NIGERIA Law and Practice Contributed by: Tayo Oyetibo LP
• tax disputes, which Nigerian courts have consist- ently held to be statutory in nature and therefore not amenable to arbitration. In addition, while commercial disputes are generally arbitrable, allegations of fraud may, in certain circum- stances, render a dispute non-arbitrable if they raise issues of public policy requiring judicial intervention. The underlying principle is that only disputes which are capable of settlement by private agreement may be referred to arbitration. Accordingly, although arbi- tration is firmly established as a preferred mechanism for resolving commercial disputes in Nigeria, its use remains subject to the overriding requirement that the subject matter of the dispute is legally arbitrable. 3.3 Advantages of Arbitration Arbitration is widely regarded as an attractive dispute resolution mechanism in Nigeria, particularly in com- mercial contexts, owing to a number of perceived advantages. Foremost is the principle of party autonomy, which affords parties considerable flexibility in structuring the dispute resolution process. Parties are at liberty to determine key aspects of the arbitration, including the choice of arbitrator(s), the applicable procedural rules, the seat of arbitration and, in many cases, the governing law. This flexibility enables the process to be tailored to the specific needs and commercial reali- ties of the dispute. Arbitration also offers a high degree of confidentiality, as proceedings are conducted privately and are not subject to the public scrutiny typically associated with court litigation. This is particularly advantageous in disputes involving sensitive commercial information or reputational considerations. In addition, arbitration is often perceived as more effi- cient and expeditious than litigation. The procedural flexibility available to parties and tribunals can reduce delays and the absence of congested court dockets may facilitate a more streamlined resolution process. Another key advantage is the ability to appoint arbi- trators with relevant technical or industry expertise,
which is particularly valuable in complex commercial disputes involving specialised subject matter. Finally, arbitral awards are final and binding, with only limited grounds for challenge. This promotes certain- ty and finality in dispute resolution. Awards are also generally enforceable under international frameworks, enhancing their utility in cross-border transactions. Taken together, these features make arbitration an increasingly preferred mechanism for resolving com- mercial disputes in Nigeria. 3.4 Disadvantages of Arbitration Arbitration is widely utilised in Nigeria, albeit not with- out its perceived limitations. A primary concern is cost. Contrary to the perception that arbitration is invariably cheaper than litigation, in practice it can be significantly more expensive. Parties are required to bear not only their legal costs but also the arbitral tribunal’s fees, the administrative costs of arbitral institutions and venue-related expenses. In complex or multi-member tribunal proceedings, these costs can be substantial and, in some cases, exceed litigation costs. Another limitation is the potential for post-award chal- lenges. Although arbitral awards are intended to be final and binding, Nigerian law permits limited judi- cial intervention, including applications to set aside or resist the enforcement of an award. In practice, unsuccessful parties may seek to challenge awards on jurisdictional or procedural grounds, which can result in delays and, to some extent, undermine the finality and efficiency associated with arbitration. Additionally, arbitration lacks the coercive powers of the court, particularly in relation to third parties. For example, the ability to compel the attendance of wit- nesses or the production of documents may, in certain circumstances, require recourse to the courts. There is also the issue of limited appeal rights. While finality is often cited as an advantage, it can equally be a disadvantage where an arbitral tribunal errs in law or fact, as there is generally no right of appeal on the merits.
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