INTERNATIONAL COMMERCIAL ARBITRATION

NIGERIA AS A CASE STUDY

-Abhishek Chaturani
ABSTRACT
International commercial arbitration places a premium on the enforceability of arbitral
judgements by parties against one another, making recognition and enforcement a crucial
component of the process. With a focus on Nigeria, this article critically analyzes
international commercial arbitration and the difficulties in enforcing foreign arbitral rulings.
Using main research resources like laws, case laws, statutes, and regulations as well as
secondary research resources like law books, journals, and articles and publications.
INTRODUCTION
 When faced with a dispute arising from business transactions, parties have a number
of Alternative Dispute Resolution (ADR) procedures to choose from. Negotiations,
mediation, conciliation, arbitration, and litigation are some of the ADR possibilities.
The topic of arbitration, particularly International commercial arbitration, is the focus
of this research article.
 A way to settle disputes that can result from transnational business transactions is
through international commercial arbitration. Its main feature is that it is a consensual,
private, and secret conflict settlement process that results in a binding judgment
outlining the rights and obligations of the disputant.
 There are two sorts of international Commercial arbitration: ad hoc and
institutionalized arbitration. In the event of a dispute in their commercial agreement,
the parties will choose the arbitrator or arbitrators as well as the rules and processes to
be followed in an ad hoc arbitration. This style of arbitration has obvious drawbacks,
one of which is that it might not be feasible to come to an agreement when the parties
are already at conflict because of an environment of hatred. In this case, it is required
for the parties to adopt an institution's arbitral rule, such as the United Nations
Commission on International Trade Law (UNCITRAL) ad hoc rules for domestic and
international disputes. On the other hand, institutionalized arbitration is a type of
arbitration where parties appoint a body, such as the International Chamber of
Commerce (ICC), to manage the arbitral procedure in line with its arbitration rules.
Arbitration can take place between two states or between a person, business, and a
state (this is known as "mixed Arbitration"). An arrangement for the implementation
of institutionalized mixed arbitration is provided for by the International Convention
for the Settlement of Investment Disputes between States and Nationals of Other
States (ICSID).
 Once the parties agree to arbitrate, they cannot use any other ADR procedures again.
Article 35(6) of the International Chamber of Commerce Arbitration states that:
“Every award shall be binding on the parties. By submitting the dispute to arbitration
under the Rules, the parties undertake to carry out any award without delay and shall
be deemed to have waived their right to any form of recourse insofar as such waiver
can validly be made.”
  The parties are reassured of the proceedings' finality by the fact that arbitral awards
cannot be challenged on their merits. In comparison to enforcing a foreign court's
judgment, international commercial arbitration's verdicts can be enforced rather
easily. The requested court is under no international obligation to enforce the
judgment unless there is a treaty between the State in which the judgment was issued
and the State in which enforcement is sought. The only substantial multilateral treaty
for the execution of judgements exists exclusively between the member states of the
European Union, despite the fact that there are numerous bilateral treaties in this area.
The New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, in comparison, has 135 states as parties. Although there are still some issues
with the Convention's application by some States' courts, they are generally of a
minor nature. It is important to remember that 168 States are party to the New York
Convention as of May 2021.

RECOGNITION AND ENFORCEMENT OF ARBITRAL AWARDS:

The decision reached by the arbitrator is final and binding on the parties. Every arbitration
agreement therefore contains the implicit covenant that the parties will uphold it. Therefore, it
is anticipated that the majority of arbitral rulings are followed voluntarily, without the
necessity for judicial enforcement. An arbitral institution cannot specifically determine
whether or not an award has been properly implemented. This is due to the fact that a
tribunal, unlike a court, has no role to play in the implementation of its findings. When a
tribunal makes its final award, it ceases to have any further involvement in the case as a
whole and becomes functus officio.
What then happens when one party refuses to implement an arbitral award?
Only when parties can hold one another accountable for arbitral awards does arbitration have
any significance. When a party requests recognition and enforcement, they are only pleading
with the court to use its authority and impose sanctions in the event that the other party
refuses to abide by the award. The last step in an arbitration process is the recognition and
execution of the award. Giving effect to arbitral awards is its focus. There are two parts to the
recognition and enforcement debate. The enforcement of judgments in the state where they
were rendered as well as the execution of judgments in another state or states The
Expression for the arbitration is referred to as the "Seat of Arbitration" which means the
juridical seat of the arbitration for the purpose of determination of the law that will govern the
arbitration. The mechanism for enforcing an award made in a domestic arbitration is the
same, therefore the enforcement in the arbitration's seat is a rather simple one. On the other
hand, the execution of awards in a state other than the one in which they were made (foreign
awards) is a far more complicated scenario frequently controlled by treaty commitments. The
emphasis of this section will be on "foreign awards" and their enforcement.
.
It is crucial to keep in mind that recognition and enforcement refer to two different notions,
not one. Therefore, it is crucial to distinguish between recognition and enforcement. An
award may be acknowledged without being put into effect. However, where it is put into
effect, the court that issued the enforcement order recognizes it. The terms "recognition" and
"enforcement" both relate to the process through which a court determines whether an arbitral
ruling has preclusive effect.

Recognition:
Recognition is typically a defensive process that takes place when a court is asked to rule on
a matter that had previously been submitted to arbitration. In this case, the party in favor of
the award will argue that the case has already been resolved. In order to demonstrate this, he
would ask the court for permission to present the award and encourage it to be accepted as a
judgment on the matters it addressed, making it legal and binding on the parties. As res
judicata, which states that the subject has been decided by a competent court and may not be
further pursued by the same parties, this ends the new proceedings. A party may nonetheless
ask for the award to be acknowledged for the purpose of granting estoppel even if it does not
resolve every issue brought up in the new court proceedings. This is done to stop the
problems it addressed from coming up again.

Enforcement
Enforcement, as opposed to recognition, is making sure that an arbitral award is obeyed. It
goes beyond recognition to enforce. A court that is adamant about giving enforcement of an
award will do so because it acknowledges that the award was made legally, is binding on the
parties, and should therefore be done so. Enforcement occurs concurrently with recognition
and puts the award's order into action.
It is important to remember that recognition and enforcement do go hand in hand because one
is a prerequisite for the other.
Purpose of Recognition and Enforcement –
Any attempt to bring new litigation on issues already adjudicated in an arbitration is stopped
by recognition. On the other hand, enforcement is the straightforward use of legal measures
to compel the party against whom the arbitral judgement was rendered to comply. The most
significant benefit of international arbitration, without which arbitration would not have had
much success on a global scale, can be stated to be the recognition and enforcement of
awards. Recognition and enforcement serve as a shield and a sword for this reason.
Pre-requisites for obtaining Recognition and Enforcement
For a party to obtain recognition and enforcement, the New York Convention
of 1958 stated certain requirement that needs to be met;
 Jurisdiction of the enforcement court:
The court must have jurisdiction over the respondent in order to grant
an application to have a foreign award enforced. In most cases, the
presence of assets in the nation would be sufficient to establish
jurisdiction for enforcement.
 Requirement to be fulfilled by the petitioner:
 Article IV is designed to make enforcement easier by imposing
requirements on the party requesting enforcement of the award. The
original arbitration agreement... or a properly certified copy, and the
verified original award must be all that is required from the party. The
party requesting enforcement provides prima facie evidence that it is
entitled to have the award enforced upon the satisfaction of these
requirements.
Grounds for refusal of Enforcement-
The New York Convention's Article V (1) outlines the only justifications for refusing
enforcement. These reasons comprise:
 Ground relating to the arbitral agreement
Invalidity of the arbitration agreement and incapacity of a party are the
two defenses to enforcement set forth in Article V (1)(a), wherein
"incapacity" refers to the capacity to engage into an arbitration
agreement under the law, and "validity" refers to the legality of the
arbitration agreement.
 Grounds relating to arbitral proceedings

When there is a "violation of the right to a defense/due process," it is

addressed in Article V (1)(b). The goal of this defense is to guarantee
that, in the interest of justice, the arbitral tribunal acts fairly. It is
crucial to remember that parties have a duty to object quickly, which
means they should do so at the beginning of the arbitration if they are
aware of the pertinent information. In order to prevent the party from
being prevented from bringing the objection before the enforcing court.

 Grounds relating to the arbitral decision itself

Article V (1)(c) addresses two issues: 1. Whether the tribunal made a
decision within its jurisdiction or without it. 2. When the tribunal has acted
outside of its authority.
INTERNATIONAL COMMERCIAL ARBITRATION IN NIGERIA.
The federally enacted Arbitration and Conciliation Act (ACA), which was first issued as a
military government decree in 1988 and is based on the 1985 UNCITRAL Model Law on
International Commercial Arbitration, governs arbitration in Nigeria. It is found in Chapter
A18 of the Laws of the Federation of Nigeria (2004).
The only reference to international commercial disputes in the body of the legislation is
under the section making provision for international arbitration, despite the fact that the ACA
is described as "An Act to provide a unified legal framework for the fair and efficient
settlement of commercial disputes by arbitration and conciliation."
The Arbitration and Conciliation Act provides that an arbitration is international if:
“(a) the parties to an arbitration agreement have, at the time of the conclusion of the
agreement, their places of business in different countries, or
(b) one of the following places is situated outside the country in which the parties have their
place of business:
(i) the place of arbitration if such place is determined in, or pursuant to the arbitration
agreement
(ii) any place where a substantial part of the obligation of the commercial relationship
is to be performed or the place with which the subject matter of the dispute is more closely
connected; or
(c) the parties have expressly agreed that the subject matter of the arbitration agreement
relates to more than one country; or (d) the parties, despite the nature of the contract,
expressly agree that any dispute arising from the commercial transaction shall be treated as an
international arbitration.”

Nigeria joined the New York Convention as a signatory. On 17 March 1970, it signed the
convention, and on 15 June of that same year, it went into effect. According to Article III of
the agreement, the convention is incorporated into Nigerian law and is described in the
Second Schedule to the Arbitration and Conciliation Act. Nigeria's adherence to the
convention is based on reciprocity with regard to the acceptance and enforcement of
judgments rendered exclusively within the borders of a member state of the convention as
well as with regard to legal issues that are classified as commercial disputes under Nigerian
law.
A number of other international arbitration agreements have Nigeria as a participant. These
agreements comprise:
1. Convention on Settlement of Disputes Between States and Nationals of Other
States (referred to as the 1965 Washington Convention) signed in October 1966.
2. 22 Bilateral Investment Treaties vesting jurisdiction on the International Center for
Settlement of International Disputes (ICSID) over disputes having connection to said
treaties.
3. The Foreign Judgment (Reciprocal Enforcement) Act enacted in 1990 provides that
Foreign Arbitral Awards could be enforced if registered as a Judgment of the High
Court in Nigeria in the jurisdiction where enforcement is sought.
4. The Economic Community of West African States Energy Protocol of 31 January
2003. 29
5. Nigeria also enacted the international Centre for settlement of investment Disputes
(Enforcement of Awards) on 29 November, 1967 for the enforcement of ICSID
awards.
These accords frequently provide that their awards are enforceable and binding on member
states.

Recognition and Enforcement of International arbitral award under the ACA:

The Arbitration and reconciliation Act provides that “An arbitral award shall, irrespective of
the country in which it is made, be recognized as binding and subject to this section… of this
act, shall, upon application in writing to the court, be enforced by the court”. The act further
adds that “the party relying on an award or applying for its enforcement shall apply – a. the
duly authenticated original award or duly certified copy thereof; b. the original arbitral
agreement or duly certified copy thereof; and c. where the award or arbitration agreement is
not made in English Language, a duly certified thereof into the English Language”.
The ACA incorporates the provision of the New York Convention in its second schedule. It
provides that –
“Where the recognition and enforcement of any award arising out of an international
commercial arbitration are sought, the Convention on the Recognition and Enforcement of
Foreign Awards (hereinafter referred to as “the Convention”) set out in the Second Schedule
to this Act shall apply to any award made in Nigeria or in any contracting State; a. Provided
that, such contracting state has reciprocal legislation recognising the enforcement of arbitral
awards made in Nigeria in accordance with the provisions of the convention; and b. That the
Convention shall apply only to differences arising out of a legal relationship which is
contractual”
Ground for refusal of Enforcement under the ACA:
Section 52 of the Act contains provisions for the rejection and revocation of arbitral awards.
Both domestic and international arbitration may use these reasons.
“Section 52 provides that;
1. Any of the parties to an arbitration agreement may, request the Court to
refuse recognition or enforcement of the award.
2. The Court where recognition or enforcement of an award is sought or where
application for refusal of recognition or enforcement thereof is brought may,
irrespective of the country in which the award is made, refuse to recognise or enforce
an award-
a) If the party against whom it is invoked furnishes the Court proof –
(i) that a party to the arbitration agreement was under some incapacity;
or
(ii) that the arbitration agreement is not valid under the law which the
parties have indicated should be applied, or failing such indication, that
the arbitration agreement is not valid under the law of the country
where the award was made; or
 (iii) that he was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise not able to
present his case; or
(iv) that the award deals with a dispute not contemplated by or not
falling within the terms of the submission to arbitration; or
(v) that the award contains decisions on matters which are beyond the
scope of the submission to arbitration, so however that, if the decisions
on matters submitted to arbitration can be separated from those not
submitted, only that part of the award which contains decisions on
matters submitted to arbitration may be recognised and enforced; or
(vi) that the composition of the arbitral tribunal, or the arbitral
procedure, was not in accordance with the agreement of the parties; or
(vii) where there is no agreement between the parties under sub-
paragraph
(vi) of this paragraph, that the composition of the arbitral tribunal, or
the arbitral procedure, was not in accordance with the law of the
country where the arbitration took place; or
(viii) that the award has not yet become binding on the parties or has
been set aside or suspended by a court of the country in which, or
under the law of which, the award was made; or
b) If the Court finds –
(i) that the subject-matter of the dispute is not capable of
settlement by arbitration under the laws of Nigeria; or
(ii) that the recognition or enforcement of the award is against
public policy of Nigeria.”
In this case, the party seeking to enforce the arbitration award must first prove the existence
of the arbitration agreement, the arbitration's proper conduct in accordance with the
agreement, and the validity of the award. Because it requires starting a legal action for
enforcement, this type of enforcement is typically time-consuming and difficult to complete.

Enforcement under The Foreign Judgement (Reciprocal Enforcement) Act:

The award is registered under the legislation to do this. Within six years of the judgment, it
permits the registration of foreign judgments. The ruling must be conclusive and final
between the parties. It just suggests that foreign court judgments be recognized and upheld in
situations where Nigerian court judgments are respected in return. It is important to note that
the legislation expands the definition of "judgment" to include arbitral awards if they have
been established in accordance with local laws that make them just as enforceable as court
judgments in that location.
Enforcement under the International Centre for settlement of Investment Disputes (ICSID)-
On November 29, 1967, the ICSID Act was enacted in Nigeria for the purpose of enforcing
ICSID awards. Arbitral awards may be recognized and upheld with its assistance.
The reason ICSID awards are regarded as a unique type of award is because the organization
has a unique mechanism for the recognition and enforcement of their award. To simply
recognize and enforce the award as if it were a final decision of a court inside their State,
each contracting state to the Convention has an obligation to perform with regard to the
award. The Supreme Court must be given a copy of the award that has been properly certified
by the arbitral center's Secretary-general in order for it to be recognized and enforced as
judgement.

CHALLENGES FACED IN ENFORCEMENT OF INTERNATIONAL ARBITRAL

AWARDS IN NIGERIA.
1. Court procedural delays might make award enforcement difficult because of the
lengthy litigation processes in Nigeria. The case of Nigerian National Petroleum
Corporation v. CLIFCO Nigeria Limited40 is a nice illustration. This lawsuit went on
for eleven (11) years before the supreme court dismissed it. The judiciary
acknowledged the issue with delays, and action was made to address it. As a result of
this action, the Federal High Court (Alternative Dispute Resolution) Rules 2019 were
created. These rules aim to "a) enhance access to justice by providing alternative
mechanisms to supplement litigation in dispute resolution; b) minimize frustration and
delays in justice delivery by providing a standard procedural framework for the fair
and efficient settlement of disputes through Alternative Dispute Resolution (ADR)
mechanisms; and c) provide a focal point for the promotion of ADR in the court; d)
promote the growth and effective functioning of the justice system through ADR
mechanisms”.
2. Other challenges include;
 Unrestricted appeals against orders enforcing arbitral awards—As in
the case of Sundersons Ltd & Anor v. Cruiser Shipping PTE LTD &
Anor, where the appellant still has the right to appeal to the highest
court despite the appeal's grounds being frivolous.
 Court with authority over enforcement: The law that governs the
enforcement in this case determines the court's jurisdiction. The apex
court is the competent authority in the ICSID case in order to keep it as
a final ruling. The Federal High Court and the High Court of a State
serve as the ACA's competent authorities.45 This raises the question of
whether the Federal and State courts share concurrent jurisdiction over
the same matter or if either court can exercise exclusive jurisdiction
based on the terms of an arbitration ruling. The Supreme Court
provided an answer to these issues in the case of Adeoye Magbagbeola
v. Temitope Sanni. To further explain their stance on the act's
jurisdiction, they cited section 57 (1) of the act, which defines court as
"High Court of a State... or the Federal High Court"47. However, it is
advisable to use the Federal court in order to avoid the state
 courts territorial jurisdiction being limited when it comes to enforcing
awards.

Conclusion
It is crucial to remember that arbitration is still a highly recommended mechanism for
resolving business conflicts, not with standing the difficulties it faces as stated above.
However, there are a few solutions I would be suggesting to ensure a smoother arbitral
process in Nigeria:
a) To ensure that the period for application for enforcement does not exceed
nine (9) months as provided under the High Court (Civil Procedure Rules)
of Lagos, from application to final Judgement, it should be added under
matters that can be heard under fast-track procedure. This will
significantly reduce the issue of delay in the enforcement of arbitral
awards.
b) limiting appeals in instances involving the enforcement of arbitral
processes; this can be accomplished by lowering the ultimate appellate
court in such cases. The Arbitration and Conciliation Act, 2017, which is
being considered for reenactment, stipulates that the different state
limitation laws shall apply to arbitral proceedings in the same manner as
they do to judicial proceedings. This would guarantee that, if claims are
made, they are done so diligently and promptly. As a result of the law's
prohibition, no litigation will be brought going forward. This makes sure
that if a party is unhappy with an arbitral ruling, the limitation (if
applicable) would void his right to seek legal remedy if the party did not
move promptly.
Although doing this would necessitate extensive legislative work, it is essential to advance
and promote arbitral procedures in Nigeria.