Why Multinational Companies Do Not Make Nigeria The Venue and Seat of Arbitration

Despite the numerous advantages of Arbitration and ADR to the global economy, Nigeria has steadily witnessed a slow-paced development in the settlement of commercial disputes through arbitration and other ADR mechanisms. Majority of the Multinational companies with huge transactions and high-profile Commercial disputes have continually made foreign countries the venue and seat of Arbitration.

Numerous Arbitral proceedings are conducted outside Nigeria even though the commercial disputes occurred in Nigeria. Unfortunately, this has led to low patronage of Nigerian Arbitrators, and the increasing volume of arbitrable disputes In Nigeria has not translated into many businesses for Nigerian Arbitrators.

In a bid to foster the growth of arbitration in Nigeria, Numerous legal luminaries have urged businesses and legal practitioners to make Nigeria the seat and venue of arbitration, especially where the subject matter of the dispute is connected to Nigeria. At the 2022 Annual Conference of the Nigerian Institute of Chartered Arbitrators (NICArb), The Attorney-General of the Federation and Minister of Justice, Abubakar Malami, SAN noted that making Nigeria the seat and venue of Arbitration in commercial agreements would enhance foreign direct investment and further boost the Country’s economy.

While some persons have attributed these concerns to the lack of confidence in Nigerian Arbitrators, it is pertinent to state that there are other reasons why this menace exists.

The major reasons why Multinational Companies do not make Nigeria the seat and venue of Arbitration are:

The ease with which arbitral agreements and awards are dismissed by Nigerian Courts on grounds of technicalities; 

A classic example of this discouraging circumstance is the decision of the Court of appeal in Mekwunye v. Imoukhuede, it took the intervention of the supreme court to overturn this decision, and despite the Supreme court’s decision, it took 12 years between 2007 when the arbitral award was made and 2019 when the Supreme Court finally laid the matter to rest.

In Mekwunye’s case (supra), the Court of Appeal had indeed set aside the Arbitral award based on a minor error on the executed agreement; the arbitration clause had wrongly referred to the appointing authority as “Chartered Institute of Arbitrators, London, Nigeria Branch,” instead of “Chartered Institute of Arbitrators, UK, Nigeria Branch”.

The Court of appeal dismissed the arbitration agreement and the arbitral award on the ground that the name of appointing authority was wrongly written. This decision brought distrust and uncertainties to the future of commercial arbitration in Nigeria as no Company would want to have its commercial disputes resolved in a country where judicial intervention is capable of setting aside an arbitral award at any cost on the ground of technicalities.

Delays and bottlenecks in enforcement of arbitral awards and appeals;

Even though the 2018 World Bank index on ease of doing business ranked Nigeria as 96th in enforcement of contracts and stated that it takes about 454 days to enforce a contract through the court, the length and stress involved in enforcement of arbitral awards in Nigeria is not entirely pleasant for commercial activities as profits from arbitral awards may remain inaccessible for a long time due to the number of days involved before enforcement is achieved. Aside from the long duration in enforcement of arbitral awards, another major challenge is the duration of appeals; appeals may be pending for 8 to 10 years if taken from the High Court to the Supreme Court.

In providing a solution to this menace, The Nigerian Institute of Chartered Arbitrators (NICArb) has suggested that specialized commercial courts be established to tackle the delays in enforcement of arbitral awards. It is also suggested that the leave of Court should first be sought and obtained before an application to challenge an arbitral award or an appeal against the enforcement of an award is brought before the court. 

long overdue laws which do not embrace recent global trends in International Commercial Arbitration;

The principal enactment governing the practice of Arbitration in Nigeria is the Arbitration and Conciliation Act which was enacted in 1988 and is now long overdue for a change. There are numerous 21st-century advancements which are not yet applicable in Nigeria due to delays in the enactment of a new Arbitration and Mediation Act. The National Assembly has passed a bill known as the Arbitration and Mediation Bill 2022 (the “Bill”), The Bill represents a significant upgrade from its predecessor but unfortunately, the bill is still awaiting Presidential Assent since the 10th of May 2022.

In conclusion, there is a need to develop a national policy on Arbitration, ensuring that trades and contracts executed in Nigeria have embedded in them an Arbitration clause that makes Nigeria the venue and seat of Arbitration and thereby promoting job creation and economic growth. As a full or part-time Arbitrator, what is key is having jobs or services to render. Nigerians get trained in ADR and Arbitration with the hope that they will make a viable career and also make a living. Unfortunately, they are faced with a lack of opportunities to practice the skills.

References:

  • Suit No. SC/851/2014: Dr. Charles Mekwunye V Christian Imoukhuede (Judgment delivered on 7th of June 2019)

  • Prof. Olubayo Oluduro, PhD (Ghent), FCArb. & Akin Olawale Oluwadayisi, Ph.D. (Ilorin) (2021) Journal on Arbitration volume 16  Number 1 ISSN: 2021-957x pp. 1-165

  • Urska Velikonja, ‘Making Peace and Making Money: Economic Analysis of the Market for Mediators in private practice,’ 72 (2009) Albany Law Review, 257-291 at 271

Written by :

ONI Oluwatoyin Bamidele

[email protected]

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