Under Nigerian law, an arbitral award is recognised as binding on the parties to it, but it does not become enforceable automatically until it has been declared enforceable by the judgment of a court. Section 31 (1) of the Arbitration and Conciliation Act 1988 (“ACA”) states that “an arbitral award shall be recognised as binding, and subject to this section and section 32 of this Act, upon application in writing to the Court, be enforced by the Court.” This implies that the power to enforce an arbitral award lies with the court whether domestic or foreign.
Globally, the power to enforce foreign judgments and awards by the courts, is limited by territorial or jurisdictional boundaries. Nonetheless, the effect of such limitation is mitigated by the theories of reciprocity and obligation. In other words, foreign judgments and awards constitute commercial obligations that are enforceable against a liable party/judgment debtor (wherever he or his assets can be found) subject to certain local or international statutory requirements.
In Re-Arbitration Between Monotgomery Jones & Co, And Liebenthal & Co (1898) LT 406, 408 Smith L.J, stated the general law (which was quoted with approval by the Supreme Court of Nigeria in Taylor Woodrow (Nig.) Limited v S.E. GmbH [1993] 4 NWLR (Pt. 286) 127 per Ogundare, JSC at page 155 paragraph A) thus “I for my part have always understood the general rule to be that parties took their arbitrators for better or for worse both as to decisions of fact and decisions of law. That is clearly the law.”
Generally, an arbitration award (local or foreign) is final and there is no provision for an appeal against an arbitral award under Nigerian law. However, there are statutory grounds for setting aside a domestic award (under sections 29 and 30 of the ACA) and foreign awards (under Article V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958) (“New York Convention”), namely:
(a) where the arbitration panel exceeded its scope of power;
(b) upon proof of arbitrator’s misconduct;
(c) the award deals with a dispute not submitted or was procured improperly or fraudulently;
(d) Where there is breach of fair hearing, illegality, incapacity of the parties, and other vitiating elements or the award is contrary to public policy. See Taylor Woodrow (Nig.) Limited v S.E. GmbH [1993] 4 NWLR (Pt 286) 127.
In this article we shall examine in a question-and-answer format, the legal framework for enforcing foreign arbitral awards in Nigeria.
1. What are the laws that govern the enforcement of foreign arbitral awards in Nigeria?
(a) The Arbitration and Conciliation Act (ACA)
In Nigeria, the primary legislation governing arbitration is the Arbitration and Conciliation Act. Section 51 (1) of the Act states that
“An arbitral award shall, irrespective of the country in which it is made, be recognized as binding and subject to this section and section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.”
(b) Foreign Judgments (Reciprocal Enforcement) Act
Enforcement of foreign judgments in Nigeria is generally governed by the Foreign Judgments (Reciprocal Enforcement) Act, Judgment according to the Act also includes Arbitral awards because by provisions of section 2(1) of the Act, Judgment is defined as: “a judgment or order given or made by a court in any civil proceedings and shall include an award in proceedings on an arbitration if the award has in pursuance of the law in force in the place where it was made become enforceable in the same manner as a judgment given by a court in that place, …”
Also, in Halsbury’s Laws of England, 4th Edition Paragraph 5 at page 8, the word “Judgment or Order” is defined as including an award which the court has registered for enforcement, ordered to be enforced or given permission to enforce as if it were a judgment or order of the court. This position was used by Pemu, J.C.A. in delivering judgment in the case of Sundersons Ltd. v. C.S. PTE Ltd. (2015) 17 NWLR pt. 1488 p.372 CA.
Flowing from the above stipulation, every requirement for the enforcement of a foreign judgment also applies to foreign arbitral awards if such award has been elevated to the status of a judgment before the court. This was the position of the court in Tulip (Nig) Ltd. v. N.T.M. S.A.S (2011) 4 NWLR pt1237 CA and Emerald Energy Res. Ltd v. Signet Advisors Ltd. (2021) 8 NWLR pt. 1779 CA.
(c) Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (“New York Convention)
Nigeria became a signatory to the New York Convention of 1958 in 1970 when it ratified the convention on March 17, 1970. The convention was incorporated by Section 54 and the Second Schedule of the Arbitration and Conciliation Act.
By the provision convention, foreign arbitral awards can be enforced directly by the Nigerian courts.
(e) International Centre for Settlement of Investment Disputes Convention (“ICSID Convention”): This Convention regulates institutional arbitration and permits ICSID arbitral awards to be enforced at the Supreme Court as enshrined in the ratifying Act (ICSID Act, L.F.N., 2010), subject to the right of a signatory nation to plead sovereign immunity. Section 1(1) of the ICSID Act provides that a copy of the award made by the ICSID duly certified by the Secretary-General of the ICSID, can be enforced at the Supreme Court of Nigeria by the party seeking its recognition for enforcement in Nigeria. The award shall be deemed as if it were a final judgment of the apex court of the country (the Supreme Court) and shall be enforceable as such.
(f) Enforcement by Action on the Award (either Garnishee Proceedings under the Sheriffs and Civil Processes Act or Summary Judgment Procedure under Lagos State High Court (Civil Procedure) Rules 2019 or similar procedure under the various rules of High Courts across Nigeria:
These procedural legislations that guide the issuance and execution of court processes in Nigerian where a judgement creditor seeks to by direct action. A foreign award can be a cause of action for instituting a summary judgment proceeding and a subsequent proceeding to attach judgement debtor’s funds. These legislations contain relevant provisions on enforcement of both judgments and arbitral awards in Nigeria including the conditions for attachment of funds in the possession of public officers.
2. What is the status of Foreign Arbitral Awards in Nigeria?
Generally, arbitral awards have binding force on the parties to an arbitration agreement. In Ras Palgazi Construction Company Limited v. F.C.D.A. (2001) LPELR-2941 (SC); (2001) 10 NWLR (Pt. 722) 559 at 569, paras. C-E the Supreme Court held: “A valid award on a voluntary reference no doubt operates between the parties as a final and conclusive judgment upon all matters referred. It should be remembered that when parties decide to take their matter to arbitration, they are simply opting for an alternative mode of dispute resolution. It must be emphasized that the parties have a choice to either go to court and have their dispute determined by the court or refer the matter in dispute to an arbitrator for resolution. Reference to arbitration, the mode adopted by the parties in the present case is consistent with the agreement executed by both parties. Arbitration as an alternative mode of dispute resolution has for decades been given legal backing. See Arbitration and Conciliation Act of 1988. See: also the cases of Commerce Assurance Ltd. v. Alhaji Buraimoh Ali (1992) 3 NWLR (Pt. 232) 710; K.S.U.D.B. v. Fanz Construction Co. Ltd. (1990) 4 NWLR (Pt. 142) 1. An arbitrator’s award under the provisions of Section 4(2) of the Act when filed in court should for all purposes have the force and effect as a judgment.
An arbitral award is recognised as binding on the parties when it is made but it does not become enforceable until it has been declared enforceable by the judgment of a court. See Section 31 of the ACA. Also, Section 51(1) of ACA expressly provides that an arbitral award will be recognised as binding and enforceable by the court irrespective of the country in which it is made. The specific words of the Act is that “An arbitral award shall, irrespective of the country in which it is made, be recognised as binding and subject to this section and section 32 of this Act, shall, upon application in writing to the Court, be enforced by the Court.”
3. What court has the jurisdiction to enforce an arbitral award in Nigeria?
Enforcement of foreign awards can be initiated before a superior court of record in Nigeria. “Court”, according to Section 57 of ACA, means the High Court of a State, the High Court of the Federal Capital Territory (FCT), Abuja or the Federal High Court. See also Section 4(1) of the Foreign Judgment (Reciprocal Enforcement) Act.
Therefore, both the Federal High Court and the various High Courts of the States or the FCT, Abuja have concurrent jurisdiction to entertain an application to enforce an arbitral award, be it domestic or foreign award. In NNPC v. Fung Tai Eng. Co. Ltd. (2023) 15 NWLR (Pt. 1906) 117 at 184 para. C – F, where the Supreme Court, in holding that the Federal High Court has jurisdiction to recognize and enforce arbitral award, held as follows:
“Recognition and enforcement of arbitral award, is not the same thing and cannot be reasonably equated with thee original jurisdiction of the trial court provided under the Constitution and has no material bearing or connection with such jurisdiction to entertain and try causes or matters specified under the Constitution…….as stated earlier, section 251(1) provides the legislative power and authority of the National Assembly to confer the trial court with the additional jurisdiction over other items and that is what the ACA has done in respect of recognition and enforcement of arbitral awards.”
4. What are the requirements and procedures for the enforcement of foreign Arbitral Awards in Nigeria?
(i) Enforcement of Foreign Arbitral Award under the Foreign Judgments (Reciprocal Enforcement) Act 1988 and Reciprocal Enforcement of Foreign Judgments Ordinance
The provisions of the enforcement of Foreign Arbitral Award under the Foreign Judgments (Reciprocal Enforcement) Act 1988 and the Reciprocal Enforcement of Judgments Ordinance are quite similar, the distinguishing areas of both laws are as follows:
(a) That Reciprocal Enforcement of Judgments Ordinance is restricted to England, Ireland, Scotland and British colonies while the Foreign Judgments (Reciprocal Enforcement) Act is not.
(b) The limitation period for registering a foreign judgment according to the Ordinance is 12 months while the Act provides that a foreign judgment must be registered 6 years in Nigeria. See Section 2 of the Reciprocal Enforcement of Judgment Ordinance and Section 4(1) of the Foreign Judgment (Reciprocal Enforcement) Act respectively.
For foreign arbitral awards to be enforced in Nigeria under the Foreign Judgment (Reciprocal Enforcement) Act, substantial reciprocity of enforcement of Nigerian judgments and awards must be assured in the superior court of the foreign country. This implies that there must be evidence of reciprocity showing that the country from where the award originated, treats Nigerian judgments and arbitral awards favourably.
Under the Reciprocal Enforcement of Judgments Ordinance and the Foreign Judgment (Reciprocal Enforcement) Act, foreign arbitral awards can only attain the status of a judgement when the arbitral award has been so elevated by an order of a court of the country where the award was obtained following an application to the foreign court by a party seeking to rely on the award.
The Court of Appeal, in interpreting the word “judgment” in the provisions of section 2(1) of the Foreign Judgment (Reciprocal Enforcement) Act, held in Tulip (Nig) Ltd. v. N.T.M. S.A.S (Supra) at 274 as follows: “As rightly submitted by respondent’s counsel by the above interpretation, an award can only be elevated to the status of a judgment if the respondent had applied before the English High Court for leave to enforce the arbitral award in the same manner as a judgment and once the High Court in England grants such an order it then becomes a judgment of the English High Court. It is only then that the Reciprocal Enforcement of Judgment Ordinance,Cap. 175, Laws of the Federation of Nigeria, 1958 and Foreign Judgments (Reciprocal Enforcement) Act, 1990 will apply. In the instant case, having regards to the fact that the arbitral award had not become enforceable as a judgment of court, the provisions of the Reciprocal Enforcement of Judgments Ordinance, Cap. 175, Laws of the Federation of Nigeria, 1958 and Foreign judgments (Reciprocal Enforcement) Act, Cap. 152, Laws of the Federation of Nigeria, 1990 were not applicable to this case.”
Similarly, in Emerald Energy Res. Ltd. v. Signet Advisors Ltd (2021) 8NWLR (Pt.1779) 623, the Court of Appeal held that
“There is no doubt that an arbitral award has the force of a judgment. It has a binding force and operates as a judgment. Without undermining the binding force of an arbitral award, the fact still remains that an arbitral award is conclusive, final and operates as a judgment but it is not a judgment in the strict sense of a judgment. There is a difference between an arbitral award and a judgment of court. To show that an arbitral award is not a judgment in the strict legal sense of the word judgment, particularly as it relates to this case, for an arbitral award to be elevated to the status of a judgment of the court of England, the party relying on that award must follow the procedure I had stated above, which is stated in the case of Tulip v. N.T.M.S.A.S. (supra).”
In addition to being elevated to the status of a judgement as decided in Tulip (Nig) Ltd. v. N.T.M. S.A.S (Supra) above, the foreign arbitral award must also be registered by a superior court in Nigeria in accordance with Section 3(1) a-b of the Foreign Judgment (Reciprocal Enforcement) Act.
In order to qualify for registration, the arbitral award must meet the following requirements:
(a) The award must be final and conclusive as between the parties;
(b) The foreign award must be a money judgment (must be for a sum certain, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty). See section 3 (2)b of the Foreign Judgment (Reciprocal Enforcement) Act.
(c) The award must be given after the Act came into force.
(d) Any judgment given before the commencement of the Foreign Judgment (Reciprocal Enforcement) Act may be registered within twelve (12) months from the date of the judgment or such a longer period as may be allowed by a superior court in Nigeria. See Section 10 (a) of the Foreign Judgment (Reciprocal Enforcement) Act
(e) Any judgment registered under the Reciprocal Enforcement of Judgments Ordinance at the time of the coming into operation of the Foreign Judgment (Reciprocal Enforcement) Act, shall be treated as if registered under the Foreign Judgment (Reciprocal Enforcement) Act and compliance with the rules applicable to the Ordinance shall satisfy the requirement of the rule made under the Foreign Judgment (Reciprocal Enforcement) Act.
For the purposes of enforcement and execution, a registered foreign arbitral award under the Act and the Ordinance, will be treated by the Nigerian court to have the same force and effect as the original award obtained in the foreign country allowing an applicant to apply for its execution.
(ii) Enforcement of Foreign Arbitral Award under The Arbitration and Conciliation Act (ACA) 1988 and the New York Convention 1958
Schedule II of the ACA sets out the Convention of the Recognition and Enforcement of Foreign Arbitral Award, 1958 (also known as the New York Convention), which also governs the enforcement of a foreign arbitration award in Nigeria and other signatory countries. Unlike the Reciprocal Enforcement Act that requires registration of the award, the ACA and New York Convention offer a more direct approach for enforcement of the foreign arbitral award at the Court. Nevertheless, before an arbitral award can be enforced by a Nigerian court, as provided under the ACA, it must first be recognized.
For an arbitral award to be valid, according to Section 26 of the ACA, it must:
- Be in writing,
- Be signed by the arbitrator(s), where the arbitral tribunal comprises more than one arbitrator, the signatures of a majority of all the members of the arbitral tribunal shall suffice, if the reason for the absence of any signature is stated.
- State the reasons on which the award is based, except in cases where parties have agreed that no reasons are to be given under section 25 of the Act.
- State the date it was made.
- State the place of the arbitration (the place where the award was made).
- Each disputing party must receive a copy of the award.
Also, Section 31 (1) of the ACA provides that, “An arbitral award shall be recognized as binding and subject to this section and section 32 of this Act, shall upon application in writing to the court, be enforced by the court.” In making an application for the enforcement of an award, the party relying on the award shall supply the duly authenticated original award or duly certified copy thereof; and the original arbitration agreement or a duly certified copy thereof and where the award or arbitration agreement is not made in the English language, a duly certified translation thereof into the English language.
Similarly, Article IV of the New York Convention provides that:
1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:
(a) The duly authenticated original award or a duly certified copy thereof;
(b) The original agreement referred to in article II or a duly certified copy thereof.
2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for the recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.
It is a fact that Nigeria has made the reciprocity reservation and so only awards made in contracting states that undertake to recognize and enforce awards made in other contracting states, including Nigeria will be recognized and enforced in Nigeria. The effect of this is that awards made in a country which is not a party to the Convention or giving reciprocal treatment to Nigerian awards cannot enjoy in Nigeria the recognition and enforcement provided under the Convention.
5. On what grounds can the Nigerian court refuse to enforce a foreign award?
Please note that, pursuant to Article V(1) and (2) of New York Convention 1958, recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party proves that-
(a) the parties to the agreement, under the applicable law, are suffering from some incapacity, or the said agreement is not valid under the governing law or under the law of the foreign country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) the award deals with a dispute not contemplated by or not failing within the terms of the submission to arbitration, provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced; or
(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or the law of the foreign country where the arbitration took place; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the foreign country in which, or under the foreign law of which, the award was made.
(f) the subject matter of the dispute is not capable of settlement by arbitration under Nigerian law; or
(g) the recognition or enforcement of the award would be contrary to the public policy of Nigeria.
It is very rare for the Nigerian court to refuse the enforcement of a foreign arbitral award unless in very exceptional cases. The Supreme Court in Taylor Woodrow (Nig.) Limited v S.E. GmbH [1993] 4 NWLR (Pt 286) 127 at 155 para C (per Ogundare JSC), held as follows:
“The grounds stated by counsel for the respondents L, Sanderson Esqr, and approved by the learned Lord Justice, are in these words
“The jurisdiction to remit the matter for reconsideration can be exercised only upon certain grounds. Those grounds are:
(1)that the award is bad on the face of it;
(2)that there has been misconduct on the part of the arbitrator;
(3)that there has been an admitted mistake, and the arbitrator asks that the matter may be remitted; and
(4)where additional evidence has been discovered after the making of the award.”
I can find no such fatal defect in the award on the appeal on hand to call for intervention by us as provided for under section 11(1). In my respectful view, misconduct has not been established.
The conclusion I reach, therefore, is that I agree with both the learned trial Judge and the Court of Appeal that this is not a case where a court would set aside the award of an arbitrator or remit it to the arbitrator for reconsideration.”
6. What is the limitation period for enforcement of arbitral awards in Nigeria?
It is important to note that the right of enforcement of an arbitral award in Nigeria is not without limitation. Generally, as provided in section 6 of the Limitation Laws of the respective States of Nigeria, an action for enforcement of contract in Nigeria must be commenced at the High Court not later than six (6) years from the date of breach or when the cause of action arises. It is trite law that any action filed after the prescribed limitation period is bound to fail and likely to be dismissed for being statute barred.
There have been conflicting arguments on when time starts to run against the party seeking to enforce an award by an action in Nigeria. Is it from when the cause of action arises (i.e. at the time of committing breach of the contract that gives rise to arbitration) or after the arbitration award is made? Can limitation period be suspended by the Scott v. Avery clauses, which provide in agreements that no action or proceedings in court in a dispute should be taken until the dispute has been referred to arbitration and an award has been made?
The former view that time starts to run from the date of breach is based on the Limitation Law whilst the latter view is premised on the assumption that an arbitral creates a new cause of action and therefore limitation period should commence to run from the date of the award.
Different interpretations have been given to the decisions in the cases of Murmansk State Steamship Line v. Kano Oil Millers Ltd. (1974) 12 SC 1; Obembe v. Wemabod Estates Ltd (1977) 5 SC. 115; and K.S.U.D.B. v. Fanz Construction Co. (1990) 4 NWLR (Pt. 142) 1 and a few more as well as a quotation from Halsbury’s Laws of England, 4th edition, paragraph 611 at p. 323, on when limitation period should begin to count.
It would appear that the Supreme Court has settled the law in City Engineering (Nig.) Ltd. v. Federal Housing Authority (1997) 9 NWLR (Pt. 520) 224. In that case, the parties herein entered into a written agreement dated 17th day of December, 1974 whereby the appellant was to build a number of housing units at Festac Town, Badagry Road, Lagos. The agreement contained an arbitration clause. A dispute arose on 12th December 1980 when the respondent terminated the agreement and the parties eventually went to arbitration presided over by Architect Akinwande Olumide Craig. The arbitration proceedings commenced on 11th December, 1981 and ended in November 1985 when the Arbitrator made his award in the sum of N3,722,118.75 in favour of the appellant. By letter dated 17th August, 1988, the appellant’s solicitors demanded from the respondent the payment of the said sum. When payment was not forthcoming, the appellant applied, by way of motion on notice, to the High Court of Lagos State, pursuant to section 31 (3) of the Arbitration and Conciliation Act No. 11 of 1988, and/or section 13 of the Arbitration Law Cap. 10 Laws of Lagos State 1973 and Order 40 rule 4 of the High Court of Lagos State Rules, 1974.
The respondent’s preliminary objection, brought on the ground of limitation law, was upheld by Ayorinde J., whose reserved ruling was upheld by the Court of Appeal (per Sulu-Gambari, JCA, Kalgo, JCA and Tobi, JCA). A subsequent appeal to the Supreme Court was unanimously dismissed and at page 245 paragraphs E-G, the Supreme Court held as follows:
“With profound respect to the learned authors, a distinction must be drawn between an action to enforce an arbitral award – this is provided for in the arbitration law itself, and the relief that can be granted in such an action is an order enforcing the award as if it were a judgment of the court. And an action for damages for breach of an implied promise to perform a valid award where it is open to the court to order damages for failure to perform the award or decree, in appropriate cases, specific performance of the award or grant an injunction restraining the losing party from disobeying the award or grant a declaratory relief. In my respectful view, the statutory period of limitation in respect of the former form of action runs from the breach that gave rise to the arbitration. The action leading to the appeal before us belongs to that category of action. In respect of the latter category of action, limitation period runs from the date the losing party refuses to obey the arbitral award. In either case, the date of the award does not apply.”
At page 246, paragraph C-D of the report, the Supreme Court held concluded thus:
“The conclusion I reach is that Question (2) is resolved against the appellant. The statutory period of limitation of six years began to run from 12/12/80 and appellant’s application to enforce the award was statute-barred when it was brought in 1988. The appellant has itself to blame for the catastrophe that has befallen it. Notwithstanding that there was some delay in the arbitration proceedings arising from various applications made by both sides, the arbitrator gave his award in November 1985, a date still within the statutory period of limitation. For unexplained reasons, the appellant waited another three years before applying to enforce the award in its favour, by which time limitation period had set in.”
It is significant to mention, as opined by the Supreme Court in City Engineering (Nig.) Ltd. v. Federal Housing Authority (supra), that Scott v. Avery clauses have been rendered ineffective and inapplicable in Lagos State as time begins to run from the date of breach irrespective the inclusion of the Scott v. Avery clause or the date of arbitral award. The provisions of Section 63 of the Limitation Law reads, thus: “Notwithstanding any term in a submission to the effect that no cause of action shall accrue in respect of any matter required by the submission to be referred until an award is made under the submission, the cause of action shall, for the purposes of this law and of any other limitation enactment (whether in their application to arbitrations or to other proceedings) be deemed to have accrued in respect of any such matter at the time when it would have accrued but for that term in the submission.”
