LEGAL FRAMEWORK OF ARBITRATION

Generally, arbitration is one of the major mechanisms of resolving disputes out of court. It is
a method that is majorly used in commercial transaction parlance. It can be said that it
predates judicial process (i.e litigation) that is mostly used now and it has now been
developed in all ramifications with technological advancement such as online arbitration and
dispute resolution.

Arbitration as a form of ADR is usually binding on the party. There are three parties in
arbitration;

 The claimant
 Defendant
 The Arbitrator (s).

The decision of the Arbitrator is called an “AWARD”. It is not appealable but it can be
challenged or varied on some grounds, i.e bias, prejudice or undue favour etc.

Note that Arbitration proceedings can either be domestic or international.

GENERAL PRINCIPLES OF ARBITRATION

There are general principles guiding arbitration proceedings, which are not limited to;

1. Voluntary Agreement –: parties to the contract must be willing to submit themselves

to the arbitration panel, unlike in court proceedings where one could be compelled to
appear before a judge. Note that an arbitration panel gets its constitutional authority
from the express and voluntary approval of the parties concerned. (See the case of
Agu v Ikewibe (1991) 3 HMR (PT 180) 385 at 420-421 S.C)
2. Binding Decision -: Since parties have voluntarily agreed to use arbitration, the
binding nature stems from the parties agreement. The binding effect will reflect the
consensual nature. ( See Environmental Dev.Construction V Umara Association)
Where the court held that a party will not be allowed to scuttle out of it simply by
reason that it did not favour it. The submission of the parties is irrevocable unless by
leave of court, or by a judge or by mutual consent.
 3. Properly Constituted Tribunal -: The panel must be properly constituted. The
appointment of the panel could be by the parties, court or by a nominated third party
where it is provided in the agreement.
4. Fair Hearing-: An arbitrator is under moral obligation to use skill, diligence and care
in carrying out his duties. The principle of fair hearing is substantial as held in Shell
Trustees (Nig) Ltd v Imani & sons Ltd (2002) 6 NWLR pt (662) 639 at 660-661
CA. Impartial and Unbiased umpire- although not bound by strict evidence Act but
bound by the Rules of Natural Justice.

SOURCES OF NIGERIAN LAW IN ARBITRATION

Legal Framework in Arbitration.

Laws of Arbitration dates back to Arbitration Ordinance of 1914 which came into force on
31st December, 1914 and it was modelled after the English Arbitration Act of 1899. This took
place during amalgamation of the Northern and Southern protectorates of Nigeria.

The ordinance was re-enacted in 1958 and it was applicable to the whole country. In the
western region, it was adopted as Arbitration Law, chapter 18, Laws of the western region of
Nigeria, 1959.

On the 14th of March, 1988, the ordinance was changed to a decree, i.e Arbitration and
Conciliation Decree, of No 11of 1988 by the Federal Military Government. The decree
applied throughout the federation and superseded state laws.

Then in May, 1999, the civilian government took over from the military government and it
was further changed to Arbitration and Conciliation Act Cap A 18, LFN 2004.

LEGAL FRAMEWORK ON INTERNATIONAL ARBITRATION

An international arbitration occurs where the parties to the arbitration agreement have
different Nationalities or have different places of business in different countries or where the
substantial part of the business is to be performed outside the country in which the parties
resides or where parties agreed that their commercial transaction shall be treated as an
international arbitration.
The foreign elements in this are Nationalities of the parties, arbitrators, place of arbitration
and place of enforcement. It must be noted that there are no general codes, statue books and
other unified materials for international law except for usages, practices, international
conventions, treaties, rules etc which can serve as guide for us. Conventions addresses the
government while rules address the parties. One of the major international laws on
commercial arbitration is United Nations Commission of International Trade Law
(UNCITRAL).

UNCITRAL

The emergence of UNCITRAL was as a result of the United Nations General Assembly No.
2205 (XXI) of 17 December 1966, Annex 1 which was majorly based on development of
progressive framework in pursuance of harmonization and modernization of the law of
International trade by preparing and promoting the use and adoption of legislative and non -
legislative international instruments in commercial law parlance which includes dispute
resolution, international contract practices, transport, insolvency, electronic commerce and
procurement and sale of goods.

UNCITRAL has formulated modern, fair and harmonized rules on commercial transactions
via

1. Conventions, model laws, rules etc. For Example;

1958 New York Convention on the recognition and Enforcement of Foreign Arbitral Awards
on the limitation period of the International sale of goods, 1914.

UNCITRAL model laws on Electronic Commerce, 1996

Rules – UNCITRAL Arbitration Rules 1986 & 2010.

UNCITRAL Conciliation Rules, 1980.

2. Legal and legislative guides.

3. Updated information in case law and enactment of uniformed commercial law
4. Technical assistance in law reform projects.
5. Regional and National seminars on uniform commercial law.

WHAT LED TO UNCITRAL LAW

 1. Inadequacy of domestic law and disparity between national laws.
2. Specialised procedural regime for international commercial arbitration and
delimitation of court assistance and supervision.
3. To provide substantial uniformity in the areas of arbitral agreement i.e composition,
jurisdiction, conduct of arbitral proceedings, recognition and enforcement of awards.

N.B. In all cases, the arbitral tribunal shall decide in accordance with the terms of contracts
and shall take into account the usages of the trade applicable to the transaction. See section
47 (5) of the Act.

The UNCITRAL model law. The United Nations adopted the UNCITRAL model law of
1985. At the General Assembly Resolution No.40/72 of 11 December, 1985. It
recommended that …“all states give due consideration to the UNCITRAL Model Law on
International Commercial Arbitration, in view of the desirability of uniformity of the law of
arbitration procedures and the specific needs of international commercial practice and same
was repeated in 2006.

On 25th January 2015, 67 countries (or 97 jurisdictions) including Nigeria have adopted this
model law. Nigeria was the first African state to adopt the UNCITRAL model law with the
promulgation of Decree No.11 of 14th March 1988.

The need for it is to cure the defect or the lacuna in municipal laws in international
commercial transaction and to regulate and harmonize the disparities in other national laws
and for some laws that are outdated.

EFFECTS AND FEATURES OF UNCITRAL MODEL LAWS

1. Arbitral agreements; some national laws allow oral, while some written.
Doctrine of Separability: Some allow arbitrary agreements to be concluded and valid
after the dispute has arisen.
2. Appointments of Arbitrators: freedom of appointment were restricted in some parts by
disqualifying foreigners or women or required courts confirmation.
3. Conduct of arbitral proceedings: disparities, as to the applicable laws of evidence.
4. Delivery of arbitral awards- all arbitrators must sign, setting aside; varies from one
jurisdiction to the other.
 5. Recognition of parties’ autonomy- Article 19 (1) of the model law provides – subject
to the provisions of this law, parties are free to agree on the procedures to be followed
by the arbitral tribunal in conducting the proceedings.
6. The principle of fair hearing and equality of the parties. Article 18 provides. Parties
shall be treated with equality as each party shall be given a full opportunity presenting
his case. A breach of which is a ground for setting aside as award.
7. Arbitral tribunal may rule on its own jurisdiction and the principle of separability is
recognised. Articles 11 and 16 of the UNCITRAL model law.
8. It has de-localized arbitral proceedings.
9. Uniform recognition and enforcement of foreign arbitral awards. Article 11 (3) of the
1958 New York convention, Article 31 of the Model law provides for the content and
forms of arbitral awards i.e must be in writing and signed by the arbitrator(s), where
they are more than one, all or majority must sign. It is a model law and not a
convention, so it is flexible and the adoption varies.

CONVENTION/ARBITRAL INSTITUTION AND RULES

1. The Geneva protocol of 1923

2. The Geneva convention of 1927
3. The New York convention of 1958
4. The Washington convention of 1965
 New York convention of 1958 (read).

THE CONVETION ON THE SETTLEMENT OF INVESTMENT DISPUTES

BETWEEN STATES AND NATIONALS OF OTHER STATES

It is also known as 1965 Washington convention. It was formulated in March 18 1965 and
was enforced on October 14, 1966 after it has been ratified by 20 countries. Pursuant to the
1965 Washington convention, the international centre for the settlement of investment dispute
(ICSID) was created in 1966.

ICSID arbitration is available only with respect to disputes to which a state is a party and the
convention is promoted by World Bank.
 As at June 30 2014, 159 countries have ratified it. Its major aim is to resolve disputes
between states and foreign investors’ also known as bilateral investment Treaties (BITs)
Arbitration.

ARBITRAL INSTITUTIONS

This institution has a formal procedure and rules designed to assist the parties. They may
adopt their own rules.

Advantages

1. Availabilities of pre-established rules and procedure

2. Administrative assistance with secretariat or court of arbitration
3. Appointment of arbitrators by the institution
4. Physical facilities and support service
5. Acting is appointing authority.
6. Established format that is workable for diverse disputes.
 Some of the institutions are;
1. London Court of International Institution ( LCIA)

Founded in 1892, it has joint management committee made up of reps from chartered
institute of Arbitrators, the London chamber of commerce and industry and corporation of the
city of London; LCIA does not need to consult National Committees- ¾ of the members are
not from UK and can administer arbitration anywhere in the world.

 Features
1. Provision for multi-party arbitration.
2. Emergency arbitrator
3. Majority power to continue deliberations
4. Additional powers to the Arbitral tribunal

2. International Chamber of Commerce ( ICC)

Created in 1920 and in 1989 the name was changed to international court of arbitration.

The first case was decided in 1923 as is the leading international arbitration institution in
terms of volume of cases and decided in the city.
Criticism – the court has been criticized to draw terms of reference which eventually leads to
a waste of time or time consuming.

- The awards rendered by ICC are not communicated to the parties directly. It is
scrutinized by ICC court.
- ICC does not settle dispute itself. It provides a forum for the settlement by arbitration
of business disputes of an international character.

3. The International Centre for Dispute Resolution (ICDR)

It is the international division of the American Arbitration Association (AAA). AAA
was established in 1926 to promote resolution of disputes by Arbitration. It provides
dispute resolution services around the world.

Features
1. International expedited procedure
2. Founder and consolidation.
3. Time within which an award shall be made.
4. World Intellectual Property Organization (WIPO)

The centre is based in Geneva and also has arbitration rules. It is specialized in Intellectual
property. Established in 1994 and its rule came out on June 1st, 2014.

Features

1. Preparatory conference
2. Founder and consolidation
3. Currency and interest.

5. The London Maritime Arbitrators Association (LMAA)

6. The Asian – African Legal Consultative Organisation (AALCO) etc.

Note- Section 15 draws out the difference between domestic and international arbitration
in terms of the rules applicable. S53 – for International.