CHAPTER ONE

INTRODUCTION

1.1.     Background of the Research

Formerly, traditional means of settling disputes have been a common occurrence in Nigeria.[1] Before the advent of colonial administration in the late 19th century, parties were represented by persons skilled in oratory prowess, who could argue and who possessed the persuasive power of argument.[2] The most serious disputes were resolved by a council of elders that would take testimony and sometimes hear the arguments of agents advocating on behalf of the disputants.[3] It was the general belief then that no appeal could come from those judgments partly because the people feared and believed in the elders and therefore their wisdom could not be questioned. As conservative as this would sound, embedded in this practice was what has come to be known as arbitration today.

Arbitration has been defined as the reference of a dispute or difference between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction.[4] Arbitration is defined in section 57 (1) of the Arbitration and Conciliation Act[5] as commercial arbitration whether or not administered by permanent arbitral institute. According to Redfern & Hunter, [6] arbitration means a situation where “two or more parties, faced with a dispute which they cannot resolve for themselves, agreeing that some private individual will resolve it for them and if the arbitration runs its full course….it will not be settled by a compromise but by a decision”.

Ezike sees arbitration as a method of settling disputes under which the parties agree to be bound by the decision of a third person whose decision is, in general, final and legally binding on both parties[7] . As far as the term arbitration is concerned, there are almost as many other definitions of the term as there are commentators on the subject.

Until now, resolutions of transnational disputes remain a relatively strange system in Nigeria, ultimately due to the incessant interference of the military in politics and governance. Although Nigeria gained her independence in 1960, it did not embrace international commercial arbitration formally by way of statute until the enactment of the Arbitration and Conciliation Decree 1988. Before then however, practitioners had been well steeped in international commercial arbitration outside the country.[8] 

The need for resorting to arbitration is more compelling considering the general advantages linked with arbitration and closely bearing in mind the lethargic attitude of Nigerian courts to the resolution of complex business disputes.[9] This without doubt scares foreign investors. The disparities between the systems of thinking, national ideologies and methods of conducting business in various parts of the world, a national of a particular jurisdiction will be more likely to present a more convincing case by the standards of the court of her jurisdiction than will a foreigner.[10] The negative perception of a judge’s national predisposition may prevent parties with different national or cultural backgrounds from agreeing on a suitable court to hear their disputes. 

For instance, the position of Nigerian law  on the limitation period for the

enforcement of arbitration award appears to be narrow and too limited compared to what obtains in other parts of the world especially England which in our view is a better attraction for foreign investors. In City Engineering Nig Ltd. v. Federal Housing Authority, [11]  the parties entered into an agreement to build housing units in Lagos. The agreement contained a provision to submit all matters in dispute in connection with the execution of the contract to arbitration; a dispute arose in the course of the execution of the contract which resulted in the contract being terminated on 12 December 1980.  The matter was referred to arbitration and proceedings commenced in 1981 and ended in 1985 when the arbitrator made his award in favour of City Engineering. In an attempt to enforce the award in 1988, the trial court held that by virtue of section 8 of the Limitation Law of Lagos State, the action for enforcement had become statute barred, having been brought in excess of 6 (six) years after 12 December 1980 when the cause of action arose, a position the Supreme Court upheld. The Supreme Court was urged on appeal to consider the position in England as demonstrated in Agromet Motoimport Ltd v. Maulden Engineering Co. (Beds) Ltd., 12  where it was held that time begins to run from the date of the breach of the implied term to perform the award, and not from the date of the accrual of the original cause of action giving rise to submission. 

This position was restated in the  recent English case of IBSSL v. Minerals Trading Corp. [12] where the court held that time begins to run from the date on which the implied promise to perform  the award is  broken, not from the date  of the arbitration agreement nor from the date of the award as it is in Nigeria. The Supreme Court’s decision in City Engineering represents the law but this has been criticized not only for the palpable difficulties for the contracting parties, but also for future of arbitration in Nigeria generally. [13]  As one writer rightly puts it “... what is the use of an arbitral award if the party seeking to enforce such an award is unable to benefit from the fruits of his victory?”[14] 

1.2.      Statement of the Problem

Having obtained the award, the successful party would have to enforce the award against his adversary but atimes the party seeking to enforce the award is constrained by the issue of time limitation. The Arbitration and Conciliation Act is silent on limitation periods and accrual of the cause of action to enforce an award, leaving those issues to be determined by the various limitation laws applicable in the States of the Federation. The willingness of Nigerian courts to enforce foreign arbitration awards and the ease or difficulty of doing so and the likely timescale of the process of enforcement are issues of immense concern to any person wishing to enforce an arbitral award in Nigeria.[15] This readily brings to mind the issue as to: who and what is affected under such circumstance? Why is it affected? When and how is it affected? And what does it intend to achieve?

In an attempt to make clear the time limitation period within which a party seeking to enforce an award must take advantage of, the judicial position in Nigeria holds that the arbitration proceedings and the enforcement of the award both constitute a single cause of action that must be prosecuted and enforced within the statutory limitation period, this is so tasking considering the fact that in other jurisdictions like China, England and Hong Kong the arbitration proceedings and the enforcement of the award are treated separately.

1.3.      Research Questions

The issue set out in this noble task is the enforcement of foreign arbitral award in Nigeria and the challenge of time limitation. While trying to examine this subject, positive attempts will

be made to proffer answers to the following questions:

1.     Can foreign arbitral award be enforced in Nigeria?

2.     If the above answer is in the affirmative, is there any time limitation within which such an award must be enforced in Nigeria? 

3.     What is the role of the national courts in enforcing foreign arbitral award in Nigeria?  Assuming the courts do have any role to play on this subject, what standards should national courts utilize in enforcing an arbitral award?

4.     Are there reasonable legal instruments or mechanisms laid down to allay the fears of foreign investors in Nigeria when it bothers on enforcing foreign arbitral award?

In our attempt to x-ray the above questions, greater attention will be given to both legislative and judicial authorities, not in any way undermining opinions of great scholars and writers on this subject, also of interest will be dissenting opinions of judges generally, where need be.

1.4.     Literature Review

We do not pretend to be the first to have written on this very subject but what we are mindful of, and what is yet to be known to us is anyone who has addressed this subject in light of the above posers under our research questions. Nonetheless, references were made to key authorities in this field in the course of our research. The major existing literature on the topic of research may be listed as hereunder:

1.     Gaius Ezejiofor’s The Law of Arbitration in Nigeria.[16] 

2.     Orojo and Ajomo’s Law and Practice of Arbitration and Conciliation in Nigeria.[17]  

3.     Ephriam Akpata’s The Nigerian Arbitration Law in Focus. [18]  

4.     Greg Nwakaby’s The Law and Practice of Commercial Arbitration in Nigeria.[19]

5.     Redfern and Hunter’s Law and Practice of International Commercial Arbitration. 21

6.     [20] William Gill’s The Law of Arbitration.[21]

7.     Peter Binder’s International Commercial Arbitration and Conciliation in UNCITRAL

Model Law Jurisdictions.[22]

8.     Gary Born’s International Commercial Arbitration.[23]

9.     Kenneth K. Mwenda’s Principles of Arbitration Law. [24]

10. Edwin O. Ezike’s Lecture Notes on Law of Arbitration 1 (unpublished).[25]

11. Abe Omogboyega’s “Enforcement of  Foreign Arbitral Award in Nigeria”[26]

In his work, G. Ezejiofor holds that Nigeria’s attraction derives from the fact that its arbitration legislation, the Arbitration and Conciliation Act, is an adaptation of the

UNCITRAL Model Law on international commercial arbitration and the UNCITRAL Arbitration Rules. That the provisions of the Model Law and the Arbitration Rules are informed by the concept of party autonomy to decide, by themselves, all the fundamental questions concerning their arbitration, and minimal judicial control of the arbitral process. The learned scholar also holds the view that the Act’s specific provision that parties to an international commercial agreement may stipulate that disputes arising from the agreement shall be referred to arbitration, in accordance with the Arbitration Rules scheduled to the Act, or in accordance with the UNCITRAL Rules, or any other international arbitration rules shows how well adapted the Nigerian law is to the requirement of international commercial arbitrations and is also liberal and flexible. Again, that the acceding to the New York Convention for the Recognition and Enforcement of Foreign Arbitral Awards by Nigeria further enhances this flexibility.  Notwithstanding the above, he points out that enforcement of a foreign award in Nigeria is a more complex question since it is often governed by treaty obligations.

Orojo and Ajomo are of the opinion that section 51 of the Arbitration and Conciliation

Act which bothers on recognition and enforcement of foreign arbitral award is adopted from

Article 35 of the UNCITRAL Model law, and that the section has the same objective as the New York Convention, and it is wider in scope in that the award is made binding and enforceable irrespective of the country in which it is made.

While grappling with the above section 51, E. Akpata submits that this section is a reenactment of a part of the contents of section 31 of the Act which deals with recognition and enforcement of awards in domestic arbitration, except that it does not, however, contain the provisions of sub-section (3) of section 31 which is to the effect that an award may by leave of a court be enforced in the same manner as a judgment or order to the same effect. According to him, the entire requirements of this section for recognition and enforcement are in actual fact dictated by the provision of Article IV of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. He further asserts that by the combined effect of sections 2 and 4 of the Foreign Judgments (Reciprocal Enforcements) Act,[27] a foreign  arbitral award is registrable in the High Court if at the time of the application for registration it could be enforced  by execution  in the country of the award but that what is not clear is whether it follows that in Nigeria before an application for recognition and enforcement of a foreign arbitral award can be entertained, it is imperative that the award be  registered. He quickly answers in the affirmative though acknowledging that such registration is superfluous.

Redfern and Hunter in dealing with enforcement of the arbitration agreement in chapter ten of their work Law and Practice of International Commercial Arbitration hold the view that an agreement to arbitrate, like any other agreement must be capable of being enforced at law, otherwise it will be a mere statement of intention which, whilst morally binding, is without legal effect. According to these learned authors, it will be of little use to enforce an obligation to arbitrate in one country if it could be evaded by commencing legal proceedings in another. 

Therefore, as far as possible, an agreement for international commercial arbitration must be given effect internationally and not simply in the place where the agreement was made. In their general approach to recognition and enforcement of arbitral awards they write that the power to enforce an award against a reluctant party, by such summary methods as the attachment of bank accounts or the sequestration of assets, is a power  that forms part of the prerogative of the State and it is not a power the State is likely  to delegate in  consequence, the enforcement of awards must take place through the national court at the  place of  enforcement operating under its procedural rules.

However, the New York Convention has come to secure a considerable degree of uniformity in the recognition and enforcement of awards in most countries of the world. This they say serves to emphasize that one of the most important features of an award in an international commercial arbitration is that it should be readily transportable. It must be capable of being taken from the State in which it was made, under one system of law, to other States in which it is able to qualify for recognition and enforcement, under different systems of law.

Kenneth Mwenda in his book Principles of Arbitration Law examines a global framework for arbitration law and outlines certain advantages and disadvantages of introducing arbitration in a developing country. According to him “although a complex international dispute may sometimes take a great deal of time and money to resolve, even by arbitration, the limited scope for challenge against arbitral  awards, as compared with court judgments, offers a clear advantage.”

Peter Binder in his International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions gives us an insight in chapter one on the number of issues the Model Law concerns, including the scope of the law’s application, certain definitions and rules of interpretation and the extent of court intervention.  In chapter two, he deals with a number of issues surrounding the arbitration agreement. Besides providing the vital definition of what constitutes an agreement under Art. 7, he also highlights the effect that a court action has in cases where an arbitral agreement exists as contemplated under article 8 of the Model Law.

He discusses in his chapter 7 attempts to minimize judicial intervention in international commercial arbitration, and where such intervention is permitted, it is to be scrutinized closely. He submits that no State would allow a binding award to be rendered within its territory without being able to review the award, or at least without the parties having the opportunity to address the court in the case of a violation of due process or other irregularities. And finally in chapter 8, he treats recognition and enforcement of awards under the Model Law.

G. B. Born in his work International Commercial Arbitration treats the topic in three parts. Part 1 examines the international arbitration agreement, which according to him, provides the legal and practical foundation for almost all international arbitrations. Part II addresses the international arbitral process which stands at the heart of any commercial arbitration and finally, Part III discusses international arbitral awards, which he sees as the ultimate test of any arbitral process. Throughout all parts, the focus is on international standards and practices with much attention devoted to the United Nations Convention on

Recognition and Enforcement of Foreign Arbitral Awards. 

1.5.      Objectives of the Study

The place of international commercial arbitration cannot be over emphasized, particularly with reference to the economic benefits that come from foreign investments. It is in view of this that this research primarily seeks an analysis of the enforcement of foreign arbitral awards by Nigerian courts and the courts’ underlying policy consideration that the arbitration proceedings and the enforcement of the award both constitute a single cause of action that must be prosecuted and enforced within the statutory limitation period contrary to what obtains in some jurisdictions like China, England and Hong Kong where the laws provide that limitation for commencing enforcement proceedings run from the final date on which, pursuant to the award, the losing party is obliged to comply with its terms . It also seeks to show the need for the use of arbitration in international or foreign businesses which is mostly necessitated by the courts seeming lack of promptness in dispensing matters relating to business and investment.  This problem is more pronounced in disputes involving foreign investments where the courts may be ill equipped to handle its technicalities.28 It is also our aim in this research to come up with possible solutions towards enhancing enforcement of foreign arbitral awards in Nigeria.

1.6 .     Methodology

This being a doctrinal research, focus is given on study of secondary sources of law. Secondary sources of law relied upon include statutes, case law, international treaties, conventions, books, journals, articles, magazines and opinions of commentators were also used in the course of our research. Reliance was also made extensively on materials from the

29Foluke Olamiposi Akinmoladun, “Enforcement of Arbitral Awards in Nigeria: An Appraisal of Emerging Trends” (n.d.), available at http://ssrn.com.abstract=1556607, (last accessed 27 August 2012).

internet   especially considering the fact that the subject under consideration is a topical area under international commercial

1.7.   Organization of the Study

The research is divided into seven chapters with clearly designated headings and subheadings. Chapter one deals with general introduction with preliminary issues. Chapter two examines an overview of the legal instruments applicable to the recognitions and enforcement of foreign arbitral awards in Nigeria. Chapter three focuses on enforcement of arbitration agreement.  Chapter four is devoted to the various methods of enforcement of foreign arbitral awards in Nigeria. In Chapter five this work discusses refusal and setting aside of foreign arbitral awards, while chapter six deals with enforcement of arbitral awards and the challenge of time of time limitation in Nigeria. The end result of this work is portrayed in chapter seven which contains our conclusion and recommendations.

1.8.      Scope of the Study

This work examines the possibility or otherwise of enforcing foreign arbitral award in Nigeria. Also crucial to this work is the issue of time limitation within which a party seeking to enforce an award can do so. The work emphasizes the role of the national court and the methods and procedures open to a party who desires to enforce a foreign arbitral award in Nigeria.  The work also takes a look at the legal instruments dealing with the subject in question. Also covered by our research is the agreement to arbitrate, the validity or otherwise of such agreement.  

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