Alternative Dispute Resolution: Unlocking the Power of Mediation, Arbitration, and Negotiation for Amicable Resolutions

CONTRIBUTOR: ANIMASAUN IYANUOLUWA

INTRODUCTION

In contemporary legal systems, Alternative Dispute Resolution (ADR) has emerged as a crucial mechanism for resolving conflicts outside of traditional court litigation. ADR encompasses methods such as mediation, arbitration, and negotiation, all designed to offer more efficient, cost-effective, and amicable resolutions to disputes. These methods are increasingly being recognized for their ability to alleviate the burdens on judicial systems while fostering a more collaborative approach to conflict resolution.

THE LEGAL FRAMEWORK FOR ADR IN NIGERIA

The Nigerian legal system recognizes ADR as a vital mechanism for dispute resolution. The primary legislation governing ADR in Nigeria is the Arbitration and Mediation Act (AMA) 2023, which replaces the Arbitration and Conciliation Act (ACA) Cap A18 LFN 2004. The AMA aligns Nigeria’s dispute resolution framework with international best practices and provides a comprehensive legal framework for both arbitration and mediation.

NEGOTIATION: THE FOUNDATION OF ADR

Negotiation is the most fundamental and informal ADR method, where parties engage in discussions to reach a mutually beneficial agreement without the involvement of a third party. This method is often the first step in resolving disputes before escalating to mediation or arbitration.

Negotiation is not heavily regulated by statutes, but contract law principles generally govern negotiated agreements. Courts often uphold negotiated settlements if they meet legal requirements of offer, acceptance, and consideration. In Union Bank of Nigeria Ltd v. Ozigi^[1], the Supreme Court upheld a negotiated agreement between parties, reinforcing the enforceability of properly concluded negotiated settlements.

Negotiation is widely used in corporate mergers, labour disputes, and diplomatic resolutions. It provides parties with full control over outcomes and is the least adversarial method of dispute resolution. However, it requires effective communication skills and a willingness to compromise.

ARBITRATION: A STRUCTURED AND BINDING PROCESS

Arbitration is a more formalized ADR method in which a neutral arbitrator hears evidence and makes a legally binding decision. This method is widely employed in commercial, labour, and international disputes, where parties seek a resolution without resorting to lengthy court trials.

The Arbitration and Mediation Act (AMA) 2023 is the primary legislation governing arbitration in Nigeria. It recognizes the enforcement of arbitral awards under both domestic and international arbitration frameworks. Nigeria is also a signatory to the New York Convention (1958), which allows for the recognition and enforcement of foreign arbitral awards.

KEY FEATURES OF THE ARBITRATION UNDER ARBITRATION AND MEDIATION ACT (AMA) 2023

1. Arbitration Provisions:

• Incorporates the UNCITRAL Model Law on International Commercial Arbitration. It aligns Nigeria’s arbitration framework with international best practices. This ensures that arbitration proceedings in Nigeria adhere to globally accepted standards, fostering confidence among foreign investors and businesses engaging in cross-border transactions^[2]
• Ensures the enforceability of arbitration agreements and awards. Courts are required to uphold arbitration clauses in contracts, preventing parties from bypassing arbitration and heading straight to litigation. This was reinforced in NNPC v. Lutin Investments Ltd, ^[3]where the court upheld an arbitration clause as binding. The Act ensures that arbitral awards, whether domestic or foreign, are recognized and enforceable in Nigerian courts, in line with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). ^[4]This was affirmed in Shell (Nig.) Exploration & Production Ltd v. FIRS ^[5], where an arbitral award was upheld.
• Provides for interim measures and emergency arbitrator provisions. The Arbitration and Mediation Act (AMA) 2023 provides for interim measures and emergency arbitrator provisions under Sections 19 to 30 of the Act.
  1. Section 19 – Power of Arbitral Tribunal to Grant Interim Measures: Allows arbitral tribunals to issue interim measures to preserve assets, maintain the status quo, or prevent harm to the arbitration process.
  2. Section 20 – Conditions for Granting Interim Measures: It specifies that the party requesting an interim measure must prove that: There is a risk of irreparable harm if the measure is not granted and when the measure is necessary to preserve the integrity of the arbitration process.
  3. Section 21 – Recognition and Enforcement of Interim Measures: It requires Nigerian courts to recognize and enforce interim measures issued by an arbitral tribunal. It also ensures that parties cannot evade compliance by shifting to the courts.
  4. Section 25 – Emergency Arbitrator Provisions: Introduces the concept of an emergency arbitrator, allowing parties to seek urgent relief before the full tribunal is constituted. The emergency arbitrator’s decision is binding and enforceable.
  5. Section 27 – Court-Ordered Interim Measures: Allows courts to grant interim relief before or during arbitration if necessary to protect parties’ rights. It ensures that parties can still seek judicial assistance for urgent matters not covered by the arbitral tribunal.
• Introduces third-party funding for arbitration, which helps reduce financial constraints for parties. A significant development that helps reduce financial constraints for parties involved in dispute resolution. The Act recognizes Third-Party Funding (Section 62 of AMA) The Act expressly allows third-party entities (such as investors, law firms, or funding institutions) to finance arbitration proceedings in exchange for a portion of the award or other financial return.^[6]This removes financial barriers, enabling individuals and businesses to pursue arbitration even when they lack the funds. However, parties benefiting from Third Party Funding must disclose the existence of a funding arrangement to ensure transparency in arbitration proceedings. This prevents conflicts of interest, particularly if arbitrators have relationships with funders
• Strengthens provisions on confidentiality and party autonomy. The Arbitration and Mediation Act (AMA) 2023 strengthens confidentiality and party autonomy, two fundamental principles of arbitration, ensuring greater protection for parties and their proceedings.

Judicial precedents have also shaped ADR jurisprudence in Nigeria. In Attorney-General of Rivers State v. Attorney-General of the Federation, ^[7]the Supreme Court of Nigeria reinforced the binding nature of arbitration agreements.

Similarly, in NNPC v. Lutin Investments Ltd (2006) 2 NWLR (Pt. 965) 506, the court upheld the principle that arbitration clauses in contracts must be honoured before litigation is pursued.

MEDIATION: A COLLABORATIVE APPROACH

Mediation is a voluntary and confidential process in which a neutral third party, known as a mediator, facilitates negotiations between disputing parties to reach a mutually acceptable resolution. Unlike arbitration, mediation does not impose a binding decision; rather, it empowers the parties to control the outcome of their dispute.

The Arbitration and Mediation Act (AMA) 2023 now provides a stronger legal backing for mediation in Nigeria. The Act ensures that mediated settlement agreements are legally enforceable under the Singapore Convention on Mediation (2019). In addition, the Mediation Guidelines of the Lagos Multi-Door Courthouse (LMDC) institutionalize mediation as a preferred ADR method for resolving commercial and civil disputes in Lagos State.

KEY FEATURES OF THE MEDIATION UNDER ARBITRATION AND MEDIATION ACT (AMA) 2023

• Establishes a formal legal framework for mediation in Nigeria. The Arbitration and Mediation Act (AMA) 2023 establishes a formal legal framework for mediation in Nigeria, ensuring its recognition as a legitimate dispute resolution mechanism. It strengthens mediation as an alternative to litigation, promoting amicable dispute resolution.
• Applies to both domestic and international mediation proceedings. The Arbitration and Mediation Act (AMA) 2023 applies to both domestic and international mediation (Section 78), ensuring that mediated settlement agreements are legally binding across jurisdictions. This aligns Nigeria with international best practices, particularly the Singapore Convention on Mediation (2019). It enhances cross-border dispute resolution, making Nigeria a more arbitration- and mediation-friendly jurisdiction

In U.B.N. Plc v. Astra Builders (WA),^[8] the Supreme Court encouraged the use of mediation and other ADR mechanisms before resorting to litigation. Mediation is widely used in family law disputes, workplace conflicts, and commercial disagreements. It is praised for preserving relationships, reducing legal costs, and expediting dispute resolution.

CONCLUSION

ADR mechanisms; mediation, arbitration, and negotiation offer diverse pathways to resolving disputes efficiently while reducing reliance on traditional litigation. The Arbitration and Mediation Act (AMA) 2023 has strengthened the legal foundation for ADR in Nigeria, ensuring enforceability and alignment with international standards. As the legal system continues to evolve, ADR remains a crucial tool for achieving amicable and equitable dispute resolutions while reducing the caseload of overburdened courts.

REFERENCE

1. (1994) 3 NWLR (Pt. 333) 385 ↑
2. UNCITRAL Model Law on International Commercial Arbitration (1985, as amended in 2006) ↑
3. (2006) 2 NWLR (Pt. 965) 506 ↑
4. New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) ↑
5. (2016) LPELR-40064(CA) ↑
6. Essar Oilfields Services Ltd v. Norscot Rig Management Pvt Ltd [2016] EWHC 2361 (Comm) ↑
7. (2019) LPELR-48976(SC) ↑
8. (2010) 5 NWLR (Pt. 1186) 1 ↑