LEGISLATION REVIEW - THE NATIONAL POLICY ON ARBITRATION AND ALTERNATIVE DISPUTE RESOLUTION (ADR) 2024
1. INTRODUCTION
In 2023, Nigeria enacted a new federal arbitration legislation – The Arbitration and Mediation Act (AMA). To consolidate on the gains of the AMA, 2023, the Federal Government of Nigeria through the Honourable Attorney General of the Federation issued a subsidiary legislation i.e. the National Policy on Arbitration and Alternative Dispute Resolution (ADR), 2024 (the ‘Policy’). These two legislations were aimed at creating the much-needed framework to make arbitral process more attractive in Nigeria and for investors outside of Nigeria. In terms of the Policy, the goal is to establish fundamental principles to guide the Federal, State Governments and their MDAs’ participation in arbitration references, position Nigeria as an attractive arbitration hub for domestic, regional and international commercial arbitration, whilst protecting national interest.
The Policy and the Arbitration and Mediation Act, 2023 represent significant advancements in Nigeria’s dispute resolution landscape. The AMA 2023, which replaced the Arbitration and Conciliation Act as the primary legislation on arbitration in Nigeria, aligns Nigeria’s arbitration framework with global best practices. While both the Policy and the AMA 2023 share common goals and similarities of content in several areas, however, there are subtle differences, especially in terms of the provisions and policy recommendations regarding dispute resolution clauses, arbitrator selection, counsel engagement, judicial intervention, and implementation mechanisms.
This Legislation (subsidiary) Review highlights the salient areas in the Policy for arbitration practitioners, arbitrators and the Nigerian and international business communities, to keep them well informed on the new Nigerian legal framework for arbitration.
2. SALIENT PROVISIONS OF THE POLICY
i) Guidelines on Dispute Resolution Clauses
The Policy grants Federal and State Ministries, Departments, and Agencies (MDAs) the liberty to agree on applicable arbitration rules to their disputes. Where there is no such agreement, the Policy defaults to the Arbitration Rules or other ADR mechanisms under extant statutes. The AMA 2023 upholds and provides for the principle of party autonomy by virtue of its Section 2. Thus, ensuring that arbitration agreements are enforceable when in writing. While both frameworks encourage flexibility, the Policy in its First Schedule introduces model language for MDAs, promoting uniformity in government contracts.
ii) Selection of Arbitrators
Where the parties agree that the arbitral tribunal shall comprise of three (3) arbitrators, the Federal, State Government and/or their MDAS are required to appoint an ADR expert with requisite qualification and competence to act as an arbitrator. The responsibility to appoint a suitably qualified and competent Nigerian arbitrator for Nigeria shall be by the HAGF or the HAGS as the case maybe. However, the arbitrator appointing authority for the Federal/State MDAs in a dispute can be assigned to the Director of the Regional Centre for International Commercial Arbitration (RCICAL).
The Policy mandates approval from the Attorney General of the Federation (HAGF) or State (HAGS) for claims above N50 million. Where the claim is below the threshold of N50million, the parties may appoint without recourse to the HAGF/HAGS.
In contrast, the AMA 2023 allows parties to determine the number and appointment process of arbitrators, ensuring efficiency through neutral mechanisms. While the Policy aims to standardise expertise, its additional bureaucratic layer may slow arbitral proceedings, especially for the Federal/State Governments and their MDAs.
iii) Criteria for Engagement of Counsel in Arbitration
The primary Policy thrust here is that Federal and State MDAs shall adopt a clear and transparent process for engaging Nigerian counsel in arbitration and ADR proceedings. The Policy further provides that the choice of counsel shall be entirely based on merit and should have significant consideration for the technical ability, international arbitration and ADR expertise and depth of experience of the counsel and/or law firm to be engaged in each dispute.
The Policy promotes local expertise, but it also recognises the need for foreign counsel to collaborate with Nigerian counsel in certain technical or complex disputes. The Nigerian counsel can also suggest a foreign counsel to the HAGF/HAGS for consideration.
iv) Code of Conduct for Arbitrators and ADR Practitioners
The Policy encourages arbitration institutions to implement a unified code of conduct. It is important to note that the AMA 2023 legally mandates arbitrators to be impartial and disclose conflicts of interest. Both frameworks emphasize ethical standards that arbitrator(s) and ADR practitioners are required to comply with the AMA 2023 and those formulated by institutions pursuant to the Policy, especially when they act as arbitrators or counsel to the Federal or State Government or their MDAS.
v) Regional Centre for International Commercial Arbitration (RCICAL)
The Policy prioritizes funding and developing RCICAL to reinforce Nigeria’s role as an arbitration hub. The Government is also required to take steps to amend the RCICA Act R.5 LFN 2004 to reflect the terms and obligations in the 1999 Headquarters Agreement as amended in 2015.
vi) Arbitration Monitoring and Contract Management
The Policy assigns the Federal Ministry of Justice (FMOJ) and State Ministries of Justice (SMOJ) oversight roles in contract monitoring and ADR compliance. Thus, in furtherance of the AMA 2023 focuses on procedural efficiency.
All disputes that emanate from investment agreements should be centrally managed by a team comprising of representatives of the FMOJ/SMOJS and relevant officers in the Nigerian Investment Promotion Commission (NIPC).
vii) National Arbitration and ADR Register/ Repository for BITs
The Policy requires all Federal and State MDAs to provide in details full particulars of all ongoing and pending investment or commercial arbitration cases or ADR proceedings before any arbitral tribunal; or arbitration or ADR related matter before a court of law in a register to be maintained and kept by the FMOJ/SMOJ.
The Government(s) and the MDAS are also required to furnish the FMOJ/SMOJ copies of the Arbitration and/or ADR Agreement in the pending investment or commercial arbitration or ADR matters.
In the case of BITs, the Federal Ministry of Justice is to serve as the repository of all existing BITs between Nigeria and other countries. Further to its obligation, under Section 5 of the Treaties (Making Procedure, Etc) Act 2004 the register of treaties shall be open at all reasonable times for inspection by members of the public.
viii) Seat And Venue of Arbitration
The Policy advocates for Nigeria as the default arbitration seat, citing economic benefits for the Federal/State Governments and MDAs. This finds anchorage under the AMA 2023 provision on upholds party autonomy by allowing parties to select their preferred seat of arbitration.
Specifically, the Policy states that the Government and private institutions are amongst others required to commit to –
a) Preference of the seat and venue of arbitration to be in Nigeria.
b) Stipulate Nigeria as the Seat and venue of all arbitrations involving Nigeria’s government bodies with the RCICAL as the default appointor, where necessary.
c) Where cases are within a particular monetary threshold involving state government/agencies; such cases should undergo ADR at the MDCs. The FMOJ shall issue guidelines from time to time with regards to the thresholds.
d) Private sector entities are encouraged to utilize ADR in first instance at the MDCs and other Government ADR Centres.
ix) Role of Courts and Judicial Intervention
The Policy directs courts to prioritise arbitration-related matters and penalise litigation delays, setting a 60-day resolution timeline for arbitration-related cases. The AMA 2023, however, restricts judicial intervention to specific instances e.g. grant of injunctions in support of arbitration, ensuring arbitration agreements are upheld and the enforcement of arbitral awards.
The Heads of Courts in Nigeria are enjoined to designate one or more courts for the hearing and determination of arbitration related matters. The Policy provides for punitive measures against lawyers who might use instrumentality of court to frustrate arbitration and ADR. The Policy further requires that judicial proceedings arising from arbitration shall be determined by the courts within a period not exceeding 60 days from the date of filing. Further, all appeals arising from arbitration shall be determined within a period of 270 days of filing the appeal.
x) Small Claims Arbitration
The Policy introduces Small Claims Arbitration for disputes below N5 million, making ADR more accessible. However, the AMA 2023 does not include provisions for small claims arbitration, requiring legislative amendments to formally integrate this feature. The Small Claims Arbitration has jurisdiction over debt recovery not exceeding #5,000,000, breach of contract, landlord and tenant matters and consumer rights issues where the claim does not exceed #5,000,000. The claims can be filed without legal representation.
In addition, the Policy states the process of instituting a small claim, the enforcement of judgment of small claims and appeals of small claims.
xii) Implementation and Legislative Framework
The Policy mandates compliance by Federal and State MDAs in any dispute where it is one of the parties. It is important to note that the AMA 2023 remains the binding and primary legislation on arbitration. In the event of conflicts, the statutory requirements of the AMA 2023 prevail over the Policy directive which is just a subsidiary legislation aimed at making the Federal, State Governments and MDAs more arbitration and ADR compliants.
The Attorney General of the Federation and those of the States are enjoined to ensure effective implementation of the Policy at the federal and/or state levels of government by their respective MDAs.
3) CONCLUSION
The National Policy on Arbitration and ADR 2024 and the AMA 2023 both seek to enhance Nigeria’s dispute resolution framework. While the Policy provides a structured approach to arbitration and ADR for the Federal, State and MDAs in particular, its successful implementation must align with the AMA 2023 to ensure efficiency, enforceability, and international acceptance. A collaborative approach between policymakers, arbitration institutions, and stakeholders will be essential in positioning Nigeria as a leading arbitration jurisdiction and fostering arbitration practice.
QUALIFICATIONS AND DISCLAIMERS: This Publication of the NWOYE (Barristers & Solicitors) Legislation Review is prepared strictly for informational purposes. It should not be relied upon or serve as a substitute for proper legal advice. Counsel will not be held liable for any action or inaction that is premised strictly on this Legislation Review.
For Further Information, Please Contact –
1. Ikemefuna Stephen Nwoye – Lead Partner
2. Bernard Onyeachonam Omeji – Associate Partner
3. Similoluwa Bolarinwa Adekanye – Legal Associate