Nigeria’s Reform Cycle On Arbitration And Mediation: What Businesses In Nigeria Still Need To Know In 2026

The Arbitration and Mediation Act 2023 represents a paradigm shift in Nigeria’s alternative dispute resolution framework. While widely praised for aligning with international best practices, several provisions continue to pose practical and strategic considerations for businesses operating in Nigeria. This article critically examines the key provisions of the Act, highlights relevant judicial authorities, and identifies areas where businesses must remain vigilant as of 2026.

Introduction

The Arbitration and Mediation Act 2023 (“AMA” or “the Act”) repealed the Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria 2004, ushering in a modernised regime for arbitration and mediation in Nigeria.¹The Act adopts a unified framework that incorporates both arbitration and mediation, drawing heavily from the UNCITRAL Model Law on Internal Commercial Arbitration (2006) and the UNCITRAL Model Law on International Commercial Mediation (2018).²

However, legislative reform alone does not guarantee commercial efficiency. Nigerian businesses must understand how these provisions operate in practice, particularly in light of evolving judicial interpretation. Several provisions have shaped today's modern ventures which will be considered in this article. Some of which are: the mandatory enforcement of arbitration agreements, the recognition of electronic Agreements, emergency arbitration, among others.

Mandatory Enforcement of Arbitration Agreements

Section 5 of the AMA imposes a mandatory obligation on courts to stay proceedings where an arbitration agreement exists, unless such agreement is null, void, or incapable of performance.³This provision reflects the well-established judicial support for arbitration agreements, as seen in the popular case of MV Lupex v Nigerian Overseas Chartering & Shipping Ltd, where the Supreme Court affirmed that courts must give effect to arbitration clauses.⁴

Similarly, in Statoil (Nig) Ltd v NNPC, the Court of Appeal emphasised that arbitration agreements are to be strictly enforced. ⁵ The implication for businesses is that they can now rely on greater judicial certainty, but must ensure arbitration clauses are properly drafted to avoid being declared inoperative.

Recognition of Electronic Arbitration Agreements

Section 2(4) expands the definition of arbitration agreements to include ‘electronic communications’⁶. This aligns with global commercial realities and reinforces judicial recognition of informal agreements, as reflected in A.G. Rivers State v A.G. Akwa Ibom State, where the court acknowledged modern contractual practices⁷.

The practical risk of this position is that businesses may inadvertently enter binding arbitration agreements through email exchanges or digital platforms.

Emergency Arbitration

Section 16 introduces emergency arbitrators empowered to grant interim relief prior to the constitution of the tribunal⁸. Although relatively novel in Nigeria, courts have historically exercised similar powers. In Kotoye v CBN, the Supreme Court laid down principles governing interlocutory and interim injunctions, which now find parallels in emergency arbitration⁹. The commercial significance of this provision sees to reduce reliance on courts for urgent relief, particularly for pressing transactions that have a limited timeframe.

Third Party Funding

The AMA 2023 expressly permits third party funding and abolishes the doctrines of maintenance and champerty in arbitration.¹⁰ Previously, these doctrines posed significant uncertainty, as seen in Oloko v Ube, where the court found third party funding to be “champertous”¹¹ i.e. an illegal or unethical agreement that where a third party not involved in a lawsuit funds the suit in exchange for a share of the proceeds of the judgment sum. However, in recent times, especially since the legislation of AMA 2023, third party fundings are now permitted for arbitration. The impact of this legislation in business enhances access to justice, however, disclosure obligations may affect legal strategy and confidentiality.

Default Appointment of a Sole Arbitrator

Section 6 of the AMA provides that unless otherwise agreed, a sole arbitrator shall be appointed.¹²This marks a departure from the previous default of three arbitrators under the previous legislation. The implication of this change will allow cost reduction in businesses, ensure a faster proceeding, and will more so enable greater accessibility for SMEs.

Joinder and Consolidation

Section 40 empowers tribunals to join additional parties where they are prima facie bound by the arbitration agreement.¹³ This addresses inefficiencies previously experienced in multi-party disputes, particularly in construction and oil & gas sectors.

Arbitrator Immunity

Section 13 explicitly grants immunity to arbitrators and arbitral institutions, except in cases of bad faith.¹⁴ This aligns with international best practices and reinforces arbitral independence.

The Award Review Tribunal (ART)

Section 56 introduces the Award Review Tribunal as an ‘optional’ mechanism for reviewing arbitral awards.¹⁵ This is a distinctive innovation in Nigerian arbitration law.

This position raises some concerns in Business ventures, such as the potential erosion of finality in dispute, increased cost, and delay where parties are not satisfied with outcomes or processes, and the strategic misuse by losing parties.

Mediation Framework

The Act formally codifies mediation and provides for the enforceability of mediated settlement agreements.¹⁶ This reflects global trends and strengthens mediation as a viable dispute resolution mechanism.

Limitation Periods

Section 34 provides that limitation periods are suspended during arbitral proceedings.¹⁷ This ensures that parties are not prejudiced by procedural delays.

Enforcement of Arbitral Awards

Nigeria remains a ‘signatory’ to the New York Convention on the Recognition and Enforcement of Arbitral Awards, and the AMA reinforces the recognition and enforcement of arbitral awards.¹⁸ The judicial support for enforcement is evident in the case of M.V. Panormos Bay v Olam (Nig) Plc.¹⁹

National Policy on Arbitration and Alternative Dispute Resolution

Following the passage of the AMA in 2023, the Federal Executive Council approved the National Policy on Arbitration and ADR in July 2024. The Policy was promulgated as part of the reforms of arbitration and ADR in Nigeria. Importantly, the Policy states the following:

1. Judicial proceedings arising from arbitration and ADR are not to exceed 60 days from date of filing.
2. Appeals shall be determined within 270 days of the date of filing of appeals.
3. Appeals for arbitration/ADR matters shall terminate at the Court of Appeal.

While these provisions are welcome, there are some issues with the implementation of the Policy as it cannot mandate the number of days for determining arbitration/ADR matters without courts either amending their rules of court/issuing practice directions. Further, it is a constitutional matter to decide that arbitration/ADR matters terminate at the Court of Appeal and it will be a much longer, legislative process to amend the Constitution of the Federal Republic of Nigeria 1999 (as amended).

Conclusion

The Arbitration and Mediation Act 2023 and the National Policy of Arbitration and ADR represents a significant advancement in Nigeria’s dispute resolution framework. However, its effectiveness depends largely on how businesses structure their contracts and how courts continue to interpret its provisions. Businesses that proactively adapt will be better positioned to leverage its benefits.

Footnotes

^{1 Arbitration and Mediation Act 2023.}

^{2 UNCITRAL Model Law on International Commercial Arbitration 2006.}

^{3 AMA 2023, s 5.}

^{4 MV Lupex v Nigerian Overseas Chartering & Shipping Ltd (2003) 15 NWLR (Pt 844) 469.}

^{5 Statoil (Nig) Ltd v NNPC (2013) 14 NWLR (Pt 1373) 1.}

^{6 AMA 2023, s 2(4).}

^{7 G. Rivers State v A.G. Akwa Ibom State (2011) 8 NWLR (Pt 1248) 31.}

^{8 AMA 2023, s 16.}

^{9 Kotoye v CBN (1989) 1 NWLR (Pt 98) 419.}

^{10 AMA 2023 (Third party funding provisions).}

^{11 Oloko v Ube (2001) 13 NWLR (Pt 729) 161.}

^{12 AMA 2023, s 6.}

^{13 AMA 2023, s 40.}

^{14 AMA 2023, s 13.}

^{15 AMA 2023, s 56.}

^{16 AMA 2023 (Mediation provisions).}

^{17 AMA 2023, s 34.}

^{18 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.}

^{19 V. Panormos Bay v Olam (Nig) Plc (2004) 5 NWLR (Pt 865).}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.