Challenging An Arbitral Award In Nigeria: Grounds, Procedure, And Legal Considerations

Arbitration has become a preferred method of resolving disputes in Nigeria because it is generally faster, more confidential, and more flexible than court proceedings. According to Greenberg, the effectiveness of international arbitration may be considered from the standpoint of its flexibility, neutrality, finality, and enforceability.¹ Still, there are situations where an unsatisfied party to the arbitral proceedings may seek to challenge an arbitral award, sometimes for compelling and legitimate reasons.

This is not unique to Nigeria. Many jurisdictions face the same reality and try to balance two objectives: respecting the finality of arbitral awards as the product of the parties' agreement, while also ensuring that awards which are clearly defective or unjust can be challenged. In Nigeria, the now repealed Arbitration and Conciliation Act ("ACA") adopted this approach by prohibiting appeals against arbitral awards but permitting challenges on limited grounds.² However, Nigerian courts expanded these grounds by introducing the broad category of "error of law on the face of the award."³ This interpretation triggered a flood of court applications seeking to set aside awards on the same basis, undermining the integrity and finality of arbitration in Nigeria.

The Arbitration and Mediation Act 2023 (AMA) replaced the Arbitration and Conciliation Act (ACA) as part of a broader effort to modernize Nigeria's arbitration framework in line with international best practices. Among other reforms, the AMA reinforces the finality of arbitral awards by expressly limiting the grounds on which an award may be challenged. It also removes "error of law on the face of the award" as a valid ground for setting aside an award, thereby reducing the risk of excessive court interference in arbitration.⁴ This article explains the grounds and procedure for challenging an arbitral award under the AMA and highlights the key issues parties should consider before taking that step.

Grounds for Setting Aside Arbitral Awards in Nigeria

Section 55(3)(a) of the AMA sets out the circumstances in which a court may set aside an arbitral award upon the application of a party. These provisions align closely with Article V of the New York Convention 1958 and Article 34(2) of the 2006 UNCITRAL Model Law. The recognized grounds are:

1. Legal Incapacity: where a party to the arbitration lacked legal capacity, for example, a minor or a person of unsound mind.
2. Invalid Arbitration Agreement: where the arbitration agreement itself is invalid under the governing law chosen by the parties, or under Nigerian law if no governing law was
3. Breach of Fair Hearing: where the applicant was not properly notified of the appointment of an arbitrator or of the proceedings, or was denied the opportunity to present their case.
4. Award Overreach: where the tribunal ruled on matters not submitted to arbitration or went beyond the scope of the arbitration agreement.
5. Procedural Irregularity: where the composition of the tribunal or the procedure adopted conflicted with the parties' agreement or with mandatory provisions of the
6. Non-Arbitrable Disputes: where the subject matter cannot be resolved by arbitration under Nigerian law. Examples include matrimonial disputes, tax matters, and criminal prosecutions.⁵
7. Public Policy: where enforcement of the award would be contrary to Nigerian public policy. Although this ground is often raised, it rarely succeeds, as Nigerian courts apply it narrowly—typically in cases involving fraud, corruption, or outcomes that are manifestly unjust or immoral.⁶

The Award Review Tribunal

One of the notable innovations of the Arbitration and Mediation Act 2023 (AMA) is the creation of the Award Review Tribunal (ART). The ART is modelled after the optional appeal scheme developed by the American Arbitration Association and the International Center for Dispute

Resolution (AAA-ICDR). The ART gives parties the option—if they expressly agree in their arbitration clause or later agreement—to submit an arbitral award for a second review on the same grounds that the AMA recognizes for setting aside an arbitral award.⁷ In essence, it introduces an internal appellate mechanism within arbitration, without immediate recourse to the courts.

Unless the parties agree otherwise, the ART will have the same number of arbitrators as the original tribunal. The parties also retain the right to appoint the members of the ART.⁸

Importantly, the AMA draws a distinction in the role of the courts after an ART decision.

• If the ART sets aside the award (in whole or in part), a dissatisfied party may apply to court for review.
• If the ART affirms the award (in whole or in part), a court application is strictly limited to two grounds: that the dispute is non-arbitrable under Nigerian law, or that the award violates public policy.⁹

Procedure for Challenging an Award- Court Route

A party seeking to set aside an arbitral award must apply to the appropriate court—either the Federal High Court or the State High Court with jurisdiction over the dispute—by way of an Originating Motion. This application must be filed within three (3) months of receiving the award.¹⁰

Although the AMA does not expressly detail the filing requirements, such an application is typically accompanied by an affidavit exhibiting the arbitration agreement and the award and a written address outlining the grounds and legal arguments for setting aside the award.

In addition to this route, the AMA also allows a party to challenge an award indirectly during enforcement proceedings. Under Section 58 of the AMA, a party may ask the court to refuse recognition or enforcement of the award by proving one or more of the following:

• that a party to the arbitration agreement lacked legal capacity;
• that the arbitration agreement was invalid under the applicable law or under the law of the country where the award was made;
• that the party was denied fair hearing; or

• other jurisdictional or public policy grounds specified in

The AMA, therefore, distinguishes between (i) an application to set aside an arbitral award and

(ii) an application to resist recognition or enforcement of an award. However, this distinction may create procedural challenges. A party could, for instance, bypass the three-month time limit for setting aside an award and instead wait to challenge enforcement at a later stage. Similarly, a party whose application to set aside an award has already failed might attempt to re-litigate the same issues by opposing enforcement. Nigerian courts have consistently frowned upon such tactics. Attempts to reopen issues already decided are treated as an abuse of court process, and courts are likely to dismiss such actions to preserve the finality and integrity of arbitration proceedings.¹¹

Outcome of a Successful Challenge

Where an award has been submitted to a court for review, what are the possible decisions the court might deliver? The court may decide to- affirm the award; vary the award; refer it back to the arbitral tribunal for consideration; or set aside (wholly or partly).¹² Where the award is varied, the variation has effect as part of the tribunal's award. Where the award is remitted to the tribunal, in whole or in part, for reconsideration, the tribunal shall make a fresh award in respect of the matters remitted. ¹³Where an award has been set aside by the court, such award becomes invalid and unenforceable in any jurisdiction.

Key Legal Considerations

A party seeking to challenge an arbitral award should keep the following legal points in mind:

• Adversarial Procedure: An application to set aside an arbitral award must be served on all other parties to the arbitration, who are entitled under Nigerian law to respond.¹⁴ A party initiating the challenge should therefore anticipate firm resistance from the opposing party, particularly where the award is in that party's favour.
• Waiver: Procedural objections—such as lack of proper notice of an arbitrator's appointment or improper composition of the tribunal—must be raised promptly once discovered. Failure to object at the earliest opportunity may be treated as a waiver of that right, preventing the party from later relying on such irregularities as grounds for challenge.
• Burden of Proof: The burden lies squarely on the party challenging the award. The applicant must present clear and credible evidence to support the specific grounds relied upon; mere dissatisfaction with the outcome of the arbitration is not enough.¹⁵

Conclusion

The provisions of the Arbitration and Mediation Act 2023 (AMA) on challenging arbitral awards align with international best practices and reflect Nigeria's ongoing commitment to strengthening its arbitration framework. By clearly defining the limited circumstances in which courts may intervene, the AMA promotes certainty, efficiency, and confidence in the arbitral process while maintaining essential judicial oversight.

In this context, parties considering a challenge should carefully assess the statutory grounds under the AMA in light of available evidence, comply with procedural timelines, and seek timely legal guidance before proceeding. A well-considered approach not only improves the prospects of success but also helps preserve the efficiency and integrity of the arbitral system. For more information on arbitration and dispute resolution, contact us at info@scp-law.com.

Footnotes

1 Simon Greenberg, Christopher Kee and J. Romesh Weeramantry, INTERNATIONAL COMMERCIAL ARBITRATION: AN ASIA [1] PACIFIC PERSPECTIVE; Cambridge University Press, para. 1.1 (2011) (See, https://www.mondaq.com/nigeria/arbitration-dispute-resolution/1157068/arbitral-awards-in-international- commercial-arbitration-appropriateness-of-review-by-national-courts)

2 Sections 29, 30 & 51 of the Arbitration and Conciliation Act, Cap A18, Laws of the Federation of Nigeria, 2004.

3 See case of Kano State Urban Development Board v. Fanz Limited (1986) 5 N.W.L.R. (Pt. 39) 74. 14 (and Taylor Woodrow (Nig) Ltd v. Suddeutsche Etna-Werk GmbH (1993) 4 NWLR (Pt. 286) 127

4 See Section 55(2) of the AMA

5 See https://www.mondaq.com/nigeria/arbitration-dispute-resolution/1526466/arbitrable-vs-non-arbitrable- disputes-unpacking-the-principles-on-arbitrability-in-nigeria; also see Kano State Urban Development Board v. Fanz Construction Co (1990) 4 NWLR (Pt. 142)

6 See Agro-Allied Development Enterprises Limited v. United Shipping Trading Co. Inc (2010) 9 NWLR (Pt. 1252) 258.

7 Section 56 of the AMA

8 Section 56 () of the AMA

9 Article 56(9) of the AMA

10 Section 55(4) of the AMA

11 See the cases of Saraki v Kotoye (1992) 9 NWLR (Pt. 254) 156 at 188-189, and Jibrin & Ors v Shaibu & Ors (2018) LPELR-47109(CA)

12 Section 55(5) of the AMA.

13https://www.mondaq.com/nigeria/arbitration-dispute-resolution/1157068/arbitral-awards-in-international-commercial-arbitration-appropriateness-of-review-by-national-courts.

14 This accords with the right to fair hearing enshrined in Section 36 of the 1999 Constitution as amended

15 See section 58(2)(a) of the AMA, 2023

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.