Why Nigeria needs the Arbitration and Mediation Bill 20222 weeks ago
On May 10, 2022, the Arbitration and Mediation Bill was passed by the Senate of the Federal Republic of Nigeria. The Arbitration and Mediation Bill 2022 crystallizes a 16-year effort to reform Nigeria’s Arbitration legislation and codify a dispute resolution Law that adequately caters to all forms of alternative dispute resolution mechanisms. Although the Bill has now been passed by both chambers of the National Assembly, the President’s assent is required to give it legal effect.
The Arbitration and Mediation Bill 2022 has made some salient introductions into the Nigerian Arbitration terrain. Below are some of the key provisions of the Arbitration and Mediation Bill:
Third Party Funding
Section 61 of the Bill makes provisions for Third Party Funding. Parties that intend to institute or defend arbitration claims but either have no financial means to do so now have a recourse to fall back on. Summarily, third party funding refers to a procedure whereby a third party who has no underlying interest in the outcome of a dispute or arbitration proceedings provides the financial resources for a claimant or counter-claimant to initiate or defend the claim. The funds provided by the third-party funder will be used to cover the cost of the claimant’s legal fees as well as other expenses related to the arbitration, including fees paid to expert witnesses. In return for the funds provided, the funder will receive a percentage of the award if the claim or counterclaim turns out successful. The provision by the Bill for Third Party Funding is a major development for parties in an Arbitration.
Before this Bill there was no extant legislation on Mediation, however, Part II of the Arbitration Bill provides explicit guidelines to govern the mediation practice in Nigeria which is a major development for growing the practice and popularity of mediation.
Section 2(4) acknowledges electronic communication and conduct of electronic proceedings in Nigeria.
Revocation of an Arbitrator’s Appointment
By section 4(1) of the bill, the authority of an Arbitrator to act in an arbitration proceeding shall not be revoked by the death or bankruptcy of any party who appoints the arbitrator.
The authority of an Arbitrator to act is only revoked on the death of the arbitrator. This provision encourages continuity of proceedings.
Composition of an Arbitration Panel
Section 6 provides that where not agreed upon by the parties, the arbitral tribunal shall consist of a sole arbitrator and such arbitrator shall not be precluded by reason of his nationality unless agreed upon by the parties.
Withdrawal of Arbitrator’s Appointment
The Bill in section 12 provides that the parties to an arbitration may agree on consequences of the withdrawal of an arbitrator from appointment.
Section 13 of the Bill states that an arbitrator has immunity in its discharge of functions unless it is shown to be in bad faith although this liability does not affect any liability incurred by reason of the Arbitrator withdrawal. Arbitrators just like litigators are now protected by law in the discharge of their duties without the fear of any imminent liability.
Appointment of an Emergency Arbitrator
The Bill allows for the appointment of an emergency arbitrator where a party requires an urgent relief and such an emergency arbitration meeting can be conducted through video conferencing, telephone and other similar means of communication. This provision allows for arbitrators to fasten proceedings as required in Construction disputes.
Improvements during the Course of an Arbitration
The Bill provides for improvement in the hearing of an arbitration proceeding. By section 39 of the bill, upon the agreement of the parties there can be a consolidated and concurrent hearing. The bill also gives the arbitral tribunal the power to allow an additional party to be joined to the arbitration, provided that the additional party is bound by the arbitration agreement giving rise to the arbitration.
Appointment of Arbitrator in International Hearings
The bill provides that under an international arbitration where parties have not appointed an arbitrator or appointing authority, the Director of the Regional Center for International Commercial Arbitration Lagos shall be deemed to be the appointing authority designated by the parties.
This bill provides more elaborate rules to guide alternative dispute resolution compared with the previous act. It adequately reflects the rise of technology and supports virtual hearings which became more widespread during covid19 pandemic and thereafter.
The Bill, which now awaits the assent of the President before it becomes law, significantly remodels the administration of arbitral proceedings under Nigerian law and provides for a more efficient and innovative means of administering and enforcing arbitration and mediation agreements and proceedings which could improve the choice of Nigeria as a seat of arbitration.
Arbitration and Dispute Resolution Thematic Area, NASSBER