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PARTIES ARE BOUND BY ARBITRAL AWARD

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Once parties have consented to arbitration, they have also consented to accept the final award by the arbitrator.

– Nimpar, JCA. Dunlop v. Gaslink (2018)

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arbitration

WHAT IS AN ARBITRATION AGREEMENT?

Arbitration is a procedure for the settlement of disputes, under which the parties agree to be bound by the decision of an arbitrator whose decision is, in general, final and legally binding on both parties. The process derives its force principally from the agreement of the parties and, in addition, from the State as a supervisor and enforcer of the legal process. So where two or more persons agree that a dispute or potential dispute between them shall be decided in a legally binding way by one or more impartial persons of their choice, in a judicial manner, the agreement is called an arbitration agreement. Common law, lex non scripta and statute are the two sources of arbitration law in Nigeria. The statutory source did not codify arbitration law to the exclusion of common law. See B. J. EXPORT & CHEMICAL CO. LTD v. KADUNA PETRO-CHEMICAL CO. LTD. (2003) FWLR Pt. 165 Pg. 445 at 469 C.A.

— H.M. Ogunwumiju, JSC. UBA v Triedent Consulting Ltd. (SC.CV/405/2013, July 07, 2023)

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PROOF REQUIRED UNDER EVIDENCE ACT NOT APPLICABLE TO ARBITRATION PROCEEDINGS

Proof as required under the Evidence Act is not applicable in arbitral proceedings as provided for in Section 256(1)(a) of the Act which says that: “This Act shall apply to all judicial proceedings in or before any Court established in the Federal Republic of Nigeria, but it shall not apply to – (a) Proceeding be an arbitrator.” Absence of evidence in proof of facts submitted to an arbitrator, required under the Evidence Act, is not a ground for setting aside an arbitral award.

– Garba, JCA. Dunlop v. Gaslink (2018)

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JURISDICTION CAN BE RAISED AT ANYTIME NOT APPLICABLE TO ARBITRATION

For instance, the general position of the law that the issue of jurisdiction of a Court can be raised at any stage of the proceedings of a case, even for the first time at the appellate stage, is not applicable to arbitral proceedings before an arbitral Tribunal because the Act, in Section 12(3) has provided the stage at which a challenge to the jurisdiction of the arbitral Tribunal is to or may be raised by a party.

– Garba, JCA. Dunlop v. Gaslink (2018)

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FROM THE FACTS AND CIRCUMSTANCES OF THIS CASE IT SHOWS THAT ARBITRATION MAY BE MORE OPEN TO FRAUD

582. Regardless of my decision, I hope the facts and circumstances of this case may provoke debate and reflection among the arbitration community, and also among state users of arbitration, and among other courts with responsibility to supervise or oversee arbitration. The facts and circumstances of this case, which are remarkable but very real, provide an opportunity to consider whether the arbitration process, which is of outstanding importance and value in the world, needs further attention where the value involved is so large and where a state is involved. 583. The risk is that arbitration as a process becomes less reliable, less able to find difficult but important new legal ground, and more vulnerable to fraud. The present case shows that having (as here) a tribunal of the greatest experience and expertise is not enough. Without reflection, then a case such as the present could happen again, and not reach the court.

— R. Knowles CBE. FRN v. Process & Industrial Developments Limited [2023] EWHC 2638 (Comm)

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ARBITRATION AGREEMENT MUST SATISFY THE NORMAL REQUIREMENT OF A CONTRACT

My Lords, every Arbitration Agreement must satisfy the normal requirement of a contract such as consensus, capacity and legal relationship. Like any other contract, the terms must be clear and certain. The Court would, however, lean towards a construction that will give effect to the intentions of the parties. Thus, where a contract contained an arbitration clause which merely reads “Arbitration if any, by the I.C.C. Rules of London”, the Court held that the words “if any” which were the basis of the opposition were either surplusage or abbreviation for “if any dispute arises” and therefore sufficient. See MANGISTAURAUNAIGAZ OIL PRODUCTION ASSOCIATION v. UNITED WORLD TRADE INC. (1995) LLYOD’S REP. 617. There must also be a valid underlying substantive contract in existence and an arbitration agreement the terms of which are certain and enforceable. The essence of the arbitration agreement is to refer disputes arising between parties to arbitration. The words by which the reference is made must therefore be clear and express, as an inference will not be implied. So also, what is referred must be clearly and sufficiently stated to ensure that jurisdiction is conferred on the arbitrator.

— H.M. Ogunwumiju, JSC. UBA v Triedent Consulting Ltd. (SC.CV/405/2013, July 07, 2023)

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IMPORTANCE OF PUTTING GOOD REPRESENTATION IN ARBITRAL PROCEEDINGS BY PARTIES

587. Notwithstanding Nigeria’s allegations, I have not found Nigeria’s lawyers in the Arbitration to be corrupt. But the case has shown examples where legal representatives did not do their work to the standard needed, where experts failed to do their work, and where politicians and civil servants failed to ensure that Nigeria as a state participated properly in the Arbitration. The result was that the Tribunal did not have the assistance that it was entitled to expect, and which makes the arbitration process work. And Nigeria did not in the event properly consider, select and attempt admittedly difficult legal and factual arguments that the circumstances likely required. Even without the dishonest behaviour of P&ID, Nigeria was compromised. 588. But what is an arbitral tribunal to do? The Tribunal in the present case allowed time where it felt it could and applied pressure where it felt it should. Perhaps some encouragement to better engagement can be seen as well. Yet there was not a fair fight. And the Tribunal took a very traditional approach. But was the Tribunal stuck with what parties did or did not appear to bring forward? Could and should the Tribunal have been more direct and interventionist when it was so clear throughout the Arbitration that Nigeria’s lawyers were not getting instructions, or when at the quantum hearing Nigeria’s then Leading Counsel, Chief Ayorinde, was failing to put necessary points to experts to test their opinion and Nigeria’s own experts (for whatever reason) had not done the work required? Should the Tribunal have taken the initiative to encourage exploration of new bounds of contract law and the law of damages that may today be required where major long term contracts are involved?

— R. Knowles CBE. FRN v. Process & Industrial Developments Limited [2023] EWHC 2638 (Comm)

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