Nigeria’s New Arbitration and Mediation Law | Paris Court of International Arbitration

Nigeria’s Evolving Arbitration and Mediation Framework: A Modernized Approach to Dispute Resolution

On 23 May 2023, Nigeria enacted the Arbitration and Mediation Act, 2023 (hereinafter referred to as the "New Act"), thereby superseding its predecessor, the Arbitration and Conciliation Act, Cap A18, 1988, which had been in force for 35 years. The overarching objective of the New Act is to establish a unified and contemporary legal framework for the efficient resolution of commercial disputes, whether through arbitration or mediation. Furthermore, it formally incorporates the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, extending its applicability to both domestic and international arbitral awards involving Nigeria.

Substantially modeled on the 2006 UNCITRAL Model Law, the New Act harmonizes Nigeria's dispute resolution landscape with international standards, applying to both domestic and international arbitrations. This legislative reform marks a significant progression for Nigeria's legal system, strategically positioning the nation as a more robust hub for arbitration within the African continent.

Let us delve into some of the salient features introduced by the New Act.

The Award Review Tribunal (ART)

One of the most distinctive innovations of the New Act is the introduction of the Award Review Tribunal (ART)—a novel mechanism that empowers parties to challenge arbitral awards rendered in Nigeria before resorting to the national courts (Section 56).

Grounds for Review: Challenges brought before the ART must be predicated upon specific grounds that are identical to those stipulated under the 2006 UNCITRAL Model Law (Section 55(3)).
Opt-In Mechanism: The ART's jurisdiction is exclusively contingent upon its express inclusion within the arbitration agreement. It is available solely for arbitrations seated within Nigeria.
Decision-Making Powers: The ART is authorized to either uphold, partially set aside, or entirely annul an arbitral award. Its decisions possess the capacity to influence or constrain subsequent judicial review by the courts.
Prescribed Timeframes: Applications for review must be submitted within three months of the party's receipt of the award, and the ART is mandated to endeavor to issue its decision within 60 days of its formal constitution.

While the ART introduces an additional procedural layer, its design is intended to streamline judicial oversight by resolving potential issues at an earlier stage, prior to their escalation to the courts.

Legalization of Third-Party Funding

Previously prohibited under common law doctrines of maintenance and champerty, third-party funding is now explicitly permitted for arbitration proceedings (Section 61). This legislative amendment positions Nigeria alongside progressive jurisdictions such as Singapore and Hong Kong in this regard.

Disclosure Requirements: Parties receiving funding are obligated to disclose the name and address of the funder to the arbitral tribunal, all other parties involved, and any relevant arbitral institution (Section 62(1)).
Security for Costs: Should an application for security for costs be made, the funded party may be required to confirm—through an affidavit—whether the funder has formally agreed to cover any adverse costs that may be awarded (Section 62(3)).

This significant change broadens access to arbitration for a wider array of parties, particularly those with constrained financial resources.

Emergency Arbitrators

In a forward-thinking legislative stride, the New Act explicitly provides for the appointment of emergency arbitrators—a feature typically found within institutional arbitration rules rather than enshrined in national legislation (Section 16).

Pre-Tribunal Formation: Parties are now able to apply to a court or an arbitral institution for the appointment of an emergency arbitrator even before the main arbitral tribunal has been formally constituted.
Binding Orders: Decisions rendered by an emergency arbitrator must be delivered within 14 days and are considered binding, although they may subsequently be modified, suspended, or terminated by the main arbitral tribunal.

This innovation aligns Nigeria’s arbitration law with leading international best practices, mirroring provisions found in the rules of institutions such as the LCIA and ICC.

Interim Measures and Judicial Support

The New Act establishes a framework of shared authority between arbitral tribunals and Nigerian courts concerning the issuance of interim measures (Sections 19 and 20).

Court Involvement: National courts are empowered to grant interim relief in both domestic and foreign-seated arbitrations.
Timely Action: Courts are expected to issue rulings on applications for interim measures within a prompt timeframe of 15 days from the date of application.
Enforcement of Interim Measures: For the first time, Nigerian law explicitly permits the enforcement of interim relief granted by arbitral tribunals (Section 28). Enforcement can only be denied under a narrow set of circumstances, such as a failure to provide required security or if the relief conflicts with the inherent powers of the court.

This legislative provision reinforces the supportive role of the judiciary while concurrently upholding the essential autonomy of arbitral tribunals.

Mediation: A Comprehensive and Modern Framework

Part II of the New Act introduces a contemporary and comprehensive framework for mediation, effectively replacing the outdated provisions on conciliation.

Scope and Safeguards: This section encompasses detailed procedural rules, provisions for mediator immunity, and strict confidentiality requirements (Sections 67–87).
Enforcement of Settlements: Outcomes reached through mediation can now be enforced as legally binding contracts, consent judgments, or consent arbitral awards (Section 82). Refusal of enforcement is strictly limited to specific grounds, such as a party's incapacity, the invalidity of the settlement agreement, or non-performance of stipulated obligations.

This robust framework significantly strengthens the legal foundation of mediation, actively encouraging its utilization as a viable and effective alternative to arbitration.

Additional Noteworthy Changes

Beyond the aforementioned key features, the New Act introduces several other significant amendments:

Default Appointing Authority: The Director of the Lagos Regional Centre for International Commercial Arbitration is now designated as the default appointing authority in international matters (Section 59).
Grounds for Setting Aside Awards: The grounds for setting aside awards mirror those of the UNCITRAL Model Law and are applicable to both annulment proceedings (Section 55) and the refusal of enforcement (Section 57).
Enforcing Arbitration Agreements: National courts are now mandated to stay litigation proceedings initiated in breach of an arbitration agreement, unless the agreement is determined to be void or otherwise unenforceable (Section 5).
Fees and Liens: Arbitral tribunal fees must be reasonable, determined based on the value and complexity of the dispute (Section 50). Unpaid fees can be secured through a lien on the final award (Section 54).
Court Procedures: A new set of rules, detailed in the Third Schedule, aims to expedite and modernize court procedures specifically related to arbitration matters.

Concluding Perspectives Nigeria’s recently enacted arbitration law unequivocally demonstrates a clear commitment to cultivating a robust and modern dispute resolution environment. By embracing universally recognized international standards and proactively addressing longstanding challenges, the New Act significantly enhances Nigeria’s appeal as a preferred destination for arbitration within the African continent. This progressive legislation is poised to foster greater legal certainty, improve procedural efficiency, and ensure enhanced enforceability, all of which are critical elements for attracting and securing foreign investment.