Over time, aggrieved parties in an arbitral proceeding have made it a habit to apply to the court to set aside the award of an arbitral tribunal. Always using the lack of jurisdiction of the arbitrator(s) or alleged procedural irregularities as a ground.
Interestingly, our courts are not taking it lightly with those who seek to frustrate arbitrament just because it didn’t go in their favour.
It is noteworthy to state that agreement to submit disputes to arbitration is a mutual consensus reached by parties devoid of any undue influence or duress from anyone; it is a decision consciously made by both parties, and agreements or contracts are meant to be executed and not to be breached. The parties from the onset are at liberty to choose any of the mechanisms of dispute resolution, and whatever mechanisms they choose would be binding on them.
In NITEL LTD v. OKEKE, the apex court held that “an arbitral award is regarded as a final and conclusive judgment on all matters referred, and the courts are enjoined, as far as possible, to uphold and enforce arbitral awards, having regard to the fact that it is a mode of dispute resolution voluntarily agreed upon by the parties.”
Section 1 sub (2) and (3) of the Mediation Act explicitly provide for the above assertion.
The case of NICON INSURANCE LIMITED V. BRIGHTHOUSE ESTATE LIMITED (2025) has reinforced the position that arbitral awards are to remain binding on parties, and parties would not be allowed to get away with instituting frivolous action to forestall the execution of the arbitral award.
BRIEF FACT
The applicant and the respondents are parties to an agreement with an arbitration clause. A dispute between the parties was referred to arbitration, and an award was entered in favour of the respondent.
The applicant applied to the High Court to set aside the award. The applicant argued that the arbitrator lacked jurisdiction because the prerequisites for using the arbitration clause regarding the agreement’s indemnity clause had not materialised. Additionally, the applicant lodged a complaint regarding the arbitrator’s misconduct. The arbitrator was found to have jurisdiction by the High Court. Additionally, it concluded that the applicant had not presented enough evidence to support any allegation of egregious misconduct on the part of the arbitrator. Thus, the application was denied by the High Court.
Aggrieved with the decision of the High Court, the applicant appealed to the Court of Appeal, where it raised two issues. The Court of Appeal ruled that the High Court correctly rendered the contested award and that the arbitrator had committed no misconduct. As a result, the Court of Appeal upheld the High Court’s decision and decided the two issues against the appellant.
Upon appeal to the Supreme Court, the appellant encountered some procedural hitches as it relates to his application for extension of time within which to seek the leave to appeal and also extension of time within which to appeal at the Supreme Court, as no substantial cause was disclosed. Ultimately, the appeal was dismissed; the learned justices, however, touched on the substantive issue and made some comments on the sacrosanct nature of the arbitration agreement and arbitral awards.
GARBA JSC, inter alia, held, “Since an arbitral award arises from a determination of disputes between the parties by an arbitrator freely and mutually chosen and appointed by them to determine the same, the parties who fully participated in the proceedings without objection should accept and abide by such an award even if they don’t like it because it did not go in their favour. They should be frank and sincere in their attitude towards such awards and should be discouraged from turning arbitral proceedings into a pre-litigation or an elongated litigation procedure for the sole purpose of frustrating and eventually defeating the primary purpose of such proceedings freely chosen by them.”
UWA JSC, while aligning himself with the lead ruling of his learned brother, also had this to say: “…I wish to emphasise that the parties having voluntarily submitted themselves to an arbitrator on the complaint raised, it would be unjust for one party to challenge it on its face.”
It was earlier held in Mekwunye v. Imoukhuede (2019) 13 NWLR (Pt. 1690) 439, where Kekere-Ekun, JSC (now Hon. CJN), at page 503, poignantly stated that “it defeats the purpose of an agreement to refer a dispute to arbitration if, after fully participating therein, a party is allowed to raise technical objections to defeat the award. This is what the respondent tried to do at the court below. It must be discouraged.”
Having given effect to the sacrosanct nature of an arbitral award, it is now imperative to consider when an award can be set aside.
In NITEL LTD v. OKEKE, the supreme court had earlier mentioned what can warrant an award being set aside; the court was at the time relying on the Arbitration and Conciliation Act 2004. The court held, “The limited circumstances in which a court can set aside an arbitral award are as provided in sections 29 (2) and 30 (1) of the Arbitration and Conciliation Act, Laws of the Federation of Nigeria, 2004, as follows:
a) If the party making the application to set aside furnishes proof that the award contains decisions on matters which are beyond the scope of the submission to arbitration, so however that, if the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the award which contains decisions on matters not submitted may be set aside.
b) Where an arbitrator has misconducted himself, or where the arbitral proceedings or award have been improperly procured.
The court went further to state what act of an arbitrator will amount to misconduct and, in addition, declared that a party seeking to set aside the award must prove the misconduct; otherwise, their claim will fail. PETER-ODILI, J.S.C., at page 471, rightly held that:
“The appellant has not established the misconduct he alluded to, and so his complaint has not gone beyond a murmur of dissatisfaction, and that is not sufficient to impugn the award well considered and arrived at by the arbitrator. Therefore, there is also no justification in setting aside the award.”
It is imperative to state at this point that the extant law guiding arbitration is the Arbitration and Mediation Act 2023, which provides exhaustively for the grounds upon which a person seeking to set aside an arbitral award may rely.
Section 55 (3) (a & b) of the Arbitration and Mediation Act provides for nine (9) grounds upon which a person seeking to set aside an award may rely. Reference can be made to the said section for a complete appreciation and comprehension.
Even in a circumstance where an award could be validly set aside, the court, by virtue of the Act, is empowered to either remit the award to the tribunal in whole or in part for reconsideration or set it aside in whole or in part.
One of the novel ideas also brought by the Arbitration and Mediation Act was the “Award Review Tribunal”, which can be seen in section 56 of the AMA. Parties are allowed to make a provision in their agreement stating that where any of the parties intend for the arbitral award to be reviewed on any grounds set out in section 55(3), an application shall be made to the Award Review Tribunal within 3 months of the arbitral award. All this is to ensure that matters are confidentially and expeditiously determined without delay and to lessen the burden on our courts.
In conclusion, it is evident that arbitration and other ADR mechanisms are being embraced and are gaining wide acceptance due to their numerous advantages, which we all know. For this reason, our courts are also playing a big role in ensuring that arbitration agreements are implemented and arbitral awards are enforced. The court, more importantly, is also cautious in considering applications seeking to set aside arbitral awards for no cogent grounds. From the above judicial authorities, a conclusion could be made that the court frowns upon the dubious act of seeking to set aside arbitral awards without giving substantial reasons and proof of why the award should be set aside.
The court has also enjoined parties to an arbitration agreement to refrain from making arbitration proceedings look like pre-litigation proceedings and an elongated procedure to frustrate the very dispute resolution mechanism chosen by them.
Abdullahi Abubakar Raji is a penultimate law student at Bayero University, Kano, and the Director of Research and Litigation of Equity Chambers. He could be reached at abdullahiraji48@gmail.com or 07057956707
Source: BarristerNG
