Apr 25, 2016

Re-Invigorating Members'Commitment through Small Claims Arbitration, ODR & Institutionalization of Mentorship - Ahmed Adetola-Kazeem

Ed's Note: This is the text of the Speech delivered by Ahmed Adetola-Kazeem, MCIArb (UK) delivered at the AGM of the Chartered Institute of Arbitrators, Nigeria Branch on 21st March 2016. Same was published by the author on www.linkedin.com on 22nd April, 2016. 
Photo Credit - www.thelaw.tv 
By the records of the Chartered Institute of Arbitrators, Nigeria has the fastest growing branch of the institute and ironically, has the lowest record of dues payment worldwide. As at 15th of October 2015, out of a total of 1241 members only 319 paid up their dues. 144 Associates out of 755, 118 Members out of 379 and 57 fellows out of 107 paid. The percentage of members who did not pay their dues in the period under review was 74.2%. When I was inducted as a member in 2010 about a 100 of us were inducted, less than 10% of that number are active presently. Many members, particularly young members are very enthusiastic when they join the institute, but with time their interest starts to wane. When asked about the reason for their loss of interest, they complained of non-inclusion and the lack of practical experience in arbitration practice. In summary, most members are disenchanted and see no reason why they should keep paying their dues without any meaningful gain or any hope of one. Some view the established arbitrators as a clique or worst still, a cabal who do not want outsiders within their ranks.

To combat the gloomy picture painted above, there is need for the institute to take concrete steps at ensuring that members have a sense of belonging by creating opportunities for them to have practical experience in arbitration. If there is a failure in this regard it will definitely come to hurt us. This point was made by Late Hon. Justice Kayode Eso who stated in the foreword to the book,Commercial Arbitration Law and International Practice in Nigeria that:
“…the greatest threats to the sustainability and growth of commercial arbitration in this country remain the dearth of reliable up-to-date literature on the subject and the entry into the practice of ill-equipped individuals who lack the learning, comportment and experience needed to harness the benefits of commercial Arbitration. (Emphasis mine)
If the situation as painted by the late learned jurist is to change, the Chartered Institute of Arbitrators and other arbitral bodies must institutionalize mentorship and create opportunities for young arbitrators to thrive by putting in place the necessary structures for Small Claims Arbitration and Online Dispute Resolution.
It should be noted that the challenges painted above are not peculiar to Nigeria; other jurisdictions face similar challenges and are trying to surmount them.Ciaran Fahy wrote in his article titled: “Dispute Resolution in the Irish Construction Industry: Future Trends”[2] that:
In my view arbitration as a process in Ireland, and indeed in other countries, is in decline and the significant growth of other dispute resolution methods is a testament to its shortcomings. In simple terms arbitration is perceived, in my view rightly, as too slow and consequently too expensive. It is by no means uncommon to find an arbitration on a one-year construction job takes up to two years or so to find the cost associated with an arbitration are a multiple of the award and even sometimes the amounts claimed. To me, that is simply unacceptable.
However, I believe the situation I have described above derives mainly from a lack of expertise and also a lack of creativity on the part of those involved rather than an inherent problem with the process itselfI have frequently heard it said that the pool of arbitrators in Ireland is very limited and that apart from a few individuals the quality is at best uneven. In my view that is true but it is not the full truth of the situation since I believe the lack of expertise extends across the full range of people involved in arbitration and in particular it seems to me to apply to lawyers where, with a few notable exceptions, the level of knowledge or understanding is limited.
In order to rectify this I believe the two approaches are required. First, the professional bodies involved in this area should recognize the need to provide ongoing training at an increasingly high level not only to those who are or who wish to be, arbitrators but also to those who themselves engaged in arbitration work. I also think those who are involved in arbitration need to be more creative in their approach and in that context I believe the two new procedures published by Engineers Ireland are significant. To me, a dispute involving a relatively small sum of money, and by that I mean anything up to €250,000, should as a matter of course, be dealt with under a fast-track procedure such as the Engineers Ireland 100-Day Procedure.” (Emphasis mine)
The writer above painted the dire situation arbitration finds itself, he emphasized that lack of expertise and creativity are reasons for the problems presently beleaguering the practice of arbitration. In order to remedy this situation, the Chartered Institute of Arbitrators and other arbitral institutions must build the expertise of their members and encourage members’ participation through Small Claims Arbitration, Online Dispute Resolution and Institutionalization of Mentorship amongst other creative means.
I say forehand, that the options are closely related but have their distinct features. An attempt would be made to highlight the features of the various suggestions within the time frame of this member’s forum. I believe a more comprehensive discussion on the various suggestions will be made at future programmes or conferences.
1.     Institutionalizing Mentorship
Talks about mentorship have become clichés. Everyone talks about it, but very few people undertake to practice it in its real sense. It cannot be said that mentorship in the field of arbitration is totally non-existent; it is at best done on an ad hoc basis or in most cases theoretical, rather than practical. The above thought was echoed by Joanna Steele in her paper titled “The LMAA in the Twenty-First Century: Securing the Future for London Maritime Arbitration”[3] where she said:

The experienced arbitrator would along the line assess the competence of the young arbitrator through oral and written assessment.
The young arbitrator through the practical mentorship sessions will learn how to conduct arbitral proceedings, how to draft orders and ultimately how to draft valid and compelling awards. For the sake of emphasis, the mentorship programme should be regulated and monitored by the concerned arbitral institution as is presently done at the International Council for Commercial Arbitration (ICCA). Once a young arbitrator has met some set criteria he or she may then be appointed as an arbitrator in Small Claims Arbitration.
1.     Small Claims Arbitration
One of the duties of an arbitral tribunal is to conduct the proceedings in a cost effective way; for instance, Art. 17(1) of the Arbitration Rules of Lagos Court of Arbitration provides that: “The arbitral tribunal, in exercising its discretion, shall conduct the proceedings so as to avoid unnecessary delay and expense and to provide a fair and efficient process for resolving the parties’ dispute”.
The problem of costs in arbitration is a recurring issue and parties frequently complain that arbitration often costs significantly more than it is expected to cost and now the cost of bringing or defending a claim before an arbitral tribunal is likely to be considerably higher than that of bringing or defending the same claim before a national court. The problem of costs is more significant if the amount in dispute is small. Added to this is the fact an established arbitrator is likely to turn down a reference if he considers the claims too small, whereas a young arbitrator will be willing to handle such reference in order to sharpen his skills and for the needed experience. There is therefore the need for arbitral institutions to align the need of users for a cost-effective arbitration process with that of young and inexperienced arbitrators’ need for the experience to grow in the field of arbitration.
Many arbitral Institutions have provisions for small-claim arbitration but one of the most robust is that of the London Maritime Arbitrators Association (LMAA). The London Maritime Arbitrators Association issued its guidelines with a view to making the decision-making process as cost-effective and efficient as possible. Arbitral institutions in Nigeria should take a cue from LMAA by coming up with similar rules or procedures with a view to mitigating the cost of arbitration and providing a veritable opportunity for qualified less-experienced arbitrators to hone their skills.
In LMAA arbitrations, there are three special procedures namely: the Small Claims Procedure (SCP), the Intermediate Claims Procedure (ICP) and the Fast and Low Cost Arbitration (FALCA).
Small Claims Procedure is applicable to any dispute which parties have agreed should be referred to arbitration under this procedure. If any such agreement refers to a monetary limit for disputes that may be so referred, such limit shall be deemed to exclude interest and cost, unless the parties agree otherwise.
·         The dispute shall be decided by a sole arbitrator, as can be gleaned from the wording of paragraph 2 of the LMAA Small Claims Procedure 2012.
·         The Claimant shall file a letter of claim not exceeding 2,500 words accompanied by relevant documents and the Respondent shall submit a letter of defence and counterclaim (if any) of the same length accompanied by relevant documents.
·         A letter of reply (if any) not exceeding 1,000 words or of reply and defence to counterclaim not exceeding 2,500 words shall be delivered by the Claimant.
·         The Respondent shall, if he so wishes, deliver to the Claimant a letter of reply to defence to any counterclaim not exceeding 1,000 words.
·         Experts’ reports shall only be admissible with the permission and subject to the directions of the arbitrator. Experts’ reports must not exceed 2,500 words.
·         The general rule is that no hearing shall be held, however in exceptional circumstances the arbitrator may require that an oral hearing shall be held. Oral hearing shall be limited to one working day of 5 hours.
·         The Arbitrator shall issue the award in a month from the date when he has received all relevant documents and submissions, or, where there is an oral hearing, from the close of the hearing.
·         The right of appeal to the courts is excluded under this procedure.
The Intermediate Claims Procedure is regulated by LMAA Intermediate Claims Procedure (ICP) 2012.
·         The Intermediate Claims Procedure shall apply when the total amount of the claimant’s claims or the total amount of any counterclaims exceed 100,000 USD, but not 400,000 USD.
·         Paragraph 2 of ICP provides for an arbitral tribunal composed by three arbitrators, unless otherwise agreed by the parties.
·         Each party may serve two written submissions, without any limit of length.
·         No expert evidence may be adduced by either party unless the permission of the tribunal has first been obtained.
·         An expert’s initial report shall be limited to 3,500 words and supplementary report to 1,000 words.
·         An oral hearing shall be held only exceptionally, but in a case where there is no oral hearing but there has been disclosure and/or witness and /or expert evidence, each party shall be entitled to serve one set of closing submissions.
·         The award shall be made within 6 weeks of service of the last submissions served by the parties.
The LMAA has adopted the Fast and Low Cost Arbitration (FALCA) Rules in order to encourage quicker and cheaper resolution of the middle range of maritime disputes– those which involve neither very large nor very small amounts of money. The LMAA FALCA Arbitration Clause for insertion in charter parties and other maritime contracts allows the parties to choose for themselves the size of the claim to which the FALCA Rules will apply, but if no figure is inserted the Rules will apply to claims under 250,000 USD.
·         A single arbitrator shall decide the dispute. Each party may serve two written submissions, without any limit of length.
·         After a swift discovery phase (as provided for in Rules 11 and 12 of FALCA Rules), the parties shall exchange copies of statements of witnesses and experts' reports (if any) and within four weeks thereafter, the parties shall exchange final submissions, together with witness statements or experts' reports in reply (if any).
·         No oral hearing shall be held, unless the arbitrator deems it necessary.
·         Under Rule 17 of FALCA Rules, the award shall be issued within 7 months of the notice of appointment of arbitrator (8 months, if there is a counterclaim) and the arbitrator may, in his absolute discretion, take into account any evidence whether strictly admissible or not, and require the production of any document or the statement of any witness (whether sworn or otherwise).
1.     Online Dispute Resolution (ODR)
Online dispute resolution (ODR) is a genre of dispute resolution which uses technology to facilitate the resolution of disputes between parties. It primarily involves negotiationmediation or arbitration, or a combination of all three. In this respect it is often seen as being the online equivalent of alternative dispute resolution (ADR). However, ODR can also augment these traditional means of resolving disputes by applying innovative techniques and online technologies to the process.
ODR techniques are already being deployed around the world in resolving a wide range of disagreements – from consumer disputes to problems arising from e-commerce, from quarrels amongst citizens to conflicts between individuals and the state. ODR is not appropriate for all classes of dispute, but on the face of it, is best placed to help settle high volumes of relatively low value disputes – robustly, but at much less expense and inconvenience than conventional courts or conventional arbitration.
It is believed that efficient mechanisms to resolve online disputes will impact on the development of e-commerce. While the application of ODR is not limited to disputes arising from business to consumer online transactions, it seems to be particularly apt for these disputes, since it is logical to use the same medium (the internet) for the resolution of e-commerce disputes when parties are frequently located far from one another.
Dispute resolution techniques range from methods where parties have full control of the procedure, to methods where a third party is in control of both the process and the outcome.[4]These primary methods of resolving disputes may be complemented with Information and Communication Technology (ICT).[5] When the process is conducted mainly online it is referred to as ODR, i.e. to carry out most of the dispute resolution procedures online, including the initial filing, the neutral appointment, evidentiary processes, oral hearings if needed, online discussions, and even the rendering of binding settlements. Thus, ODR is a different medium for resolving disputes, from beginning to end, respecting due process principles[6].
While the use of ODR has become commonplace in the Western world with e-businesses such as Amazon and eBay solving millions of disputes through ODR, It is instructive to note that the concept of ODR is still very strange in Nigeria. On eBay alone, around 60 million disagreements amongst traders are resolved through ODR yearly.[7]
There is a huge market for arbitrators and other ADR practitioners in ODR if the proper legal framework is put in place and other modalities for its success worked out. With the advent of e-businesses in Nigeria, such as Konga, Jumia, Yudala, OLX, Jiji etc., and the numbers growing daily, the potential for growth of ODR can only be imagined. If properly utilized, this would be a veritable means for the inclusion of young arbitrators in the arbitral process.

The world is moving and we must not be left behind. The world is changing so are the dispute resolution techniques and methodologies. Mentorship, Small Claims Arbitration and Online Dispute Resolution are interwoven. In most jurisdictions, Small Claims Arbitrations, due to the amount involved and the need to cut cost as much as possible, are settled via ODR. Small Claims Arbitration and ODR are equally veritable instruments for the mentoring and grooming of Young arbitrators into becoming internationally acclaimed Arbitrators.

I suggest Arbitral institutions intensify efforts on training young members in practice and procedure of arbitration. It is almost certain that the Institute will witness a rise in payment of dues and participation if members feel a sense of belonging by gaining actual experience and not just listening to speeches. This is not to say that speeches are not useful to members, but speeches without action are like learning driving or cooking theoretically without practicals.

The experienced Arbitrators must realize that the survival and success of the Institute and arbitration at large lie in the hands of motivated young arbitrators. They therefore have a duty to build the future of arbitration they would love to see, by coming up with a robust and deliberate policy to include young arbitrators in more arbitration proceedings.
[1] AHMED ADETOLA-KAZEEM, MCIArb(UK) is a counsel at Gani Adetola-Kaseem (SAN) LP. He is a member of the board of trustees, Lagos Public Interest Law Partnership (LPILP). He serves in the Young Members’ Group (YMG) steering committee, scale of fees review committee and membership committee of the Chartered Institute of Arbitrators, Nigeria Branch. He was a finalist at the International Bar Association Pro Bono Awards held in Boston in 2013 and won the Governor’s Award for best Youth Corps member (batch C) Abia State, 2010.
[2] Published in The International Journal of Arbitration, Mediation and Dispute Management, Volume 78, Number 2 at page 169
[3] Published in the International Journal of Arbitration, Mediation and Dispute Management, Volume 76, Number 3, August 2010 @ page 407
[4]C. Rule, Online Dispute Resolution for Businesses. B2B, E-Commerce, Consumer, Employment, Insurance, and Other Commercial Conflicts (San Francisco, Jossey Bass, 2002) p. 37
[5]P. Cortes, "A European Legal Perspective on Consumer Online Dispute Resolution" (2009) 15(4) Computer Telecommunications Law Review pp. 90-100.
[6]J. A. García Álvaro, "Online Dispute Resolution Uncharted Territory" (2003) 7 The Vindobona Journal of International Commercial Law and Arbitration P. 180.