INTRODUCTION
Arbitration has developed over the years, and it has been recognized as an appropriate alternative dispute resolution mechanism to litigation.1 It is particularly suitable for the settlement of contractual and commercial disputes.2 In arbitration, same as litigation, at the end of the proceedings, a final and binding decision is made. This is known as an 'award'. An award is delivered which determines the right and obligations of the parties in dispute.3 The parties to an arbitration proceeding, are generally expected to give effect to the award having participated in the arbitral proceedings in good faith.4
However, it is not unexpected for the unsuccessful party to renege from abiding by the award.5 Where this happens, the successful party who is desirous of effectuating the award, is left with the option of taking steps to enforce same as it is done to a court judgment.6 Arbitration by its nature when compared to litigation, is relatively faster in dispensing justice. However, arbitration is not free from certain inherent dilatory proclivity of the Nigerian justice delivery system which can defeat its swiftness7. This is more particular when the Government or its agency is a party to the proceedings and its outcome may be unfavourable.
While a judgment of a court is enforceable within periods of time ranging from six years from the date of its delivery, time begins to count for the enforcement of an arbitral award from the time when the cause of action accrued and not when the award was delivered and terminates six (6) years after.8 This is quite illogical in the sense that though arbitration is ordinarily reputed to be time saving and expeditious, parties to an arbitral proceeding, just like in a litigation proceeding may only know when the proceeding commences and have little or no idea when it may end.9(This was the old position of the repealed Arbitration and Conciliation Act 1988) The newly enacted Arbitration and Mediation Act 2023 has provided several innovations.
However, notwithstanding this state of the law, a possible leeway which parties could adopt to elongate the period of limitation in Nigeria, is to insert the Scot v. Avery Clause in the arbitration agreement to the effect that an action in court can only be predicated on an award.10 Irrespective, the period of limitation as applicable to arbitration is capable of making arbitration a less attractive dispute resolution mechanism especially when the subject matter is quite complicated and of a cross border nature.
- THE PREFERENCE OF ARBITRATION AS DISPUTE RESOLUTION MECHANISM
Businessmen who are prudent have favoured arbitration over litigation in settling their disputes particularly those of commercial and contractual nature.11 The advantages of arbitration as an amicable and swifter dispute settlement mechanism gives it preference over litigation.12 Arbitration has been globally accepted as the most suitable method of commercial disputes settlement as almost every nation in the world and some international organizations have laws and rules regulating its practice.13 The universal legal framework of arbitration makes it attractive.14
Arbitration awards are final and binding on the parties to the proceeding and can only be set aside by an order of a competent court on grounds enumerated under the AMA15. This is however not applicable to other dispute resolution like mediation or negotiation. The implication of this is that the time and resources expended by parties in arbitrating is secured as they are bound by the outcome, since it is final and binding on them and their privies.16
Over the years, arbitration has greatly developed and, it has been duly argued that it has acquired a distinct status as a dispute resolution mechanism independent of Alternative Dispute Resolution.17 Today, dispute resolution mechanisms are classified into Litigation, Arbitration and ADRs.18 Under both international and domestic legal frameworks, the fact that arbitral awards are recognized and enforced globally makes it preferable to all other mechanisms. The effect of this is that upon successfully arbitrating a dispute in a particular forum, if there is no or enough assets to satisfy the award, the successful party can simply have the award registered in any jurisdiction as a judgment of the domestic court of that jurisdiction and have same enforced once the award suffers no defect.
When comparing the swiftness or speed of arbitration in comparison to litigation as a means of resolving disputes, the former is faster.19 Litigation is prone to several dilatory tactics such as unjustifiable adjournments, undue technicalities, frivolous interlocutory appeals and arrest of judgment etc.20 However, arbitration is generally regarded as informal due to party's autonomy.21 This concept enables the parties to determine important issues regarding the proceedings such as the applicable law, seat of the arbitration, number of arbitrator, the language of the arbitration, the mode of conducting the proceedings, evidential matters, the qualification of the arbitrator, the possible duration of the proceedings, mode of presenting evidence, etc.22
Arbitration has the potential of fostering relationships unlike litigation which breeds enmity. No special dress is required to attend the proceedings and the atmosphere is generally friendly. The tone and language in which the proceedings are conducted is usually informal and simple devoid of legal jargons and formality which characterizes court proceedings and culminates in removing the disputants from the process of resolution as they depend solely on their respective counsel in the conduct of the proceedings.
- THE MODES FOR THE RECOGNITION AND ENFORCEMENT OF ARBITRAL AWARDS IN NIGERIA
At the end of an arbitral proceeding, it may become expedient for the successful party to resort to the court for the purpose of enforcing the arbitral award where the other party has failed or neglected to abide by the award.23 Thus,Sections 57 (1), (2) and (3) of the Arbitration and Mediation Act (AMA) 202324 contain provisions for the recognition and or enforcement of foreign arbitral awards in Nigeria.
- APPLICATION UNDER SECTION 57 AND 58 OF THE ARBITRATION AND MEDIATION ACT 2023
Before the repeal of the Arbitration and Conciliation Decree 198825 by the Arbitration and Mediation Act 2023, there were only two methods of enforcing foreign awards in Nigeria. This is by registration under the Foreign Judgment (Reciprocal Enforcement) Act, and under the New York Convention, 1958. The relevant sections of the Foreign Judgments (Reciprocal Enforcement) Act26 provides that a foreign award may be registered in the High Court at any time within six years after the date of the award if it has not been wholly satisfied and if at the date of the application for registration, it could be enforced by execution in the country of the award. Thus, the period within which an award must be registered under the Foreign Judgment (Reciprocal Enforcement) Act before it becomes statute barred is six years.
Section 57 sub-section (1), (2) (a)-(c) of the Arbitration and Mediation Act 2023 provides that:
"An arbitral award shall irrespective of the country or state in which it is made, be recognized as binding, and on application in writing to the court, be enforced by the court subject to the provisions of this section and section 58 of this Act. The party relying on an award or applying for its enforcement shall supply the original award or a certified copy, the original arbitration agreement, or a certified copy of it and where the award or arbitration agreement is not made in the English language, a certified translation of it into the English language."
Thus, an applicant makes a formal application to have the foreign award registered as judgment of the High Court in Nigeria for the purpose of its recognition or enforcement. Same must be done in good faith and any factor that may affect the way and manner the court can exercise its discretion must be fully disclosed.
- GROUNDS FOR THE REFUSAL OF ENFORCEMENT OR RECOGNITION OF AWARDS
Section 58 of the AMA27 provides for the grounds for refusal of recognition and or enforcement of awards. These grounds include: (i) incapacity of a party to the arbitration agreement (ii) the arbitration agreement is not valid under the law to which the parties have indicated should be applied or the arbitration agreement is not valid under the law of the country where the award was made (iii) proper notice of the appointment of the arbitrator was not given to the party against whom the award was invoked (iv) the award does not fall within the terms of the submission to arbitration (v) the award contains decision on matters beyond the scope of the submission to arbitration (vi) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties (vii) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the law of the country where the arbitration took place and (viii) the award has not yet become binding or has been set aside or suspended by a court of the country under the law of which, the award was made.
- APPLICATION UNDER SECTION 57 (3) OF THE ARBITRATION AND MEDIATION ACT 2023
Section 57 (3) of the AMA28 provides that "An award may, by leave of the court, be enforced in the same manner as a judgment or order to the same effect." Under this mechanism, a party desirous of having an award recognized and enforced in Nigeria, shall make an application to the Court for its enforcement.
1.3 THE RECOGNITION AND ENFORCEMENT OF AWARDS UNDER NEW YORK CONVENTION
Nigeria is a signatory to the 1958 New York Convention (also known as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards) having assented to it on the 17th day of March 1970. It is an international legal framework that makes provisions for the recognition and enforcement of foreign arbitral awards amongst member States. Every State that has assented to the Convention has an obligation to give effect to its provisions as far as recognition and enforcement of foreign arbitral awards is concerned. Article 1 of the Convention renders it applicable"to the recognition and enforcement of territorial awards made in the territory of a State other than the State where the recognition or enforcement of such awards are sought and arising out of difference between persons, whether physical or legal."
Article 2 makes it mandatory for each acceding State to recognize an arbitration agreement concluded under the Convention by parties for the settlement of any dispute. Where a party disregards an arbitration agreement or clause in a contract by instituting legal proceedings, domestic courts of member States to the Convention are enjoined if the other party makes an application for stay of proceedings to enable the parties arbitrate and refer them to arbitration.29
Article 3 thereof provides that "each contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon." The procedure for recognition or enforcement of an arbitral award is provided in Article 4. When an application is made or being made, the applicant shall "provide the duly authenticated original award or a duly certified copy of it; the original arbitration agreement or a duly certified copy of it and a translation of the above if they are not in the official language of the country where enforcement is sought."30
This is to validate the authenticity of the award being sought to be recognized or enforced. It is worthy to note that the grant of an application under the Convention is not automatic. Under certain conditions or grounds an application may be refused. The grounds for refusal of an application for recognition or enforcement of an award under the Convention are the same as provided under section 58 of the Arbitration and Mediation Act 2023.
2.1 LIMITATION LAW AND THE ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN NIGERIA
A foreign arbitral award is not a domestic award by the State where its enforcement and or recognition is being sought. It has also been described as an award made in a State other than the one its enforcement or recognition is being sought.31 The New York Convention as well as the procedural rules of the State where enforcement or recognition of an award is being sought contain the needed rules. The AMA 32 after repealing the old law, ACA33 now governs the recognition and enforcement of foreign arbitral awards in Nigeria and it is an amalgamation of the UNCITRAL Model Law on international commercial arbitration and the New York Convention. These international legal instruments enjoin all contracting States to recognize and enforce foreign arbitral awards in their jurisdictions subject to certain grounds by which enforcement or recognition may be denied.
The New York Convention in making provisions for the recognition and enforcement of foreign awards, did not specify the time limit within which recognition and or enforcement could be sought. However, its Article III makes the issue of limitation period subject to the Rules of the place where recognition or enforcement is being sought. The Convention permits contracting States to impose a time limit within which recognition and enforcement of foreign arbitral awards can be sought if they so wish. It must be noted that the Convention provides grounds pursuant to which recognition and enforcement of a foreign award can be denied and limitation period is not one of those grounds.34
It is important to note that a foreign arbitral award sought to be enforced through registration pursuant to the Foreign Judgment (Reciprocal Enforcement) Act35(FJREA) may not be subject to the difficulties of Section 7(1)(d) of the Limitation Law. Under the Act, a judgment includes an arbitral award if the award has in pursuance of the law in force in the place where it was made become enforceable in the same manner as a judgment given by a court in that place.36
Under the provisions of Sections 4(1) and 10(a) of the FJREA, the time limit for the enforcement of foreign award is six years, if the award was rendered after the order of the Minister of Justice that the Act be extended to the Country of the award or twelve months or such longer period as a superior court in Nigeria may allow, if the award was rendered before the order of the Minister of Justice. The six years period starts to run from the date of the judgment and where there have been proceedings by way of appeal against the judgment, after the date of the last judgment given in those proceedings. Assuming that there is conflict between the provisions of the Limitation Law and the Foreign Judgment (Reciprocal Enforcement) Act, it is a trite canon of interpretation that "generalia specialibus non derogant". Since the Limitation Law deals generally, with limitation period for various cause of actions, the specific provisions of the FJREA on limitation of time for enforcement of foreign arbitral awards in Nigeria through registration supersedes.
The Court of Appeal in Tulip (Nig.) Ltd. v. N. T. M. S. A. S.37 held that the limitation time for the enforcement of the arbitral award starts to run from the date the award was rendered instead of the date the cause of action leading to the arbitration accrued.
3.1 THE CHALLENGE OF TIME LIMITATION
Before the repeal of the Arbitration and Conciliation Act, CAP A18, Laws of the Federation of Nigeria, 2004, the position of law was that while a judgment of a court is enforceable within periods of time ranging from six years from the date of its delivery, time begins to count for the enforcement of an arbitral award from the time when the cause of action accrued and not when the award was delivered and terminates six (6) years after.38 This was evidenced in the decisions of court in Murmansk State Steamship Line v. The Kano Oil Millers Limited 39and reiterated in City Engineering Nig. Ltd. v. Federal Housing Authority40 However, with the repeal of the Arbitration and Conciliation Act, CAP A18, Laws of the Federation of Nigeria, 2004 by the Arbitration and Mediation Act (AMA) 2023, Section 34 (1) of the Act provides thus:
"Applicable statutes of limitation shall apply to arbitral proceedings as they apply to judicial proceedings."
This means that the old rule stating that time begins to count for the enforcement of an arbitral award from the time when the cause of action accrued and not when the award was delivered is no longer applicable as time of enforcement of arbitral awards start to count after the award is delivered. This has remedied the dilatory tendencies of the old rule.
CONCLUSION
Arbitration as a dispute resolution mechanism, evolved as a matter of necessity to compliment and cushion the hardship experienced in litigation especially in disputes that have commercial features in which the maintenance of relationship is important as parties to a litigation do not return from court to continue in friendship. Since its evolution, arbitration has enjoyed not only local acceptance but international recognition and usage by prudent businessmen especially in trans-border transactions. Its binding effect on the party insulates it from abuse and at the end of its proceedings, the arbitrator or panel usually issues an award.
However, where the unsuccessful party fails and or neglects either in whole or part to abide by the award, the successful party desirous of exploiting the award, is left with the option of recourse to the court for its recognition and or enforcement within a particular time frame. The time a judgment of a court of law will become practically and legally unenforceable starts to run from the date the judgment was delivered up to a particular period thereafter. But, the provisions of the repealed law, Arbitration and Conciliation Act, provides that the time for the unenforceability of an arbitration award starts to run from the time the cause of action upon which the arbitration is predicated accrued and not even when the arbitral proceedings commenced.
The above provisions capable of disrupting the steady growth of arbitration has been remedied in Section 34 (1) of the Arbitration and Mediation Act, 2023.
Note: The ARBITRATION AND CONCILIATION ACT, Cap A18, Laws of the Federation of Nigeria, 2004 has been repealed by the Arbitration and Mediation Act 2023.
Footnotes
1 David T Eyongndi & John I. Ebokpo (2018), "The Principle of Taking Step in the Proceedings under Nigerian Arbitration and Conciliation Act: The Need for Delineation", 7 (3) Port-Harcourt Law Journal, 123-124
2 Oluseun M. Abimbola (2013), "Prospects in Arbitration: An Overview", Diverse Issues in Nigerian Law, Essays in Honour of Hon. Justice Okanola Akintunde Boade, Olatunbosun, I. Adeniyi, and Laoye Luqman., (Eds.) (Ibadan, Zenith Publishers), 27
3 Paul O. Idornigie, and Adebanwo Adewopo (2016), "Arbitrating Intellectual Property Disputes: Issues and Perspectives", (7)(1) The Gravitas Review of Business and Property Law Journal, 1-19
4 OBI OBEMBE V. WEMABOD ESTATE LTD. (1977) ALL NLR 130 at 139; BCC TROPICAL NIGERIA LTD. V. THE GOVERNMENT OF YOBE STATE & ANOR. (2011) LPELR-9230 (CA); ONWU V. NKA 1996 7 NWLR (PT. 458), 1.
5 David T. Eyongndi, and Olabisi O. Ojuade (2019), "Applicability of Immunity Clause to Arbitration in Nigeria" 1(2) International Review of Law and Jurisprudence, Afe Babalola University, 29-37.
6 Gaius Ezejiofor, The Law of Arbitration in Nigeria, (Lagos, Longman (Nig.) Plc. 2005), 115.
7 Fabian Ajogwu (2013), Commercial Arbitration in Nigeria: Law and Practice (Lagos, Mbeyi and Associates (Nig.), Ltd. 12
8 Section 7 (1) (d) Limitation Act, 1966; CITY ENGINEERING NIG. LTD. V. FEDERAL HOUSING AUTHORITY 1997 9 NWLR (PT.520) 224
9 Gaius Ezejiofor, The Law of Arbitration in Nigeria, (Lagos, Longman (Nig.) Plc. 2005), 115
10 Ephraim I. O. Akpata, Arbitration Clause, A presentation delivered at the Chief G.O. Sodipo Memorial Lecture held at the Regional Centre for Commercial Arbitration, No. 1 Alfred Rewane Road, Ikoyi, Lagos on 7 th December 2015.
11 Dele Peters (2006), Arbitration and Conciliation Act Companion, (Lagos: Dee-Sagee Nig. Ltd.), 465
12 Oluseun M. Abimbola (2013), "Prospects in Arbitration: An Overview", Diverse Issues in Nigerian Law, Essays in Honour of Hon. Justice Okanola Akintunde Boade, Olatunbosun, I. Adeniyi, and Laoye Luqman., (Eds.) (Ibadan, Zenith Publishers), 27
13 Abdulrazaq Daibu and Lukman Abdulrauf (2015), "Challenges of Section 20 of the Admiralty Jurisdiction Act to International Arbitration Agreements" 6(4) The Gravitas Review of Business and Property Law, 14-23.
14 David T Eyongndi (2018), "An Appraisal of Perennial Hurdles in the Enforcement of Arbitral Awards in Nigeria and India" 10 Ram Manohar Lohiya National Law University Journal, 84-113
15 Arbitration and Mediation Act 2023
16 Alero E. Akeredolu, "Duel to Death or Speak to Life: Alternative Dispute Resolution Today and Tomorrow" (7th Inaugural Lecture of Ajayi Crowther University, Oyo, Oyo State delivered on the 11th day of January 2018), 18.
17 Jide Olakanmi (2013), Alternative Dispute Resolution: Cases and Materials, (Abuja: Law Lords Publications), 5
18 Andrew I. Chukwuemerie (2010), "An Overview of Arbitration and the Alternative Dispute Resolution Methods (ADRs)", A Journal of the Civil Litigation Committee of the Nigerian Bar Association, Lagos, Pearls Publishers, 100.
19 Solomon A. M. Ekwenze (2010), "Arbitration Agreement: Nature and Implications" (4) University of Ado-Ekiti Law Journal, 317. David Ike (2016), "Arbitration in Nigeria- A Review of Law and Practice" 7(3) The Gravitas Review of Business and Property Law, 67-67.
20 David Ike (2017), "An Examination of the Role of International Arbitrators", 8(2) The Gravitas Review of Business and Property Law, 61-71
21 Sunday A. Fagbemi (2015), "The Doctrine of Party Autonomy in International Commercial Arbitration: Myth or Reality"? 6(1) Journal of Sustainable Development Law and Policy, 224.
22 David T. Eyongndi (2016), "International Arbitration Agreement under Nigerian Law: Form, Content and Validity", (1) 5 Babcock University Socio-Legal Journal, 107-122
23 MacArthur J. N. Mbadugha (2015), Principle and Practice of Commercial Arbitration, Lagos, University of Lagos Press & Bookshop Ltd.,), 224
24 Arbitration and Mediation Act (AMA) 2023
25 1988, Cap. A18, LFN, 2010.
26 Sections 2 and 4 Foreign Judgment (Reciprocal Enforcement) Act.
27 Arbitration and Mediation Act 2023
28Arbitration and Mediation Act 2023
29 Section 5 of the Arbitration and Mediation Act 2023
30 The requirements are the same under section 57 (2) Arbitration and Mediation Act 2023
31 See Article I (i) New York Convention, 1998.
32 Arbitration and Mediation Act 2023
33 Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria, 2004
34 Article V New York Convention, 1998.
35 Foreign Judgment (Reciprocal Enforcement) Act Cap. F35 LFN 2004.
36 Section 2 (1) Foreign Judgment (Reciprocal Enforcement) Act Cap. F35 LFN 2004.
37 (2011) 4 NWLR (Pt. 1237) 254.
38 David Tarh-Akong Eyongndi: "Enforcement of Arbitral Awards in Nigeria and the Jigsaw of Limitation Period: The Need for Compliance with Global Best Practices".
39 (1974) 12 SC 1.
40 (1997) 9 NWLR (Pt.520) 224
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