Dispute is an intricate aspect of human interaction, and there is a need to resolve this dispute in order to foster continuous human association and cooperation.

There are several means of resolving disputes. It could be settled through the court system established in your jurisdiction (Judicial) or it could be settled out of court either through mediation, conciliation or arbitration. Arbitration however is deemed as one of the ways of resolving disputes, if not the most effective means of resolving civil disputes, especially in commercial relations.

Section 91 of the Arbitration and Mediation Act, 2023 gives an unhelpful definition of the term “Arbitration”. However, it is a form of alternative dispute resolution mechanism, whereby parties to a dispute settle their disputes outside the court settings and bureaucracy. In other words, it is a non-judicial way of settling disputes, by appointing third party experts to hear and determine the case.

Arbitration is characterized by several factors that makes it unique, distinct and effective, they include;

1. Party Autonomy: This is the foundation of every arbitration proceeding without which an arbitration tribunal cannot exercise jurisdiction. Both parties must have agreed to arbitrate.

Also, parties may decide on the number of arbitrators,^[1] the applicable procedural and substantive law,^[2] as well as the place of arbitration. Per Section 1(3) such agreement is binding except where it is void or where the parties agree otherwise.

Section 3 however further provides that the agreement is irrevocable, except otherwise agreed by the parties, thus, the party must have agreed at the time of making the arbitration agreement on whether or not it is revocable.

In essence, a dispute subject to an arbitration clause cannot be entertained in the court and is bound by the express agreement of both parties.

• Expertise: Expertise is another unique characteristic of arbitrations as the arbitrators appointed to hear the case are usually experts in the field, thus giving an edge of flexibility in the decision of the tribunal since they understand the intricacies of each dispute.

• Speed: According to the American Bar Research,^[3] Arbitration cases last for one-half and sometimes one-quarter of the time to resolve the case in a district court. This is without consideration of the extra time which may or will result where there are appeals in litigation.

The situation even becomes worse within the Nigerian jurisdiction where litigation lasts for an inordinate amount of time. Oputa JSC for example expressed his displeasure in Ajani v Giwa,^[4] a case that lasted 16 years in court.

• Quasi Judicial nature: Arbitration is a less formal, technical, and procedural form of litigation, however, the most similar ADR mechanism to litigation. Just like litigation, the procedure is accusatorial in nature, however, parties may decide to or not to employ a lawyer.

• Binding Nature: The decisions of an arbitration tribunal are called awards, and by virtue of Section 57 of the Arbitration and Mediation Act, 2023, they are final and binding irrespective of the country the award was given. Thus, a party may enforce the award in court and the award cannot be appealed. However, it can be set aside subject to the provisions of the act.

       

As earlier mentioned, parties must have agreed to arbitrate. Per Section  2(2) of the Arbitration and Mediation Act Provide that such agreement shall be in writing.

       An arbitration agreement can either be made before a dispute arises (pre-dispute arbitration agreement) or after (post-dispute arbitration  agreement). They exist either as a separate contract or part of a main contract, called an arbitration clause.

An arbitration clause forming part of a main contract remains binding even where the main contract is non-binding due to certain vitiating elements. This is because the arbitration clause is treated as separate from the main contract.

There are several standard form arbitration clauses tailored to various commercial reactions such as construction contracts and sport contracts. However, an arbitration contract can also be organically drafted. Either ways, an arbitration clause needs to be carefully drafted to suit a particular relation, as the clause determines a range of factors such as the procedural and substantive law, appointment of arbitrators, place of arbitration, as well as necessary preconditions to arbitrate.

       How about you hire a professional lawyer today?

---

^[1] Arbitration and Mediation Act, 2023 Cap. A18, s. 7

^[2]  Arbitration and Mediation Act, 2023 Cap. A18, s. 15

^[3]Measuring the Cost of Delay in Dispute Resolution

^[4] (1980) 3 NWLR (Pt. 20 at 797)

AUTHOR; JUSTICE OJIENOH