NIGERIA Law and Practice Contributed by: Olasupo Shasore, Mofiyinfoluwa Enitan, Ibukun Fasoro and Bamidele Ikusika, Africa Law Practice NG & Company
3. The Arbitration Agreement 3.1 Enforceability Legal Requirements for Enforceable Arbitration Agreements in Nigeria Under Nigerian law, arbitration agreements must meet the following essential requirements to be legally enforceable. • Written form and clarity of intent – the agreement must be in writing (recorded by any means, such as electronic communication, provided the content is accessible for future reference) and clearly express the parties’ intention to submit disputes to arbitra - tion. While parties often incorporate arbitration clauses directly into commercial contracts, sepa - rate arbitration agreements are equally enforce - able. Additionally, the language used should reflect an unequivocal commitment to arbitrate. • Capacity and subject matter – parties entering into an arbitration agreement must be entities or persons recognised under Nigerian law as capable of contracting. Additionally, the dispute must be arbitrable under Nigerian law. • Fundamental contract principles, such as consid - eration, offer and acceptance, must be complied with. 3.2 Arbitrability Limits to Arbitrability Under Nigerian Law There are subject matters that cannot be referred to arbitration, as these are considered to belong to the exclusive domain of the courts due to overriding ques - tions of public interest, policy or statutory mandate. These include: • criminal matters; • matrimonial causes and family law issues such as child custody; • winding-up of companies; and • disputes involving title to land, debt recovery and matters involving taxation and revenue collection. The general approach applied by Nigerian courts is to ask whether the dispute is capable of being settled by private agreement without affecting public rights or interests. If resolution would affect third‑party rights,
invoke public law considerations, or contravene statu - tory provisions, it is typically deemed non‑arbitrable. 3.3 National Courts’ Approach Determining the Law Governing the Arbitration Agreement In cases such as Statoil Nigeria Limited v Nigerian National Petroleum Corporation (2013), 14 NWLR (Pt. 1373) 1, Nigerian courts generally follow well‑estab - lished principles of party autonomy and commercial certainty. Where the parties have expressly chosen the law governing the arbitration agreement, courts give effect to that choice. If there is no express choice, courts typically consider whether there is an implied choice, for instance, the substantive law chosen to govern the underlying contract. In the absence of an express or implied choice, Nigerian courts look to the system of law with which the arbitration agreement is most closely connected and this is often the law of the seat of arbitration. This was the crux of the decision in Zenith Global Merchant Ltd v Zhongfu Int ’ l Investment Nigerian courts usually recognise that an arbitration agreement creates a contractual obligation to refer disputes to arbitration and will generally uphold it by staying parallel court proceedings. Under Section 5 of the AMA, where a party commences court proceed - ings despite an arbitration agreement, the other party may apply for a stay, which courts are to grant unless they find the agreement to be null, void, inoperative or incapable of being performed. However, the agree - ment becomes unenforceable where the party seeking to commence arbitration had instituted an action on ( Nig ) FZE & 2 Ors (2017), 7 CLRN 69. Enforcement of Arbitration Agreements the subject. 3.4 Validity Validity of the Arbitration Clause Despite Invalidity of the Main Contract In Nigeria, an arbitration clause may still be consid - ered valid even if the rest of the contract is alleged to be invalid. This is because Section 14 (2) of the AMA provides that the arbitration agreement is treated as distinct and autonomous from the underlying contract in which it is contained. Nigerian courts have consist - ently upheld the principle of separability to the effect that the invalidity, illegality, or non‑existence of the
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