TOPIC:
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS
By Michael .A. Sunbola LLM, MCIArb UK[1]
ABSTRACT
Arbitration is probably the oldest method of dispute resolution still in common use today. Arbitration as a process begins with an agreement, made either when a contract is made, or after a dispute has arisen. Getting a foreign Award or Judgment in your favor does not automatically mean a successful party has a clear sight of converting same to money by execution against the losing party in Nigeria. Very often, it may mean you have won the battle but yet to win the war. An examination of our laws and decisions of the Courts give some clarity to the statutory regime, laws and procedure for enforcing foreign Judgments and Awards in Nigeria; however, a great caution needs to be taken by the practitioners because each legislative regime for enforcement of foreign arbitral award is bedeviled with several challenges which this paper shall critically examine.
TABLE OF CONTENTS
1.0.INTRODUCTION
2.0.WHY ARBITRATION
3.0.LEGISLATIVE REGIME
3.1.Arbitration and Conciliation Act 1988
3.2.Reciprocal Enforcement of Judgments Act, Cap 175, LFN and Lagos 1958
3.3.Foreign Judgment (Reciprocal Enforcement) Act 1961
4.0.ARBITRATION AND CONCILIATION ACT 1988
4.1.Right to Enforce
4.2.Challenges to the enforcement of an Arbitral Award under the ACA 1988
5.0.RECIPROCITY
5.1.Reciprocity between the United Kingdom of Great Britain and Nigeria
5.2.Under the Reciprocal Enforcement of Judgments Act 1922
5.3.Under the Arbitration Act 1996
6.0.CHALLENGES IN ENFORCING FOREIGN ARBITRAL AWARDS
6.1.Challenges posed by the Federal High Court (Civil Procedure Rules) 2009
6.2.Challenges to the enforcement of an international Arbitral Award under the Foreign Judgment (Reciprocal Enforcement) Act 1961[FJREA]
6.3.Challenges under Section 8(1)(d) of the Limitation law of Lagos state and Limitation Laws of other States of the Federation
7.0.RECOGNITION AND ENFORCEMENT OF ARBITRAL AWARDS UNDER THE LAGOS STATE ARBITRATION LAW 2009
8.0.ENFORCEMENT UNDER THE INTERNATIONAL CENTER FOR SETTLEMENT OF INVESTMENT DISPUTE (ICSID)
9.0.CONCLUSION
- INTRODUCTION:
Arbitration is a private dispute resolution mechanism which provides for the reference of a dispute between not less than two parties for determination in a judicial manner by a person or persons other than a court of competent jurisdiction.[2]It is governed by the Arbitration and Conciliation Act[3]. It is voluntary and once parties agree to resolve their dispute by arbitration, they are bound by the award of the arbitration tribunal.
An award, though like a judgment in that they are both adjudicatory, cannot be executed like a judgment of a Court; in other words an award simplicita does not have the force of a judgment of Court. Every arbitral award duly made is to be recognized as binding and is expected to be complied with. This in effect means that where an unsuccessful party immediately carries out the terms of an arbitral award, the question of recognition or enforcement of the award does not arise. It is when it is not complied with that the question of enforcement through the machinery of the Court by the winning party arises. The Role of the Court in this regard was comprehensively expressed by Per Tobi JSC in Okechukwu VEtukokwu[4] stated thus:
“ In law, an arbitral award per se lacks enforcement or enforceability. It does not carry any element of sanction until a Court of law, by its judicial powers breath enforcement of sanction on it. At the completion of the arbitration, the award is a toothless dog which cannot bite until a Court of law gives teeth to it. In Ofomata and another v. Anoka and Another (1974)4 E.C.S.L.R 251, Agbakoba J. said at page 253 -: “But unlike a Judgment which has force until set aside, the decision of an arbitration lacks intrinsic or inherent force until pronounced upon by a competent judicial authority” -
It is upon this ground that the issue of enforcement of an award became relevant for discussion. This paper will critically look at all the legislative options available to a party seeking to enforce an award a foreign arbitration award and the challenges to be faced under each option. This paper also looks at all the laws governing the enforcement of foreign arbitral award to wit: the Arbitration and Conciliation Act 1988, Reciprocal Enforcement of Judgments Act, Cap 175, Laws of the Federation of Nigeria and Lagos 1958 or the Foreign Judgment (Reciprocal Enforcement) Act 1961, International Centre for Settlement of Investment Dispute (Enforcement of Awards) Act, Cap 19, LFN, 1990 and under the Lagos State Arbitration Law 2009.
2.0 WHY ARBITRATION
The essence of arbitration, in the business community, is to settle commercial disputes in an efficient manner in order , to allow the parties get on with their businesses without the attendant delay common to litigation in the courts.Consequently, the arbitration process allows parties to choose their own judges, choose the law that they wish to govern their deliberations and ,choose the venue in which they wish to settle their disputes .Ordinarily, because the parties have chosen their own judges in whom they have confidence, the findings of arbitration is “final and binding ” and an arbitral award is expected to be complied with speedily
RECOGNITION &ENFORCEMENT OF ARBITRAL WARDS
2.1Where an unsuccessful party immediately carries out the terms of an arbitral award, the question of recognition or enforcement of the award does not arise.
2.2However as often happens, an unsuccessful party may be sluggish or unwilling to comply with the terms of the award or may even seek to challenge it. Unfortunately, the arbitral process itself cannot enforce its own award.An award simplicita does not have the force of a judgment of court.
2.3Therefore,in orderto secure the execution of the award, the succesful party must take steps, after the arbitration , to have the award recognised by court so that the machinery of the the court process can be used to enforce it.. In doing so, there are many challenges which the sucessful party faces, whether the award is domestic or international.
3.0WHICHLEGISLATIVE REGIME?
3.1The first thing a successful party at arbitration has to do, is to decide under which regime he wishes to apply in having the award enforced.
3.2In Nigeria, an arbitral award may be enforced under the Arbitration and Conciliation Act, 1988, under theReciprocal Enforcement of Judgments Act, Cap 175, Laws of the Federation of Nigeria and Lagos, 1958 or the Foreign Judgment (Reciprocal Enforcement) Act 1961; under the Lagos State Arbitration Law 2009 and under International Centre for Settlement of Investment Dispute (Enforcement of Awards) Act, Cap 19, LFN, 1990. Each respective regime is not without its own challenges as discussed below.
4.0The Arbitration and Conciliation Act,1988
1.1The Right to Enforce
4.2The right of a successful party to enforce an arbitral award in court is given by section 31(1) for domestic awards and section 51(1) for international awards.
Section 31(1) provides that –
“An arbitral award shall be recognised as binding and subject to this section and section 32 of this Act shall upon application in writing to the court be enforced by the court”
Section 51(1) provides that –
“An arbitral award shall irrespective of the country in which it is made ,be recognised as binding and subject to this section and section 32 of this Act, shall, upon application in writing to the court be enforced by the court”
5.0Challenges to the enforcement of an Arbitral Award under the Arbitration and Conciliation Act 1988
5.1Time Factor
5.2Speed is a factor in enforcing any arbitral award, whether domestic or international .The sucessful party at arbitration must bring an application for the recognition and enforcement of the award immediately after the award is published .This is so because under section 29(1),an unsuccesful party may bring an application to set aside the award within 3months from the date of the award .
5.3If there has been a request for an additional award , then an application to set aside the award can be brought within 3 months of the date when the arbitral tribunal disposed of the request for additional award.
5.4Section 29(1) provides that :
“A party who is aggrieved by an arbitral award may within 3 months –
(a)From the date of the award : or
(b)In a case falling within section 28 of this Decree,from the date the request for additional award is disposed of by the Arbitral Tribunal ,
By way of an application for setting aside ,request the court to se aside the award in accordance with subsection (2) of this section.”
Therefore for a successful party at arbitration, time is of the essence to enforce the arbitral award.
6.0Reciprocity
6.1In international awards, the automatic right of recognition and enforcement given by section 51(1) to an arbitral award, “irrespective of the country in which it is made” , is contradicted by section 54(1)(a)[5] which provides that if the international award was made in a country which is signatory to the NewYork Convention on the Recognition and Enforcement of Foreign Awards 1958, then that award will only be recognised in Nigeria if that foreign country has a reciprocal legislation recognising awards made in Nigeria in accordance with the convention.
6.3Establishing reciprocity is a major challenge for the party seeking enforcement.If a convention country has a separate legislation recognising arbitral awards made in Nigeria, the party seeking enforcement would be required to show this.In practice separate legislations recognising arbitral awards made in Nigeria is not a common occurence.
6.4 It is submittedthat the fact that an arbitral award was made in a country that is a fellowsignatory to the New York Convention should suffice to show reciprocity. Of course this is an argument that a party seeking enforcement would have to advance.
7.0Reciprocity between the United Kingdom of Great Britain and Nigeria
7.1Reciprocity between the United Kingdom and Nigeria presents an interesting scenario.The United Kingdom has two legislations which recognise arbitral awards made in Nigeria.These are the Reciprocal Enforcement of Judgments Act 1922[6] and the Arbitration Act 1996 which applies in a general way to signatories to the New York Convention .
- Under the Reciprocal Enforcement of Judgments Act 1922
7.2The Reciprocal Enforcement of Judgments Act 1922 is particularly interesting because this same Act was enacted in Nigeria, when the British used to govern Nigeria, as theReciprocal Enforcement of Judgments Ordinance 1958. This legislation is what is known as “The Reciprocal Enforcement of Judgments Act, Cap 175, Laws of the Federation of Nigeria and Lagos 1958 ” Thus an Act of the United Kingdom became part of our munincipal laws.
7.3The said Act is entitled
“An ordinance to facilitate the reciprocal enforcement of judgments obtained in Nigeria and in the United Kingdom and other parts of Her Majesty’s Dominions and Territories under her Majesty’s Protection ”
7.4Under the said Act, the meaning of “judgment” extends to arbitral awards –
“any judgment or order given or made by a court in any civil proceedings whether before or after the commencement of this Ordinance , whereby any sum of money is payable , and includes an award in proceedings on an arbitration,if the award has in pursuance of the law in place where it was made , become enforceable in the same manner as a judgment given by the Court in the place.”
7.5Whether this British colonial legislation which is now a Nigerian law suffices to establish reciprocity between the United Kingdom and Nigeria was confirmed by the Supreme Court in the cases of Marine and General Assurance Co Plc vs Overseas Union & 7 others[7]and Andrew Mark Macaulay vs Raiffeisen Zentral Bank [RZB] Austria[8]
7.6In both cases the Supreme Court recognised the Reciprocal Enforcement of Judgments Act, Cap 175, Laws of the Federation of Nigeria and Lagos 1958 as the relevant legislation dealing with reciprocity of judgments and arbitral wards between the United Kingdom and Nigeria
7.7In the case of Andrew Mark Macaulay vs Raiffeisen Zentral Bank [RZB] Austria[9] the Supreme Court held at page 296[Paragraphs E-G] that:
‘The Reciprocal Enforcement of Judgments Act 1922, Cap 175 , Laws of the Federation of Nigeria and Lagos 1958 which was promulgated to deal with issues of registration of judgments obtained in Nigeria and the United Kingdom and other parts of Her Majesty’s dominions and territories was not specifically repealed by the Foreign Judgments [Reciprocal Enforcement ]Act 1961, Cap 152 Laws of the Federation of Nigeria 1990 and so it still applies to the United Kingdom and to parts of Her Majesty’s dominions to which it was extended by proclamation under section 5 of the ordinance before the coming into force of the 1990 Act. ’
7.8In particular Kalgo JSC opined that :
“The 1958 ordinance was promulgated as No 8 of 1922 to facilitate the reciprocal enforcement of judgments obtained in Nigeria and in the United Kingdom and other parts of Her Majesty’s protection. It came into operation on the 19th of January 1922.There is no doubt therefore that it applies to all judgments of the superior courts obtained in the United Kingdom and its application can be extended to other territory administered by the United Kingdom and any other foreign country.This can be done by proclamations pursuant to section 5 of the Ordinance.Therefore the 1958 ordinance having not been repealed by the 1990 Act still applies to the United Kingdom.There is no doubt that the judgement in question was given by a High Court in the United Kingdom .Therefore the provisions of the 1958 Ordinance fully apply to it. ”
7.9From the foregoing, it is clear that by the provisions of the colonial legislation,the Reciprocal Enforcement of Judgments Act 1922, which was now enacted as the 1958 ordinance,the United Kingdom has a reciprocal legislation recognising the enforcement of arbitral awards made in Nigeria,because under the said Act, “judgments” include “arbitral awards” .
- Under the Arbitration Act 1996
7.10Section 101 of the Arbitration Act 1996 gives a blanket recognition to New York Convention awards and section 102 provides a simple procedure for enforcing same. The sections provide as follows :
Section 101Recognition and Enforcement of awards
(1)A New York Convention Award shall be recognised as binding on the persons as between whom it was made, and may accordingly be relied on by those persons by way of defence, set off or otherwise in any legal proceedings in England, and Wales or Northern Ireland
(2)A New York convention award may by leave of the court be enforced in the same manner as a judgment or order of court to the same effect.....
(3)Where leave is so given judgment may be entered in terms of the award
Section 102 Evidence to be produced by party seeking recognition or enforcement.
(1)A party seeking recognition or enforcement of a New York Convention award must produce –
(a)The duly authenticated original award or a duly certified copy of it,and
(b)The original arbitration agreement or a duly certified copy of it.
8.0CHALLENGES POSED BY THE FEDERAL HIGH COURT (CIVIL PROCEDURE RULES) 2009
8.1As can be seen above, registration of an award is not a pre- requisite for its recognition and enforcement under the Arbitration and Conciliation Act 1988 or under the New York Convention on recognition and enforcement of foreign arbitral awards .
8.2However a party seeking the enforcement of a foreign arbitral award at the Federal High Court is confronted with Order 52 rule 17 of the Federal High Court Civil Procedure Rules 2009 which introduced the registration of Foreign awards ,into the enforcement process.
The rule provides that:
“Where an award is made in proceedings on an arbitration in a foreign territory to which the Foreign Judgment (Reciprocal Enforcement) Act extends, if the award was in pursuance of the law in force in the place where it was made; it shall become enforceable in the same manner as a judgment given by a Court in that place and the proceedings[provisions???]of the Foreign Judgments (Reciprocal Enforcement) Act shall apply in relation to the award as it applies in relation to a judgment given by that Court.”
8.3 The question is does Order 52 rule 17 apply to all foreign arbitral awards or it applies only to non New York Convention countries? Do New York Convention awards require registration?
8.4We are not aware that this point has come up for decision by any court. It is submitted that a New York Convention award does not require registration in order to enforce same.It suffices for the applicant seeking enforcement to apply to the court for the award to be recognised under section 51(1) of the Arbitration and Conciliation Act or Article IV of the New York Convention ,and then provide the court with the duly authenticated original award and original arbitration agreement or their certified true copies , in order to have same enforced in the same manner as a judgment of court under order 16 rule 1 of the Federal High Court [Civil Procedure]Rules. Although in practice a holder of a New York Convention award would also apply for its registration in court, this is superfluous and playing safe.
9.0Challenges to the enforcement of an international Arbitral Award under the Foreign Judgment (Reciprocal Enforcement) Act 1961[FJREA]
9.1The object of the FJREA is to make provision for the enforcement in Nigeria of judgments given in foreign countries which accord reciprocal treatmentto judgments given in Nigeria.The FJREA is also meantto facilitate the enforcement, in foreign countries, of judgments given in Nigeria.
9.2Under the FJREA “judgment”includes “arbitral awards”.
9.3As stated above, only countries which accord reciprocal treatment to Nigeria, as designated by the Minister of Justice, would be recognized. Therefore, ifthe Minister of Justice is satisfied that any particular country would enforce a judgment given in Nigeria, then he is expected to make an order directing that the FJREA extends to that country, and that the courts which he specifies in that order shall be deemed superior courts.As regards arbitration, this would mean that if the Minister is satisfied that any foreign country will enforce an arbitral award made in Nigeria, he would make an order extending the applicability of the FJREA to that award .
Section 3(1) provides as follows:
“The Minister of Justice if he is satisfied that in the event of the benefitsconferred by this Part of this Act being extended to judgments given in the superior courts of any foreign country, substantial reciprocity of treatment will be assured as respects enforcement in that foreign country of judgments given in the superior courts in Nigeria, may by order direct-
(a)That this Part of this Act shall extend to that foreign country:and
(b)That such courts of that foreign country as are specified in the order shall be deemed superior courts for the purposes of this Part of this Act.
9.4It should, however, be observed that since this Act was passed in 1961, the Minister of Justice has still not made any order granting reciprocity for the application of the FJREA to any foreign country.Consequently,in practical terms the FJREA is not effective either in providing reciprocity between Nigeria and any foreign countryor to support the registration of a foreign judgment or a foreign award within 6 years of the judgment or award. This is a major challenge for any party seeking enforcement ofan international award under the FJREA.