As with most legal concepts, Arbitration can be said to have been introduced with the coming of the colonialists. This assertion will however be completely wrong to follow as the practice of arbitration was a predominant one is the traditional african society. For instance, in the east, though society was majorly decentralised with no particular leader or village head, governance was implemented through the age grade system, where persons in society belonged to different groups based on their age and class in society. Each age grade had a leader to whom all misunderstanding and disputes between members were brought. Thus, where there was a dispute between two or more persons in an age grade, the issue was presented to the age grade leader who acted as an impartial third party, listened to the case of persons involved in the dispute and gave declarative orders to party which he felt was in the wrong. This is basically what the concept of “arbitration” entails.
Arbitration according to the Chartered institute of arbitrators (UK) is a non-judicial process for the settlement of disputes where an independent third party – an arbitrator – makes a decision that is binding. From this definition, there are certain points that can be drawn out;
- It is non-judicial- This means that it does not involve the usual court process.
- It involves an independent third party, called an arbitrator
- It always ends in a settlement which us binding on parties involved.
Arbitration has some peculiar characteristics which separate from traditional litigation. They are;
- Arbitration is consensual; That is, arbitration can only take place if both parties agree to it.
- The parties choose the independent third party( arbitrator) as opposed to litigation where the parties have no such freedom in picking a judge.
- Arbitration is a confidential procedure. The public is not entitled to particulars of any case under arbitration.
- The decision of the arbitral tribunal is final and easy to enforce. This is however not the case in certain circumstances
Arbitration has been said to be much more advantageous than litigation as we know it while some others have argued that litigation still has no worthy competition till date. On this note, it would be incisive to examine both the pros and cons of the concepts. Note also that its advantages can also be gleaned from is unique characteristics
- In arbitral proceedings the language of arbitration may be chosen, whereas in judicial proceedings the official language of the country of the competent court will be automatically applied.
- Because of the provisions of the New York Convention 1958, arbitration awards are generally easier to enforce in other nations than court verdicts
The following however are some of its disadvantages:
- There are very limited avenues for appeal, which means that an erroneous decision cannot be easily overturned.
- Although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays.
- The courts may still be imbolved in an arbitral proceeding, especially where parties do not voluntarily comply with the provisions of the award. The court’s assistance will be sought in the enforcement of such award.
- Arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of member.
Governing statutes and conventions
The governing statute in the operations of arbitration in nigeria is the Arbitration and conciliation act, (ACA)of 1988 which was largely fashioned like the United Nations Commission on International Trade Law (UNCITRAL) Model Law, with minimal difference. This act was introduced in a bid to further formalising arbitration as it then was to suit the current changes in society. The act provides certain formalities and steps which huide the minds of the parties in instituting arbitral proceedings. Some examples of such provisions include how many arbitrators are necessary in a proceeding, requirements for a valid arbitration agreement, arbitral awards, setting aside of awards etc. Nigeria is also party to several conventions such as;
- New York Convention
- the Convention on Settlement of Investment Disputes
- the UNCITRAL Model Law; and
- The Economic Community of West African States Energy Protocol and so on.
Types of arbitration l Domestic Arbitration – This is one between persons resident or doing business is the same country and the contract is subject to be performed in the same country and subject to the local statute. E.g. Arbitration and Conciliation Act, 1988. l International arbitration – Arbitration is said to be international if the parties to an arbitration agreement have their places of business in different countries or where the subject matter of the arbitration agreement relates to more than one country or where the parties expressly agree that any dispute arising from the commercial transaction between them shall be treated as an international arbitration. l Institutional arbitration – international arbitrations may either be institutional or ad hoc. A number of organizations, located in different countries, provide institutional arbitration services, often tailored to particular commercial needs. The parties provide in their contract for the arbitration to be conducted in accordance with the rules of a named arbitration agency or institution such as the Permanent Court of Arbitration of the Peace Palace, Hague (which the Nigerian Act has designated as the Appointing Authority for International Arbitration in Nigeria in the absence of any express agreement to refer to any other Appointing Authority) International Chamber of Commerce (ICC) International Court of Arbitration in Paris, The London Court of International Arbitration (LCIA), the American Arbitration Association, the Stockholm Chamber of Commerce, the Asia-African Legal consultative committee (AALCC) and the Regional centre’s for arbitration in Kuala Lumpu, Cairo and Lagos. Also, locally, we have the Abuja Multi-Door Courthouse etc. There are also a number of regional or national arbitral institutions dealing with industry-speci c matters (e.g. insurance or commodities or investment disputes etc. the International Centre for the Settlement of Investment Disputes “ICSID”. It is important that the institution does not by themselves arbitrate on the merits of the parties’ disputes. This is the responsibility of the particular individuals selected as arbitrators. Arbitrators are virtually never employees of arbitral institutions, but, instead are private persons selected by the parties. It is only where parties cannot agree upon an arbitrator, most institutional rules provide that the host institution will act as an “appointing authority” which chooses the arbitrators in the absence of the parties’ agreement. l Ad hoc arbitration – This arises where the parties in their contract agreement do not refer to arbitration under any rules of commercial arbitration administering agency or institution, but is entered into after a dispute has arisen. It is usually more exible, less expensive (as it avoids substantial institutional costs) and more con dential than institutional arbitration. The parties to this type of arbitration usually establish their own rules of procedure that may be made to t the facts of the dispute between them as the dispute arises. A lot of disputes referred for arbitration in Nigeria are ad hoc arbitration. In conclusion, the above is just a brief expose’ in the what arbitration is, it is adviseable to consult some exhaustive texts on the subject matter for more knowledge on it. Some texts i would recommend are; l Orojo & Ajomo, “Law and Practice of Arbitration and Conciliation in Nigeria l Fabian Ajogwu (SAN), “Commercial arbitration in Nigeria: practice and procedure. l Arbitration and Conciliation act, Cap 18, LFN 2004.