Introduction
By- DATENG BEST OBADIAH
The commercial and private
relationship of citizens is closely associated with disputes hence the need for
legal consideration and redress. Arbitration is a recognized system of
adjudication known as alternative dispute resolution (ADR) that plays an instrumental
role in the legal field. It provides parties involved in a dispute with an
opportunity to resolve their conflicts outside the traditional and conventional
court litigation. Arbitration offers several advantages and disadvantages
compared to litigation. This work explores the scope of arbitration in the
legal field and further discusses its merits and demerits.
Overview
of Arbitration
Arbitration is a legal process that
involves the submission of a dispute to one or more impartial individuals,
known as arbitrators, who make a binding decision on the parties involved.
The Supreme Court of Nigeria in the
case of Kano State Urban Development Board v. Fanz Construction Co. Ltd.
Sc.45/1998, stated that arbitration is the reference of a dispute or difference
between not less than two parties for determination, after judicially hearing
both sides, by a person or persons other than a court of competent
jurisdiction.
The scope of arbitration encompasses
a broad range of legal matters, including commercial disputes, international
disputes, labor disputes, etc. This method of resolving disputes has gained
popularity due to its flexibility, efficiency, and confidentiality
Merits of Arbitration In The Legal Field
It is impossible to overstate the
value and effectiveness of arbitration, not just in the legal profession but
also in the settlement of disputes between conflicting parties. The following
are a few instances highlighting arbitration's significant and extraordinary
relevance.
- Informality and flexibility: Arbitration provides a
flexible system of dispute settlement as compared to conventional court
proceedings. Parties have the sole right to choose the rules, procedures,
arbitrators, and location of the arbitration, allowing for a tailored
approach that suits their peculiar needs. The process is generally less
formal than litigation, offering a serene atmosphere for resolving
disputes.
- Expertise: Arbitrators are chosen based on
their specific expertise in the subject matter of the dispute. This
ensures that the decision-makers have a substantial understanding of the
technical or industry-based issues involved, leading to more informed and
specialized decisions.
- Confidentiality: Arbitration proceedings are
generally confidential, which provides room for privacy to the parties
involved. This can be particularly advantageous in sensitive commercial or
international disputes where confidentiality is crucial.
- Efficiency and Speed: Arbitration often delivers a
faster resolution as compared to litigation. The parties have more control
over the timetable, allowing them to avoid lengthy court backlogs and
delays in dispute settlement. Additionally, arbitration procedures are
typically streamlined and aimed at reducing procedural complexities.
Demerits of Arbitration In The Legal Field
- Limited Appellate Rights: Unlike litigation, arbitral
awards have limited grounds for appeal. The scope of review by higher
courts is usually narrow, which may limit a party's ability to challenge
an unfavorable decision.
- Lack of Precedent: Arbitrary decisions do not
create binding legal precedents like court judgments. Each arbitration is
treated as an individual case, which means that similar disputes may be
resolved differently in different arbitrations. This lack of precedent can
lead to uncertainty and inconsistency in the law.
- Costs: While arbitration can be more
cost-effective than litigation in certain cases, it is not always the most
economical option. The fees of arbitrators, administrative costs, and
legal representation can still be significant, especially in complex
disputes. Additionally, if parties are unable to reach an agreement
through arbitration, they may need to resort to litigation, resulting in
additional costs.
- Limited Discovery: Arbitration procedures often
have limited discovery of evidence than litigation. This means that
parties may have less access to relevant evidence or information,
potentially affecting the outcome of the dispute.
Legal Framework For Arbitration
Legal
Framework In Nigeria
The Arbitration and Conciliation Act
1988 (Laws of the Federation of Nigeria 2004 Cap A18), also known as the
"ACA," was the main federal act that controls arbitration in Nigeria.
Some Nigerian states, like Lagos State Arbitration Law, 2009 (LSAL), have their
own arbitration laws, though. However, following presidential assent on May 26, 2023, the
35-year-old Arbitration and Conciliation Act 1988 was ultimately repealed and
replaced by the Arbitration and Mediation Act 2023). The New Act, which is
based on the updated UNCITRAL Model Law issued in 2006 and the outcome of years
of reform effort, considerably strengthens Nigeria's position as a top location
for arbitration in Africa by enhancing the regulatory environment for both
local and international arbitration.
International
Legal Framework
The primary international legal
framework for arbitration is the United Nations Commission on International
Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. The
UNCITRAL Model Law was first adopted in 1985 and has since been adopted by many
countries around the world as the basis for their national arbitration laws. It
provides a detailed set of rules and procedures for conducting international
commercial arbitrations, covering aspects such as the appointment of
arbitrators, the conduct of proceedings, and the recognition and enforcement of
arbitral awards.
Accordingly, the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards is another important
international Legal apparatus governing international arbitration. The New York
Convention, which was adopted in 1958, aims to facilitate the recognition and
enforcement of arbitral awards in different countries. It sets out a uniform
regime for the recognition and enforcement of foreign arbitral awards, requiring
contracting states to recognize and enforce such awards subject to limited
grounds for refusal.
Consequently, there are over 160
countries that are signatories to the New York Convention, making it one of the
most widely ratified international treaties in the field of arbitration.
In addition to these two key
frameworks, several regional conventions and treaties govern arbitration within
specific geographical areas. For Instance, in Europe, the Convention on the
Settlement of Investment Disputes between States and Nationals of Other States
(ICSID Convention) is an outstanding legal framework for resolving investment
disputes between states and foreign investors. The ICSID Convention also
establishes an independent dispute settlement mechanism through which parties
can submit their investment disputes to arbitration.
Conclusion
Arbitration has a wide scope in the
legal field and is utilized in various types of disputes across different
industries. It provides several advantages such as flexibility, expertise, etc
However, it also has its demerits including limited appellate rights, lack of
precedent, costs, limited discovery, and lack of public scrutiny.
When compared to the typical court process, arbitration is a more streamlined and efficient option. It preserves confidentiality and saves time by avoiding congested courtrooms. However, it is vital to emphasize that arbitration is binding, which means that the ruling may only be subject to limited judicial review. There is also the danger of bias in the arbitration procedure. When picking between arbitration and litigation, it is critical to thoroughly evaluate the scenario and the people involved. By weighing the advantages and disadvantages, everyone can make an informed decision that aligns with their goals.
