CHAPTER ONE

GENERAL INTRODUCTION

1.1     Background of Study

In the course of business, it is inevitable that disputes will arise occasionally among business associates. While commercial disputes are common, the way they are handled can have a profound impact on the profitability, viability and survival of the business. It is true that full blown disputes are always bad news for a business venture as they can lead to poor performance, scare investors, produce waste, divert resources, cause share values to decline, and, in some cases, paralyze a business.

In Nigeria's pre-colonial society, disputes were resolved by respected members of the society or by the sovereign able assisted by his council of chiefs. Customary arbitration as it is later referred to, has similarities with the modern day Alternative Dispute Resolution (ADR) mechanisms because apart from the fact that it is quicker and less technical, it is also friendlier in nature and in most cases preserves the relationship of the parties to the dispute.

With the advent of the British, litigation relegated customary arbitration to the background but sooner than later, it was discovered that the composition of the litigation process is acrimonious and did not take into cognizance the value system of the pre-colonial societies. Though litigation has the advantage of finality and sanction, in most cases it destroys the business relationship between the parties. Either by design or coincidence, litigation with its inherence complexities became the main means of resolving commercial disputes in Nigeria. Hence, there grew a natural need amongst the business community, for a dispute mechanism that quickly resolves commercial disputes whilst preserving business relationships. As the Nigerian market became more competitive, businesses strived to maintain their customers while seeking new ones. But this is not always possible where commercial disputes drag on and on in the Courts.

Consequently, in Nigeria today, there are 3 (three) main methods of resolving commercial disputes. They are litigation, arbitration and mediation/conciliation. Large commercial disputes are litigated at the State and Federal High Court. The Federal High Court has exclusive jurisdiction over matters of revenue, company taxation, customs and excise, banking, aviation and shipping. A large portion of commercial disputes cases are adjudicated upon at the State High Court which has unlimited jurisdiction to hear and determine matters other than those within the exclusive list of the Federal High Court. Appeal from these courts lie to the Court of Appeal and further to the Supreme Court.

The clogs experienced with litigation has led to a greater awareness of the advantages of ADR mechanisms among business associates, investors and legal practitioners. Most contracts today contain ADR clauses or arbitration clauses. The Courts now refer parties to a dispute to the multi-door Court-house attached to the Courts to explore settlement of their dispute through one of the ADR mechanisms available at the multi-door Court-house. The Arbitration and Conciliation Act is being adopted or modified by many states of the Federation and there has been an increase in institutional and ad-hoc, local and international arbitrations as well as a tremendous rise in the activities of institutional arbitration centres in Nigeria and other parts of Africa. It is without doubt that Nigeria is equipping itself to grapple with the escalating commercial disputes resulting from the growth in business activities and increase in international trade and investment.

The term Alternative Dispute Resolution (ADR) is used generally to describe the different methods and procedures used in resolving dispute either as alternatives to the traditional dispute resolution mechanism of the court system or in some cases supplementary to such mechanisms. Alternative Dispute Resolution comprises various approaches for resolving disputes in a non-confrontational way, ranging from negotiation between the two parties, a multi-party negotiation, through mediation, consensus building, to arbitration and adjudication. ADR can also refer to everything; from facilitated settlement negotiations in which disputants are encouraged to negotiate directly with each other prior to some other legal process, to arbitration systems or mini-trials that look and feel very much like a courtroom process. This course material will examine the concept of ADR and the various range of ADR methods by which disputes can be resolved, the kinds of disputes that can be resolved through ADR, the benefits of referring disputes to ADR and limitations to the ADR process.

1.2     Objective of the Study

The objective of this study is to depict the application of the mechanisms of Alternative Disputes Resolution in the legal system of Nigeria. The long essay will examine the modern application of ADR in the federation. It shall also consider its legality and the advantages of its application.

1.3     Scope of the Study

This long essay is limited to the application of Alternative Dispute Resolution system in the country. It shall cover its meaning and scope. Its legality and advantages shall also be considered geographically as this research will go beyond Nigeria based on the fact that most of the English laws are now regarded as Nigerian law in the context of its legal system.

1.4     Significance of the Study

The significance of this work is to strengthen the various methods of adjudication and the observance of the mechanisms applied in resolving dispute by the established courts and tribunals, however putting forward the applicable rules and procedures guiding the bodies performing judicial and quasi-judicial function of adjudication.            

1.5     Research Methodology

The design utilized in this discourse is the qualitative research approach. It is an approach where qualitative data are south from relevant sources and also analyzed contextually without necessarily involving any quantitative techniques. Based on the nature of data required, this discourse relied mainly on secondary data sources in the process of gathering relevant information. In this process, documented and archival data were extracted from government gazettes, texts, periodicals and other relevant sources. Data generated from these sources were condensed and critically analyzed through content and context analysis where relevant and specific information were distilled from the collections.

1.6     Review of Related Literature

ADR refers to the processes of resolving dispute other than by Litigation. Major ADR processes include negotiation, mediation, conciliation, Arbitration, Early Neutrail Evaluation (ENE) and other hybrids.

According to Odoh Ben Uruchi[1], ADR is not a substitute for litigation. It complements litigation. According to him, ADR is not just a solution to the problem of congestion in courts. It is a necessary part of any efficient framework for dispute resolution, and access to justice. Thus, even where there are no delays in litigation, ADR is still a vital component of justice delivery in any society that seeks to effectively guarantee and protect citizen’s rights. This is so because, it is not all disputes that are about legal right and wrong, which is the foundation on which litigation is largely based. This is particularly important in the protection and enforcement of social and economic rights. Most of the issues that usually arise in this area cannot effectively be resolved by the application of strict legal principles. Issues therefore relating to psychological needs and values, which most social rights involve, are better resolved by ADR than litigation.

Ayinla L. A in his article[2] argued that ADR should be better referred to as Appropriation Dispute Resolution. According to him ADR is generally used to describe the methods and procedures used to resolve dispute either as alternative tot eh established dispute resolution mechanism of court or in some cases as supplementary to such mechanism of occur tor in some cases as supplementary to such mechanism. ADR may mean method of resolving an issue susceptible to normal legal process by agreement rather tan an imposed binding decision. ADR is also a procedure for settling a dispute by means other than litigation, such as arbitration or mediation.

Akande Idiat Fainmilola gave the view that the vision of ADR as communicative and congenial crimes with a frank critique of many attributes of adjudication[3]. The formality of adjudication is perceived as undermining open communication. The procedural requirements of adjudication are described as road blocks to communication and to fairness. The rights of public access and information are seen as intrusive on privacy as facilitator of agreements. Adjudication is seen as a process that often brings out the worst in its participants, either because it distorts their abilities to pursue self interest or because it defines self-interest in such a fashion that requires inflicting losses, rather than maximizing gains.

Adeoti Dorcas Abimbola[4] regarded ADR as an umbrella term for a variety of processes that differ in form and application. It refers to a wide range of dispute resolution mechanisms or techniques that share an essential characteristics: they all differ from the dispute mechanism of litigation in the court room.

ADR includes processes that are out of court proceedings. Due to the fact that pendency of court cases and suits has gone through roofs, ADR has gained paramount significance in almost every civilized dispensation. For instance, ADR in the form of arbitration and mediation is commonly used in the United Kingdom[5].

In Nigeria, ADR procedures are recognized as a means of settling disputes. In NNPC v Clifco (Nig) Ltd[6], the Supreme Court held that an arbitration clause is still effective despite the fact that there was a notation. The court here gives the support for ADR and sees it as a means of settling disputes. If this was not so the court would not have held that parties should go through ADR as state din their agreement.

It should however, be noted that ADR is mostly being discussed in relation to civil disputes, the principal categories of which involve claims founded in the law of contract[7], the law of trot, which is concerned in particular with accidents and  professional negligence, matrimonial matters and branches of trust. The insurance construction, maritime and labour industries are among the most common users of ADR processes.

1.7     Definition of Terms

•   Alternative Disputes Resolution: Alternative Dispute Resolution or ADR is a name for several dispute resolution techniques which, while believed by some to be outside the traditional mainstream of state jurisprudence, have gained acceptance among both the general public and the legal profession. In this terminology the processes were initially termed "alternative" by twentieth century legal topologists because they were seen as extra-legal supplements to state sponsored dispute resolution.

•   Mediation: Mediation is often described as a failure on the part of the parties. That is failure of the parties to succeed at negotiation. This invariably leads to the intervention of a third party mediator to facilitate further negotiation by the parties. Mediation is negotiation carried out with the assistance of a neutral third party. It is a voluntary process that offers disputants meaningful and creative solution at a fraction of the cost of the litigation system. It is a facilitative process.

•   Conciliation: Conciliation is the bringing together of disputants in an endeavour to settle their differences, the main object of conciliation is to achieve an amicable settlement of the dispute with the assistance of a neutral conciliator who is respected by both parties.

•   Multi-Door Court House: This mechanism is a proposal to offer a variety of dispute resolution services in one place with a single intake desk, which would screen clients. The idea is one, which seeks to radically change the traditional conception of the court as the only “door” to getting justice.

•   The Arbitration and Conciliation Act 2004: The Act is the current law on both domestic and international commercial arbitration and conciliation in Nigeria. It is an offshoot of the UNCITRAL Model Law, the UNCITRAL Arbitration Rules and the New York Convention.

 

 

 

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