There are three main methods for resolving commercial disputes: through litigation, arbitration and mediation/conciliation.
Large commercial disputes are litigated at the State High Courts and the Federal High Court. Section 251(1) of the Constitution of the Federal Republic of Nigeria gives the Federal High Court exclusive jurisdiction over matters of:
Customs and excise.
Many State High Courts have recently amended their civil procedure rules (CPR) to provide for a frontloaded case filing system, as well as the option of trying alternative dispute resolution mechanisms before actual trial commences.
The Arbitration and Conciliation Act (Cap A18 Laws of the Federation 2004) applies to arbitration in Nigeria. The Act is modelled on the UNCITRAL Model Law on International Commercial Arbitration 1985, with minor modifications.
The Conciliation Rules are in the third schedule to the Arbitration and Conciliation Act. They only apply to parties engaged in international commercial conciliation if the parties agree to use them.
The Lagos State High Court has implemented a fast-track route for certain cases and other State High Courts are considering similar measures (see Question 36).
Limitation periods vary depending on the nature of the claim. The limitation laws of the various states provide a limitation period of six years for actions based on:
Simple or quasi-contract (generally subject to any extensions, the period begins from the date the contract was breached).
Torts (subject to any extensions, the period begins from the date the tort was committed).
Arrears of rent.
Actions to enforce an arbitral award where either:
the arbitration agreement is not made under seal; or
the arbitration is conducted under statute other than the Arbitration Act.
Actions to recover the principal sum of money secured by a mortgage or charge on land must be brought within 12 years.
Actions based on the Convention for the Unification of Certain Rules relating to International Carriage by Air 1999 (Montreal Convention) must be brought within two years.
However, some statutory bodies have shorter limitation periods:
Actions against the Nigerian National Petroleum Corporation must be begun within one year of the cause of action arising.
Actions against public officers must be commenced within a three-month period.
The limitation period is triggered by the date when the cause of action is complete, and not the date when injury occurs.
Major commercial disputes are brought before the State High Courts, which have unlimited jurisdiction to hear all matters other than those that are within the exclusive jurisdiction of the Federal High Court. Matters in both courts are tried before a single judge, and can be appealed to the Court of Appeal.
Many of the State High Courts have created commercial divisions for the speedy resolution of commercial disputes, and particular judges may be assigned to hear specific types of commercial matters. However, there is no specific division of either court created solely for particular types of disputes. Even though maritime disputes fall within the jurisdiction of the Federal High Court, depending on territorial jurisdiction, any judge of that court can be assigned to such a matter.
The answers to the following questions relate to procedures that apply in the Lagos State High Court.
Nigeria has a unified profession, with lawyers able to practise both as barristers and solicitors. Every lawyer named on the Roll of Legal Practitioners maintained at the Supreme Court of Nigeria is entitled to appear before any court that handles commercial disputes in Nigeria, subject to the payment of annual practising fees.
The Nigerian Bar Association is proposing a Mandatory Continuing Professional Education scheme and an annual practising licence. When fully operational, these will be preconditions to obtaining the right of audience in court. Foreign lawyers, not having been called to the bar in Nigeria, are not entitled to practise law in Nigeria, and as such cannot appear in any court.
The scale of fees for lawyers is only fixed by statute for conveyancing matters. For all other matters, the scale of fees states that lawyers' fees (whether for a simple or complex matter) must take into account the:
Skill, expertise and seniority of the lawyer involved.
Subject matter of the dispute.
Importance of the matter to the client.
Time spent on the matter.
Most firms prefer to use task-based billing but will provide an hourly rate if requested. Under the 2007 Rules of Professional Conduct in the Legal Profession, contingent fees in civil matters are now permitted, without requiring the prior agreement of the Bar Council.
Litigation is almost always funded by the litigants. In situations where a dispute has the potential of resulting in a major claim against insurers, the affected insurance company may consider funding the litigation. The national Legal Aid Council assists those without financial means in limited criminal and fundamental human rights cases.
There is no general insurance scheme available to fund litigation, either before or after the event.
Court proceedings must be held in public (section 36(3), Constitution of the Federal Republic of Nigeria 1999 and Order 32, rule 1, Lagos State Civil Procedure Rules). Generally, where a court sits in private, the entire proceedings are a nullity (Menakaiya v Menakaiya 2001 16 NWLR 203). However, in certain circumstances a court can exclude from its proceedings persons other than the parties where there are specific reasons to do so (section 36(4)(a), Constitution 1999), including issues relating to:
The welfare of persons under the age of 18.
The protection of the private lives of the parties.
Special circumstances, making publicity contrary to the interests of justice, permitting the court to exclude persons to the extent that it considers necessary.
Additionally, if a minister of the federal government or a commissioner of a state satisfies the court that it is not in the public interest for any matter to be publicly disclosed, the court makes arrangements for evidence relating to the matter to be heard in private (section 36(4)(b), Constitution 1999 and section 221, Evidence Act). Although proceedings must be in public, a public officer cannot be compelled to disclose communications made to him in official confidence if he considers that the "public interest" would suffer as a result (section 169, Evidence Act).
There are no pre-action protocols which must be complied with before the commencement of legal action. However, if a statutory pre-action notice is required before an action can be commenced against certain government corporations, failure to issue such a notice may result in the matter being struck out.
How a claim is started.
How the defendant is given notice of the claim and when the defence must be served.
Actions are started by filing an originating process, which can be in the form of:
Writ of summons. Proceedings are started by writ of summons if the facts in dispute are likely to be contentious. It is the form of originating process used in the high court, unless provided otherwise. The writ should be:
accompanied by a statement of the nature of the claim or relief sought, a list of witnesses to be called at the trial and their sworn witness statements.
Originating summons. This is used where there is no substantial dispute between the parties in relation to the facts of the matter, and interpretation of a statute or a document is the major relief claimed.
Originating motion and petition. These are used where required by a specific statute.
The life span of the originating process in Lagos State is six months, and can be renewed for two periods of three months each. In those states that have adopted front-loading civil procedure rules (for example, Lagos State, Ogun State, Rivers State, Kaduna State, and Abuja FCT), the originating process is not accepted for filing unless accompanied by a list of exhibits and witness statements on oath.
The defendant must be personally served with the originating process, unless it has authorised its legal practitioner in writing to accept service on its behalf, and the legal practitioner enters an appearance (a form of acknowledgment of service) to the action (Order 7, rules 2 and 3, Lagos Civil Procedure Rules). The Lagos Civil Procedure Rules require the originating processes to be served by one of:
A deputy sheriff.
A special marshal.
Another officer of the court.
The Chief Judge can also appoint and register any law firm, courier firm or other person to serve court processes. If personal service cannot be achieved, leave must be obtained from the court to serve the process by substituted means, which can involve:
Pasting (advertising) the process at the last named address of the defendant.
Publication in a newspaper circulating in the area relevant to the transaction.
Service on another person as agent for the defendant.
The defendant has 42 days within which to enter an appearance to the processes and file a defence to the claim. A list of exhibits and witness statements must be attached to the defence. Each party then has 14 days to file any reply or a defence to counterclaim. If the defendant fails to file a defence, the claimant can apply for judgment, or have the case set down for hearing by filing a request for a pre-trial conference.
Once pleadings are completed, the claimant must apply for a pre-trial conference to be held. If it defaults, the defendant can apply to have the action dismissed (Order 25, rule 1(3), Lagos Civil Procedure Rules). The judge has power to dismiss a claim or enter final judgment against a defendant if it (Order 25, rule 6, Lagos Civil Procedure Rules):
Fails to attend the pre-trial conference.
Fails to comply with a scheduling order.
Is "substantially unprepared to participate".
Does not participate in good faith.
Any such order can be set aside within one day of the judgment, or an extended period (not exceeding the three-month pre-trial conference period) at the judge's discretion. Most pre-trial conferences are not completed within the three-month period and this aspect of the rules is presently being reviewed. The pre-trial conference concludes with the judge preparing a report to guide the subsequent course of the proceedings.
The major objectives of the pre-trial conference are to:
Provide an opportunity to formulate, settle and narrow the issues in dispute.
Organise and schedule the discovery, inspection and production of documents.
Deal with "such other matters as may facilitate the just and speedy disposal of the action" (Order 25, rule 3, Lagos Civil Procedure Rules).
If the judge believes there is undue delay, he can require a party to explain the reasons for delay and then make any orders and give any directions to speed up the proceedings (Order 27, rule 13, Lagos Civil Procedure Rules). The pre-trial judge is expected to hear all interim applications, ensure that the issues in contention are agreed between the parties, and give directions on the future course of the action. All interim applications must be supported by written argument. The pre-trial judge can direct that the case be stayed to allow referral to some alternate means of dispute resolution, and can enter interim judgment in respect of any admitted claims.
At trial, the witness statements are adopted on oath by the witness as his evidence-in-chief and the witness is then cross-examined by the opposing party. At the conclusion of the hearing, closing addresses are submitted in writing.
If a party fails to do what is required of it within the time prescribed, a daily default fine of NGN200 (about US$1.40) may be charged and an application for extension of time is required (Order 44, rule 4, Lagos Civil Procedure Rules).
The court prefers not to put the parties to the expense of a full trial if there are grounds for a speedy conclusion of the case. A pre-trial judge can give summary judgment at the pre-trial conference stage if it is appropriate given the facts at his disposal (Order 35, rule 1, Lagos Civil Procedure Rules).
In an undefended claim for a liquidated demand, a claimant can apply for judgment in default of the defendant's appearance for the amount on the claim, or for a lesser sum. If a defendant pays money into court in satisfaction of one or more causes of action, a claimant wishing to accept the payment can apply to withdraw the amount, and the proceedings are then stayed.
A claimant who believes that there is no defence to its claim can file an application for summary judgment with the originating process (attaching witness statements and copies of exhibits) (Order 11, Lagos Civil Procedure Rules). The application must be supported with:
An affidavit stating the grounds for the belief.
A written brief (or argument) in support.
If the defendant intends to defend the action, it must respond to the process and the application. The judge then determines whether the defendant should be granted leave to defend, based on whether it has a good defence to the claim. Similarly, a defendant who believes that the claim against it is not sustainable can, after filing a statement of defence, apply to have the action struck out. This application must also be accompanied by a written argument.
Where a matter is called up for hearing and neither party appears, the judge has the discretion to strike out the case (Order 30, rule 1, Lagos Civil Procedure Rules).
A defendant can apply for an order that a claimant who is ordinarily resident outside the jurisdiction of the court give security for costs, even though he is temporarily resident within the jurisdiction (Order 49, rule 3, Lagos State Civil Procedure Rules).
Are they available and on what grounds are they granted?
Can they be obtained without prior notice to the defendant and on the same day in urgent cases?
Are mandatory interim injunctions to compel a party to do something available in addition to prohibitory interim injunctions to stop a party from doing something?
An interim injunction is usually only granted in urgent cases and is usually obtained without prior notice to the other party (whether claimant or defendant). It is possible for an order for injunction to be granted the same day. However, it usually takes about two days for the order to be drawn up and served. A mandatory interim injunction (compelling the other side who has not been heard to do something) is unlikely to be granted.
The applicant for an injunction must show that:
There is a serious issue to be tried.
Damages would not be an adequate remedy.
There has been no undue delay in applying for the injunction.
It is prepared to provide an undertaking as to damages should it be found that the injunction ought not to have been granted.
Are they available and on what grounds must they be brought?
Can they be obtained without prior notice to the defendant and on the same day in urgent cases?
Do the main proceedings have to be in the same jurisdiction?
Does attachment create any preferential right or lien in favour of the claimant over the seized assets?
Is the claimant liable for damages suffered as a result of the attachment?
Does the claimant have to provide security?
An order for interim attachment is only granted if the main proceedings are within the court's jurisdiction, and are granted on grounds of extreme urgency or to preserve the situation. In urgent situations, they may be granted without prior notice to the defendant and on the same day. Such orders are granted where the applicant can show:
Full disclosure of all material facts.
An arguable case against the defendant.
Real and imminent danger that the defendant will remove its assets from the jurisdiction of the court.
The balance of convenience is in its favour.
An undertaking as to damages will be provided.
If there are no charges on the seized assets, then the attachment will create a preferential right in favour of the applicant. However, if the applicant fails on the merits at the trial, the defendant is entitled to damages incurred from the order. To obtain the order, the claimant may be required to deposit money in court as security for the order, in addition to providing an undertaking as to damages.
A trial judge can order the preservation, interim custody or sale of perishable goods on sufficient reason being given.
A claimant can obtain an ex parte order that a defendant who is about to leave Nigeria should provide security to satisfy any judgment that may be entered against it (Order 46, rule 2, Lagos Civil Procedure Rules).
The relief available to a party depends on the cause of action. The courts will not grant a relief that is not asked for. There are four kinds of remedies available:
Orders for specific performance.
Damages. Damages are generally compensatory in nature. Punitive (usually known as exemplary or aggravated) damages are available but rarely granted. They are reserved for situations where damage has been caused by abuse of government power, extreme recklessness or malice by the guilty party.
Injunctions (either mandatory or prohibitive).
The frontloading procedure in the Lagos Civil Procedure Rules means the parties must file, along with their pleadings, copies of every document they intend to admit as an exhibit at the trial. However, there is no obligation to supply documents adverse to a party's case. If one of the parties afterwards requires general discovery of documents, it can, within seven days of the close of pleadings, apply for discovery from the other party. The party on whom this request is served must answer on oath, completely and truthfully, within seven days of the request, and with its answer either:
Attach copies of documents referred to in its witness statement.
Specify the documents in its possession which it objects to producing, and the reasons for the objection.
The request forms part of the agenda for the pre-trial conference, at which time the judge can make orders in respect of it.
Would documents written by an in-house lawyer (local or foreign) be privileged in any circumstances?
If privilege is not recognised, are there any other rules allowing a party not to disclose a document (for example, confidentiality)?
The Evidence Act governs the reception and admissibility of evidence, either written or oral. Documents are not in themselves privileged unless they can be classified as official communications (section 167, Evidence Act).
Privilege can be claimed over the following communications with a legal practitioner (section 170, Evidence Act):
Any communication (whether written or oral) made to, by or on behalf of the legal practitioner's client.
Any advice given by the practitioner to his client and also the contents or condition of any document with which he has become acquainted, if they are created or obtained in the course of and for the purpose of his employment.
The client (and only the client) can give consent to disclosure, or waive privilege, as the privilege is the client's and not the legal practitioner's. However, the privilege does not apply to:
Communications made to further any illegal purpose.
Facts that show that a crime has been committed.
The obligation to maintain confidentiality continues after the legal practitioner's employment has ceased and applies to his employees. The Legal Practitioners' Rules of Professional Conduct in the Legal Profession also order a legal practitioner to preserve his client's confidence, a duty that also outlasts his employment.
Whether the legal practitioner is in the full-time employment of the client (for example, as an in-house lawyer) is immaterial. Because the Legal Practitioners Act defines a legal practitioner as a person whose name is on the Roll of Legal Practitioners which is maintained by the Supreme Court, it is unlikely that these privileges against disclosure apply to foreign counsel.
A document marked "without prejudice" is admissible in court unless it (section 25, Evidence Act):
Contains an admission against a party's interest.
Was made either on the express condition that evidence of the document should not be given, or an inference to that effect can be drawn.
In states that have a front-loading principle in their CPR, all witnesses, whether of fact or expert witnesses, give evidence through adoption on oath of their written witness depositions, which are sworn before filing. In other states, all witnesses must give oral evidence and the report of an expert witness will be tendered as an exhibit at that time.
How are they appointed (for example, are they appointed by the court or by the parties)?
Do they represent the interests of one party or provide independent advice to the court?
Is there a right to cross-examine (or reply to) expert evidence?
Who pays the experts' fees?
Nigeria has an adversarial legal system, and it is therefore up to the parties to appoint any experts they intend to call as witnesses. The judge has no power to appoint an expert witness to assist the court.
Experts represent the interests of the party that appointed them. Where front-loading principles apply, the expert report must be attached to that party's pleadings. At the pre-trial conference, the judge will agree with the parties on any action that will narrow the field of dispute between expert witnesses. This may involve requiring the experts to produce a joint report indicating areas of agreement and disagreement, together with reasons.
Each party can cross-examine the other party's expert on his evidence during trial. An application to reply to the evidence of an expert as disclosed on the pleadings can be made to the judge at the pre-trial conference, and takes the form of further written expert evidence.
The instructing party pays its expert's fees (based on the agreement between them).
To which courts can appeals be made?
What are the grounds for appeal?
Please briefly outline the typical procedure and timetable.
The final decision of the court of first instance (whether the State or Federal High Court) can be appealed to the Court of Appeal on issues of fact and law. This right must be exercised within 90 days of the judgment. Where the appeal is of an interim decision, the right of appeal must be exercised within 14 days and requires leave of the trial court, unless it is solely on a point of law, when leave is not required.
Grounds of appeal may be based on one of the following:
The trial judge has misunderstood the law.
The trial judge has understood the legal point but misapplied the law to the facts.
The trial judge misdirected himself on the facts.
The judgment is against the weight of the evidence.
A party who wishes to appeal must file a Notice of Appeal in the registry of the original trial within the prescribed time limits (see above). After the record of proceedings before the original court is compiled and served on both parties, the appellant party has 60 days from the date of receipt to file its brief of appeal. Once served on the respondent, the respondent must file its own brief within the following 45 days. A further period of 14 days is allowed for a reply brief.
Interlocutory applications are often filed during the appeal proceedings and as a result, the average time frame for an appeal is between two and three years.
Unless the court otherwise orders, the unsuccessful party is liable for the costs incurred by the successful party. The costs of litigation are, as a rule, much lower than those awarded in arbitration proceedings. Although costs are awarded on an indemnity basis (Order 49, rule 1, Lagos CPR) based on the expenses of the litigant (as well as his time and effort in coming to court), in exercising its discretion as to costs, the court can take into account:
Any offer or contribution made by any of the parties.
A payment into court and the amount of this payment.
The court can also take into account costs that arise because of the misconduct or neglect of a party to the action. As a matter of practice in calculating an award of costs, the court generally only takes into account the actual court disbursements incurred by the successful party.
In addition, the attitude of the courts has been not to award legal fees expended as an item of special damages (Guinness Nigeria Plc v Nwoke 2000 15 NWLR 135). Because of this, the successful party does not, in practice, recover anything near to the amount expended on the litigation. Even for the most protracted litigation, cost awards are unlikely to exceed NGN250,000 (about US$1,700).
Interest is not usually awarded on costs. Where a stay of execution of a money judgment is granted, the costs awarded are paid immediately as part of the conditions of granting the stay, on condition that they are refunded to the appellant if the appeal is successful.
The enforcement of a judgment depends on its terms. A declaratory judgment is not capable of enforcement as it merely states the rights of the parties. Judgments for specific performance, damages and injunctions can be enforced through:
The issue of a writ of execution.
Starting garnishee proceedings.
A domestic judgment of a court in one state in Nigeria can be enforced in the jurisdiction of another state court, on registration of the judgment in the enforcing court. It is then enforced in the same manner as a judgment of that court.
Local courts uphold the principle of freedom of contract and will, as a matter of practice, enforce the choice of law chosen by the parties. However, the Personal Income Tax Act and the Companies Income Tax Act apply to all contracts that have a connection with Nigeria, irrespective of any choice of law clauses they may contain.
Generally, Nigerian courts tend to uphold a choice of jurisdiction clause in a contract under the principle of pacta sunt servanda (parties are to be held to the bargain which they have entered). This rule is however flexible. Nigerian courts have discretion to decline to give effect to a choice of jurisdiction clause. For example, if the claimant's claim is statute-barred under the law of the foreign jurisdiction's court, the Nigerian court can refuse to enforce a foreign jurisdiction clause and allow the claimant to bring an action in a Nigerian court.
In addition, where a party to a contract containing an arbitration clause has filed an action in court, the court assumes jurisdiction over the matter despite the arbitration clause, if the opposing party takes any step in the matter without raising the jurisdictional point.
The procedure to effect service depends on whether there is a convention or agreement between the foreign country and Nigeria. If there is no convention or agreement with the country, a letter of request for service must be forwarded from the foreign court to the state attorney general who (if he decides that it is desirable that the process be served) forwards it to the court to be effected. Service is then effected by a process server, with an affidavit of service filed.
If the process originates from a country where there is an agreement or convention with Nigeria, the letter of request is directed to the state Chief Judge. The process server will then deliver the original process or a copy of it to the person to be served. In all cases the process server must submit to the Chief Registrar particulars of the costs of service. The Chief Registrar, after certifying the amount involved, sends a certificate to the foreign authority establishing the fact and date of service or failure to serve, and the costs involved. On application, a judge can order substituted or any other mode of service of the foreign process.
Nigeria is not a party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965.
If a court order is required to compel the witness to give evidence, service of the order must comply with the correct procedure (see Question 26). The witness must also comply with the requirements of the foreign jurisdiction to ensure the evidence is admissible.
Nigeria is not a party to the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970.
Nigeria has a Foreign Judgment (Reciprocal Enforcements) Act which is based on reciprocity of treatment. This statute enables judgments that are given in a foreign country to be enforceable in Nigeria by Nigerian courts. To be enforceable a foreign judgment must be registered in the high court of the state where enforcement is sought.
The application to register a foreign judgment must be made within six years of the date of the judgment or any appeal in relation to that judgment (section 4, Foreign Judgment (Reciprocal Enforcements) Act). A judgment will not be registered if it is wholly spent (that is, the time for enforcing the judgment has expired according to the statute of limitations, or the terms of the judgment have been fully complied with elsewhere), or it would not be enforceable in the country of the original court. The registration can also be set aside on application by the affected party on the grounds that:
The Foreign Judgments (Reciprocal Enforcements) Act does not apply to the judgment or it was registered in breach of this Act.
The original court lacked jurisdiction.
Insufficient time was given to the non-appearing defendant in the original court to prepare for the matter.
The judgment was obtained by fraud or is contrary to the public policy of Nigeria.
The rights under the judgment are not vested in the person applying for registration, or the registering court in Nigeria is satisfied that before judgment in the original court was given, the matter in dispute had been the subject of a final judgment of a court elsewhere that had jurisdiction in the matter.
Once the judgment has been registered, it has the same force and effect as a judgment of a Nigerian court.
The main types of ADR in Nigeria are arbitration and mediation/conciliation. The arbitration bodies most commonly used are:
The Nigerian branch of the London based Chartered Institute of Arbitrators. This was established in 1998 and, with the approval of the London headquarters, provides training courses that enable successful candidates to join the Institute and obtain the ACIArb, MCIArb and FCIArb qualifications (that is, an Associate, Member or Fellow of the Chartered Institute of Arbitrators, respectively). The arbitration rules in the first schedule of the Arbitration and Conciliation Act (Arbitration Rules) are mandatory for all domestic arbitrations. The rules are modelled on the UNCITRAL Model Arbitration Rules.
The Lagos Regional Centre for International Commercial Arbitration. This was established under the guidance of the Asian-African Legal Consultative Organisation by the Regional Centre for International Commercial Arbitration Act No.39 of 1999, to promote dispute resolution in international transactions and commerce. In particular, its main function is to promote Lagos as a venue for international arbitration and provide adequate support services for arbitration proceedings.
Both organisations maintain a list of qualified arbitrations and provide services such as hearing rooms, libraries, training courses, transcription and secretarial services to support arbitration and other ADR processes.
The High Court Laws of all the states empower the trial judge to promote settlement between the parties, and judges have used this provision to encourage parties to use ADR methods. Judges cannot, however, compel an unwilling party to mediate or arbitrate its matter, and must proceed with the litigation if the party wishes.
However, some states have adopted a multi-door courthouse approach, which allows the pre-trial judge to refer a matter to an agreed form of ADR. The exercise of the judge's power in this circumstance makes ADR compulsory, and the matter is stayed while ADR is undertaken. The resolution process takes place under the supervision of the designated ADR judge who submits a report to the pre-trial judge. The pre-trial judge can take note of the unwillingness of a party to participate in good faith in the ADR process.
Arbitral proceedings are confidential and must be conducted in private unless the parties agree otherwise (Article 25.4, Arbitration Rules), and any award given cannot be made public unless both parties agree (Article 32.5, Arbitration Rules).
In mediation proceedings held under the Conciliation Rules in the third schedule to the Arbitration and Conciliation Act (Conciliation Rules), the proceedings and the settlement agreement, if any, are also confidential, except to the extent required for enforcement (Article 14, Conciliation Rules).
The parties guide the procedure in ADR. In arbitration proceedings and conciliation hearings parties can choose to present evidence orally or through written statements. The Arbitration Rules and the Conciliation Rules provide that the proceedings must be held in private unless the parties agree otherwise, and this may support a claim of privilege.
Unlike litigation, where the costs awarded are minimal in relation to the actual costs incurred by the parties, in arbitration a successful party is more likely to recover the actual amount spent in prosecuting its claim, including legal fees.
Costs claimed must be proved and the arbitrator can disallow a successful party some or all of its costs, usually as a result of some adverse conduct on its part during the proceedings.
Where parties engage in mediation proceedings each party will bear its own costs, unless parties agree otherwise (Article 17, Conciliation Rules).
ADR is used across all industries. It is compulsory for the resolution of labour union disputes, as all trade disputes must be referred to the Industrial Arbitration Panel (Panel) (Trade Disputes Act). The Panel will attempt to mediate the dispute and move to arbitration if mediation fails. It also issues awards.
The Nigerian Branch of the Chartered Institute of Arbitrators has also established a small claims arbitration scheme for the banking sector, to encourage the resolution of banker/customer disputes by arbitration.
The arbitration bodies most commonly used are:
The Nigerian branch of the London based Chartered Institute of Arbitrators.
The Lagos Regional Centre for International Commercial Arbitration (see Question 29).
The Lagos State High Court has established a fast-track route for cases where the amount involved is more than NGN100 million (about US$695,000), or one of the parties is a non-resident investor in the country. For such matters, the total litigation process from filing to judgment is not expected to exceed eight months. The commencement date for the fast track system was 1 February 2008 and a set of rules has been issued which basically curtail the time limits for filing processes within the fast track route. Other States are considering similar provisions.
A new federal Arbitration and Conciliation Act and a model Arbitration Law for the state governments has been proposed. The two pieces of legislation are substantially similar in wording and procedure. The current debate on the draft legislation within the National Assembly is about whether only Nigerian nationals should be eligible for appointment as arbitrators in domestic arbitrations (that is, where both parties are Nigerian incorporated entities, irrespective of ultimate corporate control).