Supervisory Jurisdiction and the Seat: Can Nigerian Courts Still Set Aside Foreign Awards?

Introduction

In OIL & INDUSTRIAL SERVICES LTD v. HEMPEL PAINTS (SOUTH AFRICA) PTY LTD (2025) LPELR-81602(CA), the Nigerian Court of Appeal was invited to determine whether it had jurisdiction to set aside an arbitral award rendered under the London Court of International Arbitration (LCIA) Rules, with London designated as the seat. The parties had agreed to arbitrate disputes arising from a supply contract. Following an unfavourable award, Oil & Industrial Services Ltd sought to have the award annulled by the Nigerian courts.

In its judgment delivered on 24^th January 2025, the Court of Appeal upheld the lower court’s decision which declined jurisdiction and held that only the courts of the seat, in this case, England, could exercise supervisory powers over the award. While this outcome reflects international best practice and Is consistent with Nigeria’s increasingly pro-arbitration stance, the Court’s reasoning did not fully address the doctrinal ambiguities under the Arbitration and Conciliation Act 2004 (ACA 2004), which was the applicable law at the time. This case note reviews the decision, evaluates the statutory argument advanced by the parties, and discusses how the new Arbitration and Mediation Act 2023 clarifies this jurisdictional question going forward.

II. The Facts

The arbitration concerned a contractual dispute between Oil & Industrial Services Ltd and Hempel Paints (South Africa) Pty Ltd. The LCIA proceedings, seated in London, resulted in an award against Oil & Industrial Services Ltd, ordering it to pay various sums for unpaid invoices, interest, and costs.

While Hempel Paints applied to enforce the award in Nigeria, Oil & Industrial Services filed an application to set it aside. The Rivers State High Court consolidated both applications. It refused the set-aside request on jurisdictional grounds and proceeded to grant enforcement. On appeal, the Court of Appeal was asked to revisit both the jurisdictional issue and the trial court’s decision to address the merits after declining jurisdiction.

III. The Jurisdictional Question

At the core of the appeal was whether Nigerian courts have jurisdiction to annul arbitral awards rendered in foreign-seated arbitrations. The Appellant argued that the ACA 2004 made no express distinction between domestic and foreign awards. It relied on Sections 29 and 48 of the Act to assert that Nigerian courts could set aside awards, regardless of where the arbitration was seated. The Appellant also alleged that the arbitrator had misconducted herself by failing to consider the issue of contract frustration and argued that the trial court, having declined jurisdiction, should have struck out the claim rather than addressing the merits.

The Respondent, Hempel Paints, maintained that the jurisdiction to annul an award lies with the courts of the seat. It relied on Section 54 of the ACA 2004 and argued that the correct remedy in Nigeria would be to oppose enforcement under Section 52, not to seek annulment. The Respondent also denied any arbitrator misconduct.

The Court of Appeal upheld the trial court’s ruling and held that Nigerian courts lack jurisdiction to set aside awards seated outside the country. It further held that the trial court’s consideration of the merits did not amount to a procedural error, even after finding that it lacked jurisdiction.

IV. A Critical Comment

a. Statutory Gaps

The Court’s conclusion may be sound, but it leaves unresolved a critical interpretive issue under the ACA 2004. Unlike modern arbitration statutes based on the UNCITRAL Model Law, the ACA 2004 lacked a clear scope clause limiting the territorial reach of its provisions. This structural gap allowed litigants to argue that courts in Nigeria could annul awards regardless of the seat.

Section 29 of the Act allowed a party to apply to set aside an award within three months, while Section 48 (Part III), which deals with international commercial arbitration, also provided grounds for annulment. Neither section expressly stated that its application was limited to arbitrations seated in Nigeria. Meanwhile, Section 47(6) referred to compliance with procedural rules “of the country where the award is made”, further blurring the Act’s territorial logic.

While a narrower reading, which limits annulment powers to Nigeria-seated awards, makes doctrinal sense and reflects international norms, the statutory text did not support that conclusion. The Appellant’s argument, based on a literal reading of the ACA 2004, was not without merit. Unfortunately, the Court of Appeal did not meaningfully engage with these statutory ambiguities. Its reasoning rested instead on broad statements about the nature of arbitration and the precedents discouraging judicial review of arbitral awards

Comparable tensions have played out in other jurisdictions. In India, for example, courts initially permitted the annulment of foreign-seated awards under the Bhatia International doctrine. This was eventually overruled by the Supreme Court in Bharat Aluminium Co. v Kaiser Aluminium Technical Services, which restored the principle that only the courts of the seat may annul awards. Legislative amendments later clarified this rule in the Indian context in 2015.

b. Legislative Reforms

These uncertainties have now been addressed by the Arbitration and Mediation Act 2023. Section 5(6) of the new act makes it explicit that the powers of Nigerian courts over arbitral proceedings (including setting aside) apply only where the seat of arbitration is in Nigeria. Section 5(7) provides a narrow list of exceptions, allowing Nigerian courts to grant interim relief or enforce awards even when the seat is abroad.

This structure brings Nigeria in line with the international mainstream. It mirrors the English Arbitration Act 1996, where Section 2(1) confines supervisory powers to arbitrations seated in England, Wales, or Northern Ireland, while allowing limited intervention elsewhere for support or enforcement.

In this context, the Oil & Industrial Services decision, though made under the old law, anticipates the legislative direction of the 2023 Act. It reflects a cautious, non-interventionist approach that discourages expansive readings of annulment powers.

c. A Policy-Aligned Decision

From a policy standpoint, the Court’s position is welcome. It reduces the risk of forum shopping, prevents parties from launching collateral attacks on foreign awards, and respects the supervisory role of the seat court. It also aligns with broader institutional efforts to promote arbitration in Nigeria, including the 2017 directive from the Chief Justice of Nigeria encouraging courts to uphold arbitration agreements and penalise improper litigation tactics.

In previous scholarship, I have argued that judicial respect for forum selection clauses promotes commercial certainty and enhances Nigeria’s image as a predictable legal environment. That position holds here as well. Allowing courts to interfere with foreign-seated proceedings undermines party autonomy, disrupts international enforceability, and sends the wrong signal to commercial actors.

At the same time, this outcome should not obscure the fact that the Court bypassed a real interpretive dilemma. A more rigorous doctrinal analysis that engages the statutory structure of the ACA 2004 would have strengthened the precedent. That opportunity was missed.

V. Conclusion

The decision in Oil & Industrial Services v Hempel Paints reflects an important doctrinal shift. It marks the beginning of a more restrained approach to judicial review in arbitration-related matters and positions Nigeria more firmly within the international arbitration mainstream.

Still, the Court could have gone further in addressing the statutory uncertainties of the ACA 2004. That work has now been done by the AMA 2023, but Oil & Industrial Services remains a critical transitional case that illustrates both the doctrinal tensions of the past and the policy commitments of the present.

Article by: Dr Abubakri Yekini

University of Manchester Law School