Aug 15, 2016

Tanimola Anjorin - An exposè on the Arbitration procedural stages

Arbitration as a better alternative to litigation: An exposè on the procedural stages[1]

Alternative Dispute Resolution (“ADR”) simply refers to any means of dispute resolution excluding litigation in a courtroom.  It is a form of facilitated settlement, which is confidential and without prejudice.  Consequently, the details of the process are not usually disclosed to the public except where it snowballs into a court action. 

The laws governing arbitration in Nigeria include the Arbitration and Conciliation Act (“the Act”)[2], which is a federal law, Lagos State Arbitration Law 2009 (“the Lagos Law”) and some other states’ arbitration laws. This paper seeks to examinethe procedural stages in arbitration,one of the most common ADR mechanisms, and the reasons which make arbitration a better alternative to litigation. 

Arbitration provides a forum for participants to present arguments and evidence in support of their case, to a third party neutral who makes a binding decision called an award. It is a process controlled by a single arbitrator or a panel of arbitrators appointed by the parties.
Any of the parties to a contract may adopt arbitration where an arbitration clause is contained in the agreement, and a dispute arises in relation to it.Where there is noarbitration clause and the parties desire is to proceed to arbitration, a consent to arbitration via submission agreement may be entered by the parties.
The expeditious disposal of cases in arbitration stems from the less formal procedure adopted in arbitral proceedings.The procedure for initiating and conducting arbitration are spelt out in the arbitration rules to be found in the First Schedule to the Act. 

One of the advantages of arbitration is that the disputants have consensually chosen their own private “judge” called the arbitrator(s)[3]. The arbitral tribunal determines the venue of the hearings after due consultation with the parties. Where there are three or more arbitrators, decision is by majority. Therefore, an odd number of arbitrators is advised. 

Arbitration commences with a notice to commence arbitration being sent by an aggrieved party to the other party.In the course of arbitration proceedings, request for more information, discovery of documents and visits to relevant location may be done. However, to ensure expeditious disposal of the matter, all of these issues would most likely be narrowed down during pre-hearing review. 

The tribunal listens to the oral statements and questioning of the witnesses of both parties(cross examination)as examination-in-chief may be in form of witness statements on oath. Also, expert witnesses may be called by the parties to render their opinions on issues in dispute.This may be pruned down during pre-hearing review as the parties are likely to distill witness of facts and expert witnesses.

Arbitration proceedings are not however regulated by formal rules of evidence as stipulated in the Evidence Act thereby resulting in less formal and flexible proceedings.

In ensuring an expeditious process in arbitration, some basic procedures are adopted which endears the business world to arbitration instead of litigation:

The first step in any arbitral proceedings is to constitute the arbitral panel.This can either be provided in the arbitration agreement or conducted in accordance with the Act[4]. In any case, there can be no arbitration without an arbitrator and an arbitrator must be appointed to conduct the reference. Once the arbitrator is appointed he must be clothed with jurisdiction.Jurisdiction is the authority to arbitrate upon the dispute between the parties.

The arbitrator is only authorised to exercise the jurisdiction and powers conferred on him by the parties.His jurisdiction is derived from the agreement of the parties i.e. the issues submitted to him for determination or from Statute. The arbitral tribunal is competent to rule on its jurisdiction[5].

The mainpurpose of a preliminary meeting is to plan the expeditious and efficient conduct of the arbitration. Arbitration is a broad spectrum where innovations and variety are not only encouraged but lauded:
“…the arbitral tribunal may, subject to this Act, conduct the arbitral proceeding in such a manner as it considers appropriate so as to ensure a fair hearing”[6].

The overriding procedural obligations of an arbitration tribunal in conducting a reference include:
(i)    complying with the express mandate, if any, laid down by the parties;
(ii)   conducting the process fairly and even-handedly; and
(iii)  using all reasonable dispatch in entering on, proceeding with the reference and making an award.
Preliminary meeting therefore cannot be held until:
(i)    The tribunal has been appointed;

(ii)   The tribunal has been provided with the information as to the principal issues between the parties although this can sometimes be dealt with at the preliminary meeting;

(iii)  Administrative fees, where applicable, have been paid; and

(iv)  The impartiality of the arbitrators have been checked, where necessary, and the result made available to all.

It is imperative that adequate preparations be made well ahead by the arbitrators, the parties and their advisers before the preliminary meeting. Issues like the (i) venue[7], (ii) time[8], (iii) transportation arrangements for the arbitrators and other sundry issues must be addressed in order to have a successful meeting and most importantly, a well-drawn up agenda.

In advance of the preliminary meeting, the parties should also try to identify the matters to be dealt with and, if possible, agree on the procedure and any directions to be sought from the tribunal. If agreement is reached, this will save time and costs at the preliminary meeting itself and may even render such meeting unnecessary.

It is preferable except in very simple cases to hold a pre-hearing review before the hearing and after all the preliminary meetings. This helps to save time and costs at the hearing because the pre-hearing review helps the arbitrator and the parties clarify all outstanding issues so that by the time they go into the hearing they can go through them on a day-to-day basis and finish in a short time. The matters to be discussed at the pre-hearing review will vary depending on what has transpired at the preliminary meetings (if any).

The choice of proceedings to be adopted depends on the facts of each case[9]. Where parties do not choose or agree on any type of hearing, the tribunal chooses the type of hearing[10].It is better for the parties to agree on the type of hearing to be adopted where there is a serious dispute over relevant facts. The proceedingat trial may take the form of:documents only where there are no oral testimonies to support the claim;documents only with brief oral final submissions; or documents only with only experts in attendance to give oral testimony before the arbitrators.If “Documents Only” method is agreed, then the “issues” need to be framed with more precision than when any other form of proceedings is adopted. 
Short Procedure Hearing:
This is only suitable for “quality” dispute requiring some summary decision,i.e,“look and sniff” cases.  Each party usually bears his own costs.
Full Procedure with Hearing:

This is for disputes that require examination or cross-examination of witnesses of fact.  This evidence is usually partly oral and partly documentary. The tribunal must consider whether a Scott Schedule[11] is desirable.
It must be noted that the procedure adopted determines the length of the hearing. However,the procedure adopted must not contravene the provisions of the applicable law and procedural rules:

“…the Claimant to state the fact supporting his Points of Claim, the points at issue and the relief or remedy sought by him whilst the respondent is to state his Points of Defence in respect of the particulars unless the parties have otherwise agreed on the “required elements of the Points of Claim and Defence.[12]
The tribunal and parties must consider such factors as the complexity of the matter and the nature of the dispute in ensuring that they adopt the most suitable procedure. Disputes with little factual details may be best suited to the Statement of Case procedure by mere exchange of correspondence; e.g. quality disputes which are tobe determined on expert evidence only while pleadings may be best suited to cases involving complex issues of law.
The tribunal is to determine the time for exchange of written statements. In any case, the law provides that the time must not exceed 45days except if justifiable[13].

In arbitration proceedings the parties agree on an “Agreed Bundle” of documents, which constitutes the documents to be referred to during the hearing. The arbitrator will direct the parties to meet and agree on the bundle within a specified time. This also helps to fast track proceedings.

The Evidence Act excludes arbitration from its application[14]. This is not to say however that rules of evidence do not apply to arbitration. In fact, the rules of evidence are wider than what the Evidence Act provides and they apply to arbitration to enable the arbitrator come to a reasonable decision on the evidence before him. It should be noted that Section 15 (3) of the Actconfers powers on the arbitral tribunal to determine the admissibility, relevance, materiality and weight of evidence placed before it[15]. The reason for this provision is to play down as much as possible the recurrent technicalities that surround the rule of relevancy and admissibility under the Evidence Act.
The numerous advantages of arbitration over litigation include a faster and cheaper means of dispute resolution, utmost privacy of the issues between the parties[16]amongst others. While litigation has been shown to give room for frivolous techniques, arbitral proceedings have been sped up byadmitting written statements in place of opening and closing speeches, admitting depositions made by witnesses of fact and inviting such witnesses only for cross-examination. In addition,admitting reports prepared by experts while they appear only for cross-examination,using a Scotts Schedule.
Other ways to save time at the hearing are:

Defining the Issues

The arbitrator should direct, at the outset, that a list of issues be agreed and delivered to the arbitrator a reasonable time before the hearing, and that failing such agreement each side delivers a list of what it considers to be the issues. The procedure for defining the issues vary according to the nature and complexity of the dispute.
Exchanging Proofs in advance
The arbitrator may require that proofs of all witnesses be exchanged, and copies delivered to the arbitrator, before the hearing.
Documents Selected before Hearing
The arbitrator may require that the documents to be referred to at the hearing be selectedbefore the hearing, and this should be the responsibility of the advocate who is to conduct the case.  The arbitrator should also direct that:
(i)      The consolidated bundle(s) of the documents selected should be delivered to the arbitrator by a specified date before the hearing;
(ii)      At the hearing all the documents so submitted shall be taken as read (because he will in fact have read them); and
(iii)      At an appropriate stage the arbitrator will specifically consider the question whether a substantial number of irrelevant documents has been selected, and if so whether a special order should be made in respect of the additional costs thereby occasioned.

The frontloading system and the case management conference in the rules of court[17] can be likened to the preliminary meetings, pre-hearing sessions, defining issues and exchanging proofs and written statements obtainable in arbitration proceedings. The introduction of these similar concepts in the rules of court and a fast track division is to ensure efficient and speedy dispensation of justice but the bureaucracy in the system has prevented the system from making any remarkable achievements. Even the motion for summary judgment in the rules which shouldn’t take more than 2weeks to hear and determine usually suffers the same fate as the cases on the general cause list.
It is the duty of the arbitral tribunal to adopt procedures suitable to the circumstances and to avoid unnecessary delay and expenses. The parties must also cooperate by doing all things necessary for the proper and expeditious conduct of the proceedings as cost may be awarded against any party that foists any sort of delay tactics in the course of the proceedings.

The proceduresin arbitration sessions examined above have proved effective and efficient in the expeditious disposal of arbitral cases, thereby endearing the business community and the public in general to the choice of arbitration over litigation. The adoption of arbitration either by an arbitration clause or submission agreement has become more popular as people are coming to terms with the fact that arbitration constitutes a better alternative. It is also an amicable method of dispute resolution enabling the parties to maintain their business relationships.

[1]Tanimola Anjorin holds a bachelor’s degree in History and International Studies from Lagos State University. He thereafter obtained a Bachelor of Laws degree from Lagos State University and was called to the Nigerian Bar. He is also an Associate of the Chartered Institute of Arbitrators (UK) Nigeria Branch.
[2]1988 Cap. A18 LFN 2004.
[3]Where the parties to an arbitration agreement do not provide for the number of arbitrators to be appointed, section 7 of the Act provides that the number of arbitrators shall be deemed to be three.
[4]Section 6 of the Act provides for the number of arbitrators to be appointed in the event that the arbitration agreement is silent on this issue while Article 6 - 8 of the Arbitration Rules in the First Schedule gives a detailed procedure to be adopted in the appointment process.

[5]This is laid down in the popular case ofCOMPETENZ v COMPETENZ. See also section 12 of theAct and Article 21 of the Arbitration Rules in the First Schedule to the Act.

[6]Section 15(2)of the Act.
[7]Section 16 of the Act.
[8]  Section 17 of the Act.
[9]  Section 20(1) of the Act
[10]See Article 15 of the Arbitration Rules in the First Schedule to the Act.
[11]In arbitration sessions, parties bring numerous claims and issues which make the arbitral proceedings appear like litigation. In order to avoid this, the tribunal may resort to the use of the Scott schedule. The Scott schedule is essentially a table with inputs from both the claimant and respondent. The claimant sets out hisargument first, and then the schedule is passed to the respondent to set out his responses. The main objective of the Scott schedule is for the issues in disputes to be presented as clearly as possible, thus saving time, reducing cost and conserving efforts.

[12]  Section19 the Act.
[13]See Article 23 of the Arbitration rules in the First schedule of the Act.
[14]  Section 256(1)(a) of the Evidence Act 2011.
[15]See also Article 25(6) of the Arbitration Rules in the First Schedule of the Act.
[16]Article 25 (4) of the Arbitration rules provides: “Hearing shall be held in camera unless the parties agree otherwise”.
[17]Order 3, 5 and 25 of the High Court of Lagos State (Civil Procedure) Rules 2012.

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