Nigeria's National Policy On Arbitration And Adr 2024: A Game-Changer For Dispute Resolution

Introduction

Nigeria has taken a monumental step forward in its legal and economic landscape with the release of the National Policy on Arbitration and Alternative Dispute Resolution (ADR), 2024 ("the Policy"). The Policy in which our Arbitration Team Lead – Joseph Siyaidon served as Technical Consultant, was approved by the Federal Executive Council (FEC) on 15th July 2024. The Policy reflects the Nigerian Government's commitment to creating a robust and supportive environment for arbitration and other forms of ADR; ensuring that the country's legal framework aligns with international best practice thereby fostering a culture of dispute resolution that is fair, efficient, and effective.

The overall aim of the Policy is to reduce the burden on our Court system, expedite the resolution of commercial disputes, promote ease of doing business, and increase investor confidence.

Furthermore, the Policy not only seeks to promote the growth and practice of arbitration and ADR in Nigeria, but also demonstrates Nigeria's commitment to fulfill and implement its international treaty obligations, especially under the UNCITRAL Model Law on Arbitration, the New York Convention on the Enforcement of Foreign Arbitral Awards and the terms of the Treaty with the Asian African Legal Consultative Organisation (AALCO) as it relates to the Regional Centre for International Commercial Arbitration (RCICAL). This article examines the key provisions of the Policy and the transformational impact it holds for businesses, investors, arbitration/ADR users and practitioners in Nigeria

Key Highlights of the Policy

Below are the key highlights of the Policy detailing its major provisions, objectives, and expected Implications for Nigeria's economy and legal system generally.

1. Goal of the Policy¹

The primary goal of the Policy is to establish fundamental principles that guide the participation of the Federal and State Governments in arbitration matters, re-positioning Nigeria as an attractive hub for domestic, regional, and international commercial arbitration while safeguarding national interests.

2. The Purposeof the Policy²

The Policy was designed to provide a clear framework that enhances the practice of arbitration in Nigeria, ensuring that disputes are resolved effectively and efficiently. The Policy seeks to:

1. Promote the implementation of Nigeria's treaty obligations under various International Arbitration Conventions.
2. Promote the growth and practice of ADR in Nigeria
3. Encourage a judicial culture that supports arbitration and ADR.
4. Complement efforts to stimulate Nigeria's economy and attract foreign investment.
5. Enhance infrastructure required to set up an arbitration hub in Nigeria for critical stakeholders (arbitration community)
6. Build confidence in and promote the growth of Nigeria's arbitration laws and institutions.
7. Encourage settlement of disputes of commercial transactions emanating from Nigeria, in Nigeria.
8. Encourage reciprocity for arbitration and ADR experts

3. Scopeof the Policy³

The scope of the Policy covers:

1. Domestic Commercial Arbitration: Addressing disputes arising from commercial transactions within Nigeria.
2. International Commercial Arbitration: Providing a framework for Nigeria to handle cross-border commercial disputes efficiently.
3. ADR: Promoting mediation, conciliation, and other ADR methods as viable alternatives to litigation.

By covering these critical areas, the Policy ensures a holistic and structured approach to arbitration and ADR in Nigeria

4. Choice of Arbitration Rules⁴

The Policy, recognizing arbitration's hallmark as a party-driven process, gives the Federal and State Ministries, Departments, and Agencies (MDAs), as well as other counterparties to any contract, the liberty to choose and mutually agree on the arbitration rules that will govern their disputes. However, where there is no mutual agreement on the applicable rules, the Arbitration Rules made pursuant to the Arbitration and Mediation Act 2023 ("AMA 2023") or the rules of other ADR mechanisms under the relevant extant statutes in Nigeria shall apply.

5. Selection of Arbitrators⁵

^{The policy establishes a structured process for the appointment of arbitrators, ensuring competence, transparency, and fairness. The key guidelines on appointments of the arbitrator include:}

1. Where parties agree to a three-member tribunal, the arbitrator to be appointed by the Federal and State MDAs shall be an ADR expert with the requisite qualification and competence to act as an arbitrator.
2. Where the parties agree to appoint a sole arbitrator, the sole arbitrator shall be a suitably qualified and competent Nigerian arbitrator.
3. In international commercial arbitration involving Federal or State MDAs, the Honourable Attorney-General of the Federation (HAGF) or the Honourable Attorney General of a State (HAGS) may request the Regional Centre for International Commercial Arbitration (RCICAL) to appoint qualified Nigerian arbitrator(s) for the Federal/State MDAs.
4. In cases where the parties fail to agree on the procedure of appointment and/or the appointing authority, the HAGF/HAGS shall request the RCICAL or any other centre to appoint suitably qualified and competent Nigerian arbitrator(s) for the Federal/State MDAs.
5. The HAGF or HAGS must approve any arbitration appointments involving claims above ₦50,000,000 (Fifty Million Naira). Where the claim is below the threshold of ₦50,000,000 (Fifty Million Naira), the parties may appoint without seeking the approval of the HAGF/HAGS.

6. Criteria for Engagementof Counsel⁶

To ensure professionalism and competence in arbitration proceedings, the Policy provides guidelines for engaging legal counsel. The guidelines provide that:

1. Federal and State MDAs must adopt a clear and transparent process for engaging Nigerian counsel in arbitration and ADR proceedings.
2. Where foreign counsel is engaged due to specialized expertise, they must partner with Nigerian counsel for the Nigerian counsel to gain hands-on experience in the course of the prosecution of the case.
3. The selection of counsel must be based on merit, considering technical ability, experience in international arbitration, and depth of knowledge.
4. The choice of both Nigerian and Foreign counsel must however be done using reasonable selection criteria of a person so qualified.

7. Contract Negotiation, Drafting, and Arbitration Monitoring⁷

^{A crucial component of the Policy is Paragraph 10, which focuses on contract negotiation, drafting, and arbitration monitoring. The Policy mandates that:}

1. The Federal Ministry of Justice("FMOJ") shall participate in the negotiation and drafting of commercial contracts involving Federal and State MDAs, particularly where foreign entities are involved.
2. The FMOJ shall ensure the monitoring implementation of contracts involving the Federal and State MDAs involving foreign parties.
3. The FMOJ shall ensure the monitoring of ongoing commercial arbitration and/or proceedings and arbitration of ADR related matters involving the FGN before a court of law.
4. The Civil Litigation department of the FMOJ shall prepare a biannual report on arbitration matters involving government entities and submit same to the HAGF.

This provision is critical in preventing arbitration disputes before they arise, ensuring that arbitration agreements are well-structured, legally sound, and beneficial to Nigeria's economic interests. This provision also ensures that arbitration cases do not escalate into costly international disputes, thereby safeguarding the government from undue liabilities.

8. National Arbitration and ADR Register⁸

To ensure transparency and consistency in arbitration practices, the Policy mandates all Federal and State MDAs to provide in detail, full particulars of all ongoing and pending investment or commercial arbitration cases or ADR proceedings before any arbitral tribunal or arbitration or matter before a court of law in a register to be maintained and kept by the FMOJ/ State Ministry of Justice ("SMOJ"). The Federal and State MDAs are also required to furnish the FMOJ/SMOJ with copies of the Arbitration and/or ADR Agreement in the pending investment or commercial arbitration or ADR matters.

9. Nigeria as the Preferred Seat and Venue of Arbitration⁹

A crucial component of the Policy is its emphasis on establishing Nigeria as a preferred seat of arbitration. Historically, most arbitration cases involving Nigerian parties have been seated in foreign jurisdictions due to concerns about infrastructure, judicial interference, and enforcement challenges. This has not only increased the cost of arbitration for Nigerian businesses but has also led to a loss of potential economic benefits.

Under Paragraph 13, the Policy seeks to reverse this trend by:

1. Promoting Nigeria as the default seat and venue for arbitration.
2. Stipulating Nigeria as the seat and venue of all arbitrations involving Nigeria's governmental bodies with the RCICAL as the default appointor, where necessary..
3. Encouraging State governments/Agencies to undergo ADR at the Multi Door Couts ("MDCs") where cases are within a particular monetary threshold.
4. Encouraging private sector entities to utilise ADR in the first instance at the MDC and other Government ADR Centres.
5. Encouraging the judiciary to establish special courts, including small claims commercial courts, and specialized divisions of the judiciary as well as the expansion and strengthening of ADR centres in order to promote fair and expeditious resolution of commercial disputes, reduce delays and encourage the development of suitable skills and specialization

By implementing these measures, Nigeria aims to attract international arbitration cases and establish itself as a hub for arbitration in Africa. This move will not only bolster the country's legal industry but will also enhance Nigeria's reputation as a business-friendly environment.

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