COMMERCIAL LAW: BARR WILSON 3/8/20

ARBITRATION
MEANING OF ARBITRATION:
The Webster’s dictionary defines arbitration as the hearing and determination of
a disputed case by an arbiter.
The Black’s law dictionary defines arbitration as a method of resolution involving
one or more neutral parties who are agreed to by the disputing parties and whose
decision is binding.
We have the arbitration and conciliation act 1988 of Nigeria, which is the law that
governs arbitration in Nigeria. It defines arbitration in sect 57 as a commercial
arbitration, whether or not administered by a permanent arbitral institute.
OTHER DEFINITIONS BY OTHER SCHOLARS:
Brown and Marriot in their book on alternative dispute resolution defined
arbitration as a private mechanism for the resolution of disputes which takes
place in private, pursuant to an agreement between two or more parties under
which the parties agree to be bound by the decision given by the arbitrator
according to the law after a fair hearing such decision being enforceable in law.
ARBITRATION AGREEMENT
Arbitration begins or is given rise to by the arbitration agreement or arbitration
clause contained in the contract agreement between the parties. If the parties
agree to an arbitration or any form of dispute resolution usually it is captured in
the main contract agreement. Usually most commercial contracts have a clause
for dispute resolution and it is in that clause that is contained what form of
dispute resolution that will be taken.
EFFECT OF ARBITRATION AGREEMENT IN CONTRACT
NB: What happens to an arbitration agreement if two parties enter into a contract
of sale of goods, contract of employment etc. and there is an arbitration
agreement or clause in that contract and then one party refuses to submit to an
arbitration and chooses to go to court or in spite of the arbitration agreement,
one party decides to settle for another form of dispute resolution?
Arbitration agreement like all other contracts operate on the principle of PACTA-
SUNT-SERVANDA meaning agreement must be kept. This implies that parties are
bound by their agreement and the court will enforce such agreement. Therefore,
arbitral agreement enjoys the recognition of the law and will be enforced by the
courts. The house of lords per justice Campbell validated this position in the case
of SCOTT V. ABURY 1856 10 E.R 1121. This is the locus classicus in discussing on
arbitration. In this case, justice Campbell said that where it is expressly, directly
and unequivocally agreed upon between the parties that there shall be no right of
action whatever till the arbitrators have decided, it is a bar to the action that
there has been no such arbitration. That is to say that if there is an arbitration
agreement, no party can go to court if a dispute arises until after arbitration has
been employed. There is a Nigerian case that corresponds with the judgement
given in the above case. In the case of CELLTEL NIGERIAN B.V V. ECONET
WIRELESS LTD & ORS 2014 L.P.E.L.R (law pavilion electronic law report)22430
C.O.A, the court of appeal held that an arbitration clause in a written contract is
quite distinct from the other clauses. Whereas the other clauses in a written
contract set out obligations which the parties undertake towards each other, the
arbitration clause merely embodies the agreement of both parties that if any
dispute should occur with regards to the obligations which the other party has
undertaken to the other; such dispute should be settled by a tribunal of their own
constitution and choice. The appropriate remedy therefore, for a breach of a
submission is not damages but its enforcement. Hence the arbitration act CAP 13
shows that where a party refuses after a given time after being given notice to
have an arbitrator appointed, the court has full power and jurisdiction to appoint
an arbitrator on an application properly made by the party who has served such
notice. So, in essence, if the parties have an arbitration agreement, they must first
submit their dispute to arbitration before they can go to court. If any party
refuses to submit an arbitration and goes to court the court will not hear that
matter and it will be sent back to arbitration. That is the position of the law.
ARBITRABLE DISPUTE
NB: is it all disputes or cases that can go for arbitration?
Arbitrable disputes refer to cases that can be handled by arbitration. Not all
disputes can be submitted for arbitration. The general guide to arbitrable disputes
is that such disputes must be justifiable issues triable by a civil court.
Furthermore, the dispute must be capable of being compromised by accord and
satisfaction. That is, they must be matters on which a person can contract or
enter into agreement on terms with another person. Disputes arising from the
following transactions are arbitrable:
a) Contract
b) Personal property dispute
c) Deeds of separation
d) Inheritance dispute
e) Land use: disputes arising from land
f) Partnership dispute
g) Companies
h) Cooperatives
i) Interpretation of the law
j) Documents etc.
The above matters can be submitted to arbitration. On the other hand, some
disputes are not arbitrable on account of express provisions of the law, illegality
and public policy. Among this group of disputes are;
a) criminal offences: criminal offences cannot be submitted to arbitration.
b) Illegal contracts: contracts that are illegal ab initio cannot be submitted to
arbitration because it is illegal, and anything done concerning an illegal
contract is itself illegal.
c) Gaming and wagering contract: example is betting. Any disputes arising
from gaming.
d) Divorce petitions: divorce petitions cannot be submitted to arbitration.
Only the courts can nullify a marriage under the act.
NB: the fact that when a party admits liability of a parties claim against him, such
a claim is no longer arbitrable even when the liable party fails to fulfill his
obligation to the claimant. If a party admits liability, you can’t go to arbitration
again because he has admitted breach of the contract. By his admission the
matter is deemed to have been settled.
See the following cases of; R V. BLACKMORE (1850) 14 Q.B 544, RE BOK & CO V.
PATER RUSHTON & CO. (1919) 1 K.B 491, UNITED WORLD LTD INC. V. M.T.S LTD
(1988) 10 N.W.L.R PT 586 PG 106 AT 116.
BASIC PRINCIPLES OF ARBITRATION
1. Voluntary submission: no party is coerced or forced to submit to
arbitration. It must be voluntary. Voluntary submission is the basis to
arbitration. It is universal to the concept of arbitration under all legal
systems. It is irrelevant whether the arbitration is under statute, common
law or according to customs and usages. The pivotal concept herein is the
voluntariness and the word voluntary as defined by the black’s law
dictionary is that which is done by design or intention. Intentional, reposed,
intended, or not accidental, intentionally and without coercion.
2. Arbitrable disputes: not all matters are arbitrable. There are some matters
that are arbitrable and there are some that are not.
3. Conduct of arbitration in a judicial manner: arbitration must be conducted
in a judicial manner. An award in arbitration is reached only after a
judicious evaluation of the disputes between the parties. This implies the
determination of rights and liabilities of disputing parties after hearing and
taking evidence of all parties and weighing all adduced evidence on the
imaginary scale of justice and making consequential awards of rights and
obligations.
NB: arbitration is so much similar to litigation, the only difference is that the
parties choose who becomes the judge, there is party economy, they can
determine the time and duration etc. outside that, in arbitration it is conducted in
a judicial manner, there is examination in chief, cross-examination, tendering of
documents etc. After that, the panel of arbitrators then evaluate the evidence
and reaches a decision which is called an award.
4. Binding nature of agreements to arbitrate: all arbitration agreements, both
pre-dispute agreements and agreements breached after disputes have
arisen referred to as submissions, once subscribes to bind the subscriber
and can be enforced by a court of law where a subscriber defaults to refer a
matter to arbitration at the instance of other parties. Arbitration agreement
can be made before a dispute arisesthat is pre-dispute agreements which is
 the kind of arbitration agreement embodied in the main contract
agreement or sometimes we find where parties enter into an agreement
for arbitration after the dispute has arisen. So, where a party to an
agreement to arbitrate can only be released by mutual consent of all
subscribers or by an order of court on grounds such as fraud, coercion,
illegality and public policy. Thus, once a party enters into an agreement to
arbitrate, he cannot abandon such agreement. He must conclude the
agreement, and where he fails, a court of law can enforce that arbitral
agreement. Aside the arbitration agreement being cancelled by a joint
consent of the parties involved, it can also be cancelled or withdrawn by
the court on the grounds of fraud, coercion, illegality and public policy.
5. Binding nature of arbitration awards: in the case of FOLI V. AKESE (1930)
1WACA. The west African court of appeal held that in submissions to
arbitration, the general rule is that as the parties choose their own
arbitrator to be the judge in the dispute between them; they cannot when
the award is good on its face object to its decision either upon the law or
facts. That is to say arbitral awards are binding on the parties once the
parties have voluntarily submitted to arbitration they are bound by the
decision of the arbitral panel which is the award.
6. Confidentiality: arbitral proceedings by their nature are held in camera with
only the parties, their counsel where applicable. Witnesses and arbitrators
are present. Arbitrators are bound by ethics to treat all aspect of the
proceedings as confidential and not to be divulged to external parties
except with the express authority of all the parties to the process. It is also
the practice for sophisticated arbitration agreement to include a clause of
confidentiality binding the parties thereto. The essence of confidentiality is
particularly underscored where disputes result from matters the parties
would prefer to be removed from the glare of the public involving issues
such as; trade secrets, patent research and finances. Confidentiality is one
of the strong selling points of arbitration because in this aspect it contrasts
with litigation which constitutionally must be conducted in public.
 DEFINITION AND APPOINTMENT OF ARBITRATORS
An arbitrator is a person chosen by agreement of parties to a dispute, to settle the
dispute by taking evidence, listening to the parties and making a final decision
which is called an award. This was the definition of an arbitrator in the case of
MAGBAGBEOLA V. SANNI (2005) 4S.C.M (SUPREME COURT MONTHLY) 78 AT 80.
The appointment of arbitrator or arbitrators follows immediately after the service
of notice of arbitration by a party on the other. The respondent although often in
the notice of arbitration, the party serving the notice informs the other that it has
appointed an arbitrator and either requests concur to the appointment or appoint
its own arbitrator depending on the number of arbitrators stipulated in the
agreement. The arbitrator in the case of more than one arbitration, the arbitral
tribunal may be appointed by; the parties, if the parties can appoint the arbitrator
or arbitrators or by an arbitral institution like the Nigerian institute of chartered
arbitrators. They can appoint the panel of arbitrators upon the authorities of the
parties if the parties so authorize them or an independent appointing authority is
empowered by the parties to appoint an arbitrator of arbitrators for them. They
could be existing arbitrators. Also, the court an appoint an arbitrator for the
parties where they fail to appoint. See sect 6(2-3) of the arbitration and
conciliation act. Parties are at liberty in the agreement to specify the number and
mode of appointment of the arbitrator or arbitrators. Where parties are silent on
same then sect 7 of the arbitration and conciliation act comes into play. Sect 7 of
the (ACA) provides that subject to sub sect 3 and 4 of this sect, the parties may
specify in the arbitration agreement the procedure to be followed in appointing
an arbitrator. Also, the court held same in the case of OGUNWALE V. SYRIA ARAB
REPUBLIC (2002) 8NWLR PT 771 PG 127. Where no procedure is specified by the
parties in appointing arbitrators;
a) In the case of an arbitration with three arbitrators, each party shall
appoint one arbitrator and the two thus appointed shall appoint the
third arbitrator. If the party fails to appoint an arbitrator within 30
days of receipt of a request to do so by the other party or if the two
arbitrators fail to agree on the third arbitrator within 30 days of the
appointment, the appointment shall be made by the court on the
application of any party to the arbitration agreement.
 b) In the case of an arbitration with one arbitrator, where the parties fail
to agree on the arbitration, the appointment shall be made by the
court on the application of any party to the arbitration agreement
made within 30 days of such agreement.
Thus, you can have either one or three arbitrators, you cannot have two or four
arbitrators. Every arbitration panel must be comprised of an odd number. Hence
where it is three arbitrators, each party will appoint one then the third is
appointed by both arbitrators already appointed but where it is one, both parties
must agree on an arbitrator.
A decision of the court as regards appointment of the arbitrator shall not be
subject to appeal. This provision has been held to be inconsistent with the parties
right of appeal under the constitution. So, where the court appoints an arbitrator
no party can decline or object to the appointment. But the decision in
OGUNWALE V. SYRIA ARAB REPUBLIC SUPRA, you can appeal the decision of the
court appointing an arbitrator.