Litigation has been the traditional way of settling disputes in Nigeria. However, over time with the time consuming and cumbersome nature of litigation and also with increasing global awareness, more alternative ways of resolving disputes have become more sought after than courtroom litigation.
Some of the reasons for choosing alternative dispute resolution mechanisms other than litigation include the sensitivity or confidential nature of certain disputes, their complexity and the timely nature of resolution required for them.
The commonest forms of alternative dispute resolution in Nigeria include; Negotiation, Mediation, Conciliation and Arbitration. Arbitration has gained a lot of popularity especially in cases of cross-border transactions.
The Arbitration and Conciliation Act is the federal procedural law on arbitration in Nigeria, it provides for both domestic and international commercial arbitration and applies only to disputes arising from commercial transactions.
Arbitration is an agreement by parties to a contract, that in the case of a dispute arising between them, a tribunal of private individuals independently chosen by them or other approved persons, would settle the dispute. Arbitration is usually preceded by an “Arbitration Agreement” or an “Arbitration clause” contained in the contract, where the individuals expressly state that in the instance of a dispute, the disputed matter (s) would be submitted to Arbitration.
Badly drafted arbitration clauses are a negation to arbitration and render them unenforceable, it is always advisable to seek the services of a lawyer when entering into these kinds of Agreements.