Home Uncategorized THE RISE OF ARBITRATION AND OTHER FORMS OF ADR IN RESOLVING COMMERCIAL DISPUTES
THE RISE OF ARBITRATION AND OTHER FORMS OF ADR IN RESOLVING  COMMERCIAL DISPUTES

THE RISE OF ARBITRATION AND OTHER FORMS OF ADR IN RESOLVING COMMERCIAL DISPUTES

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The Gist With DRC by Agada John Elachi, Ph.D. FCIArb (UK), FICMC

COMMERCIAL DISPUTES

INTRODUCTION

“Once men begin to live and trade together, inevitably various forms of adjudication emerge. It follows from the above that the submission of disputes to independent adjudication is a form of ordering human society as old as society itself.”[1]

It is now common knowledge that there are other ways other than the resort to courts for the resolution of disputes especially commercial disputes. The need for other options is predicated on the dissatisfaction of disputing parties (litigants) with the traditional system of resolving matters through the courts. Some reasons for the dissatisfaction are delay, case congestion, restrictive single option, cost, unsatisfactory determination of cases, ruined relationships, and loss of foreign investments.  

WHAT IS ADR?

Alternative dispute resolution (ADR) refers to the variety of processes that help parties resolve disputes. Traditionally it was referred to as resolution without a trial – outside of the courtroom. ADR today is much more than that. It refers to a range of options available for the effective resolution of disputes. ADR includes but is not limited to early neutral evaluation, negotiation, conciliation, mediation, arbitration, and litigation. Some of these mechanisms are non-binding and others are binding.

It is worthy of note that the two most common forms of ADR are arbitration and mediation. It is also worthy of note that Negotiation is almost always attempted first to resolve a dispute. It is safe to posit that it is the preeminent mode of dispute resolution. Negotiation allows the parties to meet in order to settle a dispute. The main advantage of this form of dispute settlement is that it allows the parties themselves to control the process and the solution. This is a quality shared by most ADR mechanisms. 

Mediation is also an informal alternative where individuals trained in negotiations (mediators), bring opposing parties together and attempt to work out a settlement or agreement that belongs to both parties and is acceptable to them. Mediation is used for a wide range of case-types ranging from juvenile felonies, family matters, commercial and related disputes, and to federal government negotiations. Mediation has its strengths in its informality and flexibility. Mediation has little or no regulatory framework, however, because it is a skills based mechanism and has wide reaching consequence in its deployment and use, there is a need to ensure that a minimum standard is set for practitioners. This is what the Institute of Chartered Mediators and Conciliators (ICMC) Bill before the National Assembly waiting to be passed seeks to achieve.

Mediation has its strength and usefulness in helping parties preserve their pre-dispute relationship. So when family members, neighbours, or business partners have a dispute, mediation comes in very handy. Mediation is also effective when emotions are getting in the way of resolution. Notwithstanding these strengths, mediation may not be effective if one of the parties is unwilling to cooperate or compromise; or has a significant advantage in power over the other or there is a history of abuse or victimization. Mediation may also not be effective or applicable if the issues in dispute are rights based and parties cannot delineate from those rights.

In Neutral Evaluation, each party gets a chance to present the case to a neutral person called an “evaluator” who then gives an opinion on the strengths and weaknesses of each party’s evidence and arguments and about how the dispute could be resolved. The evaluator is often an expert in the subject matter of the dispute. Although the evaluator’s opinion is not binding, the parties typically use it as a basis for trying to negotiate a resolution of the dispute. Neutral evaluation is appropriate in cases in which there are technical issues that require special expertise to resolve or the only significant issue in the case is the amount of damages.

Closely related to neutral evaluation is Expert Determination. This is a process, which has parties invite an expert to look into the issue in dispute and make a determination. The expert does not rely on the submissions or input of parties but conducts their own investigation and make a finding, which is binding on the parties. 

Adjudication which though similar to expert determination with respect to the fact that the third party neutral is an expert in the field of the dispute, is different with regard to the fact that whilst in expert determination, the expert does not rely on party submissions, in adjudication, the adjudicator receives submissions from parties and then makes a determination which is final and binding on the parties. Adjudication is mostly used for construction disputes.

Conciliation is an ADR process where an independent third party, the conciliator who may have professional expertise in the subject matter, helps people in a dispute to identify the disputed issues, develop options, consider alternatives and try to reach an agreement.  A conciliator will not make a judgment or decision about the dispute. Conciliation may be voluntary, court ordered or required as part of a contract. Conciliation is similar to mediation but major point of difference being that whilst the conciliator can make suggestions to the parties about possible outcomes, the mediator is precluded from doing that.

Arbitration is a simplified version of a trial involving limited discovery and simplified rules of evidence. Arbitration is headed and decided by an arbitral panel. To comprise a panel, either both sides agree on one arbitrator, or each side selects one arbitrator and the two arbitrators elect the third. The panel then deliberates and issues a written decision referred to as an award. Awards are not public record and may only become public when there is a challenge or steps are taken to enforce the award. 

In arbitration the process is semi-formal. Proceedings are conducted in a relaxed and non-adversarial manner as distinct from the courtroom atmosphere. Whilst the rules of evidence are applicable in arbitration, the Evidence Act 2011 (as amended) is not applicable to arbitral proceedings. Arbitration has long been used in labour, construction, and securities regulation, but is now gaining popularity in other commercial or business disputes.

Debatable among academicians and practitioners is the question of Arbitration vs. Litigation, which is an/the alternative? Comparisons between arbitration and “traditional” litigation (lawsuit) are frequent, bearing in mind that arbitration as a form of dispute resolution dates centuries back.

ARBITRATION: A GROWING TREND

The origin of the practice of arbitration dates back to the practice by merchants of the early times for resolving their matters outside of the court system in a manner that is tailored towards and trade and commerce focused.[2]

Although arbitration has been less popular than litigation as a means of resolving disputes in the commercial sector, there has however been significant growth in the use of arbitration since late 2000s. Some reasons that have influenced this growth include:

  • The comparable ease with which an arbitral award can be enforced (using the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention)), thus potentially reducing significantly the enforcement risk;
  • The provision of a neutral forum;
  • The greater finality of arbitration, with zero/limited rights of appeal;
  • The potential for keeping the existence of the dispute and its details confidential; and ü The fact that arbitration agreements and procedures can be tailored to suit the circumstances of the specific transaction or business.
  • The expansion of commerce and emergence of commercial centres. 
  • The existence of modern facilities and infrastructure providing the right atmosphere for commerce and trade.

This trend shows no signs of reversing. Rather the extent of further growth is likely to depend on arbitration practitioners demonstrating that arbitration not only meets key requirements as an effective method of dispute resolution but also offers an improvement on the preferred option, court litigation.

Arbitration generally begins as a private agreement between the parties, and continues by way of private proceedings in which the wishes of the parties are of great importance and ends with an award that is binding and has legal force and effect. Thus, once parties have agreed to submit their dispute to arbitration, they are bound by the outcome, the award.[3]

Arbitration has its roots in African history as the earliest form of resolving dispute in the community. It was unwritten and formless, based on custom and trade practices – lex mercatoria. Arbitration till date is still very much used in rural communities to resolve their disputes. The practice of customary arbitration has been with us for a long time.[4]

Arbitration offers a great deal of flexibility to its users. To make a success of arbitration, it is important to make the right choices, both in the arbitration agreements and in the arbitration procedures subsequently applied – choices that suit the needs of the particular transaction. The choices include: ü Providing for a seat of the arbitration where the courts are supportive (especially in the case of international arbitration) e.g. where the court may be willing to provide interim relief in support of arbitration, to avoid dissipation of assets, and so forth;

  • Selecting/appointing arbitrators or choosing an arbitral institution which will make arbitral appointments if necessary, and also specifying qualifications for the arbitrators having expertise in a particular sector or type of transaction;
  • Consolidation and joinder provisions for a single dispute resolution procedure for disputes which could involve a number of related contracts; and
  • Procedures to effect expedited decision, by bifurcating proceedings or possibly summary dismissal.

Care must be taken, however, to ensure that the chosen approach maximises the benefit to the client – where options are manifold, so are potential and possible pitfalls. Despite the rise of arbitration, there remain valid reasons why the use of arbitration should sometimes be avoided. It might be that arbitration is simply not possible (e.g. tax related matters, matter relating to title to land, criminal matters) or that the formalities for an arbitration agreement have not been satisfied (e.g. not all parties to the dispute have signed the relevant contractual documentation).

Reliance upon arbitration as an efficient and effective technique for resolving existing, as well as future disputes has become the characteristic sign of properly drawn commercial agreements. While arbitration clauses may vary, their text and reach should be as comprehensive as the varieties of problems and disputes, which may arise. It is via this clause (arbitration agreement) that parties exercise party autonomy, which is one of the four principles of arbitration according to Professor Paul Obo Idornigie, SAN, C.Arb[5]. Other principles are Separability, Arbitrability, and the principle of judicial non-interference or minimal interference.  

FORMLESS TO FORMALIZED

As has been stated earlier arbitration has been part of the dispute resolution landscape for centuries[6]:  (i)       Some commentators date arbitration back to the time of the Phoenician merchants;

  • Alexander the Great’s father, Phillip the Second, used arbitration as a means for resolving border disputes;[7]
  • George Washington had an arbitration clause in his will;[8] and
  • The English used arbitration for commercial disputes as early as 1224.
  • Traditional Nigerian society, arbitration was and still is, used to resolve social disequilibrium – need to please the gods.[9]

According to Eisemann, former Secretary General of the ICCC Court of Arbitration, the first ICC arbitration he conducted was spontaneous, without rules and fees.[10] But today, arbitration has grown, formalized and anchored on fundamental principles.

We have already stated that arbitration is not an imported mechanism in Nigeria considering that disputes were traditionally resolved through customary law arbitration. In the case of Okpuruwu vs. Okpokam11 the Honorable Justice Oguntade JCA (as he then was) observed thus:

“In the pre-colonial times and before the advent of the regular courts, our people (Nigerians) certainly had a simple and inexpensive way of adjudicating over disputes between them. They referred them to elders or a body set up for that purpose. The practice has over the years become strongly embedded in the system that they survive today as custom”.

The first legislation on arbitration in Nigeria was the 1914 Arbitration Ordinance that came into force on the 31st day of December 1914[11] based on the English Arbitration Act of 1889 and was applicable to the whole country, which was then governed as a unitary state. The ordinance was enacted as Chapter 13 of the 1958 Revised Laws of Nigeria and Lagos. The Federal Government subsequently repealed Chapter 13 and promulgated the Arbitration and Conciliation Decree 1988 Laws of the Federal Republic of Nigeria, a modification of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Arbitration (hereinafter referred as the

Arbitration and Conciliation Act).[12] 

In discussion the rise of arbitration, it is important and worthy of note is the on-going review of the Arbitration and Conciliation Act taking the form of an Act to Repeal the Arbitration and Conciliation Act 1988 (Cap. 18 LFN, 2004) and Re-Enactment of the Arbitration And Conciliation Act, 2017.[13] The new Bill is revolutionary and is a radical departure from the existing legislation with 84 sections – 58 sections from the existing Arbitration and Conciliation Act and 46 new sections mainly incorporated from the 2006 UNCITRAL Law and other legislation, particularly, European based countries.

I shall undertake a brief rundown of the provisions in the proposed bill- 

  1. Section 13: Immunity of Arbitral Tribunal 

It is not common for parties in arbitration to sue the arbitrator, though they can. This new provision makes it explicit that an arbitrator cannot be sued for the work he has done in an arbitration proceeding save where he/she acts in bad faith. This is because an arbitrator performs a judicial function and therefore ought not be sued.

  • Section 16: Appointment of Emergency Arbitrator

An Emergency Arbitrator usually acts as a bridge between when the disputes arise and when especially arbitral institution will finally constitute an arbitral panel. Within the said period a lot of things are likely to happen. For instance, where the subject matter of the dispute is perishable. The new bill is proposing that somebody can be appointed in the interim and that person would be an Emergency Arbitrator who is able to make preliminary order to preserve the subject matter. Section 17 provides for how to challenge the Emergency Arbitrator.

  • Section 18 provides for the Seat of the Emergency Relief Proceedings when an emergency arbitrator is appointed. This is to be determined by the appointing authority or by the court.
  • Section 22 and 23: Preliminary Orders

There are two reliefs in seeking preliminary order, Interim measure or preliminary order. Before now one can only enforce the interim award because it is a type of award under section 25of the existing legislation but could not enforce an interim order. This was the defect the UNCITRAL Law looked at and introduced Interim measures into its 2006 amendment. Section 24 to 29 deals with enforcement of both interim award and interim order.

  • Section 39 gives parties the right to consolidate proceedings or have the tribunal hear the matter concurrently. This is of course subject to certain conditions.
  • Section 40 provides for joinder of parties.  
  • Section 45 recognizes the settlement of a matter(s) through ADR mechanism before the award is made. 
  • Section 46 provides forInterest. The current Act does not provide for award of interest. This has been a major challenge in Arbitration proceeding in Nigeria. The new bill empowers arbitrator to award interest and also award interest at the bank rate depending on the nature of the matter.
  • Section 52 provides security for cost to serve as a check on spurious matters and frivolous applications while Section 53 expressly stipulates joint and several liabilities of the parties for arbitrator’s fees and expenses.  
  1. Section 54 stipulates that an arbitrator can hold onto the award until payment of his /her fees as a Lien on the Award. Previously, once the Arbitrator makes it known to the parties that the award is ready, s/he is not allowed to hold onto the award for non-payment of arbitrator’s fees. The onus is on the arbitrator to devise means of collecting his /her fees before the award is ready.
  1. Section 58 makes provision for default appointment with regards to international commercial arbitration. The new bill has removed that power from the Secretary General Department Court of Arbitration and given it to a local body called the Regional Centre for International Arbitration. Now, parties can easily resort to the regional center to break the deadlock.
  1. Section 63 provides for extension of time at the discretion of the arbitrator. There was hitherto no express provision.
  1. Section 83 clearly defines “arbitral tribunal” to include a sole arbitrator; “parties” extended to include those who are rightfully claiming under (third party claim) and those who are parties to the arbitration. Now, when courts are interpreting the provisions of this new bill, they can have recourse to the UNCITRAL law explanatory notes.
  1. Interestingly, this new bill recognizes third party funding which is common in International Arbitration whereby some other persons who are not parties to the arbitration are able to approach a party and buy up his/her interest in that proceeding; fund it; get an award and make their money from there. Also the new bill has the model arbitration clause for contracts that every party can now make use of. You don’t have to draft your own Arbitration clause subject of course to certain peculiarities. The bill has given a model for adaptation. There is also a model statement of independence where an arbitrator has to make a statement on his independence, or otherwise and disclosure.

With the proposed bill; Nigerian legislation being supportive of arbitration; the courts setting a high bar for interfering with the findings of an arbitral tribunal; built up capacity in the field with the availability of highly trained and skilled arbitrators and/or counsel who appreciate the nature of arbitration proceedings, the future holds greener fields for young practitioners to cultivate.

DISTINGUISHING PRINCIPLES OF ARBITRATION

Earlier in this paper, reference was made to certain principles, which guide arbitration. In arbitral proceedings, the Agreement to Arbitrate is so fundamental that it is indirectly enforced by stay of proceedings, if instead of arbitrating one of the parties decides to litigate. This principle gives the parties the right to determine the “rules of the game”. The trademark of these provisions is the use of the words “the parties are free to agree” or “unless otherwise agreed by the parties” or  “subject to any contrary agreement by the parties”, followed by a default provision.

The principle of Party Autonomy encompasses the irrevocability of the arbitration agreement, appointment and number of arbitrators, challenge procedure, interim measures, place and language of arbitration, commencement of arbitral proceedings, statement/points of claim and defence, hearing, default proceedings, appointment of experts, applicable Law and receipt of written communications.

The principle of Arbitrability simply means the quality of being capable of resolution by arbitration. There are two types of Arbitrability – objective and subjective which is not to be confused with the question of what disputes fall within the terms of a particular arbitration agreement (scope of the reference). Arbitrability can arise either when applying for stay of proceedings or that the tribunals lacks jurisdiction or in applying to set aside an award.

This principle circumscribes matters that are arbitrable and those that are not. Pursuant to Section 35 ACA, the ACA shall not affect any other law by virtue of which certain disputes may not be submitted to arbitration; or may be submitted to arbitration only in accordance with the provisions of that law or another law. Section 48(b)(i) and (ii) of the ACA – provides that an arbitral award may be set aside if the court finds that the subject-matter of the dispute is not capable of settlement by arbitration under the laws of Nigeria. The dispute must consist of a justiciable issue triable civilly. The test is whether the dispute can be compromised lawfully by way of accord and satisfaction.

The principle of Separability: an arbitration agreement can be seen as a special type of clause/agreement -sui generis. Arbitration Clause or submission agreement raises the issue concerning the effect of such an agreement when the main contract has either been performed or brought to an end by breach or declared void or voidable. The agreement survives the main contract under the principle/doctrine of Separability or severability.

This principle is a legal fiction essential to the efficient working of the arbitral process. According to section 12(2) of ACA, the arbitration clause constitutes a self-contained contract collateral, independent or ancillary to the underlying or main contract. Thus, there are essentially two contracts – commercial obligations in the main contract and dispute resolution in the arbitration agreement. However, particular attention must be paid in circumstances where the arbitral clause is null and void.

With regard to the principle of judicial non-interference, the essence of resorting to arbitration is to avoid court proceedings in the resolution of such disputes. The parties, having chosen their “judges” ought to stick to them and abide by their decision and it negates the arbitral process if the court can interfere freely in the process. Accordingly section 34 ACA provides that in matters governed by the ACA, the court shall not intervene except as provided in the ACA. Note however that the Courts can intervene in the following instances stay of proceedings, revocation of arbitration agreement, appointment of arbitrators and constitution (but see ss. 7(4) and 2, 41(1)(a) of ACA respectively), challenge procedure, ss. 29 and 30, failure or impossibility to act, attendance of witnesses, setting aside an award and enforcement of an award.

One of the specific powers of an arbitral tribunal is its competence to rule on its own jurisdiction – kompetenz-kompetenz principle. Accordingly, section 12(1) of the Act provides thus:  ‘An arbitral tribunal shall be competent to rule on questions pertaining to its own jurisdiction and on any objections with respect to the existence or validity of an arbitration agreement’. 

It should be noted that a plea that the tribunal does not have jurisdiction may be raised not later than the time of submission of the points of defence and a party is not precluded from raising such plea by reason that he has appointed or participated in the appointment of an arbitrator. On the other hand, if the plea is that the arbitral tribunal is exceeding the scope of its authority, such a plea may be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the proceedings.

Obviously, arbitral proceedings are anchored on fundamental principles and in agreeing to arbitrate, all of these should be borne in mind. Lastly, arbitration does not oust the court’s jurisdiction; it merely postpones resort to litigation bearing in mind section 6 of the 1999 CRFN, as amended and the Scott v Avery Clause. 

ARBITRATION SUITABILITY FOR COMMERCIAL DISPUTES

Arbitration as a dispute resolution mechanism has its roots in commercial practices. Arbitration is preferred by many as a way to resolve commercial disputes. A commercial dispute essentially occurs when relations between businesses break down. Commercial dispute is an umbrella term that covers a number of distinct business-related issues that can have a negative impact on your business and on your individual livelihood. Every business dispute, however minor it may seem at the time, has the potential to become a troublesome, and expensive, lawsuit. 

Interestingly the ACA makes reference only to commercial arbitration. It is also important to note that commercial relations could be domestic or international, hence the dichotomy of domestic arbitration and international arbitration. Thus, whilst today we have other variants of arbitration like sports arbitration, the main focus of arbitration is commercial or related practices. Common commercial dispute situations arises from:

Contract disputes which can arise in a number of situations — from a supplier’s failure to deliver goods to your company according to the terms of your agreement to a dispute with a former employee over a non-compete agreement or employment contract. A contract is a legally enforceable agreement between two or more parties that creates an obligation to do or not do particular things. Once a valid contract exists, a party is under the duty to perform the agreed upon contractual duty. A breach of contract occurs when a party fails to perform. In a breach of contract action, the main remedies that the non-breaching party may pursue depend largely on the injury suffered. Some remedies include: damages aimed at putting the non-breaching party in the position that it would have been but for the breach, specific performance, cancellation and restitution and quasi-contractual remedies.

Tortious interference is torts arising from either intentional or negligent wrongdoing in a business relationship. It can be based either on statutes or on common law e.g. interference with prospective economic advantage, unfair competition and conversion. Though the elements of this tort vary, generally, a Claimant must establish the existence of a contract or some economic relationship between the Claimant and a third party; that the Respondent knows about that relationship; intent by the Respondent to disrupt or harm that relationship; actual disruption of the relationship; and damage to the Claimant.

Antitrust and trade regulation/law which prohibit anticompetitive behaviour and unfair business practices that harm consumers and businesses; any contract, combination or conspiracy that restrains trade unreasonably; monopolize or attempt to monopolize trade or commerce; price discrimination that threatens to harm competition etc.

The Uniform Commercial Code (UCC) governs commercial transactions and has been adopted by most states in the USA. The UCC is divided into the following articles: general provisions; sales; leases; commercial paper; bank deposits and collections; funds transfers; letters of credit; bulk transfers; warehouse receipts, bills of lading and other documents of title; investment securities; and secured transactions; sales of accounts and chattel papers. One of the more significant articles from a business perspective is Article 2, which governs contracts for the sale of goods. The UCC defines a sale as a contract in which title to goods passes from the seller to the buyer for a price. Goods are generally all things that are movable at the time of the contract for the sale. The UCC provides rules for sales contract formation, modification, performance and remedies. In addition, the UCC governs sales warranties, important to most parties involved in sales.

Corporate disputes – Businesses, including partnerships and corporations, can face a number of disputes. Perhaps a shareholder brings a suit alleging that a company’s officers or directors have breached their fiduciary duties or had a conflict of interest in a transaction that harmed the company. There could be a dispute among the partners or shareholders of a business. A corporate issue that seeks to challenge mergers, acquisitions and financing arrangements are also common. 

The list goes on and is certainly not limited to the above. What is worthy of note is that focus of arbitration is the give business practitioners an efficient and commercially viable solution to the issues which they disagree over. Such solution must not only be timely, it must make business sense. For instance, it is only in arbitration that a party can recover fully the cost of prosecuting their matter. This is not tenable in any other dispute resolution process.

Arbitration has significant advantages over litigation such as parties controlling the rule of the game, typically lower cost and shorter time to resolution, flexibility, privacy, awards which are fair, final and enforceable, decision makers who are selected by the parties on the basis of desired characteristics and experience, and broad user satisfaction. Generally and particular to commercial disputes, studies prove that Arbitration is in many ways better because:

  • Satisfaction – majority of users believe arbitration is better, cheaper and faster than litigation.[14]
  • Fairness –perceived to be “a more just process” with 80% of attorneys and 83% of business people reporting that arbitration is a fair and just process.[15]
  • International – 86% of corporate counsel are satisfied with international arbitration. [16]
  • Expertise– majority of parties find arbitrators to be more likely to understand the subject of the arbitration.18
  • Predictability – counsel make fewer errors in predicting dispute results in arbitration, demonstrating that outcomes are more predictable than in litigation.[17]
  • Repeatedly and conclusively Arbitrators Do Not Split the Baby e.g. a 2007 study showed that in only 7% of the cases were damages awarded in the midrange of 41-60% of the amount claimed, results almost identical to a similar study conducted six years earlier.[18]
  • Lacks of bias – three arbitrators are less likely to be influenced by unconscious biases than is a single judge in a bench trial.[19]
  • Compliance with awards – the rate of voluntary compliance with arbitral awards is over

90%.22

MEDIATION SUITABILITY FOR COMMERCIAL DISPUTES

“Mediation puts common sense back into dispute resolution. Outside face-to-face negotiation, I see it as the only real route to justice. It puts the power for a solution back in the hands of those most affected – the parties – and enables them to construct a solution that works for them. No one imposes a solution, no one tells them what the answer is, no one wins or loses. The deal is whatever the parties decide (so long as it is legal!) and the mediator’s job is to give the parties the best opportunity to achieve that deal.”[20]

Commercial Mediation is on the rise. In Europe and parts of America, it has become so popular that many parties now prefer the option of resolving their commercial disputes through mediation rather than arbitration or the courts. In the USA in particular, the courts are actively involved in the promotion of commercial mediation, insisting that certain claims must be submitted to court administered mediation before the court can hear them. This is the same practice in England.

In Africa and in Nigeria in particular, the situation is different. There is a dearth of awareness of the alternatives available to litigant. Even when lawyers encourage their clients to go to arbitration, they still come with the courtroom mindset. They come to the table with the same adversarial and technicality-ridden mindset that they carry on to court.

In the case of mediation it is worse. The challenge lies in the fact that when disputes arise, disputants usually will run the to the lawyers. Unfortunately, most lawyers due to a lack of understanding of the needs of their client will develop a legal mindset around the problem that has been presented to them. The consequence is that, what was originally a business problem, thus a commercial issue becomes a legal problem with the parties going head to head rather than working together as business people to solve the problem. 

It is humbly submitted that many of the problems that arise in commercial relations are business problems rather than legal problems. It may be argued that there have been breaches of the terms of the contractual relationship hence the need for restitution or damages. If the breaches are so right based and the relationship of parties do not matter that much then a resort to arbitration would make sense.

However, where the relationship of parties in a commercial context matters and parties are in an interdependent mutually beneficial relationship, counsel must encourage parties to seek solutions that satisfy their interest whilst meeting the justice of the matter. It has been argued that even when the dispute between parties are distributive in nature, there are usually underlying PEOPLE ISSUES which when unresolved will make resolution nigh impossible.

Commercial mediation covers a wide range of areas such as; insurance and reinsurance, partnership and shareholder, commerce and business, entertainment and media, construction and engineering, costs mediation, transport disputes (marine, aviation, and energy), financial services and banking, and intellectual property. In our clime, the Lagos Multi-door Court House (LMDC) has been a leading institution in the promotion of commercial mediation. 

Available statistics in January 2013 reveal that of 1,708 cases referred to LMDC, 780 had been settled. A sizeable number of the referred cases bothered on commercial transactions involving banks and trade related matters. This is commendable. Other similar institutions are encouraged to follow that initiative. It is worthy of note that recently, the Asset Management Company of Nigeria (AMCON) is looking into the deployment of ADR processes particularly mediation for the resolution of the disputes that they have with regards to their mandate in the finance sector.

According to statistics credited to the Law Society Gazette, in 2017 45% of matters mediated were generally of a commercial nature, 5% were intellectual property related, 3% – insurance, and 2% – construction[21]. What this statistics reveal is the increasing use of mediation to resolve/address commercial disputes. It is hoped that this trend will take root in Nigeria soon.

CONCLUSION

Previously, practitioners observed that there are not enough opportunities for new entrants (gaining exposure to arbitration to build relevant experience) because of the increasing competition between lawyers driven by trend towards specialization in arbitration procedure, thereby making it harder for those who are in non-specialist practices to gain experience. Advocacy skills were regarded as important but difficult to acquire, so also, language skills and a broad cultural awareness were seen as being of particular importance. But this phase has fizzled out.

The increased use of arbitration and other ADR processes lies not only with the parties’ control over the process but also primarily with their ownership of the pace of the proceedings and the confidentiality and privacy afforded by arbitration and ADR generally. In sub-Saharan Africa where the perception of lack of commercial sensitivity by the courts is an issue, considerations such as costs, neutrality, expertise of arbitrators and finality have been pointed out as additional advantages to the increased desire for arbitration.

Users have also indicated that international arbitration affords resolution of disputes independent of political and bureaucratic issues. Thus, while international companies investing in Africa drive the demand for international arbitration, local entrepreneurs have embraced international arbitration. In Nigeria development of arbitration and ADR has been boosted by changes to the legal framework in order to support arbitration and ADR. The courts have taken arbitration-friendly positions and governments are updating old arbitration legislation to comply with modern norms. Case in point, the Lagos State Arbitration Law No 18 of 2009.

Generally, home jurisdictions are considered to be safe seats for settlement of small commercial disputes, while some disputants referenced the United Kingdom, France and Switzerland as safe seats when dealing with large and sensitive commercial disputes. With Mauritius making substantial gains as an international seat, Johannesburg, Kigali and Lagos are seen as the growing contenders to establishing themselves as international seats. It is therefore clear that these jurisdictions have begun to develop a body of competent practitioners and eventually parties will no longer feel obliged to leave the region in order to resolve their disputes.

Despite the ICC, the LMAA and the LCIA remaining the institutions of choice for multinational companies negotiating agreements, national arbitration institutions have been, and are at different stages of development across Nigeria e.g. the Lagos Court of Arbitration, Lagos, ICAMA and JANADA in Abuja, and most recently the Abuja Chamber of Commerce Dispute Resolution Centre (ACCI). These developments are substantially transforming the perception of arbitration with more parties willing to agree to institution-administered arbitration while gradually moving away from ad hoc arbitrations.

Therefore, to the young practitioners, the need for greater specialization and the lack of experienced arbitrators still remains highlighted as a necessity to promoting the career prospect of arbitration. As long as commerce thrives, there will always be disputes to be resolved. It doesn’t have to be a small or big dispute, or be resolved at an escalated stage to give the arbitrator, mediator, conciliator or negotiator the renowned expertise. 

It is important to state further that asides from commercial disputes, other templates abound for trying out our skills as practitioners in resolving disputes. Market places, community or town hall meetings, school, churches and even courtship/relationships, afford the perfect opportunity to turn practice into perfection. 

Legislative reform, enforcement regime and institutional rules are becoming more homogenous thereby reflecting international best practices and the willingness to meet the demands of users. It has also presented a platform not just for the discovery process but also for economic development. Advancement in technology has and will continue to support, if not radically change, the arbitration process to the benefit of the young.

Increasing competition perceived to be the main hurdle for young practitioners calls for specialization, which could be both strength and a weakness dependent on one’s viewpoint. Expertise required from a mix of practitioners is a welcomed sub-specialization in sector knowledge for the young practitioners. My charge to you is that you ensure that you prepare, prepare and prepare. Fortune or good luck they say or is it opportunity favours the prepared. 

Thank you for your kind attention.


[1] Noussia, Confidentiality              in                    International                 Commercial                    Arbitration,                    DOI               10.1007/978-3-642-10224-02 ©                        Springer    Verlag         Berlin          Heidelberg                       2010.     

[2] Sylvan Gotshal, Arbitration’s Importance to the Lawyer, 1 B.C.L. Rev. 151 (1960), http://lawdigitalcommons.bc.edu/bclr/vol1/iss2/2

[3] Paul Idornigie (2014) Commercial Arbitration Law and Practice in Nigeria   

[4] Dele Peters (2004); ADR in Nigeria: Principles and Practice; Dee sage Nigeria Limited.                     

[5] Paul Idornigie (2014) Commercial Arbitration Law and Practice in Nigeria

[6] Edna Sussman and John Wilkinson, Benefits of Arbitration for Commercial Disputes, (2012) The Arbitration Committee of the ABA Section of Dispute Resolution brochure for broad dissemination to educate users 

[7] Frank D. Emerson, History of Arbitration Practice and Law, Cleveland university (1970) engagedscholarship@CSU law journal, vol. 19 pg. 155164

[8] Steven A. Certilman, Throw Down The Muskets, Seek Out The Town Elders, This Is A Brief History Of Arbitration In The United States, 2012, vol. 3 No. 1 pg. 10-12

[9] Alao, David Oladimeji PhD., Interrogating the Involvement of Native Gods in Contemporary African Conflict Management, Global Journal of Politics and Law Research, 2015

[10] Paul Oboarenegbe Idornigie, The Legal Regime Of International Commercial Arbitration, A thesis in the Faculty of Law School of Postgraduate

Studies, University of Jos, in partial fulfilment of the requirements for the award of the degree of Doctor of Philosophy, 2002, pgs. 84-113  11 (1998) 4 NWLR Part 90, 554 at 586

[11] J.Olakunle Orojo & M. Ayodele Ajomo, Law and Practice of Arbitration and Conciliation in Nigeria (Mbeyi & Associates (Nigeria) Limited 1999) Chapter 1, pages 3 & 13

[12] Arbitration and Conciliation Decree, 1988 now cited as Cap A18 2004 Law of the Federal Republic of Nigeria. The Arbitration Act is listed on UNCITRAL’S official list as based on the Model Law. Hitherto the different regions constituting Nigeria had arbitration laws based on the 1914 Arbitration Act of England. The arbitration laws of the various states derive their source from the laws of the various regions from which the states were created.

[13] In the bid to aid understanding of the provision and implication of the evolving practice of Arbitration in Nigeria, the Nigerian Institute of Arbitrators on the 30th of January 2018 organized a seminar entitled ‘Review of the Arbitration and Conciliation Act- Prospects and Challenges in the Arbitration Practice in Nigeria’. This seminar was organized bearing in mind the effect of the bill on the state of arbitration practice in Nigeria when signed into law by the National Assembly.

[14] Rand Institute for Civil Justice, Business to Business Arbitration in the United States, Perceptions of Corporate Counsel (“Rand”), p. 1, 30 (2011).

[15] Ibid

[16] Price Waterhouse Coopers, International Arbitration, Corporate Attitudes and Practices, (“PWC”), p. 8 (2008) 18 Rand, supra note 1 at p. 32

[17] Randall Kiser, Beyond Right and Wrong, p. 63 (publ. Springer) 2010

[18] American Arbitration Association, Splitting the Baby: a New AAA Study, available at http://www.adr.org/sp.asp? id=32004

[19] Chris Guthrie Misjudging, 7 Nev. L.J. 420, 451-453 (2007) 22 PWC supra note 2 at p. 8.

[20] David Richbell, How to Master Commercial Mediation, (2015) Bloomsbury Professional Limited

[21] http://mediatelegal.co.uk/mediation-stats-law-society-gazette

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