Court Interference with International Commercial Arbitration Under The Nigerian Arbitration Act

By Chizaram Uzodinma, Law Student at Nigerian Law School, Lagos Campus

There has been a battle of supremacy between national courts and the autonomy of parties in arbitral proceedings to decide the jurisdiction and finality of the arbitral process. The Nigerian Arbitration and Conciliation Act provides the extent of how courts can intervene in the arbitral process. However, some of the provisions permitting court intervention have sometimes served as basis for unwarranted interference.

A fitting example is Section 30 of the Act, which proves to be arguably the most abused provision for invoking the courts interference in the arbitral process. It provides for the setting aside of an arbitral award on the ground of misconduct of the arbitrator.  The problem lies not necessarily in the provision but in the fact that the Act does not define misconduct. The courts have therefore had to rely on common law definitions and illustrations of misconduct. Lord Atkin in Williams v. Wallis & Cox defined misconduct as “such a handling of the arbitration as is likely to amount to some substantial miscarriage of justice.” “Misconduct of Arbitrator” under this section has been often employed by recalcitrant losing parties to frustrate arbitration awards made against them. It is perhaps the effect of the pliability of Section 30 on the arbitral award that prompted a writer to comment:

“It has become fashionable in Nigeria in recent times for lawyers whose client lost out in arbitration, to rush to court to apply to set aside an award on the ground of the misconduct of the arbitrator. … alleged errors of law, wrong evaluation of evidence, and misconstruction of documents are all given as reasons for setting aside an award on the ground that the arbitrator has “misconducted himself”. This practice is often aimed at delaying the finality of the award, and thus destroying one of the most important advantaged of arbitration over litigation.” 1

The damage likely to result (and has indeed resulted) from the ambiguous interpretations ascribed to Section 30 of the Act was put into consideration by a National Committee which was set up in 2005 to review Nigerian laws on Arbitration and Alternative Dispute Resolution. The Report of the Committee2 stated that:

“Nigeria’s arbitration regime permits wider review of international arbitration awards than what is contemplated by the UNCITRAL Model Law… Although section 48 of the Arbitration Act sets out the minimalist grounds contained in the UNCITRAL Model Law… nevertheless section 43 of the Act makes “other provisions of the Act” applicable to international commercial arbitration. These “other provisions” include section 30(1) which as shown above, allows the courts to review arbitral awards on grounds of “misconduct of arbitrator”, (including “error of law on the face of the award”), which has been employed by lawyers to subject many arbitral awards to the length and oftentimes frustrating process of the Nigerian litigation system.”

Consequently, a high number of arbitration matters end up trapped in long years of litigation which is sometimes dragged up to the Supreme Court before a final decision is reached. This factor as noted in the Report potentially makes Nigeria unattractive for international commercial arbitration.

To eliminate this problem, Section 30 along with Section 28 and Section 48 (which provide other grounds for setting aside an award) were replaced with the more encompassing Clause 42 of the Federal Arbitration and Conciliation Bill drafted by the Committee, which adopts the minimalist grounds for setting aside an award as contained in the UNCITRAL Model law. It also makes the 3 months’ time frame for bringing an application for setting aside an award which currently applies only to an application brought under Section 29 of the current Act, applicable to every other ground for setting aside the award. This provision of the Bill greatly supports the finality and potency of awards and limits the chances of undermining the validity of the award through unwarranted visits to the courtrooms over alleged “misconducts”. The Federal Arbitration and Conciliation Bill put together by the National Committee is yet to be passed into law. Until then, we can only hope the courts exercise their discretion in narrowing the scope within which the vague and ambiguous “misconduct” as a ground for setting aside an award under Section 30 of Act can be employed to impugn on an arbitral award.

1 J.O.Orojo, “Legal Issues in International Commercial Arbitration” A paper presented at the Skills Acquisition Programme In Negotiating International Contract, Sovereign Borrowing Arrangements and International Arbitration: Organized by the Nigerian Institute of Advanced Legal Studies, Lagos, April 1995.
2 The Report of the National Committee on the Reform and Harmonization of Arbitration and ADR Laws in Nigeria, paragraph 82, p.41, available at http://www.aluko-oyebode.com/files/amended%20report.pdf.