ARBITRATION: LAWYERS MUST BECOME DISPUTE MANAGERS MANAGERS

Filed in Law by on June 27, 2011

Arbitration: Lawyers must become dispute managers managers
By George AJAYI
Monday, 27 Jun 2011

Joseph Daudu

Legal pundits have advocated the need for lawyers to explore arbitration as an alternative means of dispute resolution in order to reduce the time spent in court, decongest prisons and generate more revenue, George AJAYI writes.

The traditional mechanism for resolving disputes is regular courts of law. While it is incontestable that the rights and liabilities of litigants have been objectively and satisfactorily determined through various categories of regular courts and overwhelmingly admitted that the benefits derivable from regular courts are multifarious, it is no gainsaying that they are beset with some weakness.

For example, the procedures in regular courts are time-consuming, energy-exhausting, too technical, very cumbersome, very adversarial, confrontational and antagonistic.

In consequence of this, cases have been unduly delayed leading to inevitable court congestions. Furthermore, it has been recognised that litigation is characterised by notorious adjournments. A litigant knows when a case commences, he and his counsel cannot precisely predict when it will end as a case continues ad-infinitum.

In view of these problems coupled with the complexity of the economy, competiveness of business enterprises and the sophistication of the production processes, other alternative dispute resolution mechanisms which produce quicker decisions and are less contentious have been introduced. One of these is arbitration, which is informal, private, confidential, friendly and its decision is binding and enforceable and more importantly, parties appoint the judges (arbitrators) who preside over their cases.

Statutory regulation of arbitration in nigeria

The first arbitration statute in Nigeria was Arbitration Act 1914 which later became CAP 13 of Revised Laws of Nigeria 1958. In view of the complexity of the economy and the increasing growth of International trade, this law could not adequately address the arbitration problems. This reason informs the promulgation of Arbitration and Conciliation Decree 1988.

S. 57 (1) of the decree makes provision for both domestic and international arbitration and is confined strictly to commercial disputes.

It should be noted that the ACD was based on the United Nations Commission on International Trade Law model of International Commercial Arbitration adopted by the United Nations Assembly. The significant importance of the UNICITRAL Model Law is that it is not a treaty but a model law which serves as guide to member nations. For example, any member country that adopts it has the freedom to amend it to suit its local peculiarities. It is also confined to international commercial contracts whereby each jurisdiction has the freedom to make provision for its domestic arbitration.

Besides the UNICITRAL model law described above, the arbitration and conciliation decree is also based largely on UNICITRAL Arbitration Rules and also incorporates New York Convention 1958.

According to dr. j. olakunle orojo and Prof. ayodele ajomo in their book Law & practice of arbitration in nigeria at page 18, UNICITRAL Arbitration Rules “are the Rules fashioned by the United Nations Commission on International Trade Law adopted by the United Nations General Assembly in 1976 and recommended for use in Arbitral proceedings in member states of UN”.

The purpose of the rules is to provide adequate and simple rules of commercial arbitration which will be acceptable worldwide. The General Assembly then recommended the use of these rules in the settlement of disputes arising in the context of international commercial relations, particularly by reference to Arbitration Rules in Commercial contract.

The rules have been found acceptable in countries having different legal, social and economic systems. Unlike the rules of Western Arbitral Institutions, the UNICITRAL Arbitration Rules are quite flexible and can be tailored to the needs of arbitral tribunal of the parties.

arbitration agreement

Arbitration process derives its force and legal validity principally from the agreement of the parties. Article 7 of ACD defines Arbitration agreement as “agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined relationship, whether contractual or not. An arbitration agreement may be in form of an arbitration clause in a contract or in form of a separate agreement.”Article 7 (2) further states that an arbitration agreement shall be in writing.

contents of arbitration agreement

Under the Arbitration and Conciliation Act cap 19 Vol, 1 laws of the Federation of Nigeria 2004, the contents of the Arbitration Agreement include the following:

1. The reference (arbitration clause)

The purpose of arbitration is to refer disputes arising from the contract between the parties to arbitration. Consequently, the arbitration clause must be clear and unambiguous.

coverage of arbitration clause

An arbitration clause, apart from stating the reference may sometimes also provide that the award of an arbitrator shall be a condition precedent to the enforcement of any right under the contract. The result of this is that a party will have no cause of action in respect of a claim falling with the clauses unless and until an award has been obtained. Such a clause is referred to as Scott v Avery Clause from the leading case of Scott v avery (1856) 5. H.L. Cas 811 where the issue was considered.

Simply put, the Scott v avery clause may take the form of an express or implied term that no action shall be brought in respect of any dispute arising from the contract until arbitration has been conducted and an award made.

parties

The parties to the arbitration agreement must have contractual capacity. In other words, they must be recognised by the law of contract as legal persons. This is necessary not only for arbitration procedure but for the enforcement of the award.

Every individual has legal capacity to enter into arbitration agreement except infants, persons of unsound mind and bankrupts.

effects of arbitration agreement

By virtue of S.2 of ACD, an arbitration agreement is irrevocable except by the agreement of the parties or by leave of the court.

Under S.5 of ACD, the court can grant an order to stay proceedings if one of the parties commences action in court. However, the party wishing to stay proceedings must apply for stay before delivering any pleading or taking any other steps in the proceedings.

number of arbitrators and how they are appointed

Under S.6 of ACD, the number of the arbitrators to be appointed shall be determined by the parties in the agreement. However, if the number is not specified, it shall be deemed to be three.

By virtue of S.7 (1) of the ACD, an arbitrator may be appointed by:-

– agreement of parties

– by an appointing body

commencement of arbitral proceedings

By virtue of S.17 of ACD, the arbitral proceedings in respect of a particular dispute commence on the date the request to refer the dispute to arbitration is received by the other party.

Under Article 3.1, the party initiating recourse to arbitration the claimant shall give the other party (the respondent) a notice of arbitration.

Under S.14 of ACD, each party is given equal opportunity to present his case in consonance with the fundamental principles of fair hearing.

By virtue of S.15 (1) the arbitral proceedings shall be conducted in accordance with the provisions in schedule 1 of the decree. However, S.15 (2) modifies the provisions of S.15 (1) by stating that where the arbitral rules contain no provision in respect of any related or connected with a particular issue, the arbitral tribunal may conduct the proceedings in such manner as it considers appropriate so as to ensure fair hearing.

Under S.22 of the decree, arbitral tribunal may request experts to report on specific issue to it. However, such experts are liable to questions by the parties and the parties have right to present their own expert witness to testify on their behalf on the points at issue.

evidence/witness at arbitral proceedings

The award of the arbitration tribunal is made after due evidence has been produced by the party appearing or on the face of other evidence relating to the matter in issue.

By virtue of S.21 (5) of ACD witnesses may be sworn in before arbitrators by oath or affirmation unless otherwise agreed by the parties.

The hearing of witnesses is conducted as in normal civil proceedings and cross-examination is allowed. On request of any party to the arbitration, the court or judge may order a writ of subpoena duces tecum to compel the attendance before any arbitrator of a witness wherever he may be in Nigeria. S.20 (6) and S.23 (1) of the ACD are instructive.

In the same vein, a writ of habeas corpus ad testificandum may be issued to bring up a prisoner for examination before any arbitrator.

award (judgement)

By virtue of S.26 of the ACD, the award made by the tribunal shall be in writing and signed by the arbitrators.

Under Article 31,of the Arbitral Rules, any award of the tribunal shall be recognised as binding and shall on application in writing to the court be enforced by the court in the same manner as the judgement or order of the court.

Once an award is given it becomes absolute, conclusive, a finality and binding on all the parties.

other adr processes

As disclosed in the preceding paragraphs, besides arbitration as a mechanism for resolution of commercial disputes, other mechanisms of ADR processes include negotiation, conciliation, med-arb, mini-trial and private judging, among others.

Conclusion

In view of various benefits derivable from Arbitration and other ADR process, I will advise commercial organisations to embrace arbitration, mediation and other ADR processes in resolving their disputes.

I shall also implore my professional colleagues i.e. lawyers to embrace arbitration. They should not see arbitration and other ADR processes as a threat to their means of livelihood. Rather they should see it as a source of income generation. What does a lawyer benefit having a matter in court for 12 years or 15 years? There is no client in Nigeria that can pay a lawyer adequate remuneration to compensate for the time, energy and resources that go into litigation in this country.

Lawyers must recognise that their role is to become dispute managers and dispute resolvers. We, lawyers must also recognise that in the present day form of litigation, one cannot afford to be only a solicitor neither can one afford to be just an advocate. In my objective opinion, the lawyer of 21st century is the one who has in his armoury adequate skills of arbitration, negotiation, mediation, conciliation, mini-trials and med-arb.

AJAYI is the Registrar, Chartered Institute of Arbitrators of Nigeria.

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