Nigeria enacts two new arbitration laws

On 18th May 2009, the Lagos State of Nigeria enacted two new arbitration laws:

The Lagos state government hopes that the new laws will enable Lagos to emerge as the hub of commercial arbitration in the West African region. Nigeria's current federal legislation is the Arbitration and Conciliation Act (Cap A18 of the Laws of Nigeria 2004) enacted in 1988 which governs arbitral proceedings at both state and federal level.

The purpose of the Lagos Court of Arbitration Law is to establish the Lagos Court of Arbitration. Section 9 states that the functions of the court are to promote the resolution of disputes in the territory of Lagos state by arbitration and other alternative dispute resolution (ADR) mechanisms. Although the Lagos Court of Arbitration is not yet functioning, it will in the future provide administered arbitration proceedings, have the power to establish an arbitral tribunal and maintain a panel of neutrals which shall consist of arbitrators, mediators as well as other experts.

The Arbitration and Conciliation Act applies to both domestic and international arbitration throughout Nigeria (section 58 of the Act) but, from the date of its commencement (May 2009), the Lagos Arbitration Law applies to all arbitration with Lagos as the seat, unless the parties have expressly agreed otherwise (see section 2).

The Lagos Arbitration Law is the result of academic debate as to the legality of the federal legislation. Some academics have taken the view that arbitration, not being in the exclusive or the concurrent legislative list of the 1999 Constitution, falls within the residuary legislative competence of states. Therefore, it is argued that the Arbitration and Conciliation Act is an illegality. A contrary view is that since arbitration is a method of dispute resolution arising from trade and commerce, it is incidental and supplementary to trade and commerce (as provided by item 62 of the exclusive legislative list). Consequently, the Arbitration and Conciliation Act is a valid federal enactment.

In terms of its application, the new Lagos Arbitration Law will have a significant effect upon arbitration practice within Lagos. Unlike the Arbitration and Conciliation Act, the Lagos Law:

Although section 31 of the Lagos Arbitration Law states that arbitral procedure will be in accordance with the Rules of the Lagos Court of Arbitration, the Court has not yet issued any arbitration rules. We are yet to see if those rules will follow the UNCITRAL Model Law, as the rules in the schedule to the Arbitration and Conciliation Act do. Otherwise its provisions are substantially similar to the provisions of the Arbitration and Conciliation Act.