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Commercial Litigation and ADR Mechanisms in Nigeria

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Commercial Litigation and ADR Mechanisms in Nigeria

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Litigation is the most common form of dispute resolution in Nigeria. Its origin is entrenched in the English common law. Oftentimes, litigation is cumbersome because of ingrained culture of litigation which results in overflow of cases and delay in adjudication. This is bad for business and business relationships. The need for a more efficient dispute resolution process has contributed to the prominence of Alternative Dispute Resolution (ADR) mechanisms in recent years.

Nigerian courts through their rules now encourage litigants to resolve their disputes by adopting ADR mechanisms. The court may, with the cooperation and consent of the parties, refer the parties to ADR centers attached to the court system. If successful, the agreed terms of settlement is adopted as the consent judgment of the court. If unsuccessful, the matter is referred to court for adjudication. In adopting ADR processes, the parties may opt for informal tribunals which use informal mediation processes without possessing a formal structure or formal tribunals using formal mediation processes.

The most known and practiced ADR mechanisms in Nigeria are Arbitration, Mediation and Conciliation;

(a) Arbitration

Arbitration is the process of dispute resolution between parties to a submission or arbitration agreement. The parties agree on the composition of the arbitral tribunal, seat, timetable, procedural rules, substantive law of arbitration and finality of the decision of the arbitral tribunal. The key theme in arbitration is ‘party autonomy’. Arbitral proceedings avoid much of the formalities, proof and procedure required by courts. The arbitral tribunal may determine its jurisdiction under the competence-competence rule. Generally, the arbitration process is regulated by the Arbitration and Conciliation Act CAP A18, LFN 2004.

Arbitration is recommended for most businesses because of its confidentiality, speed, reduced cost compared to the cost of delay in court, specialized expertise of the arbitral tribunal and party autonomy. Both local and foreign arbitral awards are enforceable by Nigeria courts upon the winning party obtaining leave to register and enforce the award against the losing party.

(b) Mediation

Mediation is a voluntary, non-binding and private dispute resolution process in which a neutral person helps the parties to reach a negotiated settlement. Mediation is very flexible. A mediator applies nonbinding communication techniques to enable the parties arrive at a common terms of settlement. While there are no Federal laws governing mediation, States in Nigeria have enacted laws on mediation.

In Lagos State, Lagos Multi-door Courthouse was established for the referral of ADR cases. The domestic sources of mediation law include the Lagos State Multi-Door Court Law 2007 and the accompanying Lagos State Multi-Door Court Practice Directions on Mediation, the Citizens Mediation Centre Law 2007 and the Lagos Court of Arbitration’s (LCA) Mediation Guidelines 2011. In Kano State, there is the Mediation and Arbitration Rules 2008.

(c) Conciliation

Conciliation is another legal form of resolving disputes in a less adversarial and private manner. Under this process, the parties agree to resolve their dispute through a neutral independent person known as the Conciliator. Conciliation is also regulated by Arbitration and Conciliation Act CAP. A18 LFN 2004.

The appeal process

An appeal against final judgments is brought within 90 days after delivery of judgment and 14 days for interlocutory rulings. The Court of Appeal rules allows an Appellant to bring an application before the appellate court for enlargement of time to file an appeal. An appeal does not operate as a stay of execution of judgment at the trial court; the Appellant has to file for a stay of execution of judgment pending the outcome of the appeal. An appeal is filed against questions of law of the trial court. If an Appellant wants to bring an appeal against questions of facts or mixed law and facts, it must seek and obtain leave of the appellate court.

The parties shall settle the record of appeal at the registry of the trial court and transmit it to the registry of the appellate court. The Appellant shall file its Appellant’s Brief within 45 days after transmission of the record of appeal. The Respondent shall file the Respondent’s Brief within 30 days of receipt of the Appellant’s Brief. The Appellant shall file a Reply Brief within 14 days of receipt of the Respondent’s Brief. The parties shall, at a date fixed for hearing by the appellate court, adopt their respective briefs and the appeal will be adjourned for judgment.

Advantages of resolving disputes in Nigeria

Unlike other jurisdictions in Africa, the rules of Nigerian courts encourage and provide avenues for litigants to explore amicable and less acrimonious settlement of their dispute. Nigerian courts uphold arbitration and other ADR clauses and in most instances stay court proceedings pending the outcome of arbitral proceedings. The court system support ADR proceedings by granting necessary interim orders, discovery and enforce arbitral awards in the same way as its judgments.

Assistance in commercial litigation

Commercial lawyers are interested in their Clients’ business and their business relationship with their customers. This is why they explore amicable settlement of disputes involving their Client without compromising their Clients’ interests. If amicable settlement fails and the parties do not have an arbitration agreement between them, it may be expedient to suggest to the parties to sign a submission agreement to enable them submit themselves to arbitration because of its speed and confidentiality. If litigation is inevitable and their Clients’ claim is a liquidated sum, time would be saved by commencing a summary judgment proceeding. If their Client is the defendant, genuine admissions and reasonable offer towards timeous resolution of the matter are veritable options in preventing litigation from escalating.

Cost of litigation

Litigation has the potential of resulting in high cost for parties and their businesses because of its unpredictability. Though arbitration is much more efficient in today’s business climate, there are certain disputes that can only be resolved by litigation. Disputes involving moral questions, questions of public law, criminal, matrimonial, insolvency, matters, ownership of land, dissolution of a company and testamentary matters cannot be referred to arbitration. In practice, only contractual disputes are referred to arbitration.

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