‘Government Must Develop a Policy that Would Make Nigeria an Arbitration Hub’

Arbitration has maintained its increasing popularity in Nigeria despite the deficit in infrastructure and adequate legislation. Notwithstanding this fact, most ADR specialists and Arbitrators are desirous for Nigeria to develop into a major arbitration hub, at least in the West African sub-region. Nigeria’s first Professor of Corporate Governance, Professor Fabian Ajogwu SAN in this interview with May Agbamuche-Mbu and Jude Igbanoi recommends a strategy for promoting ADR in Nigeria including making it an Arbitration hub amongst a plethora of legal issues.

You are the Vice-President of the Lagos Court of Arbitration and a member of several arbitration organisations. We have observed a steady growth in these organisations and the activities they are involved in, but holistically how can they work together to promote arbitration in Nigeria? What should constitute our national policy on arbitration?

You have observed rightly that there has been a steady growth in arbitral institutions and the activities they are involved in. These organisations have in the past few years put in some collaborative work to promote arbitration in Nigeria. One particular instance that comes to mind is the opposition to the draft National ADR Bill which sought to regulate ADR bodies in Nigeria. Arbitrators from different organisations came together and voiced their opposition to the Bill, which eventually led to its being dropped (we hope).

Another example is the Lagos Court of Arbitration which had an inaugural board which consisted of members of the Chartered Institute of Arbitrators Nigeria and the Chartered Institute of Arbitrators UK (Nigeria Branch). One of the Board’s several achievements is the establishment of the International Centre for Arbitration and ADR which currently houses a number of key arbitration organisations in Nigeria.

From a policy perspective, the important thing to note is that arbitration practice thrives on the availability of infrastructure, enabling arbitration legislation, quality of arbitration practitioners and judicial support. Nigeria currently has Federal arbitration legislation, the Arbitration and Conciliation Act of 1988 which was modelled in line with the UNCITRAL Model Law 1985 and incorporates the New York Convention 1958. A lot has happened in the field of arbitration since 1988 and our current law is in need of overhaul. It would also be instructive to consider recent arbitration reform which has taken place in Mauritius. I would recommend that the Federal Government embraces a policy that develops Nigeria into an international arbitration hub, at the least for the West African sub region.

Currently, many arbitration proceedings between Nigerian parties take place in London, Dubai, Paris, etc even when the dispute and the parties have no connection with the seat or venue. For one, legal practitioners who prepare arbitration agreements on behalf of their clients should suggest making Nigeria the seat of the arbitration, especially when the subject matter of the dispute is based in Nigeria. Not only will this promote arbitration practice, it would also enhance tourism and create a notable surge in foreign direct investment which would in the long run, boost the Nigerian economy. To achieve the objective of becoming an international arbitration centre, the Government has to positively encourage the growth of arbitration in Nigeria by encouraging autonomy of arbitration bodies and organisations.

There is a debate among arbitration experts about whether institutional or ad-hoc arbitrations are more effective. With your vast knowledge in arbitration and years of practice as an arbitrator which would you favour institutional or ad-hoc arbitrations?

To answer this question appropriately, I must first begin by giving a brief explanation of both concepts. On one hand, institutional arbitration refers to a situation in which a specialised institution intervenes and takes on the role of administering the arbitration process. Some common institutions are the London Court of International Arbitration (LCIA), the International Chamber of Commerce (ICC), the Dubai International Finance Centre (DIFC) and the Dubai International Arbitration Centre (DIAC).

On the other hand, ad hoc arbitration is one which is not administered by an institution such as the ICC, LCIA, DIAC or DIFC. In this case, the parties will have to determine all aspects of the arbitration themselves – such as the number of arbitrators, appointing those arbitrators, the applicable law and the procedure for conducting the arbitration.

One major point to note is that the effectiveness of any arbitration proceeding depends on the cooperation of the parties involved. Having said that, I must also note that with institutional arbitrations, parties have the opportunity to choose from a list of qualified arbitrators and have an organisation with an established format to assist with the arbitration proceedings. Given this, institutional arbitrations tend to cost more than ad hoc arbitrations due to the administrative fees that may accrue.

Therefore, the decision to go for either institutional or ad hoc arbitration may be dependent on the nature of parties’ transaction and the size of the parties’ pockets. As such, for claims of a small nature and less wealthy parties, ad hoc arbitration may prove appropriate. On the other hand, for major claims and for parties for whom cost is not the main consideration, institutional arbitration may be preferred. Both forms of arbitration can prove to be quite effective – as long as parties to the proceedings are cooperative and work towards reaching an amicable settlement.

Usually, litigation and arbitration are regarded as mutually exclusive dispute resolution methods, is it possible to combine both forms of dispute resolution to develop an effective strategy?

While many consider litigation and arbitration as mutually exclusive dispute resolution methods, I beg to differ for a myriad of reasons. It has been my experience that both forms of dispute resolution are often combined to achieve an effective strategy. Both methods are adversarial, and arbitral awards cannot be enforced without recourse to the Courts. Once parties have obtained an award from the arbitral tribunal, they need to approach the Courts for the judgment to be recognised and enforced. Parties would also require the machinery of the Court – Sheriffs and the likes to enforce an award.

The arbitration process also relies on the Courts for interim injunctions to preserve the subject matter (res) among other things. For example, where there is an arbitration clause in an agreement, and one of the parties proceeds to Court to litigate the dispute, the other party to the contract can approach the Court for an order staying proceedings pending the determination of arbitration proceedings.

Accordingly, while it may be argued that both follow different procedures, with arbitration dispensing with a lot of the formalities typically the preserve of litigation, I see some difficulty with the conception of mutual exclusivity of arbitration and litigation.

Many International Arbitrations in the oil and gas industry are held in foreign countries, even where the issue are wholly Nigerian. How can we make Nigeria a more attractive Arbitral Seat for the African sub region?

My response to this question is relatively the same as my response to your first question. Like you have rightly noted, even when the issues are wholly Nigerian, most disputes in the oil and gas industry are often referred to arbitration tribunals seating in foreign countries.

I would like to point out that arbitration is consensual and based on party autonomy. Therefore, parties can, by agreement, decide to have their arbitration wherever they desire. It happens that parties prefer to have the arbitration proceedings take place abroad.

One way to change this trend is for the government to take active steps to make Nigeria a more attractive Arbitral seat. One such way is to address the infrastructural problems that bedevil Nigeria, namely: power, transportation network and security. Another way is to create a legal framework that meets international best practices. There is a need to ensure the continuous training of judges, lawyers and arbitration practitioners in order to enhance effective dispute resolution and administration of justice. There is also a need to develop existing and more arbitration institutions that have global appeal and capacity to administer diverse oil and gas related disputes.

In addition, promoting the idea that international or domestic Awards can be enforced as the Judgment of either the Federal or the State High Court in Nigeria without having recourse to the subject matter of the dispute to determine proper jurisdiction makes Nigeria an attractive choice for the seat of International Arbitration.

Basically, in order for an arbitration seat to be chosen as a place in which to conduct arbitration, it must be attractive to the parties. This can be achieved through a combination of features, namely: a dynamic arbitration legislation, supportive court system, well-trained and qualified arbitration practitioners and state of the art facilities and support services.

The general consensus of opinion is that “Pathological clauses” affect the likelihood of the swift resolution of disputes between parties to an arbitration agreement because of their inherent ambiguity and inconsistent wording. In your opinion how can individuals and arbitral institutions deal more effectively with them?

The issue of “pathological clauses” have to do with the draftsman, that is, persons who draft contracts. This can be avoided by going through the agreement with a fine toothcomb to avoid any ambiguities. The onus falls majorly on legal practitioners to exercise the utmost level of expertise when drafting contracts and agreements. As I stated in my new book, ‘Oral & Written Advocacy: Law & Practice’, co-authored with Chief ’Folake Solanke, SAN, CON, pathological arbitration clauses constitute an abuse of written advocacy. Arbitration lawyers must avoid such outrageous blunders and rather, demonstrate their professional competence.

Sustaining a significant amount of foreign direct investment is necessary for the growth of Nigeria’s GDP, however this should inevitably, be directly linked to a viable legal framework. Could you give an appraisal of our current legal framework for the retention and protection of foreign direct investment in Nigeria?

As you have rightly stated, sustaining a significant amount of foreign direct investment is necessary for the growth of Nigeria’s GDP. The current legal framework has created opportunities for the growth of foreign direct investment. For instance, by virtue of Section 17 of the Nigerian Investment Promotion Commission Act, any person, be it Nigerian or Foreigner can participate and invest in the operation of any enterprise in Nigeria (except for items on the negative list). Also, pursuant to Section 54(1) of the Companies and Allied Matters Act, although all foreign companies are required to register with the Corporate Affairs Commission, a company may apply to the Federal Executive Council for exemption if it satisfies the requisite conditions. In addition to this, there also exist a number of incentives that many foreign companies can take advantage of. Such as pioneer status (tax relief for a period of 3-5 years), duty draw back and suspension scheme, Rural Investment Allowance, tax relief for investment in export processing zones, repatriation of 100% of capital and profits if importing capital through an authorised dealer. All these are geared towards promoting and enhancing foreign direct investment in Nigeria.

Recently, hackers extracted $441,000 from the Central Bank of Nigeria. Attacks like this put a spot light on the effective policing of cybercrime and cyberattacks. Do you believe the cybercrimes Act 2015 adequately provides protection for unsuspecting internet users, especially considering the complexity of third-party platforms and internet liability?

I am of the opinion that to the extent of its provisions, the Cybercrimes Act of 2015 provides some protection for unsuspecting internet users. The Act is a good initiative by the Nigerian legislature. With respect to the adequacy of these provisions the challenge would be in their implementation. The approach adopted by the Act is a decentralised and distributed enforcement framework, which involves the collaboration of the National Security Agency and all other relevant enforcement agencies. The Act also provides for Cybercrime investigation, prosecution and enforcement. Looking at the provisions of the Act, it is doubtful that the Government considered the cost implications of the implementation. It would cost millions of dollars to set up cybercrime investigation systems in all law enforcement agencies. Furthermore, I am of the view that the definitions in the Act are too specific. In the long run, this would give room for offenders to devise other means of committing cybercrimes outside the specific definitions of the law. These are the gaps which the Nigerian legislature must fill after considering the opinions of stakeholders in order to ensure adequate protection of unsuspecting internet users.

You recently co-authored a book titled “Oral & Written Advocacy: Law & Practice-Traditional and Modern Trends in Advocacy with Chief Folake Solanke SAN. Some legal practitioners are of the view that lawyers are losing their advocacy skills because of our court rules which encourage written arguments leaving little or no room from real court-room advocacy. Could you share your thoughts on this perspective?

You will observe that the first female SAN, Chief Solanke CON, and I sought in our recent book, to present both the traditional (oral) and the modern (written) trends in advocacy. Whilst I have always been in support of written advocacy, I have also advocated for a bit of oral advocacy. Oral advocacy predated written advocacy, however, certain factors such as the extraordinary amount of time, high costs expended on trials and the congestion in law courts, caused a shift towards a preference for written advocacy over oral advocacy. The shift was inevitable and is indeed laudable, however, both oral advocacy and written advocacy are part of the adjudication process. One cannot exist without the other, and I am so disturbed by the recent trend in law courts which seeks to further quash or stifle the limited amount of time provided by the Rules of Court for oral addresses. It is said that practice makes perfect, and so, the more lawyers are encouraged to speak up and engage in oratory, the sharper their advocacy skills will be, and the more public confidence will be instilled in the judicial system. No one can forget the moving and eloquent oratory of outstanding advocates such as the late Chief F. R. A. Williams, SAN, Chief G.O.K. Ajayi, and the late Chief G.C.M. Onyiuke, amongst others. It was in fact, their excellent oral advocacy which compelled quite a number of individuals to venture into the legal profession.

As a seasoned advocate you know that oratory and court advocacy are skills learnt and developed by guidance and consistent practice. Tone, cadence, argument structure etc are all parts of the elocution of great oratory in court, these take years to learn. While advocacy is taught as a separate module in law schools in most other jurisdictions and therefore these lawyers are furnished with the advantage of advocacy training from their day of call, Nigerian lawyers do not have any such advantage since the Nigerian law school does not teach an active module for advocacy. Do you think there is some advantage in teaching advocacy in the Nigerian law school?

In my recent book, ‘Oral and Written Advocacy: Law & Practice’ which was co-authored with the First Lady Silk of Nigeria, Chief ’Folake Solanke, SAN, CON as lead author, we made the point that advocacy is the specialty of lawyers, whether oral, or written. Lawyers often refer to jurisdiction as the life blood of a case; we refer to advocacy as the life blood, essence, the very core of legal practice. To practice as a legal practitioner in Nigeria, one must have been called to the Nigerian Bar as a Barrister and Solicitor of the Supreme Court of Nigeria. Be it by way of litigation, alternative dispute resolution, corporate/commercial work, transactional work, etcetera, in every mode of representation of a client by a legal practitioner, the legal practitioner acts as an advocate; he puts his best foot forward on behalf of his client, he supports his client’s cause, acts in his client’s best interest, and is always seeking the good of his client. There can therefore be no practice of the law without advocacy. As such, I wholeheartedly support the call for advocacy to be taught as a separate module at the Nigerian Law School. The law school curriculum should be amended to include courses which are designed to hone public speaking and trial advocacy skills, bearing in mind, the Rules of Professional Conduct for Legal Practitioners. Students must be taught the art of persuasion; they must learn to persuade any audience of the merits of a cause or proposal and of the credibility of any proponent. Whether written or oral, the lawyer must communicate effectively. This is not limited to the courtroom but also to client meetings, business negotiations and presentations to public agencies.

You assisted the Securities and Exchange Commission with drafting Nigeria’s pioneer code of Corporate Governance. Could you comment on the rationale behind these rules? Could you also give us insight into the extent to which these rules are being enforced?

The SEC Code of Corporate Governance was issued because of the need to ensure the highest standards of transparency, accountability and good governance, without unduly inhibiting enterprise and innovation. It has been observed that weak corporate governance was responsible for the corporate failure in Nigeria up to the period when the Code was enacted. The aim of the Code is to align Nigerian companies with international best practices.

As with all forms of legislation in Nigeria, the enforcement of the Code has been gradual. With time, the Securities and Exchange Commission has gained influence in its regulatory compliance activities. Other institutional agencies which have assisted with the enforcement of this Code include the Nigerian Stock Exchange, the Corporate Affairs Commission, and the Central Bank of Nigeria, amongst others. There has clearly been a reduction in the failure of companies in recent times, due to the creation of awareness on the importance of sound corporate governance practices as well as a close monitoring and supervision of companies by all the regulatory agencies involved.

The recent restructuring of the NNPC by the Minister of State for Petroleum Resources Mr. Emmanuel Kachikwu has been met with mixed reactions, some major stakeholders in the oil and gas industry have expressed reservations on its outcome. In your opinion what impact will this have on the oil and gas sector?

I am of the school of thought that there is a need to reduce the non-essentials functions from the NNPC. I agree with the Honourable Minister of State for Petroleum Resources that the NNPC has to operate in a more efficient way than it did previously. The NNPC needs to run not like the sluggish elephant that it used to be in the past. It needs to be efficient and productive. The NNPC needs to impact on the lives of its shareholders who are really the people of this country. It needs to deliver on the reasons for which it was established in 1977. If you have set up something for more than 38 years and it turns out like the NNPC, it needs to be born anew.

One way of achieving this is by restructuring the NNPC. As such, for operational efficiency and service delivery, the Nigerian National Petroleum Corporation has been restructured into seven divisions. It is important to understand that NNPC was reorganised years ago, starting from 1988 in strategic business units, covering the entire spectrum of the oil industry operations, exploration and production, gas development, refining, distribution, petrochemicals, engineering and other commercial investments. One of the things we needed to see is a streamlining of all of these different units, to bring them to more manageable sub-divisions.

Most countries are developing sustainable solutions to their future energy needs due to climate change and the fluctuation in crude oil pricing. Could you suggest a possible strategy to guarantee energy security in the short-term and in the long-term for Nigeria?

Energy security goes hand in hand with economic development. As such, a country that has failed to establish a secure energy source will face severe challenges just as Nigeria is currently facing. This is because a sustained availability of affordable energy in its various forms is fundamental to the provision of jobs, health services, education, etc.

Nigeria’s economy is mono-cultural as every economic activity revolves around oil and gas. There is an urgent need for Nigeria to diversify its energy supply as any major breakdown in the sector will lead to an economic meltdown.

The Nigerian government would do well to explore alternative sources like solar, wind, biofuel and, perhaps, nuclear energy. Nigeria should strive for a well rounded energy mix, combining the available renewable energy with the non-renewable fossil fuel. Nigeria’s dream of being among the top 20 world economies in 2020 would remain a dream, if the energy issue is not properly and urgently addressed. Accordingly, there should be in place a deliberate effort towards increasing Nigeria’s energy independence.

You wrote an authoritative book ‘Mergers & Acquisition in Nigeria Law and Practice.’ Given the fact that lawyers from other jurisdictions have led their Nigerian counterparts in most mergers and acquisitions executed so far in Nigeria, how should Nigerian Lawyers be building proficiencies that put them in a better position to take advantage of the Nigerian market as globalisation brings previously unknown law firms to our shores?

Nigerian lawyers should not take their engagement with foreign Counsel in Mergers & Acquisitions (M&A) lightly, as there is a lot to be learnt from them. Mergers & Acquisitions cover various aspects of law: the regulatory aspect, the antitrust aspect, the litigation aspect, due diligence, etc. A broad range of experience is indispensable, and a lawyer who aims to build his proficiency in Mergers & Acquisitions must successfully rotate through different practice areas. It is a difficult practice; specialisation is always much easier, but acquiring experience in a broad range of subjects is beneficial for M&A. The lawyer must also learn effective communication because in M&A, no party wants to be taken by surprise. Also, as a lawyer that wants to be proficient in M&A, you must read broadly. You can never know too much. Read financial literature, such as the Wall Street Journal, the Economist, Financial Times, Fortune and Forbes, which aid in the understanding of the business context of M&A. Reading widely enables the lawyer to understand where the Client is coming from, and Clients love to be understood by their lawyers. Another way by which proficiency can be built is by attending trainings in that area. The Nigerian Bar Association, Section on Business Law has a role to play in capacity building and the creation of awareness in this area.

You chaired the committee of the Nigerian Communications Commission on Corporate Governance that drafted the 2014 NCC Code of Corporate Governance for the telecommunications sector. Kindly share with us some of the highlights of that code?

The NCC Code of Corporate Governance for the telecommunications sector was enacted based on the need to strengthen the growth of the telecoms industry and increase economic development. The Code was necessary as good corporate governance in institutions encourages corporate success and business accountability. Some of the highlights of the Code include the following:

a) The abolition of the single person ‘dual offices of Chairman of Board of Directors and CEO’ in any telecommunications company operating in Nigeria. This is to institute independence in the conduct of affairs in these companies, as well as uphold the principle of checks and balances.

b) In the NCC Code, effective leadership and organisational efficiency are encouraged. The principle is to the effect that the decisions and deliberations of the Board are value-based (a good principle of corporate governance) by ensuring accountability, transparency, responsibility, independence, integrity, reputation and fairness, amongst others. The aim is for these companies to grow and outlive their founders.

c) The Boards of communications companies are encouraged in the Code to ensure the equitable treatment of all shareholders and that the interests of minority shareholders are protected. The Code provides that there should be dialogue and engagement between the Board and the shareholders of telecommunications companies to align the appreciation of and attain the mutual understanding of corporate governance.

You are a member of the General Council of the Bar and the Council of Legal Education. Stakeholders in the legal profession have raised concerns about falling standards in the legal profession and about the quality of lawyers leaving law school. In your opinion what can be done to address these issues?

Thank you for that question. I addressed this burning issue at my lecture given at the 50th anniversary of the Nigerian Law School/ Council of Legal Education in 2014. It is received wisdom that sound education is a prerequisite for honouring the trust we hold as legal practitioners in our different callings. We hold this trust for the future generation of lawyers. One of the factors responsible for the decline in the quality of lawyers leaving the law school, is the general decline in the quality of education in Nigeria. Education has a cost which must be borne by someone. The government has over the years, given less capital allocation to the education sector. Many Federal and State Universities are bereft of funds due to low priority given to education these days. The falling standards in the legal profession can be attributed to the poor system of legal education as the proper education of a lawyer starts at the University.

It is important for the government to increase its capital allocation to education until the minimum of 25% of the national budget prescribed by UNESCO is achieved and surpassed. Where the government is unable to fund the cost of quality education, parents who can afford to pay the fees of their children should be made to do so, as what we have in Nigeria at the moment is a system of free education which is not matched by a commensurate financial backing. There is the need to provide the basic and fundamental tools required for the realisation of high level and functional legal education. The law school curriculum also needs to be updated in line with the current economic, political, and administrative trends in society. We also need to train lawyers to be firm and courageous and to stand for the Rule of Law. In spite of the unpredictable political climate, lawyers need to be trained not to kowtow to the government’s every dictate, but to stand for what is right, and encourage due process. The teaching method should also not be limited in scope; law teachers need to consistently improve their teaching schools, reach beyond the regular law subjects and make learning more practical for the law students using case studies, analysis and research. More emphasis should also be placed on research. A sharp contrast lies between what is taught at the law school and what obtains in actual legal practice.

You are the founder and fellow of the AIFA Reading Society which aims to promote and entrench the reading culture among young people. What practical steps is this organisation taking to improve the literacy levels of young people in rural areas?

Good question. This is a community development project. The AIFA Reading Society has several programmes which have been established in Lagos State and Enugu State, such as the AIFA book revolving scheme (an annual book drive which involves the donation of educational textbooks and other instruction materials to select public secondary school libraries), the iRead2Lead Initiative (which encourages children to talk about their favourite books), the Little Writers Awards (an essay competition) and the Calculate2Succeed programme (which empowers students with the tools necessary to succeed in Mathematics and Science subjects. We at AIFA are of the belief that individuals who read are the ones who lead.

Every child must be fully enabled to read in order to succeed in school and discharge his responsibilities as a citizen of a democratic society. A good education encourages reading, and reading is a cornerstone for a person’s success throughout life. With this knowledge in mind, AIFA is taking steps to extend its programmes and initiatives to schools in rural communities, such as Zaria, Kaduna State, a school in rural Ikare, Lagos State, and a school in the rural part of Enugu State. We plan to upgrade the libraries in those schools, and set up AIFA Study Centers, similar to the community libraries in the United Kingdom and other countries. This is because we recognise the fact that empowering others to read is not restricted to providing reading materials, but also providing a conducive environment where the reading can be done. We are in the era of globalisation, and everything seems to be digitised. However, the vast majority of information in the world today is still in print form, mostly hidden in books. We also intend to identify, encourage and support outstanding and committed teachers in these rural areas, as they have a very important role to play in the reading culture among the youths.