Charting the Course: How the Seat of Arbitration Shapes Maritime Dispute Resolution

Contributor: Janeth Udoka

Introduction

Maritime arbitration is essential for resolving disputes in an industry responsible for over 90% of global trade. The significant economic risks faced by the sector, highlighted by the 2021 Suez Canal blockage that caused an estimated daily loss of $9.6 billion in global commerce, emphasize the necessity for efficient and effective maritime dispute resolution via arbitration^[1].
Globally, the maritime industry is highly susceptible to disputes due to its intricate and technical characteristics. It involves diverse contractual relationships and commercial transactions that sometimes lead to conflicts necessitating swift resolutions. The timely execution of contractual obligations and adherence to agreed terms are vital for the smooth functioning of maritime commerce. Consequently, most maritime contracts include arbitration clauses as the primary dispute resolution mechanism. Arbitration is preferred in this sector for its confidentiality, neutrality, procedural flexibility, and efficiency compared to traditional litigation. As international trade and commerce grow especially in goods transportation, passenger transport, maritime service provision, and vessel and offshore equipment construction and sales there is an escalating global inclination toward arbitration for resolving maritime disputes^[2].

What is the Seat of Arbitration?

The “seat” of arbitration refers to the legal location of arbitration proceedings, establishing the governing legal framework and linking the arbitration process to the supervisory jurisdiction of a specific national legal system^[3]. In arbitration, parties must typically agree on a seat, as confirmed in their arbitration agreement. If they do not, arbitration rules often allow the arbitral institution or tribunal to decide on the seat. Although oral hearings may take place where the seat is not located, the seat itself does not always indicate the law governing the dispute. For instance, a contract under New York law could have arbitration in France, while a contract governed by Nigerian law could be seated in London^[4].

Why Does the Seat Matter?

 The choice of seat has a profound impact on various aspects of the arbitration^[5]:

• Procedural Law: The seat determines the “lex arbitri,” the law governing the arbitration’s procedural aspects. While parties can establish their own procedures, the lex arbitri acts as a gap-filler, addressing procedural issues not explicitly agreed upon.
• Mandatory Requirements: Many jurisdictions impose mandatory rules on arbitrations seated within their territory. These rules cannot be waived. For instance, an arbitration seated in England is subject to English arbitration law, mandating arbitrators to adopt procedures suitable to the specific case while minimizing delays and expenses.
• Curial Role of Courts: Choosing a seat signifies an agreement to grant the courts of that jurisdiction a “curial role” in the arbitration. The courts of the seat hold exclusive jurisdiction to hear applications concerning annulment or setting aside the arbitral award. While other jurisdictions might refuse to enforce an award, they lack the authority to vacate it.
• Grounds for Annulment: The seat dictates the grounds for challenging the arbitral award. As different jurisdictions have distinct standards and procedures for such challenges, the choice of seat can significantly influence the success of a challenge.
• Interim Relief: Courts of the seat have jurisdiction to entertain applications for interim relief. They can compel reluctant parties to participate in the arbitration or assist in obtaining discovery.

Nigeria’s Position on International Arbitration

When parties to an international commercial arbitration expressly and unambiguously agree on Nigeria as the seat of their arbitration or that the arbitration is to be conducted in accordance with Nigerian law, the law governing the arbitration will be Nigerian law. Accordingly, the principal arbitration statute in Nigeria, the Arbitration and Mediation Act (AMA), will apply^[6]. However, if the parties have not specified the applicable law or if the agreement is ambiguous, and the substantive contract is governed by Nigerian law, section 32 of the AMA will be used to determine the seat of arbitration. Section 32 of the AMA provides thus^[7]:

“(1) The seat of the arbitration shall be designated (a) by the parties to the arbitration agreement;

(b) by an arbitral or other institution or person authorised by the parties with powers in that regard

(c) subject to subsection (2), by the arbitral tribunal.

(2) Where the parties have not designated the seat of the arbitration and they have not authorised any arbitral or other institutions to designate the seat of the arbitration, the seat of the arbitration shall be any place in Nigeria as the arbitral tribunal may determine, unless the arbitral tribunal decides that a place in another Country should be the seat of the arbitration having regard to all the relevant circumstances, including —

(a) the Country with which the parties and the transaction have the closest connection;

(b) the law that the parties have selected to govern their substantive rights under the contract, and

(c) any law that the parties may have chosen to govern the arbitration.

(3) Notwithstanding the provisions of subsections (1) and (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate to consult among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.

(4) In this section the expression “seat of arbitration” means the juridical seat of the arbitration for purposes of determination of the law that will govern the arbitration proceedings (the curial law).”

 Similarly, Article 18(1) of the Arbitration Rules^[8] in the First Schedule to the AMA provides that:

“Where parties have not previously agreed on the seat of the arbitration, the seat of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the arbitration. The Award shall be deemed to have been made at the seat of arbitration.”

Based on the provisions of the AMA and the Arbitration Rules, unclear selection of the arbitration seat leads to arbitrators making that determination, considering both the case’s circumstances and party convenience. This may yield unexpected results for either party, potentially with significant consequences. The dispute between the Federal Republic of Nigeria (FRN) and Process and Industrial Developments Limited (P & ID) exemplifies the FRN’s challenges related to the arbitration seat’s identification stemming from their agreement, highlighting the case’s relevant circumstances^[9].

The P & ID V FRN Case

The dispute between the Federal Republic of Nigeria (FRN) and Process and Industrial Developments Limited (P&ID) stems from a Gas Supply and Processing Agreement (GSPA) established on January 11, 2010, for a 20-year gas supply. Under this agreement, Nigeria was to provide wet gas to P&ID in exchange for natural gas liquids. When disagreements arose, P&ID initiated arbitration as per Clause 20 of the GSPA, which specified arbitration under the Nigerian Arbitration and Conciliation Act in London. While the arbitration venue was initially accepted, it later became a contentious issue as the proceedings continued.

In Procedural Order No. 12, the tribunal ruled that London was the seat of arbitration, meaning that English courts had supervisory jurisdiction, not Nigerian courts. Despite this, Nigeria sought relief in its domestic courts, which granted injunctions and later set aside the tribunal’s liability award. However, the tribunal disregarded those rulings, maintaining that Nigerian courts lacked jurisdiction since the arbitration was seated in England.A final award of about $9 billion (later exceeding $11 billion with interest) was made against Nigeria. The FRN challenged the award before the English High Court, alleging fraud and corruption in the arbitral process.

In October 2023, the English High Court set aside the award, finding it was obtained through fraud, bribery, and perjury by P&ID^[10]. The court held that enforcement would be contrary to public policy. In June 2025, the English Court of Appeal affirmed that the seat of arbitration was London, not Nigeria, thereby confirming the English courts’ supervisory authority^[11]. Later, in October 2025, the UK Supreme Court upheld a £44 million cost order in favour of Nigeria arising from the case^[12].

This case underscores how the seat of arbitration determines which country’s courts have ultimate supervisory control over arbitral proceedings. It also demonstrates the importance of precise drafting of arbitration clauses in contracts, as the seat directly influences jurisdiction, enforcement, and the overall outcome of disputes and key lessons for parties engaged in maritime and offshore arbitration in Nigeria.

Conclusion
The determination of the seat of arbitration is a pivotal factor in shaping the effectiveness and enforceability of arbitral proceedings within Nigeria’s maritime sector and beyond. As illustrated by the P&ID v. FRN case, the choice of seat defines the applicable procedural law, the extent of judicial intervention, and ultimately, the integrity and outcome of the arbitration process. For a maritime nation like Nigeria, where international trade and offshore transactions are integral to economic growth, careful and deliberate drafting of arbitration clauses particularly regarding the seat is essential to safeguard national interests, ensure predictability in dispute resolution, and foster investor confidence in Nigeria’s maritime and commercial environment.  

REFERENCE

1. Anchoring Fairness: The Art of Maritime Arbitration in Resolving High-Stake Disputes in Africa: INTERNATIONAL JOURNAL OF RESEARCH AND SCIENTIFIC INNOVATION (IJRSI) ISSN No. 2321-2705, Available at https://rsisinternational.org/journals/ijrsi/digital-library/volume-12-issue-7/2155-2167.pdf accessed October 2025. ↑
2. Maritime Arbitration Disputes – Navigating The Seat Of Arbitration: Ayoola Senbanjo & Muhiz Adisa available at https://www.mondaq.com/nigeria/arbitration-dispute-resolution/1689484/maritime-arbitration-disputes-navigating-the-seat-of-arbitration accessed October 2025. ↑
3. Loukas M. (2016). Seat of Arbitration and Indian Arbitration Law Indian Journal of Arbitration Law, No. 4 ↑
4. The Seat of Arbitration: A Crucial Choice with Far-Reaching Implications: Beverley Agbakoba-Onyejianya & Emmanuel Agherario (2024) available at https://oal.law/the-seat-of-arbitration-a-crucial-choice-with-far-reaching-implications/ accessed October 2025. ↑
5. Alain, H. (1979). The Place of Arbitration And The Lex Arbitri Arbitration Journal, No.34 ↑
6. Arbitration and Mediation Act 2023. ↑
7. Section 32 of the Arbitration and Mediation Act 2023. ↑
8. Arbitration Rules. ↑
9. Ibid. ↑
10. Federal Republic of Nigeria v. Process & Industrial Developments Ltd [2023] EWHC 2638 (Comm) ↑
11. (Process and Industrial Developments Ltd v The Ministry of Petroleum Resources of the Federal Republic of Nigeria [2025] EWCA 715). ↑
12. (Process & Industrial Developments Ltd v FRN [2025] UKSC 42). ↑