In the fast-paced world of business, disputes do arise. These disputes can be generic trade disputes, labour disputes, vendor disputes, or a contractual breaches.
What is thus needed is an efficient Dispute Resolution & Determination system aimed at disposing of disputes and having its decisions enforced in a timely manner. Also, due to a number of reasons, the traditional Courtroom/Litigation system might not always be an option for parties to a commercial dispute.
As a result, there has been a steady geometric rise in the use of Alternative Dispute Resolution methods in Nigeria. This article will thus be focused on the subtopics of :
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– The definition of Alternative Dispute Resolution (or “ADR”).
– The types of ADR methods available in Nigeria currently.
– The advantages and disadvantages of ADR in Nigeria.
What is ADR?
Alternative Dispute Resolution simply involves the use of procedures other than traditional Courtroom litigation in the settlement & disposal of disputes.
What is the Legal Framework governing ADR in Nigeria?
ADR in Nigeria is mainly governed by the Arbitration and Conciliation Act of Nigeria and Section 19 of the Constitution of the Federal Republic of Nigeria as well the Arbitration and Conciliation Laws of various states and in places like Lagos State,The Lagos Court of Arbitration as well as the Lagos Multidoor Courthouse (LMDC).
What are the available types of ADR methods in Nigeria?
The ADR methods currently available in Nigeria are :
– Negotiation :- This is an ADR process that involves parties attempting to reach a joint resolution of the conflict (usually through their legal representatives though this can be done personally) without 3rd parties. This also involves the stages of :-
a). Opening
b). Bargaining
c). Closing
d). Execution
– Mediation :- This ADR process, usually commenced by the disputing parties voluntarily or the order of a court, involves the use of a neutral and objective 3rd party usually skilled in a particular profession most competent to deal with the dispute subject matter known as the mediator (also appointed by the parties or the court) .
The parties to a dispute are usually under no obligation to accept the conclusions or reports of the mediator and can apply to a court to have the results of a mediation process set aside.
It should however be noted that once parties agree to a mediation report, the next step is to make a Court application to have the mediation report to be upheld as a consent judgment. Consent judgments cannot be appealed against.
Conciliation :- This is an ADR process governed by the Arbitration and Conciliation Act that also involves a neutral and objective 3rd party known as a conciliator who usually disposes or resolves a dispute by means of a decision called a settlement after trying to bring both disputing parties to a voluntary and conciliatory agreement.
Arbitration :- This is the most commonly used ADR method for Commercial disputes in Nigeria and it is governed by the Arbitration and Conciliation Act.
It is a process that involves the agreement of both parties (usually by means of a pre-signed arbitration clause) or the order of a court subjecting them to the jurisdiction of an impartial 3rd party known as an Arbitrator or Board of Arbitrators (sometimes referred to in some quarters as “boardroom litigation”), the decisions emanation from an Arbitration being referred to as an award and which are binding and enforceable on disputing parties and can’t be set aside by a court except in a very limited set of cases.
What are the advantages and disadvantages of ADR in Nigeria?
Advantages
– ADR methods tend to be much quicker in lifespan than courtroom litigation (usually months).
– ADR is usually more informal and relaxed with an emphasis on amicable dispute settlement and business relationship preservation.
– ADR is cheaper than courtroom litigation in the long-run.
– ADR is suitable for where disputing parties require privacy compared to courtroom litigation where every matter becomes public record and any member of the public can walk into the court during the hearing of a case as an interested onlooker.
– ADR methods like Arbitration usually involve the use of highly qualified experts as Arbitrators (some of them tend to be retired Supreme Court judges).
– ADR methods like Arbitration are still as equally enforceable as courtroom judgments.
Disadvantages
– ADR methods cannot be applied to certain types of disputes (eg. Criminal, Matrimonial causes, or Election Petition matters).
– ADR methods still require a lot of input from lawyers and still require their decisions to be enforced by courts via courtroom applications.
– ADR methods like Arbitration, although binding, enforceable and very speedy, can be very expensive in the short-term
– There still remains the possibility of a sole arbitrator having an interest or bias in a matter brought before him.
– ADR still cannot be used to procure urgent legal mechanisms like ex-parte orders .
Are Arbitral awards gotten in other countries enforceable in Nigeria?
Yes, International Arbitral awards are enforceable in Nigeria regardless of their countries of origin in line with Section 51 of the Arbitration and Conciliation Act.
Conclusion :- ADR methods, especially Arbitration, remain the go-to option for the timely and less confrontational settlement of business disputes as evidently seen in the frequent insertion of Arbitral clauses in many contracts and should be seriously considered.