Introduction
The principal legislation applicable to the practice of Alternative Dispute Resolution in Nigeria is the Arbitration and Mediation Act of 2023. An Act which repealed the Arbitration and Conciliation Act of 2004 and introduced notable innovations in the field of Alternative Dispute Resolution in Nigeria.
The former President of Nigeria, Muhammadu Buhari, assented to the Arbitration and Mediation Act, 2023, an Act that serves as a unified legal framework intended to ensure fair and efficient resolution of commercial disputes by arbitration and mediation.[1]
The new Act is divided into three parts:
- Arbitration
- Mediation, and
- Miscellaneous provisions.
The Act also contains schedules, the first schedule contains Arbitration rules guiding the application of ADR mechanism in the resolution of dispute under the Act. The second schedule covers the Domestication of the Convention on the Recognition and Enforcement of Arbitral Awards (The New York Convention) within Nigerian legal Framework.[2] It applies to proceedings in international commercial mediation, domestic commercial mediation, domestic, domestic, and international settlement agreements resulting from mediation and concluded in writing by parties to resolve a commercial dispute.[3]
The final schedule consists of Arbitration proceeding Rules which provides the procedures for the application of Arbitral Awards in the High Courts.
The aim of this article is to outline and briefly discuss the salient innovations in the new Act, particularly the bindingness of mediation settlement which was introduced in the new Act, Third party funding, consolidation and Joinder of parties.
NOTABLE INNOVATIONS IN THE AMA 2023
- The establishment of the Award Review Tribunal (ART) with power to review arbitral awards and to grant interim measures:
One of the major innovations of the new Act is the establishment of the ART saddled with the responsibility of acting as a second arbitral tribunal to review arbitral awards where a party desires to make an application under section 55(3) of the Act. The ART is to conclude and give its decision within 60 days of its constitution and other enforcement proceedings will be stayed during such period pending the decision of the ART.[4]The ART also has power to grant interim measures enforceable in court upon the application of the affected party.
- Third party funding:
The new Act abolished the common law twin torts of maintenance and champerty in relation to Third Party Funding arbitration thereby promoting easy access to justice. Third party funding involves an agreement entered between the disputing parties and a third party who bears the financial burden of the arbitration arrangements. The third party bears the claimant’s legal fees and other arbitration expenses.[5] The only role of the Third party funder is to bear the cost of the arbitration.
The third party funder is however required to disclose his identity and address before or during the arbitration. This is necessary to help combat partiality and ensure confidentiality in third party funding.
- Consolidation:
Parties under the new Act are free to consolidate arbitral proceedings including proceedings involving a different party or parties. It also provides for concurrent hearing.[6] The Act however states that the arbitral tribunal shall only order consolidation of proceedings on the agreement of the parties making such order.[7]
- Joinder of Parties:
The Act also allows parties to join additional parties to the arbitration. The tribunal shall have the power to allow parties to join additional party provided that the party in question is bound by the arbitration agreement.[8] This innovation is admirable as it saves time and cost of arbitration processes which sometimes scares parties away from adopting arbitration as a mechanism for resolving their disputes.
- Recognition of Mediation as one of the mechanisms of ADR:
Unlike the old Act, the AMA recognised mediation in Part two of the Act. The Act defined Mediation as the process whereby parties seek the assistance of a neutral third party or parties to help them in reaching a mutually agreeable resolution for their dispute arising from a contractual or legal relationship. Settlement of agreement arising from mediation agreement are now binding and enforceable in court as a contract, a consent judgment or consent award. The mediator however[9], does not have the authority to impose on the parties a solution to the dispute. This is a significant and an applaudable innovation of the AMA as it prevents incessant withdrawal by parties to mediation agreement. As soon as parties have reached a settlement, they ae bound by such settlement and any breach of such settlement entitles the aggrieved party to approach the court for the enforcement of the agreement.[10]
This is however not obtainable under the old Act which gave the court wide discretion to decide whether to enforce or disregard mediation settlements reached by disputing parties.
- Recognition of Electronic Communication as a form of Arbitration Agreement:
Under the AMA, it is expressly provided that electronic communication between parties to a dispute will qualify as arbitration agreement provided the information therein can be easily accessed for future reference purposes.[11]
Electronic communication is defined under the Act as “any communication that the parties make by means of data messages, that is, any information generated, sent, received, or stored by electronic means”
Therefore, under the AMA, any form of online correspondence, be it email, Whatsapp or Facebook messenger or SMS can qualify as an arbitration agreement in writing provided it can be easily accessed for reference purposes.
Conclusion
The Arbitration and Mediation Act 2023 introduced notable innovations which serves applaudable development in Nigerian Legal and commercial field. It guarantees quick access to justice and enhances Nigerian attractiveness to investors. Also, the recognition of Mediation as a mechanism for settlement of commercial and legal dispute is a notable development.
This article is for informational purposes only and should not be considered legal advice. For specific legal guidance, please contact our team directly.
For expert guidance on arbitration, litigation, and dispute resolution matters, please contact our specialized team in the Litigation & Dispute Resolution Practice , Part of our full-service offering across Lagos, Abuja, and Abakaliki. Please contact our partner Hans Offia on [email protected]
[1] Section 1 of AMA 2023.
[2] Section 1(5) AMA 2023.
[3] Section 67(1) AMA 2023.
[4] Section 56 of AMA 2023.
[5] Section 91(1) od the Arbitration and Mediation Bill 2022.
[6] Section 39(1) AMA 2023
[7] Section 39(2) AMA 2023
[8] Section 40(1) AMA 2023.
[9] Section 87 AMA 2023.
[10] Section 86 AMA 2023.
[11] Section 39(1) and (2) of the Act.
