EMBRACING ARBITRATION AS A SWIFT MECHANISM IN THE 21ST CENTURY LEGAL SERVICES MARKET DELIVERY.
Arbitration offers very challenging but also lucrative practice areas to lawyers. These may include commercial arbitration, investment arbitration, construction arbitration, sport arbitration e.t.c.
Arbitration has become very important in the business world and certainly a common feature in international and domestic commercial transactions. It is therefore not unusual to find an arbitration clause in most commercial agreements as a key component of how disputes are to be resolved2.
The Nigerian Lawyers and African lawyers in particular, however appears to be slow at catching up with the pace of developments in Arbitration and neighboring fields which includes mediation and negotiations.
This paper is aimed at discussing the benefits of this emerging area of law over litigation and why the Nigerian lawyer must brace up to this area of practice which is competing to send litigation into extinction in years to come due to the slow pace of adjudication in law courts.
MEANING OF ARBITRATION AND LITIGATION
The Black’s Law Dictionary3 defines Arbitration to mean a dispute resolution process in which disputing parties choose one or more neutral parties to make a final and binding decision resolving the dispute . while the Cambridge online dictionary4 defines it as the process of solving an argument between people by helping them to agree to an acceptable solution. Redfen and Hunter conceptualized Arbitration thus:
“The practice of arbitration therefore, comes, so to speak, naturally to primitive bodies of law and after courts have been established by the state and a recourse to them has become the natural method of settling disputes, the practice continues because the parties to a dispute want to settle them with less formality and expense than involved in a recourse to the courts”5
Arbitration generally means an agreement by parties to submit a dispute or disagreement to a neutral third party (ies) for amicable resolution. That neutral third party is either a sole arbitrator or a body of arbitrators, which are both referred to as an “arbitral tribunal”. The decision of the arbitral tribunal is called an “arbitral award”. An arbitral award is final, binding and not subject to appeal in respect of disputes referred and decided upon.
Litigation on the other hand refers to the process of bringing a lawsuit in court in order to enforce a particular right or dispute.
The common definition of litigation, goes as, a case, lawsuit, controversy, which is resolved by the contest of facts, interpretations and truth, under the authority of the law of the land, the Magistrate, within the court of law. Thus, on the whole, the concept of litigation can be defined to be a procedure, executed with decorum, in a court to enforce a said law or right6.
HISTORY OF ARBITRATION
Some historians hold that arbitration was used as a means of resolving disputes before the appearance of the court system. These historians point to records of the ancient Egyptians, Greeks and Romans to support this claim. These records indicate that in ancient times, contrary to the practice of today, the arbitrator was generally a person known and trusted by both parties – the better known the arbitrator the more confidence the parties would have in his or her judgement.
Philip of Macedon, father of Alexander the Great, is recorded to have used arbitration to settle territorial disputes arising from a peace treaty with some of the Greek states in 337 BC7.
The concept of Arbitration is not new in Nigeria. Before the advent of colonialism, every community in Nigeria evolve their own extra judicial method of dispute resolution with similarity in formula and process. Extra judicial settlement of dispute has always been a feature of our indigenous customary law.
The practice of arbitration therefore, comes, so to speak, naturally to primitive bodies of law, and after courts have been established by the state and a recourse to them has become the neutral method of settling disputes, the practice continues because the parties to a dispute want to settle them with less formality and expense 8.
However with the advent of the British Colonial Government and the further amalgamation of the northern and southern protectorate of Nigeria in 1914, Nigeria became a part of the British empire and subject of the English legal system.
The first formal statute on arbitration was promulgated for the entire country on 31st December 1914 and was known as the Arbitration Ordinance of 1914. Subsequently the Ordinance was re-enacted as the Arbitration Ordinance Act 1958. The Arbitration Ordinance Act 1958 provided for only local and domestic arbitration.
In 1988, the Arbitration and Conciliation Decree was enacted. This decree allowed Nigeria to adopt the Convention on the recognition and enforcement of foreign arbitral awards also known as the “New York Convention”9.
The Arbitration and Conciliation Act CAP A18 LFN 2004 is a modification of the 1988 Ordinance.
LAW COURT PRACTICE IN NIGERIA
Going to court to resolve matters has always been part and parcel of the people of Nigeria. Although this may not be in the real sense of structured court system as we have it now. There were traditional courts where traditional rules applied against parties. These parties were represented by their respective Counsel who presented their case to the umpire or council of Chiefs as the case may be10.
The advent of colonialism brought about a lot of social-economic and political changes in Nigeria which gave rise to modernization. Disputes and resolutions became more complex and less amenable to traditional method of resolutions.
In 1863, English law was introduced in the colony of Lagos and courts were established there too. The growing complexity of commercial and political disputes at the time revealed a dire need for legally qualified persons to represent litigants in court. This birthed the Supreme Court Ordinance of 1876 that gave way to a regulated a Legal Profession as we have it today.
PROBLEMS ASSOCIATED WITH LITIGATION IN NIGERIA
Litigation in Nigeria is synonymous with delay. A survey, conducted by the Lagos State Ministry of Justice between 2002 and 2005, revealed that it takes an average of five years to conclude a commercial lawsuit in the high court. It is believed that the use of Arbitration will eliminate half of the factors that cause delay in Nigerian courts.
Among the factors notorious for causing delay in the Nigerian courts are (1) inability of parties to bring their witnesses to court on hearing date; (2) failure of the prison to bring awaiting-trial inmates to court – often due to shortage of vehicle, faulty vehicle or lack of petrol to fuel the vehicle; (3) transfer of a partly-heard case from one judge to another, resulting in the case starting afresh before the new judge; and (4) conduct of a trial-within-trial when a defendant disowns his/her extrajudicial statement11.
Law practice in Nigeria is not what it used to be in 1863 where most of the cases revolve round simple contracts, chieftaincy and land matters. What constitute legal practice has evolved from the traditional focus on litigation, and now includes advisory on transactions, opinion on foreign and international law, serving as umpires in Alternative Disputes Resolution proceedings et.c.
There is a global consensus that the Legal Profession in virtually all jurisdictions around the globe is presented with enormous challenges.
Rapid changes in legal services market place in the 21st century resulting from tougher economic conditions that have affected client’s businesses, new trends in the nature of legal services demanded by clients and new approaches to the engagement of the services of law firms by both businesses and Governments appear to have reshaped the dynamics of legal services and the capacity expected from legal practitioners12.
ARBITRATION TO THE RESCUE
Traditionally, we seek justice through litigation in our national courts of law. Over time, however, several countries, Nigeria inclusive, have come to accept arbitration and other alternative dispute resolution methods as legal means of resolving conflicts in contractual, business relationships.
Arbitration practice and other alternative dispute resolution methods today is becoming vibrant in Nigeria and has culminated in the establishment of several professional bodies which includes; the Chartered Institute of Arbitrators (Nigeria), Chartered Institute of Arbitrators UK (Nigeria Chapter), Association of Professional Negotiators and Mediators.
There are also several dispute resolution centres with patronage especially in Lagos and Abuja. In Abuja, there is the Abuja Chamber of Commerce and Industry, Abuja Multi-Door Court, Janada International Centre for Arbitration and Mediation (JIKAM). In Lagos there is the Lagos Court of Arbitration.
The advantages of Arbitration over litigation cannot be over-emphasized, some of them include;
The arbitration process is fairly quick. Once an arbitrator is selected, the case can be heard immediately. In litigation, on the other hand, a case must wait until the court has time to hear it; this can mean many months, even years before the case is heard.
Litigation is an ancient process that involves determining issues through a court, with a judge or jury. Arbitration, on the other hand, involves two parties in a dispute who agree to work with a disinterested third party in an attempt to resolve the dispute.
When the subject matter of the dispute is highly technical, arbitrators with appropriate degree of expertise can be appointed while one cannot choose the ‘Judge’ in litigation.
Proceedings and arbitral award are generally non-public and can be made confidential while litigation is handled in open court with its judgment is also delivered in public court room.
The costs for the arbitration process are limited to the fee of the arbitrator (depending on the size of the claim, expertise of the arbitrator, and expenses), and attorney fees. Costs for litigation include attorney fees, pre-trial costs for depositions and interrogatories, records searches, and court costs, which can be very high (This point is contestable).
TYPES OF ARBITRATION
An institutional arbitration is one where a specialised institution is appointed and takes on the role of administering the arbitration process / case management.
Each institution has its own set of rules which provides a framework (such as timelines for the filing of documents or procedures for making applications etc) for the arbitration and its own form of administration to assist in the process13. These includes; the International Chamber of Commerce (ICC), International Court of Arbitration Paris, London Court of International Arbitration (LCIA), American Arbitration Association, Stockholm Chamber of Commerce, Asia-African Legal Consultative Committee (AALCC) and the regional centres for arbitration in Kuala Lumpur, Cairo and Lagos14.
Arbitration is said to be International if the parties to an arbitration agreement have their places of business in different countries or where the subject matter of the arbitration agreement relates to more than one country or where the parties expressly agree that any dispute arising from the commercial transaction between them shall be treated as an international arbitration. International arbitration can be between companies or individuals.
Domestic Arbitration is a form of ADR where one or more person(s) are appointed to hear a case that takes place within one jurisdiction15.
These persons are resident or doing business in the same country and the contract is subject to be performed in the same country and also subject to local statute.
BECOMING AN ARBITRATOR
Every lawyer can be an arbitrator. But not all arbitrators are lawyers. Although there are several professional bodies in Nigeria that admit members and offer arbitration trainings, it is not compulsory for lawyers to undergo these special trainings before they can be appointed as an arbitrator.
For the avoidance of doubt, no section of the Arbitration and Conciliation Act16 gives a qualification as who an arbitrator should be.
However, since arbitration usually arises from legal disputes which can be tried as civil matters. These may include matters in dispute about real or personal property, disputes as to whether contract has been breached by one or both parties, trade disputes etc.
Going by the nature of disputes that usually give rise to arbitration, it is important that the Arbitrator is knowledgeable in procedural law and evidence. The arbitrator should also be able to evaluate argument in a fair, neutral manner and draw logical conclusions.
It is therefore only natural that lawyers take the lead in arbitrating a settlement. Lawyers are advised therefore to gain practical experience through attending trainings, shadowing experienced Arbitrators and acting as Arbitral Registrars, as well as pro bono arbitrating of small disputes17.
If we had been told 50 years ago, that typewriters will go into extinction, we probably would have laughed it off. The early believes that a lawyer must go to court, wear wigs and gown and argue cases ferociously is no longer in tune with modern realities. Usually, the major reason why a client engages the services of a lawyer is to get the dispute resolved as fast as possible. This is even truer for commercial transactions. No one is interested in the legalistic regalia the lawyer adorns or the open court room dramas. In the 2017/2018 legal year alone, 17,076 new cases were filed before the Federal High Court across its various divisions in the country, at the beginning of the new 2018/2019 legal year, 191,766 cases were still pending in the court18. The courts are being overwhelmed with cases that would have been easily disposed off through arbitration. Lawyers must therefore rise to the occasion by encouraging their clients to embrace Arbitration as a way of declogging cases pending in our various courts.