A CRITICAL ANAYALYS OF ARBITRATION AND MEDIATION

AS A VERITABLE MEANS OF SETTLING DISPUTES IN

NIGERIA. AN OVERVIEW OF THE ARBITRATION AND
CONCILIATION ACT.

A GROUP TWO RESEARCH WORK

SUBMITTED BY

MEMBERS OF GROUP TWO

LED BY MICAH EFFIONG
FACULTY OF LAW

SUBMITTED TO
THE COURSE LECTURER
CONTINUING LEGAL EDUCATION (CLE)
DEPARTMENT OF JURISPRUDENCE
FACULTY OF LAW
UNIVERSITY OF UYO, UYO.

14TH November, 2023

ABSTRACT

This research paper examines the effectiveness of arbitration and mediation as

alternative dispute resolution mechanisms in Nigeria. It provides a critical
analysis of these methods by examining decided cases and relevant statutes in
the country. The paper explores the advantages, disadvantages, and challenges
faced by arbitration and mediation, highlighting their applicability in settling
disputes. Furthermore, it discusses the evolution and development of arbitration
and mediation frameworks in Nigeria and presents a comparative analysis of
these mechanisms. An overview of the Arbitration & Conciliation Act (2004) is
also dissected. The paper concludes with recommendations for improving the
efficiency and effectiveness of arbitration and mediation processes in Nigeria.
 MEDIATION AS A VERITABLE MEANS OF
SETTLING DISPUTE
Mediation can be best described as an interest based- negotiation under
the guidance of a third party. This process involves a neutral third party whose
intervention facilitates communication and negotiation between the disputing
parties to foster a mutually agreed settlement between them. It is a voluntary
private dispute resolution process in which an impartial third party assists
parties to reach a negotiated settlement. Mediation is the process in which
parties involved in a dispute meet jointly and separately in confidence with a
neutral and independent outside party to explore and decide how the dispute
between them will be resolved. In Mediation, a neutral third party (the
mediator) assists the parties in a dispute to communicate their positions on
issues and to explore possible solutions or settlements. The mediator does not
give an evaluation or opinion of the case, but rather prompts the parties to
assess their relative interests and positions and to evaluate their own cases by
the exchange of information, ideas, and alternatives for settlement.
The process and the outcome are non- binding. The mediator is actively
involved in the negotiation process but, unlike a judge or arbitrator, he has no
power to impose a settlement, rather he assists in shaping solutions to meet the
parties’ mutual interests and achieve reconciliation. The growth of mediation as
an alternative method of resolving conflicts between parties have grown
tremendously in recent years on a global level. In the Nigeria traditional
societies, mediation has always being a tool for settling disputes peacefully
between disputing parties, it was also a tool for preserving cultural norms and
traditional values. The advent of colonization brought the court system;
urbanization relegated the traditional mediation into the background, though
customary ADR is still recognized in the Nigeria Legal System.
Mediation as an Alternative Dispute Resolution (ADR) mechanism in
Nigeria has developed into a structured process and within a legal framework.
The Arbitration and Conciliation Act Cap A18, Laws of the Federal Republic of
Nigeria (LFN) 2004, an adoption of the UNCITRAL Model Law in
International Commercial Arbitration was enacted in 1988, (Nigeria adopted the
Model Law in 1988). In Nigeria both at the State and Federal level, the
recognition that the courts alone cannot serve the purpose of satisfying
settlement of commercial disputes amidst conflicting parties, have necessitated
efforts to ingrain into the legal system, a framework for alternative dispute
resolution.
The Nigerian Legal System recognizes and encourages settlement of
disputes via ADR mechanisms such as Mediation. There some provisions in
various State High Court Laws (for e.g. see Section 24 High Court Rules of
Lagos State, Section 29 High Court of Rivers State 1999 and Section 22 High
Court of Bornu State Cap 63 laws of Bornu State 1994) which promotes and
encourages Mediation as a tool for resolution of disputes and restoration of
relationship of parties and avoids it as being prejudiced by a “battle” before a
court or tribunal. Though, mediation is one of the veritable means of settling
disputes, there is however some cases whereby mediation is not suitable. Such
cases include;
A.) Where the onus lies on the court to decide issues of law and construction,
which can impact the relationship between the parties far beyond the parties
present contractual relations into the future.
B.) In a situation where the parties want the court to decide on a recurrent point
of law such that the decision will be established as a reference point for future
decisions.
C.) When confidence is eroded as a reason of criminal accusations against an
individual or group of persons, mediation cannot be seen in the future as
credible in such an instance where the person(s) will be involved.
D.) Instances in which a party seeks some injunctive relief to shield his position.
E.) Considering the fact that the cost of mediation can sometimes be prohibitive,
especially when the sum to be mediated compared to mediation cost is relatively
insignificant.

WHAT IS ARBITRATION?

Arbitration means a commercial arbitration whether or not administered

by a permanent arbitral institution. Section 57 of the Arbitration and
Conciliation Act, 1988 ( LFN 2004) It is a private dispute resolution mechanism
established for the settlement of disputes by a neutral third party (the Arbitrator)
or panel of neutrals referred to as the Arbitral Tribunal. Arbitration does not
apply in criminal cases, election petition matters, matrimonial cases,
interpretation of the law, statute or document, or cases of urgency among others.
The principal legislation that governs arbitration is the Arbitration and
Conciliation Act 1988 (Laws of the Federation of Nigeria 2004 Cap A18)
(ACA), which is the federal statute. However, some states in Nigeria also have
their arbitration laws, for example, the Lagos State Arbitration Law, 2009
(LSAL). Arbitration and mediation are distinct processes, although they share
similarities as alternative dispute resolution mechanisms.
Arbitration involves a neutral third party, the arbitrator(s), who makes a
final and binding decision on the dispute, resembling a judicial decision. On the
other hand, mediation involves a neutral third party, the mediator, who
facilitates communication and negotiation between the parties towards reaching
a mutually acceptable settlement. Unlike arbitration, mediation does not result
in a binding decision unless the parties agree to it.

MEDIATION AND ARBITRATION IN NIGERIA

Mediation and Arbitration, being globally recognized forms of
Alternative Dispute Resolution are very important to the subject matter of ADR
in Nigeria. The primary legislation that governed Arbitration in Nigeria for
more than 30 years was the Arbitration and Conciliation Act, 1988 Chapter
A.18, Laws of the Federation of Nigeria, 2004 (ACA). However, a new
legislation was required to address the complexities and evolving needs of
arbitration in the country and place Nigeria’s arbitration practices in line with
globally recognized standards. On the 26th of May 2023, the Arbitration and
Mediation Act 2023 (AMA) was signed into law by the President of Nigeria,
and it became the new primary legislation on Arbitration. Interestingly, the new
Act completely erased Conciliation.

ARBITRATION AS A VERITABLE MEANS OF

SETTLING DISPUTE

Arbitration is a procedure in which a dispute is submitted, by agreement

of the parties, to one or more arbitrators who make a binding decision on the
dispute. In choosing arbitration, the parties opt for a private dispute resolution
procedure instead of going to court.
Its principal characteristics are:

Arbitration is consensual: Arbitration can only take place if both parties have
agreed to it. In the case of future disputes arising under a contract, the parties
insert an arbitration clause in the relevant contract. An existing dispute can be
referred to arbitration by means of a submission agreement between the parties.
In contrast to mediation, a party cannot unilaterally withdraw from arbitration.
The parties choose the arbitrator(s): Under the WIPO Arbitration Rules, the
parties can select a sole arbitrator together. If they choose to have a three-
member arbitral tribunal, each party appoints one of the arbitrators; those two
persons then agree on the presiding arbitrator. Alternatively, the Center can
suggest potential arbitrators with relevant expertise or directly appoint members
of the arbitral tribunal. The Center maintains an extensive roster of arbitrators
ranging from seasoned dispute- resolution generalists to highly specialized
practitioners and experts covering the entire legal and technical spectrum of
intellectual property.
Arbitration is neutral: In addition to their selection of neutrals of appropriate
nationality, parties are able to choose such important elements as the applicable
law, language and venue of the arbitration. This allows them to ensure that no
party enjoys a home court advantage.

Arbitration is a confidential procedure: The WIPO Rules specifically protect the

confidentiality of the existence of the arbitration, any disclosures made during
that procedure, and the award. In certain circumstances, the WIPO Rules allow
a party to restrict access to trade secrets or other confidential information that is
submitted to the arbitral tribunal or to a confidentiality advisor to the tribunal.

The decision of the arbitral tribunal is final and easy to enforce: Under the
WIPO Rules, the parties agree to carry out the decision of the arbitral tribunal
without delay. International awards are enforced by national courts under the
New York Convention, which permits them to be set aside only in very limited
circumstances. More than 165 States are party to this Convention.

Arbitration has four types of functions:

1. Resolving contractual disputes between management and labor
2. Addressing interests of different parties in bargaining situations such as
public sector labor relations,
3. Settling litigated claims through court-annexed programs,
4. Resolving community disputes.

Advantages and Disadvantages of Arbitration

Advantages
1. Efficient and Flexible: Quicker Resolution, Easier to schedule, the dispute
will normally be resolved much sooner. It may take several years to procure a
court trial date, while an arbitration date can usually be obtained within a few
months. Also, trials must be scheduled into court calendars, which are usually
backlogged without hundreds, if not thousands of cases in front of you. On the
other hand, arbitration hearings can conveniently be scheduled based on the
availability of parties and the arbitrator.
2. Less Complicated: Simplified rules of evidence and procedure. Litigation
inevitably leads down a long path of filing papers and motions, and attending
court processes such as motion hearings. The normal rules of evidence used in
court may not be strictly applied in arbitration proceedings, making it much
easier to admit evidence. Discovery, the time-consuming and expensive
procedure that involves taking and answering interrogatories, depositions, and
requests to produce documents, maybe largely reduced in arbitration. Instead,
most matters, such as who will be called as a witness and what documents must
be produced, are handled with simple phone calls with the arbitrator.
3. Privacy: Keep it out of the public eye. Unlike a trial, arbitration leads to a
private resolution, so the information brought up in the dispute and resolution
can be kept confidential. This could be enticing for well-known public figures
or clients in business disputes because all evidence, statements, and arguments
will be completely confidential. On the other hand, in court, even if certain
records will not be released, there is still a risk of some public access to
potentially sensitive business information.
4. Impartiality: Choosing the “judge” The parties to the dispute usually pick the
arbitrator together, so the arbitrator will be someone that both sides have
confidence will be impartial and unbiased.
5. Usually less expensive Most of the time, but not always the case, arbitration
is a lot less expensive than litigation. Arbitration is often resolved much more
quickly than court proceedings, so attorney fees are reduced. Also, there are
lower costs in preparing for the arbitration than there are in preparing for a jury
trial.
6. Finality: The end of the dispute. For binding arbitration, there are limited
opportunities for appeal. That gives finality to the arbitration that is not often
available with a trial decision, which may be subject to appeals, new trials and
further appeals.

Disadvantages
1. Questionable Fairness
Mandatory arbitration: If arbitration is mandatory by contract, then the parties
do not have the flexibility to choose arbitration upon mutual consent. In these
cases, one party can force the other party to go to arbitration, even a jury trial
maybe more advantageous to the other party.
Subjective Arbitrator: The process of choosing an arbitrator is not always an
objective one. There are cases when the arbitrator could be biased because it has
a business relationship with one party or is selected by an agency from a pool
list. In those situations, impartiality is lost.
2. Finality: No appeals. While this may be a positive if you find the arbitration
decision favorable, you should be aware that if arbitration is binding, both sides
give up their right to an appeal. If one party feels the decision is erroneous,
there is very limited opportunity to correct it.
3. Can be more expensive: There are many cases in which arbitration can
become more expensive than court proceedings. Quality arbitrators can demand
substantial fees that would not apply in court. In non-binding arbitrations, the
final decision or award in the case is not "binding" and the parties are free to
take their issue back to court, essentially adding the cost of litigation to that of
the prior arbitration. If you are on the employer side, employers must pay the
arbitrator’s fees in full. This can be very expensive as arbitrators’ fees can be
very high for cases in employment law.
4. Unpredictability: Unconventional outcomes. As stated earlier, arbitration
does not necessarily follow the formal rules of procedure and evidence that are
involved in a courtroom trial. Rules of evidence may prevent some evidence
from being considered by a judge or a jury, but this limitation does not apply to
arbitrators. Thus, an arbitrator’s decision may be based on evidence that a judge
or jury would not consider at trial, which could be damaging to your case. On
the other hand, if certain information from a witness is presented by documents,
then there is no opportunity to cross-examine the testimony of that witness. An
arbitrator may make rulings that would not be appropriate in court or may push
for unconventional solutions that you were not expecting. This could both be a
pro or con, so you must carefully evaluate how this may affect your desired
ruling.
Stages of an Arbitration Hearing
1. Introduction
During the introduction, the commissioner will start recording the process,
stating the case details and asking the parties to state their names and positions
(for example, manager/employee). The commissioner will deal with what
language will be used and will explain the procedure that will be followed. The
commissioner will describe the process of arbitration and explain the parties’
rights. The commissioner may ask the parties whether they would like to go
back into conciliation mode to try to resolve the matter before proceeding with
arbitration.
2. Preliminary issues
Before proceeding with the arbitration, the commissioner must ensure that the
CCMA has the power or authority to hear the matter (jurisdiction). Furthermore,
if a party wants to have legal representation, the application must be made at
this stage (if this has not already occurred in writing).
3. Outline and narrowing of issues in dispute
The commissioner may ask the parties to explain what the dispute is about. This
is usually done in the form of opening statements where both parties explain
why they see the dismissal as being fair or unfair. The commissioner may also
ask specific questions to obtain background information such as the date of
employment, the date of dismissal and the reason for dismissal. The
commissioner will then try to determine which issues are not in dispute
(common cause) and which issues are in dispute. Evidence is only needed on
issues that are in dispute.
4. Hearing of evidence
The parties then present their case. They may call witnesses and submit relevant
documents. After each witness has testified, the other party can cross-examine
that witness. Cross- examination may be used to get additional information
from the witness, to dispute anything that the other side does not agree with and
to put a version to the witness so that s/he has an opportunity to respond to it.
After that, the party that called the witness may re-examine the witness (based
only on the questions that witness faced during cross-examination).
5. Concluding arguments
During this last phase of the hearing, the parties are invited to argue their case.
They may summarize the evidence that was presented on which they would like
to rely; argue why a certain version should be accepted or not; refer to case law;
and explain what outcome they seek.
6. Arbitration award
The arbitration award, which is issued within fourteen (14) days after the
hearing, is the final binding outcome of the matter.

Why arbitration is a preferred method of dispute resolution?

One of the key advantages of arbitration under the Act is the expeditious
resolution of disputes. Court cases often suffer from significant delays due to
heavy caseloads and procedural complexities. Conversely, arbitration allows
parties to select their arbitrators, who can focus solely on their case.

THE ARBITRATION AND CONCILIATION ACT OF 2004

The Arbitration and Conciliation Act of 2004 is a national arbitration law
in Nigeria that governs the conduct of arbitration proceedings in the country.
The Act was enacted to provide a legal framework for the resolution of disputes
through arbitration and conciliation, and to promote the use of alternative
dispute resolution mechanisms in Nigeria

Overview of the Act

The Arbitration and Conciliation Act of 2004 is divided into six parts and
contains 81 sections. The Act provides for the following:
Part I: This part of the Act contains the preliminary provisions, including the
definitions of key terms used in the Act.
Part II: This part of the Act deals with the arbitration agreement, the
appointment of arbitrators, and the conduct of arbitration proceedings. It also
provides for the powers of the arbitrator, the making of awards, and the
enforcement of arbitral awards.
Part III: This part of the Act deals with the recognition and enforcement of
foreign arbitral awards.
Part IV: This part of the Act deals with conciliation proceedings, including the
appointment of conciliators, the conduct of conciliation proceedings, and the
making of settlement agreements.
Part V: This part of the Act deals with the establishment and functions of the
Chartered Institute of Arbitrators, Nigeria.
Part VI: This part of the Act contains the miscellaneous provisions, including
the power of the Minister to make regulations, the power of the Chief Justice of
Nigeria to make rules, and the repeal of the Arbitration and Conciliation Act of
1988.

Key Provisions of the Act

Some of the key provisions of the Arbitration and Conciliation Act of 2004
include:
Arbitration Agreement: The Act provides that an arbitration agreement must be
in writing and must be signed by the parties or contained in an exchange of
letters, telex, telegrams, or other means of communication

Appointment of Arbitrators: The Act provides for the appointment of arbitrators

by the parties or by a third party, such as an arbitral institution

Conduct of Arbitration Proceedings: The Act provides for the conduct of

arbitration proceedings, including the power of the arbitrator to determine the
admissibility, relevance, and weight of evidence, and the power to order interim
measures

Making of Awards: The Act provides that the arbitrator must make the award in
writing and must state the reasons for the award

Enforcement of Awards: The Act provides for the enforcement of arbitral

awards, including the recognition and enforcement of foreign arbitral awards

Conciliation Proceedings: The Act provides for the conduct of conciliation

proceedings, including the appointment of conciliators and the making of
settlement agreements.

Recent Developments
In May 2023, the Arbitration and Mediation Act, 2023 was signed into law in
Nigeria, replacing the Arbitration and Conciliation Act of 2004. The new Act
seeks to address some of the shortcomings of its predecessor and to promote the
use of alternative dispute resolution mechanisms in Nigeria. Some of the key
provisions of the new Act include:

Enforceability of Mediation Settlements: The new Act provides for the

enforceability of mediation settlements, which was not provided for in the
previous Act.
Electronic Mediation: The new Act allows for electronic mediation, which was
not provided for in the previous Act
International Mediation: The new Act provides a comprehensive approach to
international mediation, which was not provided for in the previous Act

In summary, the Arbitration and Conciliation Act of 2004 is an important piece

of legislation that provides a legal framework for the resolution of disputes
through arbitration and conciliation in Nigeria. The Act has been in force for
almost 20 years and has been used to resolve a wide range of disputes in the
country. However, with the recent enactment of the Arbitration and
Mediation Act, 2023, it remains to be seen how the use of alternative dispute
resolution mechanisms will evolve in Nigeria in the coming years.