Should I Consider Arbitration For My Dispute?
• What is Arbitration?
Arbitration is an ADR procedure whereby disputes are brought before a set of people known as arbitrators who make a binding decision on the dispute.
In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
• Legal Framework On Arbitration In Nigeria
Arbitration is principally governed by the Arbitration and Conciliation Act. We also have the Lagos Arbitration Law.
For the international space, we have the New York Convention For The Recognition and Enforcement of Foreign Arbitral Awards to which Nigeria is a party.
• Disputes Subject To Arbitration In Nigeria
Arbitration is applicable only to commercial disputes. It does not cover criminal matters, tax disputes, bankruptcy disputes, electionmatters as well as constitutional matters.
• Pros And Cons Of Employing Arbitration
Arbitration is one of ADR’s key mechanisms and the advantages that readily accompany employing ADR in resolving disputes equally apply. Let’s take a look at specific pros and cons of arbitration.
Pros
Speed, Confidentiality, Flexibility, Considerable Party Autonomy over Arbitration Proceedings.
Cons
Expensive, No opportunity for appeal, Jurisdictional complications for foreign arbitrations.
• Should I Prefer Arbitration in settling my dispute?
We’ll say it depends .
Arbitration is routinely employed for its speed in dispute resolution as opposed to the nature of court trials. The clogging of court cases together with the procedural technicalities associated with litigation has made litigation somewhat frustrating for litigants. However, depending on who your business partner is, arbitration could become frustrating also. There are several cases of parties who try to frustrate arbitral proceedings or enforcement. Some go back to court even after an arbitral award that should bind both parties.
Notes:
1. If it’s a simple contract with very minimal value, it might be an overkill agreeing to arbitration because arbitrators are not cheap and their cost may exceed the transaction amount.
2. If it’s huge contract that cannot afford any delay particularly in energy, construction and maritime sectors, consider using arbitration. Going to Court may lead to a ruin of the contract and its terms.
3. The drafting of the arbitration clause is the ultimate. If badly drafted you might find yourself in some trouble when you realize that the seat of your arbitration is in Hong Kong while all your business dealings are in Lagos, Nigeria. (Trust us we’ve seen arbitration agreements gone bad for bad drafting)
4. Sometimes, it might be good to preserve your right to go to Court. For example, in employment contracts, inserting an arbitration clause may be unfavorable to the employee while advantageous to the employer.
• Conclusion
Arbitration is a big developments in the commercial world offering some bit of assurance to investors and commercial stakeholders in resolving their disputes. However, ensure it’s drafted by professionals who have experience in handling the challenges or otherwise of arbitration agreements.
References
1https://www.wipo.int/amc/en/arbitration/what-is-arb.html#:~:text=Arbitration%20is%20a%20procedure%20in,instead%20of%20going%20to%20court
Visit our website for more details and follow us on our social media handles for news updates and informative articles.
Website: www.scottslegal.com
Email: info@scottslegal.com
Twitter: scott_legal
Instagram : Scott’s legal
LinkedIn- Scott’s Legal