Introduction
The National Policy on Arbitration and Alternative Dispute Resolution (ADR) 2024 marks a pivotal moment in Nigeria’s justice sector reform, aimed at transforming dispute resolution into a faster, more efficient, and commercially responsive system. Developed by the Federal Ministry of Justice and coordinated with key judicial and governmental actors, the Policy envisions a holistic shift in managing disputes, particularly commercial disputes. It emphasizes the central role of arbitration and ADR in relieving court congestion, promoting private settlements, and aligning Nigeria with global best practices. ADR is a vital tool in a commercial landscape increasingly reliant on legal certainty and efficiency. Domestic and foreign businesses require confidence in the enforcement of contracts and swift resolution of disputes. The Policy responds to this need by embedding arbitration and ADR mechanisms within the judicial, executive, and administrative fabric of the Nigerian state¹.
Key Provisions of the Policy
The Policy sets out a framework that is judicially led but administratively supported, with contributions from Ministries, Departments, and Agencies (MDAs), the Attorney General of the Federation (AGF), and State Attorneys General².
Objectives and Principles
The primary objectives of the Policy include:
- Institutionalizing arbitration and ADR as first-line options for dispute resolution.
- Enhancing access to justice and reducing litigation backlog.
- Aligning domestic arbitration practice with international standards.
- Establishing Nigeria as a globally competitive seat for arbitration³.
Notable Features
1. Enforcement of Arbitration Clauses
Courts are mandated to uphold the sanctity of arbitration agreements by giving full effect to valid arbitration clauses included in contracts⁴. Judicial proceedings must not proceed until the court has ascertained whether the dispute falls within the scope of an enforceable arbitration agreement. This principle is rooted in recognizing party autonomy, a cornerstone of the National Policy and international best practices under the UNCITRAL Model Law ⁵.
Where a valid arbitration agreement exists, courts must decline jurisdiction over the substantive dispute unless the agreement is found to be “null, void, inoperative, or incapable of being performed ⁶.
2. Designation of Special Courts and Judges
To enhance expertise and ensure consistency in arbitration-related decisions, Heads of Courts are directed to designate specialized courts or assign judges with expertise in arbitration and ADR matters⁷. Specialized adjudication leads to more informed rulings and boosts Nigeria’s attractiveness as a hub for Arbitration in Africa.
The Policy also encourages judicial training programs focusing on arbitration laws, procedural matters, enforcement of arbitral awards, and interim measures⁸.
3. Practice Directions and Enforcement Mechanisms:
Courts are directed to issue Practice Directions for arbitration and ADR matters⁹. These Directions should address:
- Early judicial evaluation of arbitration agreements.
- Standardized timelines for interim measures (such as preservation of assets pending arbitration).
- Fast-tracked procedures for enforcement or challenge of arbitral awards.
- Protocols for court-ordered mediation or conciliation where appropriate.
The aim is to create a uniform, predictable framework that aligns national judicial practices with international ADR norms.
4. Provisions for sanctions against abuse of process
The Policy mandates courts to discourage bad faith tactics through punitive costs and sanctions against parties or lawyers who seek to frustrate arbitration or ADR proceedings. This includes:
- Filing frivolous applications to delay arbitration¹⁰.
- Challenging enforcement of awards on baseless grounds.
- Seeking judicial interventions contrary to the principle of minimal court interference.
5. Small Claims Arbitration Framework
- Designed for low-value, high-frequency disputes such as debt recovery and consumer complaints¹¹.
- Simplified procedures with decisions to be delivered within 60 days¹².
Involvement of MDAs and Attorneys General
The policy introduces a compliance and enforcement structure that involves the Attorney General of the Federation (AGF) and State Attorneys General in driving uniform implementation across all levels of government. Their roles include:
- Supervising the establishment of dispute resolution units in MDAs;
- Ensuring that MDAs incorporate ADR clauses in all government contracts;
- Overseeing compliance with policy directives and tracking implementation outcomes at the state and federal levels.
- MDAs are to incorporate arbitration clauses into all relevant contracts and PPP agreements¹³.
- The AGF and State AGs are tasked with ensuring inter-agency compliance, supporting legal reforms, and defending arbitration as a valid dispute resolution method¹⁴.
- MDAs must also promote internal capacity-building in ADR processes across procurement, legal, and compliance units¹⁵.
Implications for Commercial Dispute Resolution
The Policy introduces substantial benefits for the business and investment community:
1. Increased Efficiency
With time-bound judicial determinations and reduced scope for judicial interference in arbitral matters, the Policy signals a business-friendly environment¹⁶
2. Cost Savings
Reduced litigation costs through early resolution mechanisms and party-driven processes like mediation and arbitration¹⁷.
3. Improved Dispute Resolution Outcomes
The policy increases the predictability, consistency, and enforcement of arbitral awards, enabling businesses to better manage risk and legal exposure and instilling confidence in them.
4. Enhanced Confidence in Contract Enforcement
Clear directives to MDAs to honor ADR provisions in government contracts strengthen commercial confidence, especially for investors wary of state-related disputes¹⁹.
Opportunities and Challenges
Opportunities
- Investor Confidence: By embedding arbitration in government processes and reinforcing court support for ADR, Nigeria signals reliability to global investors²⁰.
- Economic Diversification: Efficient dispute resolution is a key enabler of sectors like infrastructure, energy, fintech, and manufacturing, which rely on complex commercial contracts²¹.
- Regional Arbitration Hub: With reforms aligned with UNCITRAL and global best practices, Nigeria is well-positioned to rival traditional arbitration centers across Africa and beyond²².
Challenges
- Implementation Gaps: The success of the Policy depends on consistent implementation by state courts, MDAs, and legal professionals²³.
- Capacity Constraints: Some MDAs and courts may lack the expertise and resources to operationalize the reforms fully²⁴.
- Cultural Resistance: Stakeholder awareness and acceptance—especially among legal practitioners and civil servants—will be essential to shifting the dispute resolution mindset²⁵.
Conclusion
For businesses and investors, the National Policy on Arbitration and ADR 2024 represents more than legal reform—it signals that Nigeria is ready to do business internationally. Stakeholders across the public and private sectors must now work together to ensure its full and faithful implementation²⁶.
This publication is for informational purposes only and does not constitute legal advice. Dispute resolution matters are context-specific and require a tailored approach based on individual circumstances. We strongly recommend consulting qualified legal professionals for advice tailored to your needs.
At Lex Luminar, we are committed to advancing dispute resolution excellence. Our team remains engaged with emerging legislative and policy developments, such as the National Policy on Arbitration and ADR, to ensure clients receive timely, informed, and strategic guidance.
For further information or assistance with arbitration and ADR matters, please get in touch with us at support@lexluminar.com
Footnotes
- Federal Ministry of Justice, National Policy on Arbitration and ADR, 2024, Section 1.2.
- Circular from the Chief Justice of Nigeria, Hon. Justice Walter Onnoghen, 2017, reaffirmed in NJC Directives, 2024.
- National Policy on Arbitration and ADR, 2024, Section 4.1(a).
- UNCITRAL Model Law on Arbitration, adopted 1985, amended 2006, Articles 8 and 16.
- Arbitration and Mediation Act, 2023, Section 5(2).
- National Policy on Arbitration and ADR, 2024, Section 4.1(b).
- UNCITRAL Model Law, Article 8(1).
- National Judicial Council (NJC) Directives, 2024, Part 3.
- National Policy on Arbitration and ADR, 2024, Section 4.2.
- Lagos High Court (Civil Procedure) Practice Direction on ADR, 2024.
- Arbitration and Mediation Act, 2023, Section 55.
- National Policy on Arbitration and ADR, 2024, Section 4.3(a).
- National Policy on Arbitration and ADR, 2024, Section 4.3(b).
- National Policy on Arbitration and ADR, 2024, Section 4.3(c).
- National Policy on Arbitration and ADR, 2024, Section 5.
- Lagos State Small Claims Court Rules, 2018 as Model Law for States.
- National Policy on Arbitration and ADR, 2024, Section 5.1.
- Practice Direction for Small Claims Arbitration, Abuja High Court, 2024.
- Arbitration and Mediation Act, 2023, Section 57.
- National Policy on Arbitration and ADR, 2024, Section 5.2(c).
- National Policy on Arbitration and ADR, 2024, Section 6.
- National Policy on Arbitration and ADR, 2024, Section 7.
- National Policy on Arbitration and ADR, 2024, Section 8.
- National Policy on Arbitration and ADR, 2024, Section 9.
- National Policy on Arbitration and ADR, 2024, Section 10.
- National Policy on Arbitration and ADR, 2024, Section 11