Key Highlights of the Arbitration and Mediation Act 2023

INTRODUCTION

The Arbitration & Mediation Act 2023 (the “Act”) came into force on the 26th of May 2023.

This new legislation repeals and replaces the Arbitration and Conciliation Act of 1988 and now serves as the primary legislation which regulates arbitration proceedings and mediation in Nigeria.

Below are some of the key highlights of the Act 2023.

1. Introduction of Third-Party Funding in Arbitration:

Funding is an essential part of every dispute resolution mechanism. Unlike the former law, the Act recognizes the concept of third-party funding. Under the Act, a third-party financier such as a business entity or individual may offer financial assistance to one of the parties taking part in an arbitration proceeding that is unable to afford its cost. The financier covers some or all the arbitration costs in exchange for a portion of the prospective arbitral award or settlement. A third-party financing agreement will need to be executed between the parties to streamline the scope of the responsibilities and benefits of the financier. The cost of “Third-Party funding” must be included in the arbitral award.

2. Abatement of limitation period:

Under the new law, the period between the commencement of an arbitration and the final arbitral award will not be considered in evaluating whether the cause of action is statute barred. Therefore, the limitation period for a claim that is a subject of arbitration is suspended until the process is concluded. Where parties are unable to reach a resolution, the time frame spent in the arbitration process would not be considered in the calculation of the limitation period for the purposes of full-blown litigation in court. This provision makes arbitration and mediation more appealing, and parties are afforded ample time for arbitration.

3. Introduction of a procedural framework for Mediation:

The Act makes provision for substantive and procedural framework for local and international business disputes and settlement agreements resulting from mediation. Given the established legal and procedural framework that the Act provides for, this may boost universal recognition for mediation procedures in Nigeria.

4. Appointment of an Emergency Arbitrator:

The Act permits the appointment of an emergency arbitrator in cases where a party requires urgent reliefs. Where a party requires urgent relief, the party may apply to an arbitral institution designated by the parties, or if no such designation exists, to the court for the appointment of an emergency arbitrator. This application can be submitted either concurrently with the filing of the notice of arbitration or after the filing of a notice of arbitration, but before the constitution of the arbitral tribunal.
In addition, the Act allows for the conduct of emergency arbitration proceedings through various means of communication, including video conferencing, telephone, and similar methods.

5. Granting Immunity to both Arbitrators and Mediators:

The new law gives immunity to the arbitrators and mediators, as well as the appointing authorities and arbitral institutions. This immunity is only in respect of the execution of responsibilities by the arbitrator, mediator, appointing authority, or arbitral institution, unless it can be demonstrated that they acted in bad faith. It should be noted, however, that this exemption does not relieve arbitrators and mediators from any liability stemming from their withdrawal. This ensures that arbitrators, like litigators, are now protected by law while carrying out their duties, removing worries about potential liability.

6. Power of Parties to determine penalty for withdrawal of an Arbitrator after Appointment:

The Act introduced a novel principle of law whereby, parties in arbitration or mediation proceedings are at liberty to agree on a penalty to be applied if an arbitrator seeks to withdraw after accepting the appointment.

7. Powers to grant Interim measures:

Interim measures in arbitration are temporary measures ordered by an arbitral tribunal pending the issuance of the final award. Under the Act, any party to the proceedings could apply to the tribunal for interim reliefs pending the final decision of the tribunal. This is usually done to preserve the “res” (subject matter of dispute) pending the outcome of the process. This interim order can be recognized and enforced in any Nigerian Court.

8. Joinder of new Parties after commencement of proceedings:

Prior to the Act, there was no provision for the addition of a third party to arbitration proceedings. However, under the Act, a party can now apply to the arbitral tribunal to add a new party to the arbitration proceedings, provided that the party being added consents to be bound by the arbitral award. This new provision helps to enhance procedural efficiency by enabling the tribunal to exercise authority over all essential parties to the arbitration dispute.

CONCLUSION

The passage of the Arbitration and Mediation Act signifies a paradigm shift in Nigeria’s alternative dispute resolution mechanism. It includes provisions that acknowledges the rising role of ADR as a method of conflict resolution. The Act closes some loopholes and flaws in the previous legislation, providing greater clarity, flexibility, and procedural frameworks for both arbitration and mediation procedures.

The content of this article is intended to provide a general guide to the subject matter. Professional legal advice should be sought about your specific circumstances.

If you would like to know more about Arbitration and Mediation in Nigeria, please contact us at info@berkeleylp.com.