I went to a seminar on arbitration at the Lagos Court of Arbitration (LCA) Speaker Series sometime in September 2017. It was my 2nd time being there, having been dragged there by my partner Olawale Balogun, Esq. or ‘Skuly’ as he is fondly called by all that know him well (I call him babe.). The lecture was on the advantages of arbitration while also lecturing on the types of arbitration awards by Fabian Ajogwu (SAN) of Kenna Partners. It was definitely not a long or boring lecture as I’d thought it would be; if it was long, I didn’t notice because I found the discourse intriguing in many ways and felt like if I blinked I’d miss out on something funny or informative. I was right on the ‘Blink and Miss’ or ‘Snooze and Loose’ issue as someone asked what I thought was a very good question; “Are all matters arbitrable?”. Wow! mind officially blown. I had thought of that briefly in the past, as it would seem that no dispute is outside the reach of amicable settlement through arbitration, or so I’d read from countless articulate articles. I however allowed my thoughts to stray to other things like the traffic I was crawling through at the time, hence allowing such an intellectual question to fade off without answers. Sitting in that seminar had brought back that ‘Aha’ feeling; I’d finally get the answer to this question without even opening a book.
Arousing a bit of intellectual banter, the first comment to that question came from a member of the audience towards the tail end of the seminar which related to tax related matters or Industrial Disputes and Revenue matters (Income Tax & other Tax matters), maritime and admiralty related matters specifically. The tests to whether a dispute is arbitrable included:
1. Whether the dispute can be settled lawfully by way of accord and satisfaction (United World Ltd Inc v MTS (1998) 10 NWLR (Pt 568)106),[1]
2. Whether the matter borders on public policy
3. Whether the matter affects the capacity or legal status of a person (individual or corporate)
4. whether the dispute borders on rights or interests in property (real or intellectual) granted by the State, such as land title by registration; patents or trademarks;
5. whether the dispute pertains to claims invoking statutory relief such as claims under employment, retail insurance policies or consumer legislation.[2]
It was concluded that where the answer to the above are in the affirmative, then such matters are not arbitrable.
More importantly, my understanding from this seminar was that the issue of arbitrability may not be very clear in developing economies such as Nigeria, where the issues concerning public policy are more intertwined and often less transparent, and where the competition between evolving private and public interests are sometimes blurred[3]. Therefore, before a dispute can be referred to arbitration, one must consider if “the matters in dispute in each case relates to third party rights or represent an attempt to delegate to the arbitrators, a matter of public interest which could not be determined within the limitations of a private contractual process”[4]. In other words, one must consider the award sought to be granted or which can possibly be granted. For example, where the arbitral award will have the effect of binding third parties or the public at large, such matters cannot be arbitrated upon e.g. a judgement in rem against a ship, an assessment of the rateable value of land, a divorce decree, a winding up order[5]
This led me to understand why tax matters cannot be arbitrated upon. The alternative forum provided for the speedy dispensation for tax matters is the Tax Appeal Tribunal (TAT), of which appeal lies with the Federal High Court[6]. The facilitator stated as a side comment, to buttress his point, that an award against the tax agencies will have the effect of being applicable to the public at large, which is not the way such matters operate. See Shell (Nig.) Exploration and Production Ltd & 3 others v. Federal Inland Revenue Service were the court dealt with this issue by drawing a distinction between the purely private and commercial ambit of tax revenue of the Government of Nigeria or its organ, and matters pertaining to taxation of companies and other bodies carrying on business in Nigeria for which the Federal High Court has exclusive jurisdiction to adjudicate upon same without a doubt.[7]
What I found most interesting was the issue of maritime and admiralty matters, given my knowledge of how broad and complex such matters can be. I have known most maritime matters to be resolved by arbitration, and considering that there is the Maritime Arbitration Association of Nigeria (MAAN), I thought that it would be a ‘no brainer’ for arbitration to apply so long as parties agree to it one way or the other.
I was fascinated to find that in maritime and admiralty disputes, one must first determine the cause of action before submitting the matter in dispute to arbitration. For example; a ship is given an artificial personality just like you would a limited liability company, hence the ship is said to have a personality of its own. Therefore, there are certain claims which attach to the ship even where the ownership changes and this is what differentiates an action in rem and an action in personam. The complexity of the action in rem or personam may be so broad and intertwined that it raises the question: “can an action in rem be arbitrated upon knowing that the action in rem affects a third party, the status of individual rights, and the public at large? After loads of reading, a summary of my understanding is that one may have to adopt a ‘split the baby’ approach[8]. A cause of action may arise from a matter that affects the vessel itself or out of its operation or any agreement relating to or connected with the res;[9] where the cause of action arises out of the latter, such matters give rise to actions in personam and can be arbitrated upon at will. However, an action arising out of the former cannot be arbitrated upon as it is seen to affect the rights and status of a third party and as it relates to the public especially when it relates to arrest of ships[10]. Thus, the practice is that while parties arbitrate over maritime issues like carriage of goods and other purely commercial maritime matters or matters arising from a bill of lading, if for any reason the issue of the arrest of the ship arises, the practice is that the parties refer the matter to the Federal High Court for the order of arrest which cannot be awarded by the arbitrator(s) at any point in time.
On the issues relating to all matters contained in section 251 of the Constitution of the Federal Republic of Nigeria which contains issues that can be handled exclusively by the Federal High Court. The commentator stated that the issues stated therein are largely un-arbitrable, however a caveat arises here, and I fully agree that only matters that affect the general public policy will not be arbitrable. Therefore, once again the cause of action must be considered before completely ruling out arbitration.
Other un-arbitrable matters include the following:
1. Matrimonial matters, like divorce or conjugal rights.
2. Insolvency matters, Ex- declaring a person insolvent.
3. Criminal offences.
4. Dissolution or winding up of a company.
5. Matters relating to guardianship of minors or lunatics.
6. Testamentary matters like validity of a will[11]
7. immigration matters
8. probate matters
9. pension related issues
CONCLUSION
While I am a big fan of arbitration and a beautifully drafted or incorporated arbitration clause in an agreement any day, legal draftsmen/lawyers must be careful in the use of such clauses, as it may not favour parties in particular circumstances, as its presence may just be out rightly useless.
My moral lesson from all this is that one should never be afraid to learn new things even if it makes you look silly at first. Learning new things of this sort vis-a-vis the intricacies of arbitration) is perhaps more of a commitment by the lawyer to ensure that they maintain the quality of services offered and given to clients, in the sense that taking the time to learn about and understand ‘grey area’ issues contributes to legal expertise that is in the best interest of the client.
Thanks for reading
REFERENCES
[1]https://uk.practicallaw.thomsonreuters.com/1-542-4705?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1; Arbitration procedures and practice in Nigeria: overview by Funke Adekoya and Prince-Alex Iwu, ǼLEX Partners
[2]http://www.tamimi.com/en/magazine/law-update/section-8/may-7/arbitrability-of-disputes-issues-of-arbitrability-and-public-policy-in-the-uae.html
[3] http://www.tamimi.com/en/magazine/law-update/section-8/may-7/arbitrability-of-disputes-issues-of-arbitrability-and-public-policy-in-the-uae.html; Arbitrability of Disputes: Issues of arbitrability and public policy in the UAE; by Fiona Campbell – f.campbell@tamimi.com; Determining the Public Ways Through Private Disputes
[4] ibid
[5] Issues of arbitrability and public policy in the UAE; by Fiona Campbell – f.campbell@tamimi.com; Determining the Public Ways Through Private Disputes; http://www.tamimi.com/en/magazine/law-update/section-8/may-7/arbitrability-of-disputes-issues-of-arbitrability-and-public-policy-in-the-uae.html; Arbitrability of Disputes:
[6]Recent-Developments-On-The-Arbitrability-Of-Tax-Disputes-In-Nigeria.Pdf http://www.spaajibade.com/resources/wp-content/uploads/2016/12/RECENT-DEVELOPMENTS-ON-THE-ARBITRABILITY-OF-TAX-DISPUTES-IN-NIGERIA.pdf;
[7] Unreported Appeal No. CA/A/208/2012; handed down by the Court of Appeal, Abuja on 31st August, 2016.
[8]arbitration and dispute resolution; SPA Ajibade & Co; http://www.spaajibade.com/resources/wp-content/uploads/2016/12/RECENT-DEVELOPMENTS-ON-THE-ARBITRABILITY-OF-TAX-DISPUTES-IN-NIGERIA.pdf; Recent-Developments-On-The Arbitrability-Of-Tax-Disputes-In-Nigeria.Pdf;
[9]Maritime Claims–Practices, Procedures And Enforcements; B Ayorinde & Cohttp://www.mondaq.com/Nigeria/x/293392/Marine+Shipping/Maritime+ClaimsPractices+Procedures+And+Enforcements;
[10]INTRODUCTION TO MARITIME LAW AND ADMIRALTY JURISDICTION IN NIGERIA. At: The 14th International Maritime Seminar for Judges; Paper presented by JEAN CHIAZOR ANISHERE (LL.M); M.T.M.; F.IoD, M.CIArb http://shipperscouncil.gov.ng/assets/uploads/MSJ/Commentary_Introduction_to_Maritime_Law.pdf;
[11]https://www.coursehero.com/file/pvtvrk/Following-matters-cannot-be-referred-to-arbitration-1-Matrimonial-matters-like/; viewed on 19th October 2017
