Challenges of Enforcing Arbitration Awards in Nigeria -By Ishie-Johnson Emmanuel Esq.

Abstract

This article explores the persistent challenges surrounding the enforcement of arbitration awards in Nigeria. Despite concerted efforts by the Nigerian government to promote arbitration as an effective alternative dispute resolution mechanism, parties continue to encounter significant obstacles when seeking to enforce arbitration awards. This article critically examines the legal framework governing arbitration in Nigeria, identifies the key enforcement challenges, and offers practical recommendations to strengthen the enforcement process and promote confidence in arbitration as a dispute resolution tool.

Introduction

Arbitration has increasingly become a preferred method of dispute resolution in Nigeria, especially in commercial transactions. However, enforcing arbitration awards continues to pose significant challenges. The Arbitration and Mediation Act (AMA) 2023 governs Nigeria’s arbitration framework, striving to create an efficient and effective system for arbitration. Despite this legislative effort, parties often encounter numerous obstacles that hinder the enforcement of arbitration awards, thereby undermining arbitration’s role as a reliable alternative dispute resolution mechanism.

Research Questions

1. What are the key challenges faced in the enforcement of arbitration awards in Nigeria?

2. How does judicial intervention and the use of court processes affect the enforcement of arbitration awards?

3. To what extent has the Arbitration and Mediation Act 2023 addressed existing enforcement challenges?

4. What impact do enforcement challenges have on the perception of arbitration and foreign investment in Nigeria?

5. What practical measures can improve the efficiency and effectiveness of arbitration award enforcement in Nigeria?

Research Objectives

1. To identify and analyze the major obstacles hindering the enforcement of arbitration awards in Nigeria.

2. To evaluate the role of Nigerian courts in the arbitration award enforcement process.

3. To assess the effectiveness of the Arbitration and Mediation Act 2023 in improving enforcement mechanisms.

4. To examine the consequences of enforcement difficulties on Nigeria’s investment climate and arbitration credibility.

5. To propose viable recommendations aimed at overcoming enforcement challenges and strengthening the arbitration framework in Nigeria.

Significance of the Study

This study is significant as it highlights the practical challenges undermining the enforcement of arbitration awards in Nigeria, which limits the effectiveness of arbitration as an alternative dispute resolution mechanism. By critically examining legal and institutional barriers, the research offers insights for policymakers, legal practitioners, and stakeholders seeking to improve Nigeria’s arbitration regime. Addressing these challenges is crucial to enhancing confidence in arbitration, promoting quicker dispute resolution, and attracting foreign investment by creating a more predictable and reliable legal environment. Ultimately, this study contributes to strengthening the rule of law and fostering economic growth through effective dispute settlement mechanisms in Nigeria.

Literature Review

The enforcement of arbitration awards in Nigeria has attracted significant scholarly attention due to the persistent challenges faced by parties. Ezejiofor (2019) identifies the lack of uniformity in judicial attitudes towards arbitration awards as a major hurdle. Courts sometimes demonstrate reluctance or a limited understanding of arbitration principles, resulting in inconsistent rulings that undermine enforcement efforts

Okpaleke (2020) highlights the improper use of court processes by losing parties, who frequently resort to filing frivolous applications, appeals, or stay orders to delay enforcement. This strategic misuse of litigation tools prolongs the resolution timeline and frustrates creditors seeking to enforce awards promptly.

Afolabi (2018) discusses the role of public policy as a significant limiting factor. The invocation of Nigerian public policy often sparks litigation questioning whether arbitration awards violate national interests or legal norms, further complicating enforcement.

The recent enactment of the Arbitration and Mediation Act (AMA) 2023 introduced reforms aimed at enhancing arbitration enforcement. Onyeze (2023) acknowledges the AMA’s provision of a comprehensive enforcement framework but stresses that the Act’s ultimate success depends on effective implementation across courts and arbitration institutions.

Additional challenges noted in the literature include the significant financial burden associated with enforcement proceedings, which can deter parties from pursuing arbitration awards (Onyeze, 2023). Prolonged court timelines exacerbate these challenges, undermining arbitration’s promise as a faster dispute resolution alternative (Ezejiofor, 2019).

This review underscores the need for further research on the practical application of the AMA 2023 and strategies to harmonize judicial approaches while addressing procedural abuses and public policy concerns.

Challenges of Enforcing Arbitration Awards

The difficulties associated with enforcing arbitration awards in Nigeria have far-reaching consequences that impact both parties and the broader legal and economic environment. These challenges include:

1. Delay in Enforcement: Prolonged enforcement procedures often cause frustration and financial losses for parties seeking to realize their awards promptly.

2. Increased Costs: The substantial expenses involved in enforcement proceedings add to the financial burden on parties, potentially deterring them from pursuing arbitration remedies.

3. Lack of Confidence: Persistent enforcement challenges erode confidence in both the arbitration process and the Nigerian court system tasked with supporting it.

4. Reduced Effectiveness: These obstacles diminish arbitration’s appeal as a dispute resolution mechanism, making it less attractive to commercial actors.

5. Increased Litigation: Difficulties in enforcement may intensify litigation, as parties are more inclined to resist or challenge arbitration awards through the courts.

6. Negative Impact on Foreign Investment: Unpredictability and inefficiency in enforcement can discourage foreign investors, who may perceive Nigeria’s arbitration framework as unreliable.

7. Undermining Rule of Law: The recurring enforcement issues can damage the integrity of the Nigerian judiciary and tarnish the nation’s reputation for upholding the rule of law.

8. Loss of Time and Resources: Parties expend significant time and resources navigating enforcement hurdles, eroding the cost-effectiveness of arbitration.

9. Uncertainty and Unpredictability: The lack of a clear, efficient enforcement process creates uncertainty, complicating strategic decision-making for parties involved in arbitration.

Recommendations

To address the challenges of enforcing arbitration awards in Nigeria, the following measures are proposed:

1. Legislative Reforms

• Clarify Arbitration Laws: Review and amend existing arbitration legislation to ensure clarity, consistency, and alignment with international best practices.

• Limit Judicial Intervention: Restrict unnecessary court interference in arbitration proceedings to preserve the autonomy and finality of arbitral awards.

• Streamline Enforcement Procedures: Simplify and expedite the legal procedures involved in enforcing arbitration awards to reduce delays and costs.

2. Judicial Capacity Building

• Arbitration Training: Provide comprehensive training programs for judges and judicial officers on arbitration principles, procedural rules, and best practices.

• Specialized Arbitration Courts: Establish specialized courts or tribunals dedicated to handling arbitration-related matters to ensure expertise and uniformity in decisions.

3. Institutional Strengthening

• Strengthen Arbitral Institutions: Enhance the capacity, independence, and credibility of arbitral institutions to manage proceedings effectively.

• Improve Registry Systems: Develop efficient registry and case management systems to facilitate the processing and tracking of arbitration awards.

4. Enforcement Mechanisms

• Effective Enforcement Mechanisms: Create robust and practical mechanisms for enforcing arbitration awards promptly and effectively.

• Asset Preservation: Introduce provisions enabling courts to grant asset preservation orders to prevent dissipation of assets during enforcement proceedings.

Other Recommendations

• Promote Arbitration Culture: Educate parties, legal practitioners, and the public on the advantages of arbitration to foster wider acceptance and use.

• Encourage Institutional Arbitration: Advocate for the use of institutional arbitration to enhance procedural efficiency, transparency, and consistency.

• International Cooperation: Engage and collaborate with international arbitration bodies and organizations to adopt global best practices and elevate Nigeria’s arbitration regime.

Conclusion

Enforcing arbitration awards in Nigeria presents significant challenges, including judicial delays, legislative ambiguities, and the improper use of court processes. These obstacles undermine arbitration’s effectiveness as a dispute resolution tool and negatively affect Nigeria’s investment climate.

Addressing these challenges requires comprehensive legislative reforms, enhanced judicial capacity, strengthened arbitral institutions, and the establishment of effective enforcement mechanisms. Implementing these measures will bolster the enforcement framework, improve confidence in arbitration, and create a more conducive environment for business and investment.

Ultimately, a well-functioning arbitration system will support Nigeria’s economic growth, attract foreign investment, and offer parties a dependable method for resolving disputes. It is crucial for all stakeholders, policymakers, judges, legal practitioners, and the business community to collaborate in overcoming these challenges and advancing Nigeria’s arbitration regime.

References

1. Books

• Ajomo, M. A. (2018). Nigerian Arbitration Law: Practice and Procedure.

• Ezejiofor, G. (2019). The Law of Arbitration in Nigeria.

• Okpaleke, F. (2020). International Commercial Arbitration: Nigerian Perspectives.

2. Articles

• Afolabi, O. (2018). Public policy and the enforcement of arbitration awards in Nigeria. Journal of Arbitration Studies, 28(1), 34–47.

• Ezejiofor, G. (2019). The challenges of enforcing arbitration awards in Nigeria. Nigerian Law Journal, 23(1), 1–15.

• Okpaleke, F. (2020). Improper use of court processes in arbitration proceedings. Journal of International Arbitration, 37(2), 145–158.

3. Legislation

• Arbitration and Conciliation Act, Cap. A18, Laws of the Federation of Nigeria, 2004.

• Arbitration and Mediation Act, 2023.

4. International Sources

• United Nations Commission on International Trade Law (UNCITRAL). (2020). Model Law on International Commercial Arbitration.

• International Chamber of Commerce (ICC). (2021). ICC Arbitration Rules.

Ishie-Johnson Emmanuel Esq. Writes from Ishie-Johnson and Associates.

Phone No: 08033816237 or 08023186281 or 08076885444

Email: emmajohnsonace@gmail.com