Author: Diane Okoko, FCIArb, FSCIArb
A major attraction to arbitration is the ability of Parties to enforce an award in other states which do not necessarily have to be the state where the award was given. This is largely due to bilateral and multilateral treaties amongst nations, the world over. The 1958 NY Convention makes it easier to enforce an international arbitral award, even more so than court judgements obtained from litigation. International awards, distinct from domestic awards, in recent times enjoy the status of a foreign judgment. Whereas 161 State Parties have signed the Convention, same cannot be said of countries that have reciprocal arrangements for the enforcement of judgments. Thus, an arbitral award, regardless of the quality of its reasoning and remedies granted, loses value where it is unenforceable. Arbitration has gained remarkable acceptance within the business community for a myriad of reasons, some of which include; a. Its private and less formal nature; b. speed of the process; c. flexibility; d) less expensive nature of arbitral proceedings (although this has been questioned in recent times in the light of the complexity of and quantum of amounts involved in the disputes and thus, the cost of the proceedings as a whole). Of all of these, confidentiality is the bedrock of arbitration based on the privacy of the arbitral process. It is one of the hallmarks of arbitration and one of arbitration’s most prominent features, one which has endeared arbitration as the preferred means of dispute resolution in the business world.
Confidentiality has been considered essential to arbitration as it recognises the needs of businesses to maintain secrecy inherent in their dealings. The protection of business secrets is perhaps the primary purpose of the principle of confidentiality. Confidentiality also affords business partners to continue doing business even where there is a dispute on some aspect of the transaction. Parties to an arbitration value confidentiality for more reasons than the above, however, some of these reasons are not un-related to the almighty concept of party autonomy. Parties want to have greater control over their proceedings, inclusive of a greater influence over the choice of applicable law, the forum and jurisdiction in which the dispute will be heard and a greater efficiency in terms of money and time. In recent times, however, there has been a clamour for transparency especially in investment treaty arbitrations which have led to a number of initiatives towards incorporating more “openness” into the arbitral system.
This paper will discuss how awards made within the OHADA region can be enforced in non-OHADA signatory states with emphasis on the Nigerian experience i.e. how awards obtained under the Organization for The Harmonization of Business Law in Africa (OHADA) jurisdictions can be effectively enforced in Nigeria. The paper will attempt to lay out the ways by which an OHADA based arbitration award can be enforced fluidly in the Nigerian courts through the examination of critical sections of the Nigerian Arbitration Act as well as some extant laws which enable same. It is noteworthy to point out at this point that Nigeria is not an OHADA signatory state.
Intra-African arbitration awards are those awards made within the continent for which enforcement is sought in another country different from the country where it was made. For the purpose of this paper, the issue of enforceability of foreign arbitral awards in Nigeria will be examined under these five instruments namely;
a. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“the New York Convention”);
b. The OHADA Treaty; and
c. The Arbitration and Conciliation Act (ACA)
d. Enforcement under the Foreign Judgment (Reciprocal Enforcement) Act
e. Enforcement under the International Centre for Settlement of Investment Disputes (ICSID) Arbitration Rules
The New York Convention, 1958
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, commonly referred to as “the New York Convention” was adopted by the United Nations member states in June 1958 as a guide for the recognition and enforcement of foreign arbitral awards amongst contracting states. Nigeria ratified the Convention on March 17, 1970 with its arbitration rules being domesticated by virtue of S.54 of the Arbitration and Conciliation Act.
Context of the New York Convention
Article I of the New York Convention sets out its scope of application. It also sets out two considerations which a nation may adopt when acceding to the Convention. The first being the ‘reciprocity rule’, where recognition is given only to awards made by another signatory state. The second consideration allows a nation to apply the New York Convention only to those transactions considered "commercial" under its own national law.
From the above, it is obvious that the Convention, has an underlying intent to make enforcement within signatory states as simple as possible as it does not lay down stringent conditions to be met before enforcement can be effected. Article IV of the Convention lays down the procedure for obtaining enforcement of an award. It is to the effect that to obtain the recognition and enforcement of an award in a contracting state, the party applying for recognition and enforcement shall, at the time of the application, supply:
a. The duly authenticated original award or a duly certified copy thereof;
b. The original agreement referred to in article II or a duly certified copy thereof.
Paragraph 2 of Article IV states that “If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent”.
Recognition and enforcement of the award may be refused under any of the following circumstances as provided by paragraph IV of the Convention:
a. A party to the arbitration agreement was, under the law applicable to him, under some incapacity, or the arbitration agreement was not valid under its governing law;
b. A party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
c. The award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration (subject to the proviso that an award which contains decisions on such matters may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those matters not so submitted);
d. The composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the hearing took place (the "lex loci arbitri");
e. The award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement;
f. The subject matter of the award was not capable of resolution by arbitration; or
g. Enforcement would be contrary to "public policy".
OHADA Uniform Arbitration Act, (UAA) 2018
OHADA arbitration is governed by the UAA and Common Court of Justice and Arbitration (CCJA) Rules. The initial versions of these two bodies of rules were adopted on 11 March 1999 and after nearly 20 years of application, they were modified by the Council of Ministers on 23 November 2017 in Conakry, to take into consideration the recent developments in international arbitration. The revised texts became effective on 15 March 2018 and abrogated the earlier versions made in 1999.
The OHADA signatory states are predominantly of the civil law legal tradition; French speaking and all but one belong to the franc economic zone. OHADA operates a uniform law regime which upon adoption, becomes automatically applicable in all its member states. Within OHADA, there is the CCJA which has final jurisdiction on matters pertaining to OHADA Uniform Acts. The provisions of the UAA take into consideration some important principles of French, Belgium and Swiss international arbitration law, while being more closely inspired by the UNCITRAL Model Law on International Arbitration.
Concerning its scope of application, the UAA applies if the seat of arbitration is within the OHADA territory, for the settlement of a contractual dispute when the contract is to be applied, partially or totally, in the OHADA territory or if at least one contractual party has its domicile or residence in the OHADA territory.
Considering that this paper is for the purpose of discussion enforcement of OHADA awards in Nigeria, discussion on the UAA is restricted to only a passing reference for the sake highlighting the requirements for enforcement and not in depth as the UAA will not apply in Nigeria not being a signatory state.
Enforcement of Foreign Awards Under the UAA
Provisions for recognition and enforcement, refusal and annulment of arbitral awards are contained in Articles 25 and 30 – 34 of the OHADA UAA. Article 25 is to the effect that an award is final and binding on the parties and has a res judicata effect. Articles 30 – 34, however apply to member states only.
Article 30 of the OHADA UAA provides that an arbitral award may be forcefully executed only by virtue of an order of exequatur granted by a competent Judge of a state of the parties. Article 31 sets out the requisite documents to be produced by a party seeking enforcement thus;
a. The original award;
b. the arbitration agreement or copies of the documents meeting the conditions required to establish their authenticity.
c. Where those documents are not written in one of the original language(s) of the Member State where the exequatur is demanded, the party shall submit a translation certified by a translator registered on the list of experts established by the competent courts.
It provides for the refusal or denial of recognition and exequatur only where the award is manifestly contrary to international public policy of the parties’ states.
Under the OHADA UAA, the major ground for refusal to grant an exequatur is;
“where the arbitral award is manifestly contrary to a rule of international public policy of the States Parties”.
The Arbitration and Conciliation Act (ACA),
The ACA is modelled after the UNCITRAL Model Law and has almost mirror provisions. For the purpose of enforcement of foreign arbitral awards, Nigeria is a signatory to the New York Convention and so she is under an obligation to recognize and enforce any foreign award by virtue of the reciprocity requirement, subject to conditions as laid down by the Act.
An application for recognition or enforcement of foreign arbitral awards in Nigeria shall be made in the ‘court’ and S. 57 (2) of the ACA has defined the ‘court’ to mean the High Court of a State, the Federal High Court, and the High Court of the Federal Capital Territory, Abuja.
S. 51 of the ACA provides a unified legal framework for recognition and enforcement of arbitral awards of foreign arbitral awards thus;
1. "An arbitral award shall, irrespective of the country in which it is made, be recognized as binding and subject to section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.
2. The party relying on an award or applying for its enforcement shall supply;
a. the duly authenticated original award or a duly certified copy thereof;
b. the original arbitration agreement or a duly certified copy thereof; and
c. where the award or arbitration agreement is not made in the English language, a duly certified translation thereof into the English language."
The provision of S.51 of the ACA is manifestly different from that of Article 1(3) of the New York Convention to the extent that it does not lay emphasis on the reciprocity rule. The clear wordings of the Section “irrespective of the country in which it is made” amplify the ambit within which foreign awards are enforceable in Nigeria and is an expansion of the scope covered by even the New York Convention. This singular section (S.51) represents the major difference between the 2 pieces of legislation.
In Ebokam v. Ekwenibe & Sons Trading Company the Nigerian Court of Appeal listed the following requirements needed from a party seeking recognition and enforcement under the New York Convention, 1958 as follows;
1. The arbitration agreement;
2. That the dispute arose within the terms of the submission;
3. That arbitrators were appointed in accordance with the clause which contains the submission;
4. The making of the award; and
5. That the amount awarded has not been paid.
Application to court for recognition and enforcement of an award is to be made by a Motion on Notice. Once the Court recognizes the award by granting leave to the creditor to register same, it shall be enforced as a judgment of that Court.
Under S.52 of the ACA, the application for enforcement may be refused if the respondent against whom enforcement is sought provides proof of the following facts;
a. That a party to the arbitration agreement was under some incapacity.
b. That the arbitration agreement is not valid under the law in which the parties have indicated should be applied.
c. That he was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings.
d. That the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration.
e. That the award contains decisions on matters which are beyond the scope of the submission to arbitration.
Enforcement under the Foreign Judgments (Reciprocal Enforcement Act
A fourth instrument for enforcement to be discussed in this paper is the Foreign Judgments (Reciprocal Enforcement) Act. Nigerian Courts will recognise and enforce judgments and orders of any superior court given or made in any proceedings, including civil and criminal proceedings and awards in arbitral proceedings if the award is enforceable in the country where it is made, in the same manner as a court judgment would be enforced.
“Judgment” means a judgment or order given or made by a court in any civil proceedings and shall include an award in proceedings on an arbitration if the award has in pursuance of the law in force in the place where it was made become enforceable in the same manner as a judgment given by a court in that place, or a judgment or order given or made by a court in any criminal proceedings for the payment of a sum of money in respect of compensation or damages to an injured party;
S.2 of the Act stipulates that a foreign arbitral award can only be enforced by the Nigerian courts if the award is enforceable by superior courts of the country where the award was made. By inference, the award must have the status of the judgment of a superior court of that country, whereby S.51 of the ACA grants automatic access to enforcement where it has powers of enforceability from the superior courts of the jurisdiction where it was made.
For this purpose, the enforcement mechanism is set out under Order 52, Rule 17 of the Federal High Courts (Civil Procedure Rules), 2019 thus;
“Where an award is made in proceedings on an arbitration in a foreign territory to which the foreign Judgment (Reciprocal Enforcement) Act extends, if the award was in pursuance of the law in force in the place where it was made; it shall become enforceable in the same manner as a Judgment given by a court in the place and the proceedings of the Foreign Judgments (reciprocal Enforcement) Act shall apply in relation to the award as it applies in relation to a Judgment given by that court”.
The position under the ACA when it comes to refusal of recognition/enforcement is a little different from the OHADA UAA (for use within the member states) and gives a wider latitude than the OHADA UAA. The court will refuse to recognize and enforce an award where any of the conditions laid down under S.52 (2)(a) (paragraphs i to viii) of the ACA have been met. In addition to these conditions 2 other instances exists which may give rise to a genuine ground for the court to refuse the recognition of an award thus; (1) where the subject-matter of the dispute is not capable of settlement by arbitration (non-arbitrable) under the laws of Nigeria, or (2) that the recognition or enforcement of the award is against Nigerian public policy.
Enforcement under the International Centre for Settlement of Investment Disputes (ICSID) Arbitration Rules
By far, ICSID awards appear to be the easiest awards to enforce in Nigeria. With respect to arbitrations arising out of foreign investments in Nigeria, there appears to be more procedural benefit in exploring institutional arbitration at ICSID. The ICSID Act significantly removes the delay and difficulties that parties would ordinarily encounter in enforcing arbitral awards under the ACA. This is because the ICSID Act provides that where a copy of an award made by the ICSID is filed at the Supreme Court of Nigeria, such an award will have effect as if it were an award contained in a final judgment of the Supreme Court and shall be enforced accordingly. This provides finality as there is no further right of appeal thereafter.
Challenges to enforcement of Arbitral Awards in Nigeria
The perception that foreign awards are not so easily enforceable in Nigeria may not be without merit. The ACA itself sets out two very succinct conditions set out in S.51 of the Act are the considerations of “Public Policy” and “Non-Arbitrable” subject matters.
1. Public policy considerations
The very subjective defence of public policy has oftentimes been used in resisting the enforcement of unfavourable awards against in Nigeria. Indeed, it is expressly provided under Nigerian law that an international arbitration award may be set aside where the recognition or enforcement of the award is against the public policy of Nigeria. Given the fluidity of the concept of the public policy of Nigeria or any other country at any given point in time, this creates significant uncertainty in how a Nigerian court would construe a particular award, especially in cases where the value of the award is considerably huge.
In the popular IPCO (Nigeria) Limited Vs NNPC arbitration proceedings the Nigerian court upheld the NNPC’s public policy challenge against the award. In a related action to terminate the arbitration agreement and proceedings, a similar objection was also put forward by the Federal Inland Revenue Service (FIRS), which was neither party to the underlying contractual dispute nor the governing arbitration agreement. Curiously, the Revenue’s objection was nevertheless upheld by the Nigerian court. It is worrisome that virtually “anything” can be lumped under the public policy argument especially because the wordings of the Article V(2)(b) of the New York Convention lends credence to this by its qualification that an award can be set aside by a country where enforcement is sought if the award goes against the public policy of that country.
In view of the recurring public policy arguments, it is perhaps necessary to point out that the Nigerian Supreme Court had highlighted the danger of reaching decisions on the basis of public policy in the Nordwind case, in the following words;
‘It is dangerous for a court to base its decision mainly on public policy, which indeed would be another means of avoiding the rules, law and procedure which govern a matter. Public policy is equated with public good. To ask a court to decide only as a result of public policy or public good goes beyond the measure of liberalism in the application of the law or even viewing a matter from the socio-economic context of law. Who is to determine what constitutes public policy? To rely on public policy or public good simpliciter is to give room for uncertainty in the law. It is a way ‘to beg the question.’ Continue Part 2 here