A Review of Key Innovations/Highlights in the Arbitration and Mediation Act 2023.
By Christabel Ogechi Ifezie
1.0. INTRODUCTION
On the 26th of May, 2023, President Muhammadu Buhari assented to the Arbitration and Mediation Bill, thereby making it into an official law. The Arbitration and Mediation Act (hereinafter referred to as the AMA 2023) repealed the 35-year-old Arbitration and Conciliation Act (ACA) 1988 in section 90, and is currently the official legislation governing Arbitration, Arbitral proceedings, Mediation and Arbitral awards. The AMA comprises 92 sections, divided into three Parts and a Schedule. Part I (sections 1 – 66) deals with Arbitration, Part II (sections 67 – 87) deals with Mediation and Part III (sections 88 – 92) comprises the Miscellaneous Provisions.
The AMA has been loudly applauded for introducing innovative sections and mechanisms to regulate the dispute resolution proceedings conducted across the country. In light of this, this article seeks to dive deep into the provisions of the newly enacted Arbitration Mediation Act 2023 to give a review of the provisions of the Act.
2.0. NOVEL PROVISIONS IN THE ARBITRATION AND MEDIATION ACT 2023
2.1. ENFORCEMENT OF ARBITRATION AGREEMENT
The requirement that every arbitration agreement shall be in writing, which was provided under section 1(1) of the ACA is now provided in section 2(2) of the AMA. Section 2(3) goes a step further to state that an arbitration agreement shall be in writing where its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct or by any other means. Thus, an arbitration agreement can now be executed electronically and where it is in such form, it is deemed to be in writing. In Arcus Gives Nig. Ltd. V. Greater Port Harcourt City Development Authority, although the parties did not sign the agreement, the arbitration agreement was validly admitted because it was recorded and agreed by the parties. The Court held, inter alia, that although the arbitration agreement was not signed by the parties, it was nonetheless binding on the parties because the parties were aware of all the terms of the agreement, accepted the terms as binding on them, benefitted from the terms of the agreement, and asserted rights and claims under the arbitration agreement.
Also, the AMA provides for stay of proceedings under section 5 of the AMA (previously section 4 of the ACA). Thus, the court is mandated to grant a stay of proceedings once the application is properly made, except where the agreement is void, inoperative or incapable of being performed. This is in line with Article 2(3) of the New York Convention which states that the court of a Contracting State shall refer the parties of an action to arbitration, if there is a valid arbitration agreement between the parties regarding the subject matter of the dispute. It is clear that Nigeria by enacting this Act is trying to meet up with international standards and this is a commendable innovation.
2.2. ENFORCEMENT OF INTERIM MEASURES.
Under the new AMA, a party can obtain interim reliefs pending the constitution of an arbitral tribunal. Section 19 of the AMA 2023 grants the Court the power to issue interim measures of protection in relation to arbitration proceedings whose seat is in the Federal Republic of Nigeria or in any other country as it has in relation the proceedings in the courts. An arbitral tribunal also, may at the request of a party, grant interim measures. An interim measure is a temporary measure whether in the form of an award or in another form, which, at any time before the award which decides the dispute is issued, the arbitral tribunal orders the party to:
a. maintain the status quo pending the determination of the dispute;
b. take action that may prevent, or restrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;
c. provide a means of preserving assets out of which a subsequent award may be satisfied;
d. preserve evidence that may be relevant and material to the resolution of the dispute preserve the subject matter of the arbitration itself.
Under section 28(1) of the AMA 2023, an interim measure issued by an arbitral tribunal is binding and shall be enforced upon application to the Court, irrespective of the country which it is issued. This is however, subject to section 29. Section 29 provides for the grounds for refusal of enforcement of interim measure vis: noncompliance with the provision of security, incompatibility of the measures with the powers conferred in the Court, etc. Interim measure is also provided under Article 26 of the Arbitration Rules.
2.3. EMERGENCY ARBITRATOR PROCEEDINGS.
The Act also provided for the appointment of emergency arbitrator. Section 16 of the AMA states that the party that requires emergency relief may, following the filing for a request of a dispute, to be referred to arbitration, but before the constitution of the tribunal, submit an application for the appointment of an emergency arbitrator to any arbitration institution designated by the parties, or failing that, to the Court as defined in section 91. Section 16(2)-(4) provides for the procedure to be followed and the appropriate documents needed for such application. Where such emergency arbitrator has been appointed, a challenge where necessary must be made within three days of receipt of the appointment by the party challenging such arbitrator. The arbitral institution or the Court that appointed the arbitrator shall decide on the challenge within three days after reasonable time has been afforded the parties to make their submissions. Where the emergency arbitrator dies, is removed , has withdrawn or has been successfully challenged, the arbitral institution or the Court shall appoint a substitute emergency arbitrator within two business days.
Article 27(1 – 15) of the Arbitration Rules provides extensively in the appointment of emergency arbitrator and the conduct of emergency relief proceedings.
2.4. AWARD REVIEW TRIBUNAL
One laudable addition to the AMA 2023 is the creation of an “Award Review Tribunal” which is a mechanism to address challenges of award within a specified timeframe under the Act. Section 56 of the AMA 2023 provides that parties may stipulate in their arbitration agreement that an application to review the award on any of the grounds stated in Section 55(3) shall be made to an Award Review Tribunal. The Tribunal shall render it’s decision within 60 days of its constitution, and where the Tribunal annuls an award, the Court may reinstate that award upon application by the party if it considers the Tribunals decision “unsupportable,” having regard to the grounds for annulment. Where the Tribunal has affirmed an award, an application to set aside the award may only be made to the Court in the grounds set out in section 55(3)(b)(i) or section 55(3)(b)(ii) of this Act; i.e., on the grounds of non-arbitrability of the subject matter or the dispute, or on the grounds of public policy.
2.5. CONSOLIDATION, CONCURRENT HEARINGS AND JOINDER OF PARTIES.
Section 39(1)(a) provides that parties may agree to consolidate arbitral proceedings with other arbitral proceedings, including proceedings involving different parties. Concurrent hearings shall also be held on such terms as may be agreed, and an order for consolidation of proceedings or concurrent hearings shall not be made unless the party agrees to the making of such order. The arbitral tribunal, under section 40(1) also has the power to allow an additional party to be joined to the arbitration, provided that, prima facie, such additional party is bound by the agreement giving rise to the arbitration. This power does not limit the tribunals to determine its competence (jurisdiction) pertaining the questions arising out of this decision. Thus, where a contract creates separate but correlated rights and obligations between parties or more than two parties, and such contract provides for arbitration agreement, while each party is entitled to enforce its separate rights by commencing arbitration proceedings, the AMA allows for a consolidation of such arbitration proceedings.
2.6. THIRD-PARTY FUNDING
Unlike the ACA, the AMA introduced a novel provision of third party funding which applies to arbitration-related matters in Nigeria. A Third-Party Funding agreement is defined in section 91 as a contract between the Third-Party Funder and a disputing party, an affiliate of that party, or a law firm representing that party, in order to finance part of all of the proceedings, either or as a part of a selected range of cases, and the financing is provided for either through a donation, grant, or in return for reimbursement dependent in the outcome of the dispute or in return for a premium payment. A Third-Party Funder was also defined as my natural or legal person who is not a party to the dispute but enters into an agreement with a disputing party to finance part or all of the cost of the proceedings. Under section 50(1)(g), the costs of arbitration hall be fixed by the arbitrators includes the costs of obtaining a Third-Party Funding. While section 61 states that the torts of maintenance and champerty don’t apply to Third-Party Funding of arbitration, section 62(1) mandates the party benefitting from the Third-party Funding agreement to give written notice of the name and address of the Third-Party Funder to the other party(ies), the orbital tribunal, and the arbitration institution where applicable. This is to prevent the issues of conflict of interest which may otherwise arise. Where the respondent has brought an application for security for costs based on the disclosure of Third-Party Funding, the tribunal may allow the funded party to furnish affidavit stating whether the Funder agreed to cover adverse costs order under the finding agreement, and this shall be a relevant consideration to the decision of the tribunal in whether to grant security for costs.
2.7. STATUTE OF LIMITATION APPLICABLE TO ARBITRAL PROCEEDINGS
Section 34(1) states that the applicable stature of limitation which applies to judicial proceedings before the Court shall also apply to arbitration proceedings. Section 34(2) provides that I computing the time prescribed by the statute of limitation for the commencement of judicial or arbitral proceedings in respect of a dispute which was the subject matter of an award which the Court orders to be set aside or the affected part of an award which the Court orders to be set aside, the period between the commencement of the arbitration and the date of the order referred to shall be excluded. Thus, the period during which the dispute was referred to arbitration would not be counted in the calculation of the time prescribed for the statute of limitation. Section 34(3) goes further to expressly abolish the application of Scott v. Avery clause to the statute of limitation; i.e., for the purpose of statute of limitation, when a cause of action has accrued, any provision that an award is a condition precedent to the instituting of legal proceedings in respect of a matter to which the arbitration agreement applies shall be disregarded.
2.8. MEDIATION PROVISIONS
Part II of the AMA 2023 provides for Mediation proceedings. It applies to both domestic mediation and international mediation proceedings. Except for the provisions of section 73(3) as it relates to conduct of mediation, fees and expenses, parties may agree to vary or exclude any provisions of this Part. Under section 76, all information relating to the mediation proceedings shall be kept confidential, except where disclosure is required as stipulated under subsections (a) – (d). The mediator is also barred from acting as an arbitrator in respect of any dispute that was the subject matter of the mediation proceedings, unless otherwise agreed by the parties. In addition to the above, the Act provides for the enforcement of settlement agreements, and makes the Singapore Convention applicable to international settlement agreements, provided that (i) the settlement agreement is made in a signatory state; and (ii) the underlying relationship is a commercial one.
2.9. AWARD OF INTEREST
Section 46 of the AMA 2023 provides for Award of Interest. Although in the copy of the Act uploaded, the provision of Section 46 is omitted, the provision was contained in the Arbitration and Mediation Bill. It is the opinion of the writer that such omission was an oversight and as such, it would be briefly addressed. This section states that the parties may agree on the arbitral tribunal’s power to award interest. The Tribunal may award simple or compound interests from such dates, and at such rates which it deems or considers just. The tribunal may award such interests from the date of the award until payment at such rates it considers reasonable and just under the circumstances, on the outstanding amount of any award (including the award of interest under subsection (2) or any award as to cost.
2.1.0. IMMUNITY OF AN ARBITRATOR
The Act in Section 13 introduced the immunity of an arbitrator, an arbitral institution or an appointing authority or an employee of any of the above-mentioned from any liability done in the discharge or purported discharge of their functions as provided for in the Act. However, this immunity does not extend to actions or omissions carried out mala fide. Thus, where an arbitration in executing his functions under the provisions of the Act causes damage or incurs liability, he would not be held liable except it can be proven that he acted in bad faith. This section shall not, however, affect any liability incurred by an arbitrator by reason of such arbitrator’s withdrawal under section 12 of this Act.
2.1.1. COSTS
By virtue of Section 50(1), the arbitral tribunal shall fix costs of arbitration in its award. The term ‘costs’ was also expanded to include administrative costs, costs of obtaining Third-Party Funding and other costs as approved by the arbitral tribunal. Additionally, the tribunal has the power to order any party claiming or counterclaiming for costs, to provide security by way of bank guarantee or in any way the tribunal deems fit or appropriate under the circumstances. Security for costs provides protection to a party against the costs of arbitration in certain situations where for instance, the counterparty is running low on funds. Section 53(1) states that the parties shall be jointly and severally liable to pay the arbitrator such reasonable fees as may be incurred during the arbitral proceedings. This is a departure from the previous position that ‘costs follow the event,’ i.e., costs shall be borne by the unsuccessful party, which is a principle adapted from litigation.’ In Akande v. Jegede, the Supreme Court held that here liability is joint and several, it means that liability in one is liability on all. It is important to state that this discretion afforded to an arbitrator is not unqualified and has to be exercised judicially and reasonably. Therefore, the arbitrator has the power to apportion costs jointly and severally between the parties regardless of which party emerged successful.
3.0. CHALLENGES/QUESTIONS PERTAINING TO THE ARBITRATION AND MEDIATION ACT.
Notwithstanding the commendable developments, some questions relating to the Act which were not fully addressed will be elucidated below:
Firstly, under the ACA, one of the grounds for setting aside an award was on the ground of the arbitrator’s misconduct. Thus, where the arbitrator has misconducted himself or acted unfairly or unjustly in handing down an award a party may apply to the Court for the award to be set aside on the ground of misconduct, under section 30 of the ACA. However, this ground has been removed under the AMA, which begs the question: under what provision of AMA can an application to set aside an award on the ground of misconduct be brought? Arguments have been made that the application can be brought under section 55(3)(b)(ii) – where the award is against public policy, however, this is dicey as it does not capture the full intent and provision of misconduct as did the ACA.
Secondly, the provision of section 46 was omitted in Part I of the AMA. While the arrangement of sections included section 46 on awards of interest, this provision was omitted in the Act itself.
Additionally, the definition of international arbitration under section 91(5)(b) and (c) makes use of the word ‘State’ instead of country. It states that an arbitration is international if the seat of arbitration or a place where a substantial part of the obligations of the commercial relationship is to be performed or the place which the subject matter of the dispute is closely connected is situated outside the ‘State’ which the parties have their place of business or the parties have agreed that the subject matter if the arbitration agreement relates to more than one ‘State.’ The use of the word ‘State’ rather than ‘Country’ connotes Federating States which does not reflect the meaning of international arbitration. A better suited word would be ‘country’ or ‘sovereign state’ so as to connote independent states which reflects the true import of the section, however, this is not included in the Act and gives leeway for misinterpretation and misconstruction.
The Courts have the duty of interpreting the Act in such a way as would give effect to the intention of the legislators. Until the Court gives interpretation on these areas, they remain unresolved and open to multiple misconstruction.
4.0. CONCLUSION
With the enactment of the new Arbitration and Mediation Act, Nigeria has demonstrated its willingness to promote the use of arbitration in dispute resolution. The Act has been tailored to reflect global standards and meet up with international practices worldwide. With provisions providing for Award Review Tribunal, emergency relief proceeding, and so in, it can be inferred that the Act also aims to facilitate arbitration and mediation as a viable took for the decongestion of the number if cases that go from arbitration to the Courts in Nigeria. Despite the laudable innovations, there are still a number of questions pertaining the Act as stated above which should be addressed by the legislation. All in all, the Act requires the utmost attention, not only to ensure the fulfilment of its true purpose but also to establish the principles by which it must abide.
ABOUT THE AUTHOR
Christabel Ogechi Ifezie is a 400 level law student of the University of Nigeria, Nsukka. She has interests are in Corporate and Commercial Law, Alternative Dispute Resolution, Intellectual Property and Energy Law.
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