CHAPTER ONE

INTRODUCTION

1.1. Background of the Research

Formerly, traditional means of settling disputes have been a common occurrence in Nigeria. Before the advent of colonial administration in the late 19th century, parties were represented by persons skilled in oratory prowess, who could argue and who possessed the persuasive power of argument. The most serious disputes were resolved by a council of elders that would take testimony and sometimes hear the arguments of agents advocating on behalf of the disputants. It was the general belief then that no appeal could come from those judgments partly because the people feared and believed in the elders and therefore their wisdom could not be questioned. As conservative as this would sound, embedded in this practice was what has come to be known as arbitration today.

Arbitration has been defined as the reference of a dispute or difference between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than a court of competent jurisdiction. Arbitration is defined in section 57 (1) of the Arbitration and Conciliation Act as commercial arbitration whether or not administered by permanent arbitral institute. According to Redfern & Hunter, arbitration means a situation where “two or more parties, faced with a dispute which they cannot resolve for themselves, agreeing that some private individual will resolve it for them and if the arbitration runs its full course….it will not be settled by a compromise but by a decision”.

Ezike sees arbitration as a method of settling disputes under which the parties agree to be bound by the decision of a third person whose decision is, in general, final and legally binding on both parties . As far as the term arbitration is concerned, there are almost as many other definitions of the term as there are commentators on the subject.

Until now, resolutions of transnational disputes remain a relatively strange system in Nigeria, ultimately due to the incessant interference of the military in politics and governance. Although Nigeria gained her independence in 1960, it did not embrace international commercial arbitration formally by way of statute until the enactment of the Arbitration and Conciliation Decree 1988. Before then however, practitioners had been well steeped in international commercial arbitration outside the country.

The need for resorting to arbitration is more compelling considering the general advantages linked with arbitration and closely bearing in mind the lethargic attitude of Nigerian courts to the resolution of complex business disputes. This without doubt scares foreign investors. The disparities between the systems of thinking, national ideologies and methods of conducting business in various parts of the world, a national of a particular jurisdiction will be more likely to present a more convincing case by the standards of the court of her jurisdiction than will a foreigner. The negative perception of a judge’s national predisposition may prevent parties with different national or cultural backgrounds from agreeing on a suitable court to hear their disputes.

For instance, the position of Nigerian law on the limitation period for the

enforcement of arbitration award appears to be narrow and too limited compared to what obtains in other parts of the world especially England which in our view is a better attraction for foreign investors. In City Engineering Nig Ltd. v. Federal Housing Authority, the parties entered into an agreement to build housing units in Lagos. The agreement contained a provision to submit all matters in dispute in connection with the execution of the contract to arbitration; a dispute arose in the course of the execution of the contract which resulted in the contract being terminated on 12 December 1980. The matter was referred to arbitration and proceedings commenced in 1981 and ended in 1985 when the arbitrator made his award in favour of City Engineering. In an attempt to enforce the award in 1988, the trial court held that by virtue of section 8 of the Limitation Law of Lagos State, the action for enforcement had become statute barred, having been brought in excess of 6 (six) years after 12 December 1980 when the cause of action arose, a position the Supreme Court upheld. The Supreme Court was urged on appeal to consider the position in England as demonstrated in Agromet Motoimport Ltd v. Maulden Engineering Co. (Beds) Ltd., 12 where it was held that time begins to run from the date of the breach of the implied term to perform the award, and not from the date of the accrual of the original cause of action giving rise to submission.

This position was restated in the recent English case of IBSSL v. Minerals Trading Corp. where the court held that time begins to run from the date on which the implied promise to perform the award is broken, not from the date of the arbitration agreement nor from the date of the award as it is in Nigeria. The Supreme Court’s decision in City Engineering represents the law but this has been criticized not only for the palpable difficulties for the contracting parties, but also for future of arbitration in Nigeria generally. As one writer rightly puts it “… what is the use of an arbitral award if the party seeking to enforce such an award is unable to benefit from the fruits of his victory?”

1.2. Statement of the Problem

Having obtained the award, the successful party would have to enforce the award against his adversary but atimes the party seeking to enforce the award is constrained by the issue of time limitation. The Arbitration and Conciliation Act is silent on limitation periods and accrual of the cause of action to enforce an award, leaving those issues to be determined by the various limitation laws applicable in the States of the Federation. The willingness of Nigerian courts to enforce foreign arbitration awards and the ease or difficulty of doing so and the likely timescale of the process of enforcement are issues of immense concern to any person wishing to enforce an arbitral award in Nigeria. This readily brings to mind the issue as to: who and what is affected under such circumstance? Why is it affected? When and how is it affected? And what does it intend to achieve?

In an attempt to make clear the time limitation period within which a party seeking to enforce an award must take advantage of, the judicial position in Nigeria holds that the arbitration proceedings and the enforcement of the award both constitute a single cause of action that must be prosecuted and enforced within the statutory limitation period, this is so tasking considering the fact that in other jurisdictions like China, England and Hong Kong the arbitration proceedings and the enforcement of the award are treated separately.

1.3. Research Questions

The issue set out in this noble task is the enforcement of foreign arbitral award in Nigeria and the challenge of time limitation. While trying to examine this subject, positive attempts will

be made to proffer answers to the following questions:

1. Can foreign arbitral award be enforced in Nigeria?

2. If the above answer is in the affirmative, is there any time limitation within which such an award must be enforced in Nigeria?

3. What is the role of the national courts in enforcing foreign arbitral award in Nigeria? Assuming the courts do have any role to play on this subject, what standards should national courts utilize in enforcing an arbitral award?