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Newly signed Arbitration & Mediation Act ’23

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By Mercy Kelani

Nigeria envisions becoming a preferred arbitral seat, repealing ACA, '88.

May 26, 2023 witnessed the signing into law of the Arbitration and Mediation Act, 2023. The newly signed act is necessary to promote and develop arbitration in Nigeria. It has replaced the formerly existing 35-year-old Act of 1988 (ACA), focusing on conforming Nigeria’s legal framework with modern international principles and practices of this process. Enactment of the Act and Nigeria’s efforts towards becoming a preferred seat was deemed reasonable, given that Nigeria has the largest economy in Africa.

Generally, the arbitral seat is described as the legal home of an arbitration; where it is legitimate for it to occur. The choice of an arbitral seat is significant because it is responsible for providing the procedural law necessary to the practice. The courts of the seat also have supervisory jurisdiction over the practice, with primary competence to address practical aspects of it. Nigeria’s aspiration to become a preferred arbitral seat can also be considered from the level of its cross-border trade and disputes.

Increased arbitral work is equal to more revenue.

Majority of the arbitration users must be bold in the legal and institutional framework of the country that would become a leading seat for them. The country must also have a respectable portfolio of work and activity related to the activity. Increased arbitral work is equal to more revenue for every participant in the legal sector: lawyers, technical experts, arbitral institutions and service providers for its conduction. Businesses in the industries of hospitality and tourism would also have increased revenue.

These increased revenues result in increased taxes payments to the government. Also, occupying this preferred seat of wealth and honour would bring about an effective regime of dispute resolution which would boost foreign direct investments in a country. Using the experience in the United Kingdom (London) as case study — being the preferred arbitral seat in the world — a report by The City UK stated that resolution was provided to more than 4000 disputes in 2021 by the international arbitration in the UK.

There is a need to develop other factors aside the modern law.

Reports also have it that legal services sector of the UK, including the arbitral sub-sector, accounted for a contribution of 30.7 billion pounds to the economy of the UK in 2021. In 2020, the legal and accounting sectors of the UK paid taxes of 20.5 billion pounds to the UK government. Therefore, it is pertinent that Nigeria makes deliberate policies to ensure that this act is a service that would support the country’s quest for economic growth, given the high level of revenues associated with it.

According to the CIArb London Centenary Principles and the Queen Mary International Arbitration Survey 2021, the major markers of quality which affirms the choice of users of the arbitral seat are modern and international arbitration law; greater support for the seat by local courts and judiciary; better track record in enforcement of agreements to arbitrate and arbitral awards; independent and effective judiciary; and increased neutrality and impartiality of the local legal system. Although Nigeria has enacted a modern law for this cause, there is a need to develop other factors.

The commitment of Nigeria to promote this practice is evident.

However, some of these factors have been addressed by the Act through its innovative provisions. These provisions include enforcement of arbitration agreements; award challenge proceedings under section 55 of the Act and Award Review Tribunal under section 56; timelines for arbitral claims in court; legal representation in proceedings the practice which states that parties to proceedings can be represented by any person; third-party funding of the cause; interim measures of protection; arbitrator’s immunity; and emergency proceedings. Aforementioned provisions stress the commitment of Nigeria to improve this practice.

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