Historical Development of Arbitration in Nigeria

Arbitration is not a new notion in Nigeria; experts on the subject believe that Arbitration and alternative dispute resolution, unlike litigation, are not imported mechanisms based on historical precedent. Conflicts were resolved through Arbitration and other forms of alternative dispute resolution. Our indigenous customary law has always included extra-judicial dispute resolution.

An example can be seen in the case of Okpuruwu v. Okpokan. In that case, Oguntade JCA observed, “during the pre-colonial times when regular courts had not been there, Nigerians surely had a simple and cheap method of adjudicating disputes occurring among them. The parties were usually referred to as elders or a body set up for that purpose.”

It was also mentioned that traditional Arbitration and alternative conflict resolution techniques acknowledge the practice of swearing oaths in front of shrines. Oath-taking in front of shrines has long been outlawed in several parts of Nigeria, although worshipping in shrines is still practised in some parts of the south/east and south/south.

According to Akpata: In the environs of Benin City, the Village Head (Odionwere) or the family head (Okaegbe) principally functioned as the arbitrator or the mediator to resolve conflicts or disputes among the people. The parties were also at liberty to request any community member they reposed confidence to mediate or arbitrate with the undertaking to abide by his decision.

Subsequently, Nigeria became a part of the British Empire and subject to the English legal system once the British introduced colonialism and amalgamated southern and northern Nigeria in 1914. Despite our adoption of the English legal system, customary Arbitration remains a viable option for resolving conflicts, particularly in rural areas.

Arbitration was used to settle conflicts over land in the past. In Larbi v. Kwasi, The Privy Council held that a customary Arbitration was legal and binding and that a losing party’s rejection of the arbitrator’s decision, which he had previously consented to, was contrary to good sense. The first formal statute on Arbitration, the Arbitration Ordinance 1914, was promulgated for the entire country on 31 December, 1914, based on the English Arbitration Act 1889.

The Arbitration Ordinance, Laws of the Federation of Nigeria and Lagos, 1914 was re-enacted. The four regions that made up Nigeria at the time, namely the Northern, Western, Eastern, and Southern Cameroons Regions, likewise adopted and formally incorporated this Act.

It is important to note that the Arbitration Ordinance 1914 was scanty as it provided only for local or domestic Arbitration. The Arbitration Act was the only surviving piece of Arbitration legislation in Nigeria during its political independence in 1960. However, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards entered into force on 10 June 1958.

According to Justice Akpata: “Nigeria being a colony of the British at the material time and not having enacted any law relating to international commercial Arbitration, could not subscribe or accede to the Convention.”

Nigeria did not adopt the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the “New York Convention,” dealing with international commercial Arbitration until the Arbitration and Conciliation Decree’s passing in 1988 (which took effect on 14 March).

It is worth noting that, prior to the 1988 Act, Nigeria had adopted the New York Convention, and enforcement of a foreign arbitral award in an international Arbitration held outside of Nigeria was only possible under the provisions of the Foreign Judgment (Reciprocal Enforcement) Act Laws of the Federation of Nigeria No. 31 of 1960, if it was registered in a Nigerian High Court, among other things.

Nigeria also became a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States on 14 October 1966, six years after gaining independence from the United Kingdom.

Presently, the Arbitration and Conciliation Act (Chapter 18, Laws of the Federation of Nigeria 2004) (the “ACA”) governs international commercial Arbitration in Nigeria, and it incorporates the 1985 UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Model Law”). It is regarded as the primary source of Arbitration laws in Nigeria.

Read also: Overview of Arbitration in Nigeria

Arbitrable Disputes

The Arbitration and Conciliation Act (ACA) 2004 applies to commercial disputes. The scope of “commercial” is broad and defined at Section 57 as “all relationships of a commercial nature”, including “trade transaction for the supply or exchange of goods or services, distribution agreement, commercial representation or agency, factoring, leasing, construction of works, constructing, engineering licensing, investment, financing, banking, insurance, exploitation, agreement or concession, joint venture and other forms of industrial or business cooperation, carriage of goods or passengers by air, sea, rail, or road”.

Thus, disputes arising out of criminal, tax, constitutional matters, and bankruptcy are not arbitrable in Nigeria, as in many other States. The ACA does not explicitly list conflicts that are not arbitrable. The test is whether the conflict can be settled legitimately by method for accord and fulfilment.  Some examples as to arbitrable and non-arbitrable matters following the current position of the law are as follows:

Disputes that Arbitration can settle include:

  • Matrimonial causes
  • Breach of contract
  • Tort
  • Compensation for acquisition of land

Arbitration cannot be used in the settlement of the following matters:

  • Disputes involving crime
  • Disputes involving the interpretation of the constitution or other statutes are not arbitrable.
  • Tax disputes
  • Bankruptcy

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