NIGERIA Law and Practice Contributed by: Tayo Oyetibo LP
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1. Dispute Resolution Methods 1.1 Main Dispute Resolution Methods The principal methods for resolving commercial dis- putes in Nigeria are litigation, arbitration and other alternative dispute resolution (“ADR”) mechanisms, particularly mediation. Commercial disputes typically arise between business stakeholders or partners regarding the interpretation, performance or enforcement of contractual obliga- tions. Traditionally, litigation remains the predominant mechanism for resolving such disputes. Litigation entails the submission of a dispute to a court of com- petent jurisdiction, which adjudicates upon the rights and obligations of the parties and delivers a binding and enforceable judgment. Notwithstanding the continued prominence of litiga- tion, arbitration has gained significant traction as a preferred dispute resolution mechanism in commer- cial transactions. Arbitration is a private, consensual process whereby parties agree to submit their dis- pute to one or more neutral third parties (arbitrators), whose decision, embodied in an arbitral award, is final and binding on the parties. The increasing preference for arbitration is attributable to its relative efficiency, confidentiality and the ease of enforcement of arbitral awards. In addition, mediation and other ADR mechanisms are increasingly utilised in the resolution of commer- cial disputes. Mediation involves the engagement of a neutral third party who facilitates negotiations between disputing parties with a view to achieving
an amicable settlement. The process is non-adjudi- catory and party-driven. In Nigeria, mediation is now expressly recognised and regulated under the Arbitra- tion and Mediation Act, 2023. In practice, while litigation remains prevalent, there is a discernible shift towards arbitration and mediation, reflecting a broader acceptance of ADR mechanisms in the Nigerian commercial dispute-resolution land- scape. 1.2 Choice of Dispute Resolution Method The principal dispute resolution mechanisms avail- able in Nigeria include litigation, arbitration, media- tion, conciliation and negotiation. The relative popu- larity and suitability of each mechanism are largely determined by the nature, complexity and contractual context of the dispute. Litigation remains the most widely utilised mecha- nism, particularly for general commercial disputes. It is commonly employed in matters such as debt recov- ery, breach of contract, land and property disputes and issues relating to company management and administration. Its continued prevalence is attribut- able to its formal structure, coercive powers and the authority of court judgments. However, the attendant delays, costs and procedural rigidity have encouraged a gradual shift towards alternative mechanisms. Arbitration has gained considerable prominence, especially in complex, technical commercial disputes. It is frequently adopted in sectors such as construc- tion, energy, maritime, international trade, intellectual property and technology-related disputes. Its use is
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