The Arbitration and Mediation Act (AMA) 2023, enacted into law on May 26, 2023 represents a significant milestone in Nigeria’s dispute resolution landscape. AMA replaces the outdated 1988 Arbitration and Conciliation Act and has introduced extensive reforms for improved efficiency, enhancing international confidence in Nigeria’s arbitral landscape, with the aim to ultimately make Nigeria an attractive seat for arbitration and mediation.
The Act further codifies the practice of mediation lot in Nigeria, for the first time and in so doing, regulates the practice of mediation within the parameters of international best practices.
This review highlights some of the Act’s salient sections and brings to the fore its transformative impact on Nigeria’s Alternative Dispute Resolution landscape.
HIGHLIGHTS OF THE NEW ACT
1. Heightened Measures for Better Efficiency: The Act introduces provisions for the appointment of emergency arbitrators (Section 16), case consolidation (Section 39), and electronic communication tools for streamlined proceedings, improving the arbitration process. The provision for emergency arbitrators enables parties to address urgent matters promptly, even ahead of the constitution of the proper tribunal, thereby affording parties the opportunity for interim relief before the determination of the substantive issues in dispute. The inclusion, in the Act, of electronic communication and procedural tools, such as virtual hearings, electronic filing, and document production significantly improves the efficiency of the arbitral process, allowing for quicker resolutions, reduced costs, and streamlined proceedings. The Act, by virtue of Section 40, also permits the joinder of additional parties who are prima facie, committed by the arbitration agreement.
2. Alignment of Statutes of Limitation: Section 34 of the Act aligns the statutes of limitation for arbitral proceedings. Section 34(4) introduces a significant change to the limitation period for the enforcement of awards. The limitation period now excludes the duration of the arbitration process itself. This provision addresses the controversy surrounding the calculation of time for enforcing arbitral awards, which was previously counted from the accrual of the cause of action. By excluding the period during which the arbitration is ongoing, the Act ensures a fairer and more balanced approach to determining the timeframe for enforcement of arbitral awards.
3. Introduction of the Award Review Tribunal (ART): Section 56 of the Act establishes the Award Review Tribunal (ART) to manage challenges to awards in a timely manner. Parties can agree to file for reviews of the award before the ART, thereby reducing the burden on the courts and hopefully, shortening length of time for a successful party to wait before the award is enforced. The Act, however, permits parties, if necessary, to seek further court review of the ART’s ruling. The ART is mandated to render its award within sixty (60) days. It is hoped that the presence of the ART in the Act will significantly reduce incidences of award setting aside
procedures brought before the courts.
4. Validity of Electronic Communication in Arbitration Agreements: A significant highlight of the Act is outlined under Section 2(4). The section recognizes electronic communication as a valid form of an arbitration agreement, if the information contained therein is accessible and usable for subsequent reference. By embracing electronic communication, the Act acknowledges the evolving landscape of modern communication methods and the need to adapt legal frameworks accordingly. This recognition not only enhances convenience and efficiency but also ensures that the intent of the parties, even though electronically conveyed, can be given expression to.
5. Sole Arbitrator as the default number of arbitrators: The Act makes provision for the appointment of a single arbitrator as the default number of arbitrators, where the parties have not specified, in the arbitration agreement, how many arbitrators unlike in the former law which had three arbitrators as the default. To a large extent, this provision is poised to significantly lower arbitration costs. Section 6(2).
6. Expansion of the scope of Costs: Section 50 of the Act recognizes third-party funding and Institutional fees as part of costs of arbitration. This provision demonstrates Nigeria’s commitment to modernizing arbitration practices, facilitating fair cost allocation, and broadening opportunities for effective participation in dispute resolution through arbitration.
7. Third-Party Funding: The introduction of the new Section 61 has done away with the torts of maintenance and champerty in arbitration and arbitration-related court actions. This abolition legalizes third-party funding arrangements, affording accessibility to parties for the resolution of their disputes. Section 62 imposes a requirement mandating supported parties to disclose to counterparties, the arbitral tribunal, and relevant arbitral organizations.
8. Interim Measures of Protection: By virtue of Section 20 of the Act, the arbitral tribunal is empowered to grant interim measures upon a party’s request. This is a significant improvement on the arbitral efficiency as it clothes the tribunal with powers to grant interim measures of protection rather than parties having to refer to the courts for same. Section 28 makes the interim relief granted enforceable by any court of law regardless of where the order was procured, just like a court judgment.
9. Lien on Arbitration Award: A crucial provision is introduced under Section 54, which expressly allows tribunals and arbitral institutions to place a lien on final awards until all arbitrators’ fees and institutional costs have been paid in full by the relevant parties. The practical matter of prompt and equitable compensation for the arbitrators and institutions is addressed by this provision. The Act, by this section, establishes a mechanism to protect the financial interests of arbitrators and institutions.
10. Recognition of Foreign Arbitral Awards: The Act, under Section 60, significantly codifies the recognition and enforcement of foreign arbitral awards. The Act offers a clear framework for the recognition and enforcement of international arbitral judgments by explicitly adopting the New York Convention.
11. Mediation: Part II of the Act, for the first time, regulates the practice of both domestic and international Mediation. Section 76 guarantees the secrecy of mediation sessions, whilst Section 77 limits the admissibility of mediation remarks as evidence in subsequent cases, thereby giving parties better comfort to approach and use mediation as a final dispute resolution mechanism.
12. International Reach and Commercial Mediation: Section 87 of the Act extends the applicability of the Singapore Convention by giving recognition to international settlement agreements made outside of Nigeria, provided it emanates from a signatory state and the dispute arises from a commercial relationship. This provision embraces international commercial mediation, domestic commercial mediation, domestic civil mediation, and settlement agreements arising both from domestic and international mediation.
With the passage into law of the Arbitration and Mediation Act, 2023, a new vista of hope has been opened for Alternative Dispute Resolution (ADR) in Nigeria. With the reforms in this law, Nigeria is now positioned as a key arbitration hub in Africa.
Diane Okoko, FCIArb, FICIArb, is the principal partner of Marcus-Okoko & Co., and she specializes in Arbitration, Corporate Law and Regulatory Compliance.
Theophilus Ifeoluwa Aigbogun is a Junior Associate of Marcus-Okoko & Co., and he specializes in Corporate Law, Technology Law and Regulatory Compliance