Dispute resolution under the Nigerian legal system has moved from a total reliance on litigation to including alternative dispute mechanisms, as well as a preference for the same because of their perception as being timely and non-confrontational.
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
However, as ideal as it may seem to explore arbitration, one of the alternative dispute mechanisms with the others being negotiation, conciliation, med-arb (a portmanteau of mediation and arbitration), and mediation, it is imperative to consider whether such matters are capable of being referred to arbitration. The latter is referred to as arbitrability and has two arms, namely procedural arbitrability and substantive arbitrability. The former is of emphasis in this piece.
Procedural arbitrability considers whether any conditions precedent to the commencement of an arbitral proceeding as agreed by the parties in an Arbitral Agreement has been satisfied before resorting to arbitration. These conditions, depending on individual agreement, ranges from a requirement to pursue mediation and subsequently arbitration where the former fails, an agreed method of appointing arbitrators, and so on. It may also consist in the requirement to give notice as stipulated in the Arbitral Agreement. However, notice is also a statutory requirement (Article 3(1) (2) and (3) of the Arbitration Rules).
In Mekwunye v. Imoukhuede (2019) 13 NWLR (Pt. 1690) 439, There was an Arbitration Clause in a Deed of lease between the Appellant (the landlord) and the Respondent (the tenant) which required that dispute be referred to a sole Arbitrator appointed by the President of the Chartered Institute of Arbitration, London (Nigerian Chapter).
After a dispute ensued, the Appellant wrote to the Chairman, Institute of Arbitrators (UK) Nigerian Branch to appoint an Arbitrator. Series of events transpired thereafter following which an Arbitrator invited the parties for a preliminary meeting. The Respondent initially challenged the Arbitrator’s appointment but withdrew the objection afterwards to participate in the proceedings.
After the Final Award was published in favour of the Appellant, the Respondent sought to set aside the Award on grounds of some alleged procedural irregularities in the commencement of the Arbitration.
The Trial Court refused to set aside the award, hence another appeal to the Court of Appeal. At the Court of Appeal, the award was set aside on the following grounds:
- The notice of arbitration was defective for non-compliance with Article 3(3) of the Arbitration Rules
- The Arbitration institution referenced in the Arbitration Agreement was non-existent.
- The Arbitrator was not validly appointed as the appointing authority had only merely recommended her, and
- The Arbitrator was in error when a letter of adjournment was written by the Arbitrator on a firm’s letter-head rather than on the Arbitrator’s personal letter-head.
Upon further appeal to the Supreme Court, the apex court reversed the decision of the Court of Appeal on the grounds that the respondent had waived his rights to challenge the arbitral award having taken part in the proceedings without any objections.
It would appear that the Court of Appeal in espousing the procedural irregularities in the Mekwunye’s case dwelt heavily on technicality rather than substantive justice. Had that case ended on that note, it would have been a dangerous precedent for the much touted speedy disposal of dispute through Arbitration particularly as an otherwise simple Landlord and Tenancy dispute had to drag over a period of 12 years in Court.
The intervention by the Supreme Court was remarkable in entrenching merit over technicality but the case will remain a metaphor for how further litigation arising from an arbitral award would ultimately deprive parties of the primary aim of arbitration.
The recommendation will probably be for the litigation arising from an award to be time bound. This can only be achieved by amendment to the relevant laws.
The Mekwunye’s case remains an authority for the position that where a contract provides that some requirements be satisfied before an arbitral proceeding, it becomes necessary for the claimant to ensure that the requirements are met, otherwise, the respondent has a right to object to such proceeding. However, as gleaned from section 33 of the Arbitration and Conciliation Act 1998 LFN 2004 and Article 30 of the Arbitration Rules, this right can be waived when the party has knowledge of this non-compliance but does not object within the time provided. In such circumstance, the party has condoned or waived the mistake. A similar provision is contained in section 58 of Lagos State Arbitration Law 2009.
In the case in view, the arbitral clause to have an arbitrator appointed by the Chartered Institute of Arbitration (CIArb) (UK), Nigerian Branch was a misnomer. Nonetheless, the Supreme Court found for the appellant since it was clear from the agreement that dispute should be referred to arbitration, and the respondent had condoned the mistake in the name of the appointing authority.
It suffices to say that the case in view further demonstrates, with respect to arbitration, the preference by Nigerian courts of substance over technical defect.
Likewise, compliance with the statutory requirements to give notice would not be discountenanced if imperfectly done, so long as it offers the receiving party sufficient knowledge of the claim, the amount involved, and the reliefs sought.
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Article by:
Aminat Tijani
Royal Heritage Solicitors.