Arbitration is a flexible and consensual means of resolving commercial disputes through a binding and enforceable process. Impartial decision makers – also known as “arbitrators”, are either selected by the disputing parties, or through a mechanism agreed on by these parties to form an arbitral tribunal. The purpose of this arbitral tribunal is to collectively bring about a binding decision which effectively resolves the dispute in question.
Arbitration may be institutional or ad hoc. Parties to an arbitration in the Lagos Court of Arbitration (LCA) are free to agree on whether to use the LCA Rules, other arbitral rules or no rules whatsoever.
Institutional arbitrations are administered by an arbitration institution, such as the LCA. Typically, proceedings are conducted under the arbitration rules which have been drafted by the chosen institution and selected by the parties. The 2018 LCA Arbitration Rules set out the framework of the procedure, from the submission of the notice of arbitration to the issuance of the award.
Ad hoc arbitrations are not organised under the supervision of an institution. Here, parties agree to arbitrate without designating any institution to administer the arbitration and may choose to either adopt a ready-made set of arbitration rules (such as the UNCITRAL Arbitration Rules), or draw up a set of rules specifically for resolving the disputes between them.
Overwhelmingly, institutional arbitration is more popular than ad hoc arbitration.
One of the advantages of arbitration over other ADR mechanisms is the finality of its awards. Once an award is given by an arbitral tribunal, this award is deemed binding and enforceable under the New York Convention; a Convention signed by over 150 countries. Each of the parties to this Convention undertook to recognise and enforce arbitral awards made in other signatory countries and are bound by this undertaking. This results in arbitral awards enjoying much simpler international recognition than court judgements.
International arbitration conventions and national laws give parties complete autonomy to agree upon the substantive laws and procedures applicable to their arbitration. One of the principal reasons for granting parties procedural flexibility, is to enable them to dispense with technical formalities of national court proceedings and to tailor the procedures to their particular disputes.
Unlike proceedings in most national courts, arbitration hearings are conducted in private. These hearings are almost always closed to the press and public; parties’ submissions and tribunal awards often remain confidential.
One of the most valuable attributes of arbitration is providing parties with a neutral forum, detached from the parties and their respective home-state government, thus avoiding the so-called “homeboy” advantage. Thus, parties are free to choose a neutral arbitral venue when drafting their arbitration clause/agreement. Further, once a dispute has arisen, parties may appoint independent arbitrator(s) of their choice to form a neutral tribunal or the appointment is made on their behalf.
Although arbitration carries with it legal and arbitrator fees as well as administrative costs, generally, the process is usually less expensive than litigation. It typically consumes significantly less time than a trial does, as the time frame of arbitration is determined by the parties, their submissions, the nature of the dispute and the tribunal, not the court. Arbitration is also cost effective because the arbitrators’ decision is almost always final and binding. Of course, should the arbitrator exceed his or her authority or jurisdiction, either party may file an application to vacate the award in a court of competent jurisdiction. Such applications can only be filed based limited grounds for setting aside arbitral awards.
Arbitration awards are usually final and binding. Appeals are usually impermissible from an arbitral tribunal’s award in International arbitration procedures. There are instances where an award can be set aside i.e. due to procedural anomalies such as an unfair procedures or the arbitrators’ lack of independence, however, these instances seldom occur.
In most legal traditions, judges are generalists, often without specialisation in complex matters, and are randomly assigned cases regardless of their experience. Arbitration, on the other hand, permits parties to choose experts in a specialised field to hear a case and clearly understand the complexities and technical issues involved in that specific disputes.
Any dispute arising out of or in connection with the interpretation of the provisions of this Agreement or its performance shall be submitted to the Lagos Court of Arbitration and resolved under the Rules of the Lagos Court of Arbitration. The dispute shall be resolved by a sole arbitrator, unless otherwise agreed by the parties for a tribunal of three arbitrators. The appointment of the Arbitrator(s) shall be in accordance with the said Rules, and the Award/Decision of the arbitrator(s) shall be final and binding on the parties. The seat of arbitration shall be Lagos, Nigeria, and the language of the arbitral proceedings shall be English.”
If a dispute has arisen but there is no agreement between the parties to arbitrate, or if the parties wish to vary a dispute resolution clause to provide for LCA arbitration, the following clauses may be used. Words and spaces in square brackets should be deleted and completed appropriately:
Parties may also freely adopt the LCA Standard Arbitration Submission Agreement for Existing Disputes. Please contact info@lca.org.ng for the Submission Agreement.
Lagos Court of Arbitration
1A, Remi Olowude Street
2nd Roundabout, Lekki-Epe Expressway
Okunde Bluewater Scheme
Lekki Peninsula Phase 1 Lagos
Telephone: +234 (0) 9090000783
, +234 (0) 8053931053
info@lca.org.ng
Opening Hours: Monday – Friday 9am – 5pm