WHAT IS ARBITRATION?

Arbitration is a private dispute resolution mechanism established to settle disputes by a neutral third party known as the “the Arbitrator” or panel of Neutrals referred to as the Arbitral Tribunal.

When discussing the key features of an arbitration process, the vital factor is the parties’ willingness or agreement to arbitrate. The agreement of both parties to arbitrate is the foundation of any valid arbitration. It is the primary source of the tribunal’s power and authority to arbitrate the dispute between the parties.  The contractual nature of Arbitration requires the willful consent of each party before the Arbitration can be successful. Without any arbitration agreement, there can be no arbitration n Nigeria.

Generally, litigation is known as the means to settle conflicts in Nigeria. In reality, conflicts are inevitable in interpersonal relationships or business relationships. In the Nigerian legal system, parties may resort to litigation where an aggrieved party brings an action to the court against the offending party. Likewise, we have arbitrators in Nigeria to settle disputes amicably, which has helped preserve the relationship between parties after it is concluded.

The significant advantage of Arbitration is to reduce the stress and severe cost of litigation. The process of Arbitration in Nigeria is less expensive, and it gives room for individuals to represent themselves easily, although they have the privilege of having a legal representative.

Arbitration in Nigeria is classified under the alternative dispute resolution, and this includes:

• Mediation
• Conciliation and
• Negotiation

We will elaborate on the varying methods keeping in mind that Arbitration is the focal point.

Mediation:

This is a system in which the opposing parties invite an impartial and neutral third party called the mediator to facilitate dispute resolution. The mediator’s role is to expedite the resolution of the dispute. The mediator promotes understanding between the parties, facilitates communication, focuses the parties on their interest, and uses creative problem techniques to enable the parties to reach their own mutual agreement/settlement. Both parties collectively procure the mediator, and the process is voluntary as the parties are not obligated to accept the mediator’s suggestions.

Negotiation

This is regarded as a problem-solving process in which the parties to a dispute or an imminent dispute come together voluntarily, either personally or by their representatives, to discuss their differences and make an attempt to reach a joint resolution or decision of the conflict on their own without calling a third party.

Compared to the other types of ADR, Negotiation is different as there is no room for a third party. It is technical and less formal since it involves only the parties to a dispute.

Conciliation

This system of ADR has many similarities to mediation. Although while mediation has no statutory protection, conciliation is statutorily protected and is regulated by the Arbitration and Conciliation Act (ACA).

Conciliation is a system of Alternative dispute resolution where a third party known as the conciliator uses his best endeavors to bring the disputing parties together to arrive at a mutual settlement.

Applicable law

The law that guides Arbitration in Nigeria is The Arbitration and Conciliation Act of 1988, and this is applicable over the federation except for Lagos state, which has its law, The Lagos State Arbitration Law, 2009(LSAL)

Note that every dispute can be resolved through Arbitration. However, there are arbitral matters that Arbitration can settle; and non-arbitral matters which cannot be settled through Arbitration.

Arbitral matters Include:

• Matrimonial causes ancillary matters, for example, division of property
• Breach of contractual agreement.
• Compensation for compulsory acquisition of land or any land dispute
• Torts

Non-arbitrable Matters include:

• An election Petition is a matter of public policy
• All criminal matters except plea bargain
• Matrimonial causes like the dissolution of marriage and nullity of a void marriage.

An arbitration can only be valid when the following condition precedence is followed:

1. Agreement to Arbitrate:

One of the vital features of Arbitration is that it shows that the parties have consented to resolve their dispute by Arbitration. In a situation where there is no voluntary agreement by the parties, there cant be Arbitration.

2. It must be in writing

Both the ACA and LSAL state their requirement, which is the fact that any arbitration agreement must be in writing. This is essential as it shows the parties’ intention to arbitrate.

3. Number of Arbitrators to be Appointed

Most times, the number of arbitrators depends on the complexity of the dispute in question and the value of the claims.

4. The Scope of Arbitration

An arbitration agreement must determine the scope of the tribunal’s jurisdiction. The subject matter of the conflict or dispute must be effectively determined.

 

5. Confidentiality

Although Arbitration is essentially a private and confidential mechanism used to resolve the dispute, some national Laws do not provide for this. Ensure that parties regulate it in their arbitration agreement.

 

6. Arbitral Award

This is the final decision of the arbitral tribunal. It determines the rights of both parties with finality. The arbitral award should be in writing.

Conclusion

The significant advantage of Arbitration is the independence both parties enjoy in deciding how they want their Arbitration conducted. The parties are allowed to exercise this independence when drafting their arbitration agreement to ensure that they obtain the absolute benefit from the process.