Arbitral awards are the final and binding decisions made by an arbitral tribunal at the conclusion of arbitration proceedings. They are akin to court judgments and determine the rights and obligations of the parties with respect to the dispute submitted to arbitration. An arbitral award may grant monetary compensation, order specific performance, or dismiss claims, depending on the issues in dispute. Under Nigerian law (and international practice), an arbitral award is enforceable in the same way as a court judgment, subject to any statutory or procedural requirements.
Arbitration has become an increasingly popular method of resolving commercial disputes in Nigeria. Its advantages speed, confidentiality, party autonomy, and technical expertise, make it a preferred alternative to litigation. However, the true value of arbitration lies in the enforceability of arbitral awards. This article examines the legal framework, procedures, and practical considerations surrounding the enforcement of arbitral awards in Nigeria.
Legal Framework for Enforcement|
The enforcement of arbitral awards in Nigeria is governed by a combination of domestic legislation and international conventions. The key legal instruments include:
a) Arbitration and Mediation Act, 2023 (AMA): This recently enacted law repealed the Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria 2004. The AMA provides a modernized and more comprehensive legal regime for arbitration and mediation, aligning with international best practices. Section 57 (1) provides that (1) An arbitral award shall, irrespective of the country or state in which it is made, be recognized as binding and, on application in writing to the Court, shall be enforced by the Court, subject to Section 58 of this Act.
b) Sheriff and Civil Process Act, Cap S6, LFN 2004: This law complements arbitration statutes by regulating the process of enforcing judgments and awards through the courts.
c) New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958): Nigeria ratified this Convention in 1988, making foreign arbitral awards from other contracting states enforceable in Nigeria, subject to certain conditions.
Types of Awards
It is important to distinguish between:
Domestic Awards: Made in Nigeria in accordance with Nigerian arbitration law.
International Awards: Made outside Nigeria or under rules recognized as international, enforceable in Nigeria if they meet the requirements of the New York Convention.
Procedure for Enforcement
Domestic Awards
In the case of a domestic award, if a party fails to comply voluntarily, the successful party may apply to the appropriate court for enforcement.
The procedure is as follows:
a) File an originating motion at the High Court with appropriate jurisdiction.
b) Attach the duly authenticated original award or a certified copy, along with the arbitration agreement.
c) Provide a supporting affidavit verifying the award and the failure to comply.
d) Serve the application on the other party, who may choose to oppose it by filing a challenge or an application to set aside the award.
The court will recognize and enforce the award as if it were a judgment of the court, unless the award is successfully challenged on grounds such as misconduct, lack of jurisdiction, or public policy considerations.
Foreign Awards
Enforcement of foreign arbitral awards is guided by the New York Convention, incorporated into Nigerian law by the Arbitration and Mediation Act. The applicant must:
a) Apply to the High Court under Section 57 of the AMA.
b) Submit the original award and arbitration agreement (or certified copies).
c) Demonstrate that the award falls within the scope of the New York Convention.
The opposing party may resist enforcement by showing grounds provided under the Convention, such as incapacity of a party, invalidity of the arbitration agreement, improper notice, or that enforcement would be contrary to Nigerian public policy.
Challenges to Enforcement
Parties may still encounter significant challenges, including:
a) Judicial Delays: Prolonged timelines in the Nigerian court system can frustrate the prompt enforcement of awards, undermining the efficiency that arbitration is meant to achieve.
b) Improper Use of Court Processes: Losing parties often file frivolous applications, appeals, or stay proceedings in order to delay enforcement, sometimes abusing court processes to frustrate the successful party.
c) Allegations of Public Policy: The concept of “public policy” when invoked can lead to litigation over whether the award violates Nigerian public policy and cause delay in enforcement.
d) Lack of Uniformity in Judicial Attitude: Some courts may exhibit reluctance or lack of familiarity with arbitration principles, leading to inconsistent decisions.
e) Cost of Enforcement: The financial burden of enforcement proceedings including legal fees, filing fees, and incidental costs can be significant, especially when coupled with protracted litigation.
f) Challenges in Recognizing Foreign Awards: In practice, parties seeking to enforce foreign awards may encounter procedural hurdles, such as proving reciprocity under the New York Convention or authenticating foreign documents to the satisfaction of the court.
g) Non-Compliance Post-Enforcement: Just like in litigation, even after the court grants recognition of the award, actual recovery of funds or compliance by the losing party may be difficult, especially where the debtor has dissipated assets or lacks means to pay.
Grounds for Refusal of Enforcement
Although Nigerian courts generally favor enforcement of arbitral awards, there are limited grounds on which a court may refuse to enforce an award. These grounds are provided under section 58 of the Arbitration and Mediation Act, 2023 (for domestic and foreign awards) and reflect international best practice, particularly the New York Convention.
The common grounds include:
a) Invalid Arbitration Agreement: If the arbitration agreement was not valid under the law to which the parties subjected it, or under Nigerian law.
b) Lack of Proper Notice or Inability to Present Case: If the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or the proceedings, or was otherwise unable to present their case.
c) Excess of Jurisdiction: If the award deals with matters beyond the scope of the arbitration agreement or contains decisions on issues not submitted to arbitration.
d) Improper Composition of Tribunal or Procedure: If the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or with the applicable law.
e) Award Not Yet Binding or Set Aside: If the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which it was made.
f) Public Policy: If enforcement of the award would be contrary to the public policy of Nigeria.
Conclusion
The enforcement of arbitral awards in Nigeria reflects the country’s growing commitment to arbitration as an effective dispute resolution mechanism. Both domestic and foreign awards are enforceable under a clear legal framework that seeks to honor party autonomy and ensure finality. Nonetheless, parties should be mindful of procedural requirements and potential pitfalls when seeking enforcement. By adhering to best practices, parties can enhance the prospects of successful and timely enforcement of their awards, thereby preserving the integrity and utility of arbitration in Nigeria.