Some of its drawbacks were caused by the law maker’s departure from the carefully considered framework contained in the 1985 UNCITRAL Model Law. One instance of this is the inclusion of the nebulous ground of “misconduct” as a ground for setting aside arbitral awards (section 30 of the Act). This inclusion has wrought much confusion and controversy. Perhaps the worst manifestation of this syndrome is the ever-recurring argument that “error of law on the face of the award” is a ground for setting aside awards in Nigeria because it forms part of “misconduct”. Other weaknesses of the framework set up by the ACA were not caused by the Act itself, but from judicial decisions that have sought to enforce rights created by the Act. A notorious candidate in this category is the decision of the Nigerian Supreme Court in City Engineering v. FHA, which established the problematic principle that an award issued pursuant to the ACA must be enforced within 6 years from the date on which the “cause of action” which led to the arbitration arose.
The ACA Amendment Bill (Bill), which was passed by the Nigerian Senate on 1 February 2018, seeks to cure several of the ills of the current regime. Unsurprisingly, the Bill draws a lot of inspiration from the 2006 Model Law. We will identify below and discuss briefly five of the key innovations in the Bill. It is important to note that this piece is not intended as a critique of the Bill. We will take up that discussion in future posts, and no doubt, tomes will be written on this subject in due course.
This post only seeks to highlight potential game-changing provisions in the Bill, to whet the appetite of arbitration users for the new dawn we hope to herald in short order. (Please note, the discussion below does not refer to section numbers in the Bill. This is because the numbering of the provisions is still in a state of flux as provisions may be altered by the legislature.)
Famous Five Innovations of the ACA Amendment Bill
1 – General Principles and Scope of Application. The Bill sets out the foundational principles of the legislation. Arbitrants who have had their arbitrations stalled by unwarranted court intervention will be heartened by the stipulation that “parties are free to agree on how their disputes are resolved, subject only to such safeguards as are necessary in the public interest”, and that “parties, arbitrators, arbitral institutions, appointing authorities and the Court shall do all things necessary for the proper and expeditious conduct of the arbitral proceedings.” To be clear, these prescriptions are not in themselves revolutionary, since statements to like effect exist in case law. What the Bill has done is distill and crystallise these policy matters in a way that they will hardly go unnoticed by inattentive arbitration users. It would be interesting to see courts insist that litigants remain faithful to the policy objectives of the legislation when they seek unwarranted court intervention.
2 – Robust Provision for Interim Measures of Protection and Emergency Relief. The Bill makes elaborate provision for interim measures of protection and emergency relief. Of course, “emergency arbitrator” provisions have become de rigueur in recent times in institutional rules of arbitration. It is therefore unsurprising that the Bill gives parties the right to apply to a designated arbitral institution or a court for the appointment of an emergency arbitrator.
Even more interesting is the treatment of interim measures of protection. The Bill (borrowing from the Model Law) not only confers the power to issue interim measures of protection, it prescribes conditions for the grant of such measures. To use the familiar terms from litigation jurisprudence, the conditions are: there must be likelihood of irreparable harm; the balance of convenience must weigh in favour of the grant of the measure, and there must be a reasonable possibility of succeeding on the merits.
The Bill also provides for the grant of a “Preliminary Order” which is the equivalent of an ex parte order. A party applying for an interim measure of protection may, without notice to his adversary, seek a Preliminary Order. If granted, the Order will subsist for only 20 days. The Bill envisages that during this period, the arbitral tribunal would consider the application for interim measures of protection on an inter partes basis.
The Bill also thoughtfully deals with other incidences of the interim measures process, such as: (a) the modification, suspension and termination of interim measures where subsequent facts emerge which show that they ought not to have been granted; (b) the duty of the party requesting an interim measure to disclose any material change in the circumstances upon which a measure was requested or granted, and (c) recognition and enforcement (or refusal of recognition and enforcement) of interim measures, including those issued outside Nigeria.
3 – Limitation Periods. The ACA does not regulate the application of limitation periods to arbitration. It leaves this matter to generally applicable Limitation Laws and the judicial decisions interpreting such laws. In its 1997 decision in City Engineering v. FHA, the Nigerian Supreme Court determined that the cause of action in an application to enforce an arbitral award is the same as the cause of action which led to the arbitration. Accordingly, an award made in respect of that cause of action must be enforced before the expiry of the limitation period for claims concerning that cause of action (in that case, six years).
The effect of this decision has been that parties in arbitration are in a race against time. The author has seen situations in which proceedings which would otherwise have been good candidates for bifurcation cannot be bifurcated for fear that a second phase in the arbitration may not be concluded in time for the resulting award to be enforced. The Bill neatly eliminates the “race against time” phenomenon by prescribing that (amongst others) “[i]n computing the time for the commencement of proceedings to enforce an arbitral award, the period between the commencement of the arbitration and the date of the award shall be excluded”.
4 – Recourse against Award. The Bill seeks to revolutionise the framework for seeking recourse against arbitral awards. First, the Bill expressly abolishes the ground of “error of law on the face of the award” as a ground for setting aside awards. The Bill then replaces the current grounds for setting aside awards with the clearer grounds contained in the Model Law. These are: legal incapacity, invalid arbitration agreement, lack of due process, exceeding the scope of the submission, procedural irregularity, arbitrability and public policy.
This amendment will be a breath of fresh air to arbitration users long frustrated by the never-ending debate as to what constitutes “misconduct” and “improper procurement”. More still, under the Bill, mere proof of one of the grounds for setting aside an award is not sufficient. The applicant must also show that the existence of that ground “has caused or will cause substantial justice to the applicant”.
The most significant innovation under this subject is the introduction of the concept of an “Award Review Tribunal”. This will be a second tier tribunal which will (instead of a court) consider any application to review an arbitral award. A decision of the Award Review Tribunal setting aside an arbitral award will only be reversed by a court if the court takes the view that the decision is unsupportable, having regard to the ground on which it was made. Where the Award Review Tribunal affirms the arbitral award, its decision will only be reviewed by a court on the grounds of arbitrability and public policy. The Award Review Tribunal process is clearly aimed at further insulating the arbitral award from the unpredictability of court decisions.
5 – Other Sundry Matters to Cheer About. There are several other welcome innovations in the Bill. These include: (a) the stipulation that there shall be a sole arbitrator (rather than three arbitrators under the ACA) where parties have not agreed on the number of arbitrators; (b) immunity of arbitrators and arbitral institutions; (c) (the suggestion of?) permission to challenge an arbitral tribunal’s preliminary ruling on its jurisdiction; (d) consolidation, concurrent hearing and joinder; (e) the power to award interest; and (f) provision of grounds for the refusal of recognition or enforcement of domestic awards.
The ACA Amendment Bill itself is imperfect. There will in due course be occasion to critique the solutions is prescribes for the bugs arbitration users have had to contend with since the current legislation was enacted in 1988. However, the Bill, if passed into law, will significantly improve the legislative framework for arbitration in Nigeria. That potential outcome is to be celebrated.