Nigeria revises its Arbitration Act
On 26 May 2023, the President of the Federal Republic of Nigeria signed the Arbitration and Mediation Bill into law. The Bill, now the Arbitration and Mediation Act 2023 (“New Arbitration Act” or “Act”) repeals the country’s 35-year-old Arbitration and Conciliation Act (“Previous Arbitration Act”) and will govern both domestic and international arbitration proceedings in Nigeria. This post examines the main changes introduced by the New Arbitration Act, which promises to cement Nigeria’s status as a leading arbitration hub in Africa.
Enforcement of arbitration agreements
The New Arbitration Act brings Nigeria’s legislative framework for the enforcement of arbitration agreements in line with its obligation under the New York Convention. It mandates courts to stay proceedings commenced in breach of the arbitration agreement unless the court finds that the agreement is “void, inoperative or incapable of being performed” (Section 5). This is an improvement on the Previous Arbitration Act which made the decision to stay proceedings subject to the court’s discretion and required the applicant to demonstrate its willingness to proceed with the arbitration (Section 5, Previous Arbitration Act).
Emergency arbitrator proceedings
The Act allows parties to apply to their designated arbitral institution or the court (failing a designation) for the appointment of an emergency arbitrator when seeking interim relief prior to the arbitral tribunal’s constitution. If granted, the arbitral institution or court shall appoint the emergency arbitrator within two business days from receipt of the application (Section 16).
Enforcement of interim measures
The Act recognises interim measures as binding and provides that they are enforceable upon application to court, irrespective of the country in which the interim measure was issued, subject to limited exceptions. These include the grounds to refuse the enforcement of an arbitral award, the applicant’s non-compliance with a condition for the grant of the measure, and the measure’s incompatibility with the powers of the court (Section 29).
Consolidation, concurrent hearings and joinder
The New Arbitration Act recognises the agreement of parties to consolidate arbitral proceedings or hold concurrent hearings. Without the parties’ consent, an arbitral tribunal may not consolidate proceedings or hold concurrent hearings (Section 39). The Act also allows the joinder of additional parties provided that the additional party is, prima facie, bound by the underlying arbitration agreement (Section 40).
Award review tribunal
The Act’s most distinguishing feature is the introduction of an Award Review Tribunal (“ART”) — an opt-in mechanism that allows parties to seek the annulment of an arbitral award before a second arbitral tribunal constituted in the same manner as the initial tribunal (Section 56). The Act mandates the ART to render its decision within 60 days of its constitution. If the ART annuls an award, either in whole or part, the court may reinstate the award (or part thereof) upon a party’s application, if it considers that the ART’s decision is “unsupportable”. However, if the ART upholds the validity of an award, the court can only annul the award on grounds of non-arbitrability and public policy.
Third party funding
The New Arbitration Act abolishes the torts of maintenance and champerty in relation to arbitration and arbitration-related court proceedings. These torts were considered prohibitive of third-party funding, and their abolition invariably allows parties to enter these arrangements (Section 61). If a funding arrangement is in place, the Act requires the funded party to disclose the name and address of the funder to its counterparties, the arbitral tribunal and, where applicable, the arbitral institution (Section 62).
Part II of the New Arbitration Act contains detailed provisions that govern domestic and international mediations and the resultant settlement agreements. The Act specifically requires that mediation proceedings are confidential (Section 76), precludes the admissibility of statements made during the mediation as evidence in subsequent proceedings (Section 77), and bars the mediator from acting as arbitrator unless agreed by the parties (Section 79). In addition, it provides for the enforcement of settlement agreements, and makes the Singapore Convention applicable to international settlement agreements, provided that (i) the settlement agreement is made in a signatory state; and (ii) the underlying relationship is a commercial one.
Nigeria is long now regarded as a leading arbitration destination in Africa. The New Arbitration Act demonstrates the country’s commitment to strengthening its reputation and further promoting the use of arbitration within its borders. The Act’s provisions reflect global best practices in international arbitration as adopted by leading arbitration jurisdictions and arbitral institutions. The provisions on third-party funding are of particular interest, and we can expect increased activity as a result. The Act is a breath of fresh air, and its implementation is certainly one to keep an eye on.