NAVIGATING THE COMPLEXITIES OF INTERNATIONAL ARBITRATION IN NIGERIA: OPPORTUNITIES AND OBSTACLES.

In an increasingly globalised economy, cross-border transactions are the norm, and with them comes the inevitable potential for disputes. For businesses operating or investing in Nigeria, international arbitration has emerged as a preferred method for resolving commercial conflicts, offering a distinct alternative to often protracted and public court litigation. While Nigeria has made significant strides in positioning itself as an arbitration-friendly jurisdiction, navigating this landscape presents both promising opportunities and persistent obstacles.

THE ALLURE OF INTERNATIONAL ARBITRATION: OPPORTUNITIES FOR BUSINESSES

International arbitration offers several compelling advantages for parties involved in cross-border disputes with a Nigerian nexus:

Neutrality and Impartiality: For foreign investors, the prospect of litigating in Nigerian courts can raise concerns about perceived biases or unfamiliar legal systems. International arbitration provides a neutral forum, allowing parties from different jurisdictions to select arbitrators who are impartial, independent, and often possess specialised expertise in the relevant industry or legal area (Chaman Law Firm). This minimises concerns about "home advantage" that might arise in national courts.
Confidentiality: Unlike court proceedings which are typically public, arbitral proceedings are confidential. This is a significant draw for businesses seeking to resolve disputes discreetly, protecting sensitive commercial information, trade secrets, and their reputation from public scrutiny (Chaman Law Firm, San Jose Corporate Lawyers).
Efficiency and Speed: While not always guaranteed, arbitration is generally designed to be faster and more efficient than traditional litigation. Parties can often agree on streamlined procedures, timelines, and the choice of arbitrators, leading to quicker resolutions (Chaman Law Firm, San Jose Corporate Lawyers). This allows businesses to focus on their core operations rather than getting bogged down in lengthy legal battles.
Flexibility and Party Autonomy: A hallmark of arbitration is the high degree of party autonomy. Businesses can tailor the arbitration process to their specific needs, including:

Choice of Arbitrators: Parties can select arbitrators with specific industry knowledge or legal expertise (IBA Arbitration Guide - Nigeria).
Applicable Law: Parties can choose the substantive law governing their contract and dispute, even if it's not Nigerian law.
Language and Venue: They can agree on the language of the proceedings and the seat of arbitration, offering convenience and potentially reducing travel costs.
Procedural Rules: They can adopt institutional rules (e.g., ICC, LCIA, UNCITRAL) or design their own ad hoc procedures.

Enforceability of Awards: Nigeria is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. This means that arbitral awards made in other signatory states can generally be recognised and enforced in Nigeria, and vice versa. The Arbitration and Mediation Act 2023 (AMA), which repealed the Arbitration and Conciliation Act 1990, explicitly incorporates the principles of the New York Convention, making it easier to enforce foreign awards. Section 57(1) of the AMA states that an arbitral award, irrespective of the country it's made, "shall be recognised as binding" and, upon application," be enforced by the court." (Tope Adebayo LP, Proshare).
Specialised Institutions: Nigeria boasts a growing institutional framework for arbitration, notably the Lagos Court of Arbitration (LCA). Established under the Lagos Court of Arbitration Law, No. 17, 2009, the LCA is a private-sector driven international centre offering world-class facilities, a panel of experienced neutrals, and modern rules (LCA Website). Its strategic location in Lagos, a commercial hub, further enhances its appeal as an arbitral seat. The Nigerian Institute of Chartered Arbitrators (NICArb) also plays a significant role in promoting arbitration and providing rules.

NAVIGATING THE HURDLES: OBSTACLES AND CHALLENGES

Despite the robust legal framework and growing opportunities, international arbitration in Nigeria is not without its complexities and obstacles:

Challenges with Enforcement of Foreign Awards: While the AMA 2023 aims to streamline enforcement, inconsistencies and judicial attitudes can still pose challenges.
Judicial Intervention: Historically, there have been instances of excessive judicial intervention or delays in enforcing arbitral awards, undermining the finality and speed that arbitration promises (Tope Adebayo LP). Although recent judicial pronouncements emphasise upholding arbitral awards, the risk of litigation to set aside or resist enforcement remains.
Inconsistencies in Legislation: Some legal scholars point to lingering inconsistencies between the AMA 2023 and older statutes like the Reciprocal Enforcement of Foreign Judgment Ordinance 1958 and the Foreign Judgment (Reciprocal Enforcement) Act 1961, which could create confusion in enforcement proceedings (Tope Adebayo LP).
Public Policy Grounds: Courts can refuse enforcement on limited "public policy" grounds. While this is a common provision in international arbitration laws, its broad interpretation can sometimes lead to uncertainty.
Lack of Specialised Arbitrators in Emerging Sectors: Nigeria's economy is diversifying, with growth in sectors like fintech, renewable energy, and artificial intelligence.
Dilemma: Disputes in these novel areas often require arbitrators with deep technical and legal expertise. Finding a sufficient pool of highly skilled and specialised arbitrators for these emerging sectors can be challenging (Harlem Solicitors).
"Pathological" Arbitration Clauses: A common pitfall arises from poorly drafted or "pathological" arbitration clauses in contracts. These clauses can be vague, inconsistent, or fail to clearly designate the seat of arbitration, leading to preliminary disputes over jurisdiction and delaying the substantive arbitration process (ResearchGate).
Cost and Duration: While often touted as faster and cheaper, complex international arbitrations can still be expensive and time-consuming, especially if multiple hearings are required or if the parties engage in aggressive procedural tactics. Fees for arbitrators, institutional administration, and legal counsel can be substantial.
Cross-Border Jurisdictional Issues: Despite a chosen seat, international disputes inherently involve different legal systems. Navigating conflict of laws rules, gathering evidence across borders, and dealing with varying legal cultures can add layers of complexity.

THE WAY FORWARD: OPTIMISING NIGERIA'S ARBITRATION LANDSCAPE

To fully capitalise on the opportunities and mitigate the obstacles, continuous efforts are needed:

Judicial Support and Training: Continued judicial training on the principles of international arbitration and the AMA 2023 is crucial to ensure consistent and pro-arbitration judicial attitudes, minimising unwarranted interventions and delays in enforcement.
Capacity Building for Arbitrators: Investing in training and certification programmes for arbitrators, particularly in emerging sectors, will help build a robust pool of specialised professionals. Institutions like the LCA and NICArb play a vital role here.
Promoting Best Practices in Clause Drafting: Legal practitioners drafting commercial contracts should be meticulous in formulating clear, unambiguous, and enforceable arbitration clauses, specifying the seat, institution, and rules.
Leveraging Technology: The digitalisation of arbitral processes, including virtual hearings and electronic document management, can further enhance efficiency and reduce costs, making Nigeria an even more attractive arbitral venue.
Regulatory Consistency: Future legislative reviews should aim to harmonise any lingering inconsistencies between the AMA 2023 and older enforcement laws to provide greater certainty.

CONCLUSION

International arbitration offers a sophisticated and effective mechanism for resolving complex cross-border commercial disputes involving Nigerian entities. The recent enactment of the Arbitration and Mediation Act 2023, coupled with the presence of world-class institutions like the Lagos Court of Arbitration, positions Nigeria favorably as a regional hub for alternative dispute resolution. While challenges related to enforcement consistency and specialised expertise persist, a concerted effort from the judiciary, legal practitioners, and arbitral institutions can further solidify Nigeria's standing. By strategically navigating these complexities, businesses can unlock the full potential of international arbitration, ensuring fair, efficient, and enforceable resolutions for their commercial disagreements.

REFERENCES:

Arbitration and Mediation Act 2023. (Replaced the Arbitration and Conciliation Act 1990).
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.
Lagos Court of Arbitration (LCA) Law, No. 17, 2009.
Chaman Law Firm. "5 Proven Benefits Of International Arbitration." (chamanlawfirm.com)
San Jose Corporate Lawyers. "The Advantages and Disadvantages of Arbitration." (sacattorneys.com)
Tope Adebayo LP. "Challenges of Enforcement of Foreign Arbitral Awards in Nigeria: Addressing the Inconsistencies in the Nigerian Legislations." (topeadebayolp.com)
Proshare. "Nigeria: Procedure For Recognition And Enforcement Of Arbitral Awards." (proshare.co)
Harlem Solicitors. "Arbitration and Emerging Legal Issues in Nigeria: Addressing Challenges and Opportunities." (harlemsolicitors.com)
ResearchGate. "Challenges of Nigeria as a Preferable Seat of International Commercial Arbitration." (researchgate.net)
International Bar Association (IBA) Arbitration Guide - Nigeria. (ibanet.org)
Nigerian Institute of Chartered Arbitrators (NICArb) resources. (blog.nicarb.org)