NIGERIA Law and Practice Contributed by: Tayo Oyetibo LP
the extent of recovery is subject to the discretion of the court or arbitral tribunal. In litigation, the general rule is that costs follow the event, meaning that the successful party is typically entitled to an award of costs against the unsuccess- ful party. However, such awards are discretionary and are often modest in practice. Nigerian courts typical- ly award costs as a contribution towards expenses incurred, rather than full indemnity for legal fees. As a result, while costs are routinely awarded, they rarely reflect the actual legal fees incurred, particularly in complex commercial disputes. In arbitration, the position is somewhat different. Arbitral tribunals generally have broader discretion to award costs and may, depending on the applicable rules and the parties’ agreement, award costs on a more substantial or even full indemnity basis. As in litigation, the prevailing party will often seek to recov- er costs, although the tribunal may apportion costs between the parties where appropriate. In mediation and other non-binding ADR processes, there is no adjudicatory award of costs. Instead, costs are typically borne equally by the parties, unless oth- erwise agreed as part of the settlement terms. Accordingly, while cost recovery is available in Nigeria, particularly in litigation and arbitration, it is not abso- lute and parties should not assume full reimbursement of their legal expenses. 5.6 Assessment of Costs In Nigeria, the award of costs is discretionary, whether in litigation or arbitration and is guided by well-estab- lished principles aimed at achieving fairness between the parties. In exercising this discretion, courts and arbitral tribu- nals typically take into account the following factors: • outcome of the case – the general principle is that costs follow the event , such that the success- ful party is entitled to costs, although this is not applied rigidly; • conduct of the parties – this includes whether a party acted reasonably, complied with procedural
rules and court orders or engaged in dilatory, frivo- lous or obstructive conduct; • complexity and importance of the matter – more complex or high-value disputes may justify higher costs awards, particularly where significant time and expertise were required; • time and resources expended – the court or tribu- nal may consider the extent of legal work undertak- en, including the number of appearances, volume of documentation and overall effort involved; • success on issues – where a party succeeds only in part, the court or tribunal may apportion costs accordingly; • settlement efforts – the willingness (or refusal) of a party to explore settlement, including ADR, may influence the award of costs; and • terms of any contractual arrangement – in some cases, contracts may include provisions relating to costs or indemnity, which the court or tribunal may take into account. In practice, while these factors guide the exercise of discretion, Nigerian courts tend to award moderate or nominal costs, rather than full indemnity, whereas arbitral tribunals may adopt a more flexible approach depending on the applicable rules and the parties’ agreement. 6. Interim Remedies 6.1 Availability of Interim Relief Availability of interim relief is discussed in 2.6 Interim Relief . 6.2 Interim Relief to Support Arbitration and ADR Nigerian courts are empowered to grant interim relief in support of arbitration and they exercise this juris- diction where there is a compelling need to preserve the subject matter of the dispute or prevent injustice. This power is expressly recognised under the Arbitra- tion and Mediation Act 2023. In particular, Section 19 of the Act authorises the courts to grant interim meas- ures of protection in relation to arbitral proceedings, whether the seat of arbitration is in Nigeria or else- where. Such measures may include injunctions, asset
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