NIGERIA Law and Practice Contributed by: Tayo Oyetibo LP
4.2 Requirements to Engage in ADR It is not unusual for the Courts to ask the parties whether they are willing to settle their dispute. There is no universal statutory requirement that parties engage in ADR before commencing litigation in all cases. However, in practice, there are significant procedural and contractual frameworks that either encourage or, in certain circumstances, effectively require parties to explore ADR before resorting to the courts. First, where parties have contractually agreed to an ADR mechanism, most commonly arbitration or mediation, as a condition precedent to litigation, such agreement is binding. A failure to comply with such a pre-condition may render any court action premature and incompetent. In the case of arbitration clauses, the court will typically decline jurisdiction and stay proceedings, thereby compelling the parties to sub- mit to arbitration in accordance with their agreement. Secondly, the Rules of Court in several jurisdictions, particularly in Lagos State and the Federal Capital Territory, incorporate mandatory pre-action proto- cols and case management procedures designed to promote ADR. Under these frameworks, parties are required, at the pre-action stage or during the Case Management Conference (CMC), to explore amicable settlement options, often through referral to institu- tional ADR platforms such as the Lagos Multi-Door Courthouse or the Abuja Multi-Door Courthouse. The consequences of non-compliance depend on the nature of the obligation, as outlined below. • Contractual ADR clauses: Non-compliance may result in a stay or dismissal of the court proceed- ings for want of jurisdiction or prematurity. • Statutory or rules-based requirements: Failure to comply with pre-action protocols may render the action incompetent and liable to be struck out. • Case management directives: Non-compliance may attract procedural sanctions, including adverse cost orders or delays in the progression of the case. Accordingly, while ADR is not universally mandatory, it is increasingly embedded within both contractual arrangements and procedural rules, with tangible con-
sequences for parties who fail to engage with it where required. 4.3 Impact of ADR ADR plays a significant and increasingly impactful role in dispute resolution in Nigeria. Where successfully deployed, it obviates the need for protracted litiga- tion or arbitration, thereby saving time and costs and preserving commercial relationships. Where parties reach a settlement through ADR – particularly media- tion – the terms of settlement are typically reduced to writing, executed by the parties and endorsed by the ADR Judge or Mediator. Such a settlement may then be entered and adopted by the court as a consent judgment, thereby acquiring the same binding force and enforceability as a judgment delivered after a full trial. Importantly, engagement in ADR does not, in itself, extinguish or prejudice a party’s right to pursue litiga- tion or arbitration where settlement is not achieved. Rather, ADR is complementary to and not a substitute for, formal adjudicatory processes. 4.4 Timing of ADR ADR processes and litigation cannot run concurrently; they must proceed one at a time. Ideally, ADR is usu- ally resorted to before instituting a Court action, but subject to the circumstances of each case, it can be resorted to before judgment is given in a matter. If litigation is pending and the parties resort to ADR, the terms of the settlement reached would be presented to the Court and entered as a consent judgment. Critically, under Section 71 of the Arbitration and Mediation Act 2023, the period between the com- mencement of an arbitration and its termination is excluded from the computation of time for the pur- pose of the Limitation Law. This ensures that a party is not “timed out” of Court while genuinely attempting to settle via ADR. 4.5 Confidentiality ADR may be engaged at various stages of a dispute in Nigeria, depending on the nature of the dispute, the parties’ agreement and the procedural context.
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