THE NOVEL PROVISIONS OF THE AMA, 2023
- Stay Of Court Proceedings
The Act now mandates the courts to stay proceedings commenced in breach of the arbitration agreement, on the request of any of the parties, not later than when submitting their first statement on the substance that the dispute refer the parties to the arbitration. Unless the court determines that the arbitration agreement is void, inoperative, or incapable of being performed, the Court must make an order for a stay of proceedings.
- Creation Of A Review Mechanism For Arbitral Awards
The creation of an “Award Review Tribunal” (the “ART”) is a significant innovation of the Act. It mandates parties to specify in their agreement that arbitral awards may be reviewed by a second arbitral tribunal if a party seeks to make an application under Section 55(3) of the Act (grounds for application for setting aside an award). The ART, which is constituted in the same manner as the original arbitration tribunal, shall endeavour to render its decision in the form of an award within 60 days of it being constituted. However, the award rendered by the ART remains subject to challenge by the Court by any party to the Arbitration.
- Grounds For Setting Aside An Arbitral Award
As part of the novel provisions of the AMA, 2023, the Act exempts “misconduct of an arbitrator” as a ground for challenging arbitral awards, which is significant in dealing with the gullible act of parties seeking injunctions to restrain arbitral proceedings. It further establishes that one of the necessities or grounds for an affected party or parties to set aside an award is that it “has caused or will cause substantial injustice to the applicant”. This phenomenal impact improves the finality and preservation of awards, thereby restricting courts’ involvement in setting aside arbitral awards.
- Emergency Arbitrators
The Act permits the appointment of emergency Arbitrators for providing emergency relief following the filing of a request for a dispute to be referred to arbitration prior to the constitution of the arbitral tribunal. The emergency arbitrator shall be appointed within two business days after the date the application is received. These emergency arbitration meetings can be conducted through various means of communication, such as video conferencing and via the use of telephones. More so, the decisions made by emergency arbitrators are binding and enforceable, ensuring swift resolution of urgent disputes.
- Electronic Communication As A Form Of Arbitration Agreement
The Act expressly embraces the need for an arbitration agreement to be in writing via electronic communication provided that it satisfies the requirement for the information contained therein to be accessible and useable for subsequent reference.
In addition, Section 91 AMA, 2023 defines “electronic communication” as “any communication that the parties make by means of data messages, that is, any information generated, sent, received or stored by electronic…means”.
Hence, unlike the ACA, the AMA, 2023, embraces electronic communication, allowing for the conduct of electronic Arbitration and Mediation within Nigeria.
- Third-Party Funding
Contrary to the ACA, the Act ushers in novel provisions on Third-Party funding (“TPF”) that apply to arbitrations in Nigeria and arbitration-related proceedings in Nigerian courts.
Section 91 of the Act defines a “Third-Party Funder” as any natural or legal person who is not a party to the dispute but who enters into an agreement either with a disputing party, an affiliate of that party, or a law firm representing that party, in order to finance part or all of the cost of the proceedings, either individually or as part of a selected range of cases.
In this instance, the Act provides that an arbitral tribunal shall fix the costs of arbitration in the final award and such costs include the cost of obtaining Third-Party funding. It goes on to expressly repeal the impediments of common law torts of maintenance and champerty in relation to TPF arbitration. Furthermore, to guard against potential conflicts of interest that may arise, the Act mandates that the identity and address of any third-party funder be disclosed before and/or during the arbitration. The Act also provides that where a respondent brings a security for costs application based on the disclosure of TPF, the tribunal may allow the funded party or its counsel to provide the tribunal with an affidavit confirming whether the funder has agreed to cover adverse costs orders. The affidavit is intended to form part of the information that the tribunal will consider in its decision on the security for cost application.
- Consolidation, joinders, and concurrent hearings in Arbitral Proceedings
[ Another groundbreaking change in Nigerian arbitration is a provision in the new Act that recognizes the agreement of parties to consolidate arbitral proceedings or hold concurrent hearings. That is to say, without the parties’ agreement to the making of such an order, the arbitral tribunal will not be able to hold concurrent hearings or consolidate the proceedings.
In furtherance, the Act gives the arbitral tribunal the power to allow the joinder of additional parties to the arbitration, provided that, prima facie, the additional party is bound by the underlying arbitration agreement. These new provisions will successfully benefit parties by providing efficiency, cost savings, consistency, judicial economy, settlement opportunities, and increased finality.
- Introduction of provisions on Mediation
Part II of the Act provides detailed provisions for international dispute resolution mediations, including how mediations are conducted, the status of matters disclosed in mediations, and the enforcement of agreements reached following a relevant mediation.
Unlike the repealed ACA which has no specific provision for mediation as a frequently utilized alternative dispute resolution mechanism in Nigeria, the Arbitration and Mediation Act recognizes and codifies Mediation as a dispute resolution mechanism for the first time.
Before the enactment of the AMA, 2023, there were no existing legal provisions on mediation, thus this Act as a federal statute now codifies explicit guidelines to govern the practice of Mediation in Nigeria, which is an important step for expanding the practice of Mediation.
Summarily, the Act defines “mediation,” as the process where parties seek the assistance of a neutral third party or parties to help them in reaching a mutually agreeable resolution for their dispute arising from a contractual or legal relationship. This definition covers various terms like mediation, conciliation, or other similar expressions.
- Arbitrator’s Immunity
The new Act introduces and recognizes the immunity of an arbitrator, an appointing authority, or an arbitral institution. Under the Act, an arbitrator, an appointing authority, or an arbitral institution is granted immunity in the performance of their duties; unless it can be proven that they acted in bad faith. However, it’s important to note that this immunity does not exempt an arbitrator from any liabilities arising from their withdrawal. This provision ensures that arbitrators, similar to litigators, are now safeguarded by law while carrying out their responsibilities, alleviating concerns about potential liability.
Other key novel provisions introduced by the Act include;
- Limitation of Time: The limitation period for the enforcement of awards now expressly excludes the period between the commencement of the arbitration and the date of the award in computing the time for the commencement of enforcement proceedings.
- There is a time frame of 30 days for a party to receive the acceptance of the invitation to mediate. Failure to respond may be treated as a rejection to mediate.
- Number of arbitrators: The Act now provides that where the number of arbitrators is unspecified, the default is a sole arbitrator, rather than three as it was under the ACA.
- The Act provides that, there shall be one mediator unless the parties agree otherwise.