It is well settled that owing to nature of human beings and the number of activities engaged into, makes dispute and conflicts inevitable.
Different commercial and legal expectations, cultural approaches, political ramifications and geographical situations are all sources for disagreement and dispute between contracting parties.
The diversity and complexity with which commercial transactions are conducted, coupled with the high demand for commodities and services in an extremely populated and fast-paced global community translates into disputes being considered a norm and a part and parcel of everyday commercial dealings.
Over the years, there has been a paradigm shift in the mode of resolution of commercial disputes, as disputing parties now more often than not opt for Arbitration and other Alternative Dispute Resolution (ADR) modes as opposed to the traditional court/litigation system. This is as a result of the numerous comparative advantages Arbitration and ADR mechanisms have to offer.
This has therefore brought about an obvious need for an adequate, efficient and reliable mechanism for the resolution of these disputes whenever they arise; and as a result, concerted efforts have over time been made by the commercial community to model a dispute resolution mechanism to meet the demands of individuals, firms and companies doing business in the world at large.
Ordinarily, the first point of call for nearly every disputant is the traditional court system of litigation. However, concerns over cost and delays in litigation procedures, together with increasing globalization have led to more flexible means of resolving disputes which provide alternatives to court-based litigation governed by the law and procedure of a particular state or country. This is because the quick and fair resolution of commercial disputes is an indispensable requirement for stability and growth in any economy.
The term “litigation” generally refers to legal proceedings in court, a judicial contest to determine and enforce legal rights or ascribe legal obligations. It generally refers to legal proceedings including the administrative process. It involves the presentation of respective cases by disputing clients to an unbiased judge, usually through a qualified legal practitioner and the tendering of evidence in support of allegations of facts made during the course of proceedings. The judge after hearing the respective arguments of learned counsel to both parties and considering the evidence before it, makes a decision which is called a judgement.
Litigation is however beset with several deficiencies. For instance, its procedural set up sometimes makes it very difficult to obtain justice and quick resolution of disputes in courts.
Most of the procedural rules of the various courts in Nigeria are in dire need of reform and review in view of the need to discard technicalities and uphold substantive justice.
As a result of the snail-speed nature of cases, the courts have become overly congested with cases from decades ago still being heard even at first instance. This therefore underscores the need to have a commercially viable and time-effective alternative mechanism of dispute resolution.
MEANING OF ADR
Alternative Dispute Resolution (ADR) refers to any means of settling disputes outside of the courtroom. It is popularly referred to by many as “Out of Court settlement” and generally describes the methods and procedures used in resolving disputes either as alternatives to the traditional dispute resolution mechanism of the court or in some cases, supplementary to such mechanisms.
ADR processes arose largely because the litigation process was and still is, unduly expensive- in the long-run and especially prolonged as a result of judicial technicalities embedded in that method of dispute resolution.
Apart from the fact that businessmen and women prefer private resolution of their disputes to exposure to the machinery available in the glare of the regular courts, there is the advantage that settlement through ADR tries to achieve an expeditious resolution of the conflict between the parties by reducing hostility and antagonism while saving business relationships and encouraging a continued cordiality between the parties. These are made largely possible because the procedure provides greater room for compromise than litigation.
It is important to note that ADR is not a single process, but is a term used to refer to a number of methods for resolving disputes outside the traditional court system.
Alternative Dispute Resolution has already been defined vaguely to mean the settlement of disputes by mechanisms other than our traditional court system.
Differences between Litigation and Alternative Dispute Resolution
As can be seen above, there exist a good number of differences between Litigation and ADR forms in general; and a notable few of them are discussed below:
1. Formality: ADR processes are relatively informal when compared to what obtains in the traditional court process. Negotiation and Mediation have a tendency to be as informal as possible while Arbitration retains some level of formality.
2. Party Control: In ADR processes, unlike what obtains in Litigation, the parties have more control over the process.
3. Binding Nature: ADR processes are generally not binding (with Arbitration being an exception). Most ADR processes encourage the parties to reach a consensus as regards the outcome of the process and the effectiveness of that process is largely dependent on party compliance.
4. Legal Representation: Generally, ADR processes do not require legal presentation for the parties. The parties play the major role in the process with the legal representatives (if any) merely occupying a supporting role.
While ADR cannot be used for resolution of disputes in certain matters such as Election Petition matters, Criminal matters, Constitutional matters and Human Rights issues and may be relatively more expensive than litigation; its advantages however outweigh these minor shortcomings in that it allows for: the speedy and swift determination of disputes, expert decisions, party autonomy, confidentiality and privacy, flexibility and simplicity of procedure, and the fact that it in many cases results in preservation of good business and personal relations.
FORMS OF ADR
Alternative Dispute Resolution is an umbrella term that covers all non-litigation processes. It may be conveniently categorized into two groups namely: the Non-Binding ADR and the Binding ADR.
The Non-Binding ADR, inter-alia, includes negotiation, mediation or conciliation and neutral evaluation (These methods are mainly reconciliatory in nature).
Binding ADR, on the other hand, includes arbitration and other adjudicatory ADR methods (including less popular methods like mini-trial, expert determination of issues and mediation-arbitration, otherwise known as “med-arb”, amongst others).
The main forms that ADR however takes are:
Negotiation should normally be the first step at resolution of any dispute. It is an indispensable step in any ADR process as it is consensual to all ADR activities and is often seen as the preeminent mode of dispute resolution.
It involves the giving up of something in other to get something else in return, and this is largely done by the parties involved without any external interference as this method can only be effective where the parties are willing to make concessions and compromise their positions in order to arrive at terms of settlement that would be agreeable to all parties.
In mediation, a third party acts as a go-in-between for the parties, who tries to open up the channel of communication between the parties in order to resolve the dispute and lacks power make any decisive determination of the issues.
Mediation has to be voluntarily accepted by the parties to the dispute as ADR is hinged on the consent of the parties.
The process of mediation aims to facilitate the development of consensual solutions by the disputing parties.
The mediator therefore simply assists the parties to focus on the salient issues to improve their chances of reaching an agreement.
Conciliation is very similar to mediation. However, the conciliator can offer and proffer solutions and terms to the parties which the parties are at liberty to either accept or reject. The ACA of 1988 provides for the right to settle disputes by conciliation .  Mediation and conciliation are sometimes used interchangeably, but this is not right, because they are not quite the same thing.
Arbitration is a procedure for the settlement of disputes, under which the parties agree to be bound by the decision of an arbitrator whose decision is, in general, final and legally binding on both parties.It is the reference of a dispute by parties thereto for settlement by a person or tribunal of their own choice, rather than a court.
Where two or more persons agree that a dispute or potential dispute between them shall be decided in a legally binding way by one or more impartial persons of their choice, in a judicial manner, the agreement is called an arbitration agreement or a submission to arbitration and when after a dispute has arisen, it is put before such person(s) for decision, the procedure is called an arbitration and the decision made is an award, which is binding.
One of the primary reasons for parties’ agreement to resolve their dispute by arbitration is to avoid delay and reach a very expeditious conclusion of their discord.
FRAMEWORKS FOR ADR IN NIGERIA
The Arbitration and Conciliation Act, Chapter 19, Laws of the Federation of Nigeria 1990 (ACA 1988)
It is an Act which provides a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and conciliation; and to make applicable the Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention) to any award made in Nigeria or in any contracting State arising out of international commercial arbitration.
The Lagos State Arbitration Law, 2009 (LSAL 2009)
In itself is “a law to provide for the resolution of disputes by arbitration in Lagos State and for connected purposes”. The LSAL 2009 was enacted based on the updated UNCITRAL model law.
International Chamber Of Commerce
The ICC is an international business organization. A key benefit offered by the ICC is its International Court of Arbitration, which allows businesses to resolve international disputes without facing the potential risks and biases of foreign courts and foreign laws.
Chartered Institute Of Arbitrators (CIArb)
It is a leading professional membership organisation representing the interests of alternative dispute resolution (ADR) practitioners worldwide. It has over 14,000 members located in over 130 countries supporting the global promotion, facilitation and development of all forms of private dispute resolution worldwide. Institute members cover the three main ADR disciplines of arbitration, construction adjudication and mediation.
Lagos Court Of Arbitration (LCA)
The LCA was established under the Lagos Court of Arbitration Law, No. 17, 2009 to provide institutionalised arbitration and ADR services. The LCA was empowered to appoint an arbitral tribunal in respect of any disputes referred to it and maintain a panel of neutrals which consist of arbitrators, mediators and other experts with the requisite skills and experience to meet set functions.
The Regional Centre for International Commercial Arbitration, Lagos (RCICAL)
It was established in Lagos, Nigeria in 1989 under the auspices of the Asian African Legal Consultative Organisation (AALCO) by exchange of letters of agreement concluded in 1980 between the AALCO and the Centre’s host – the Federal government of Nigeria (the host).
In furtherance of the tenets of international law, the domestication of the headquarters agreement cumulated in the codification of the terms therein in a municipal law – Regional Centre for International Commercial Arbitration “Regional Act No. 39 of 1999 (the Act)” bringing to completion the legal framework for the existence of the Centre in Nigeria.
•The Arbitration and Conciliation Act 1988
Just as in the case of arbitration, it provides a unified legal frame work for the fair and efficient settlement of commercial disputes by conciliation.
Lagos Multi Door Courthouse
The Negotiation and Conflict Management Group (NCMG), the initiators of the Multi-Door Courthouse concept in Nigeria in collaboration with the High Court of Lagos established The Lagos Multi-Door Courthouse (LMDC) in June, 2002. Thus was in a promotion of Private-Public sector partnership.
In the courts in Nigeria today, parties to a dispute are provided with the various mechanisms of alternative dispute resolution such as mediation in order to to ensure speedy and friendly resolution of such dispute as opposed to the traditional system of litigation. Parties can willingly walk into the Multi-Door Court House and Court can also refer disputes already being litigation to it.
Today, China is regarded as one of the world’s fastest growing economies . This is because China focused on four key areas in its bid to bring its legal system in line with world standards and attract investment. The areas were foreign trade, foreign investment, intellectual property protection and dispute resolution.
The importance of ADR to all growing economies cannot therefore be overemphasised. Courts should not be the place where the resolution of disputes begins but rather where disputes end after alternative methods of resolving such disputes have failed, as ADR processes tend to arrive at settlements that are more creative, satisfactory and longer lasting than those imposed by the Court.
1. A. T.Bello, “Why Arbitration Triumphs Litigation: Pros of Arbitration” Singaporean Journal of Business Economics, And Management Studies (2014) Vol.3, NO.2, p. 1
2. J. D. M. Lewis, L. A. Mistelis, S. M. Kroll, Comparative International Commercial Arbitration; (Kluwer Law International: 2003), p. 1 (para 1-2)
3. J.A. Agaba, Practical Approach to Criminal Litigation in Nigeria, 3rd Ed., (Bloom Legal Temple: Abuja, 2015), p. 2
4. Legal Practitioners Act, Cap. L11, LFN 2004, s. 2
5. 1999 Constitution of the Federal Republic of Nigeria, Cap. C23, LFN 2004; Act No. 24, 5 May 1999 (as amended), s. 294 (Hereinafter 1999 CFRN)
6.E. R. Oddiri, Paper on Alternative Dispute Resolution; Presented at The Annual Delegates Conference of the Nigerian Bar Association (August 2004) http://www.nigerianlawguru.com/articles/arbitration/ALTERNATIVE%20DISPUTE%20RESOLUTION.html (accessed 12 May 2017)
7. C.A. Candide-Johnson & O. Shasore, Commercial Arbitration Law and International Practice in Nigeria, (Lexis Nexis Publishers: 2012), p. 225
8. J. Macfarlane, Rethinking Disputes: The Mediation Alternative, (Cavendish Publishing Limited: 1997), p. 2
9. See ACA 1988, Part II
10. G. Ezejiofor, The Law of Arbitration in Nigeria, (Longman Nigeria Plc: 1997), p. 7
11. J. O. Orojo & M. A. Ajomo, Law and Practice of Arbitration and Conciliation in Nigeria, (Mbeyi & Associates (Nig.) Ltd: Nigeria: 1999), p. 3
12. F. Ajogwu, Commercial Arbitration in Nigeria: Law and Practice, 2nd Edition, (Center for Commercial Law Development (CCLD), Lagos, Nigeria: 2013), p. 5
13. Around the world with Bola Ajibola; Produced on behalf of Magna Curia Chambers, Faculty of Law, Obafemi Awolowo University, (National Institute for Planning and Administration (NIEPA): 2007) p. 207
14. China Economic Update – May 2018 World Bank Group
Gboremi Ogundipe is an alumna of the University of Lagos, and an aspirant to the Nigerian Bar, having recently concluded her training at the Nigerian Law School.
Her key interests are in ADR, Corporate Commercial Law and International Law/Diplomacy.