ENFORCEMENT OF ARBITRATION AWARD

INTRODUCTION

Arbitral award enforcement is without doubt a topical issue. Arbitration is a private means of resolving dispute which is resorted to, chiefly because the parties choose to avoid employing as much as possible the state machinery for dispute resolution, namely the court and its dreaded time consuming procedures and technicalities and to save time and money.  The essence and need for the enforcement of foreign arbitral awards in Nigeria can best be represented in the very words of an eminent scholar as follows: –

“One reason business people enter into arbitration agreement or may insist on inserting arbitration clause in contract is to hope for a binding and an enforceable award should one be rendered. An arbitration agreement or award without an effective enforcement mechanism may, in practice, be valueless. If an agreement or award which is not voluntarily carried out cannot be coercively enforced against a recalcitrant party, then the rationale for arbitration is eroded and confidence in the arbitral process would be shaken[1]

In arbitration practice, after the making of an arbitral award, if the unsuccessful party complies with the terms of the award, the matter is at an end. However, it is not always that the unsuccessful party complies with the terms of the award as some may set out from the onset to impeach the award or refuse to perform the terms of the same and in which case when the successful party takes steps to enforce the award, the unsuccessful party may put up resistance by requesting the court to refuse recognition and enforcement of the arbitral award.

For a court to enforce an arbitral award, it must first determine and declare the award valid. Enforcement means, “the act of putting something, such as law, into effect; the execution of a law; the carrying out of a mandate or command.”[2] Often people use the terms recognition and enforcement interchangeably as if they mean one and the same thing. The recognition of an award is on its own a defensive process. It usually arises where the unsuccessful party commences an action in respect of the same subject matter or behaves as if no valid arbitral award has been rendered. In such a situation the successful party in whose favour the award was made will apply to the court to recognize the arbitral award and declare it valid and binding on the unsuccessful party in the arbitration.[3]

Parties to arbitration ab initio choose their arbitrator for better or for worse. Thus, parties are expected to accept an award as binding and enforceable immediately it is rendered.[4] However, an arbitrator does not possess the power or wherewithal to enforce an award; hence the inevitable involvement of the court and even other law enforcement agencies. It is true that enforcement of award is done by the court. However, execution of the award is the function of the Sheriff. Since the Sheriff cannot act without direction from the court, the need for application to court for enforcement and consequent execution of award arises. Except a court is seized of an application for setting aside an award or an objection to enforcement of an award in a situation where there is a pending application for enforcement of an award, there cannot be an issue of stay of execution whether of monetary or non-monetary award.[5]

Some learned authors and various text-writers, have posited that there are various methods of enforcement of arbitral awards in Nigeria, namely:

• Enforcement under section of the Arbitration and Conciliation Act
•  Enforcement of Arbitral Awards Under The Registration of Foreign Judgment Statutes.
• Enforcement under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards June 10 ,1958 ( New York Convention)
• Enforcement of Award by Action at law
• Enforcement of Award Pursuant to  International Centre for the Settlement of Investment Disputes (ICSID) Convention

1. Enforcement of Arbitral Awards Under The Arbitration Act

Where arbitration is held pursuant to Arbitration and Conciliation Act, the resultant award can only be enforced in the manner prescribed by the Act. There are two subsections in section 31 of the Arbitration Act for enforcement of an award. For this reason, some text-writers are of the view that there are two systems for enforcing such arbitral award. However, an examination of the two subsections reveals that only one method is prescribed.  Section 31 of the Arbitration Act provides:

1. An arbitral award shall be recognized as binding and subject this section and section 32 of this Decree, shall, upon application in writing to the court, be enforced by the court.
2.  The party relying on an award or applying for its enforcement shall supply:
3.  the duly authenticated original award or duly certified copy thereof;
4. the original arbitration agreement or duly certified copy thereof.
5.  An award may, by leave of the court or a judge, be enforced in the same manner as a judgement or order to the same effect.[6]

It is noteworthy that both sub sections (1) and 3 create a distinction without difference.

Under sub section 1, the applicant, in his written application, prays the court to enforce the award simpliciter, not as its judgement. However, it is difficult to see how this can be done except the court enforces the award in the same manner as a judgement or order of the court, that is to say by involving the Sheriff and Civil Process Procedure which necessarily requires an order of the court[7]. Court judgments are not executed by the court but by the Sheriff hence, the court cannot directly enforce the award by execution.

Again subsection (3) is said to be a summary and prompt procedure[8]. Under this method, the award creditor seeks the leave of the court or judge to enforce the award in the same manner as a judgement or order to the same effect. It is clear that the expression ‘by leave of court,’ the Award Creditor is required to pray the court for that leave. This again calls for an application to be made to the court. Thus, there is only one method of enforcing an arbitral award pursuant to an arbitration conducted in accordance with the Act, namely by way of Motion on Notice, but where there is no provision made in the Rules of a Court for enforcement of a statutory award, the originating summons is to be employed.[9]

Section 51 of the Arbitration Act[10] provides a unified legal framework for recognition and enforcement of arbitral awards of both local and foreign arbitral awards thus:

(1) “An arbitral award shall, irrespective of the country in which it is made, be recognized as binding and subject to section 32 of this Act, shall, upon application in writing to the court, be enforced by the court.

(2) The party relying on an award or applying for its enforcement shall supply-

(a) the duly authenticated original award or a duly certified copy thereof;

(b) the original arbitration agreement or a duly certified copy thereof; and

(c) where the award or arbitration agreement is not made in the English language, a duly certified translation thereof into the English language”

In the case of Imani & Sons Ltd. V. BIL Construction Co. Ltd [11]the Court of Appeal held that in addition to the motion on notice filed by the party seeking enforcement, the party also needs to provide the following simple requirements; 

“(1) The Arbitration Agreement;

(2) The Original Award;

(3) The name and last place of business of the person against whom it is intended to be enforced;

(4) Statement that the award has not been complied with, or complied with only in part”

2.  Enforcement of Arbitral Awards Under the Registration of Foreign   Judgments Statutes

The Reciprocal Enforcement of Judgment Ordinance 1958[12] and the Foreign Judgments (Reciprocal Enforcement) Act 1990,[13] regulates registration of foreign judgments in Nigeria. For an award to be recognized under these legislations, it must be registered in the court of the country where it was made and become enforceable in the same manner as a judgment given by the court in that jurisdiction.

In Tulip Nig. Ltd v Noleggioe Transport Maritime S.A.S[14] the court held:

“the provisions of the Reciprocal Enforcement of Judgment Ordinance and the Foreign Judgments Act will apply in the enforcement of foreign arbitral award where same has been elevated to the status of a judgment by leave of the High Court been sought and obtained”

Pursuant to the provisions of the Foreign Judgment (Reciprocal Enforcement) Act, a judgment or an award rendered in a foreign country may be enforced in Nigeria within six years of the judgment or award. For such foreign award to be enforceable in Nigeria, it must have been capable of enforcement in the country of its origin.[15] For arbitral award to merit enforcement under this Act, such arbitral award must have acquired the character of a judgment in the foreign country where it was made.

For a foreign award to be enforced pursuant to this Act, there must be evidence of reciprocity showing that the country from where the award originated treats Nigerian judgments and arbitral awards favourably.[16]

Reciprocity is very important in determining whether to enforce any foreign award under this Act. The method of enforcement of award under this Act is by application to court for registration of the award and immediately this is achieved, the successful applicant can then use the ordinary writ of execution to execute the award. The application for the registration of the award shall be served on the respondent as the order to be made shall affect his interest. The application shall be made by originating summons within six years of making of the award or where there have been proceedings by way of appeal against the judgment, after date of the last judgment given in those appeal.[17]

The superior court in Nigeria will not enforce the award if at the time of the application for its enforcement there exists an appeal in any court on the award for purposes of setting it aside or if it has wholly been satisfied or it could not be enforced by execution in the country of the original court. The enforcement of foreign award under this Act shall not be made if the court is satisfied that the arbitral tribunal had no jurisdiction in the circumstances of the case to deal with the matter, if the successful party or the arbitral tribunal failed to serve notice of its proceedings to the defendant, if the award was obtained by fraud, and if the enforcement of the award will be contrary to the public policy of Nigeria.[18]

• Enforcement under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards June 10 ,1958 ( New York Convention)

New York Convention applies to Nigeria by virtue of section 54 of the Arbitration and Conciliation Act which provides that,

“Without prejudice to sections 51 and 52 of this Act, where the recognition and enforcement of any award arising out of an international commercial arbitration are sought, the convention on the Recognition and Enforcement of Foreign Award (hereafter referred to as “the Convention” set out in the second schedule to this Act shall apply to any award made in Nigeria or in any contracting State.

Nigeria acceded to the Convention on 17th March, 1970 but no serious efforts were made to domesticate the Convention in Nigeria until the promulgation of the Decree in 1988. Today the Convention has been given right place of existence by incorporating it in section 54 of the Act and second schedule to the Arbitration and Conciliation Act. The New York Convention is one of the many, perhaps, one of the most important of the attainments of the United Nations in promoting a more effective and universal rule of law. It promotes the peaceful settlement of international disputes, not the sort of disputes between states with which the United Nations Charter is concerned, but commercial disputes which are inherent in international trade and transactions[19].

Rt. Hon. Sir Michael Kerr, opined that the Convention is the bed rock of modern international arbitration, the foundation on which the whole edifice of international commercial arbitration rests.[20]

The Convention applies to two sets of awards, namely:

1. Arbitral awards made in the territory of a state other than where the recognition and enforcement of such awards are sought and arising out of differences between persons whether physical or legal.
2.  Arbitral awards not considered domestic awards in the State where their recognition and enforcement are sought.

Foreign arbitral awards made in Nigeria or in any other contracting State may be enforced under the Convention provided always that the award arose from an agreement in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration. Article 111 of the Convention provides inter alia:

“Each contracting State shall recognize arbitral award as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following Articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this convention applies than are imposed in the recognition and enforcement of domestic arbitral awards.

From the foregoing, it is obvious that the recognition and enforcement of arbitral awards pursuant to the Convention are required to be in accordance with the rules of procedure of the country where recognition and enforcement are sought. It then means that in Nigeria, recognition and enforcement of foreign arbitral awards under New York Convention are enforceable by leave of the judge or court, and by application to court.[21]

A party seeking to enforce his arbitral award pursuant to the Convention shall at the time of filing his application supply the appropriate court with the duly authenticated original award or a duly certified copy thereof and the original agreement referred to in Article II of the Convention or a duly certified copy of it. Where the arbitral award sought to be enforced or the agreement is not in an official language of the country in which the award is sought to be enforced, the party seeking for the enforcement shall obtain translation of the arbitral award or the arbitration agreement in the official language of that country.[22] The party against whom the recognition and enforcement is sought may request the court to refuse recognition and enforcement of the award pursuant to the grounds set out in Article V of the Convention.

Pointedly for an arbitral award to be enforced in Nigeria under the New York Convention, it must be shown that such a contracting state has a reciprocal legislation authorizing the recognition and enforcement of arbitral awards made in Nigeria. This is because Nigeria has made the reciprocity reservation and so only awards made in contracting states that undertake to recognize and enforce awards made in other contracting states and Nigeria will be recognized and enforced in Nigeria. The implication of this position is that arbitral awards made in a country which is not a party to the Convention or giving reciprocal treatment to Nigerian arbitral awards cannot enjoy in Nigeria the recognition or enforcement provided under the Convention.[23]

In Ebokam v. Ekwenibe & Sons Trading Company,[24] the Nigerian Court of Appeal listed additional requirements needed for a party seeking recognition and enforcement under the New York Convention in court. The requirements are as follows:

“1. The arbitration agreement;

2. That the dispute arose within the terms of the submission;

3. That arbitrators were appointed in accordance with the clause which contains the submission;

4. The making of the award; and

5. That the amount awarded has not been paid.”

Once the Court recognizes the award by granting leave to the creditor to register same, it shall be enforced as a judgment of that Court.

• Enforcement of Award by Action at law

This method is inapplicable to awards rendered pursuant to the Arbitration and Conciliation Act of the Laws of the Federation of Nigeria. This method can only be used to enforce non-statutory awards which are awards arising out of other domestic means such as customary arbitral award. In such a case, the award creditor has got to institute an action by way of writ of summons wherein he pleads the entirety of his case simultaneously with the fact of arbitration and award. The state of law is as stated in Eke v Okwaranyia[25] when the Supreme Court held that a party seeking

enforcement of customary law arbitral award shall plead and prove the following:

1.  That there had been a voluntary submission of the matter in dispute to an arbitration of one or more persons.
2. That it was agreed by the parties either expressly or by implication that the decision of the arbitrators would be accepted as final and binding.
3. That the said arbitration was in accordance with the custom of the parties or of their trade or business.
4.  That the arbitrators reached a decision and published their award.
5.  That the decision or award was accepted at the time it was made.[26]

That followed some earlier decisions such as Ohiaeri v Akabueze[27] and Agu v Ikewibe.[28] There is some controversy in this regard. Certain decisions of the Supreme Court omit requirements (b) and (e) above.[29]Some scholars argue that those requirements are not necessary and constitute a clog and hindrance to effective application of customary law arbitration. The contention is that those requirements reduce customary law arbitration to a mere attempt at settlement.

Arbitration is a judicial process and akin to court proceedings whose outcome is binding and enforceable and this is distinguishable from various modes of negotiation for settlement such as conciliation and mediation.[30] If the plaintiff is successful, the customary arbitral award is merged in the court’s judgement. It becomes recognized and enforceable by the court and can be executed as such. This method is also open to common law arbitral award which is not conducted in accordance with the Arbitration and Conciliation Act. Because rarely is common law arbitration encountered in practice, it is deemed expedient to skip discussion on this. The reason why a party seeking to enforce a customary law or common law award has got to prove the five ingredients lies on the fact that such arbitral award is not accorded the status of statutory award which is recognized as binding and enforceable immediately it is rendered.[31]

For this reason above, with regard to common law and customary law arbitration, the court embarks on full scale trial of the case, reopening issues

canvassed by parties and considered by the arbitrator, who may be called upon as a witness in the court proceedings and cross-examined on facts pleaded. Indeed, it is cumbersome and somehow leads to duplication of efforts.

In the case of a foreign award, enforcement of award by action at law is applicable and it is inconsequential whether there is reciprocal treatment in the country where the award was obtained or not. In Topher Inc of New York v Edokpolor (Trading as John Edokpolor & Sons),[32] the Plaintiffs sued for the sum of £2,142 awarded in its favor by arbitrators in New York, and the Defendant moved the High Court to set aside the award on the ground that it was “founded on a Foreign Arbitration governed by the laws of the State of New York, United States of America“. The trial Judge, whilst noting that in Nigeria, there was no statute similar to the Arbitrations (Foreign Awards) Act, 1930, of England held, as submitted for the Defendant held that “for a foreign arbitral award to be recognized, there must be a treaty guaranteeing reciprocal treatment or an order in Council to that effect”

On appeal to the Supreme Court, the Court held as follows:

” i. A party is not prevented from suing upon a foreign judgment regardless of whether there is a reciprocal treatment in the country where it is obtained, if no order is made under section 124 to modify that position.

ii. A suit brought upon a foreign award ought not to be struck out merely on the ground that there must be a treaty guaranteeing reciprocal treatment in the country where it was made or an Order in Council to that effect”

It is to be noted that the Supreme court decision is based on the Doctrine of Obligation which postulates that if a foreign court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, the liability to pay that sum becomes a legal obligation enforceable domestically by a debt action[33].

It is to be noted one of the underpinnings of the Arbitration Act is curing the mischief of re-opening the issues already canvassed by parties and adjudicated upon by the arbitrators created by the common law and customary law arbitration.

• Enforcement of Award Pursuant to  International Centre for the Settlement of Investment Disputes (ICSID) Convention

ICSID has a special and autonomous mechanism for the recognition and enforcement of their award and this explains why ICSID award is said to be a special form of award.[34] Each of the Contracting States to the Convention has only one duty to perform with respect to the award and that is, to recognize and enforce the award as if it is a final judgment of the court within their State. The applicant for the recognition or enforcement is only required to furnish the court with a certified true copy of the award certified by the Secretary General. In Nigeria, the appropriate authority or court for the registration, recognition and enforcement of ICSID award is the Supreme Court of Nigeria which is the highest court of the land.

In accordance with the provisions of section 12 of the Constitution of Nigeria on domestication of Conventions and Article 69 of the Convention which expects each contracting State to take such legislative or other measures that may be necessary for making the provisions of the Convention effective in the contracting State territory, the Federal Republic of Nigeria enacted the International Centre for the Settlement of Investment Disputes (Enforcement of Awards) Act Cap i20 Laws of the Federation of Nigeria, 2004. The Act which has only two sections provided in its section 1 that,

“Where for any reason it is necessary or expedient to enforce in Nigeria an award made by the International Centre for the Settlement of Investment Disputes, a copy of the award duly certified by the Secretary General of the Centre aforesaid, if filed in the Supreme Court, by the party seeking its recognition for enforcement in Nigeria, shall for all purposes have effect as if it were an award contained in a final judgment of the Supreme Court, and the award shall be enforced accordingly.

The provision set out above, which provides for the enforcement of ICSID awards in Nigeria, is a clear intention and commitment on the part of the Nigerian government to execute their international arbitration obligations under the Convention. The Nigerian Act cited above did not make any provision for the recognition and enforcement of ICSID awards in Nigeria rather it states in section 1(2) that the Chief Justice of Nigeria shall make such provisions for the enforcement of ICSID awards in Nigeria. Unfortunately, the Chief Justice of Unfortunately, the Chief Justice of Nigeria has not made or adopted any rule of procedure for the enforcement of ICSID awards at the Supreme Court of Nigeria as at today. Once the ICSID award is registered at the Supreme Court, it ranks on the same equal level as a final judgment of Supreme Court of Nigeria and this has the support of Article 54(1) of ICSID which provides that,

“Each contracting State shall recognize an award rendered  pursuant to this Convention as binding and enforce the pecuniary obligation imposed by the award within its territories as if it were a final judgment of a court in that state.A contracting state with a Federal Constitution may enforce such an award in or through its Federal Court and may provide that such courts shall treat the award as if it were a final judgment of the court of a constituent state.”

It is important to mention herein that whereas Article 54 of the Convention enjoined all the contracting State parties to enforce ICSID awards without any interference, there is a very big obstacle also imposed on the award at the time of execution, and that is, the issue of sovereign state immunity which a State party can raise at the stage of execution.[35] Where an application is filed for the enforcement of ICSID award, the national or domestic court has only one duty to perform and that is to ensure that the award is enforced. The issue of sovereign state immunity comes up at the stage of the execution[36]Though the plea of state sovereign immunity is a serious obstacle in the execution of ICSID awards pursuant to Article 55 of the Convention, a State party going into ICSID arbitration agreement with another has a right to waive the plea of sovereign immunity so as to show good faith. Once the parties waived their right to plea of state sovereign immunity, any award made shall be expressly executed without more.[37]

CONCLUSION

It goes without saying that arbitration practice will be a meaningless and hopeless exercise if the successful party has no established procedure and instrument for recognizing and enforcing the arbitral award in circumstances wherein the unsuccessful party fails to comply with it. Arbitration and Conciliation Act has clear provisions as discussed above on the procedure for the enforcement of arbitral award. The Foreign arbitral award are enforceable in Nigeria pursuant to the provisions of the Arbitration and Conciliation Act Cap A18 Laws of the Federation of Nigeria, New York Convention, ICSID Convention, and Foreign Judgment (Reciprocal Enforcement) Act Cap F 35 Laws of the Federation of Nigeria, 2004.

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[1] Amazu A. Asouzu, “The Adoption of the UNCITRAL Model Law in Nigeria, Implication of the Recognition and Enforcement of Arbitral Awards,” Journal of Business Law, 1999, 185.

[2] Black Law Dictionary, 6th Ed.528

[3] Nwakoby G. C., The Law and Practice of Commercial Arbitration in Nigeria, 2nd Ed. Snaap Press Ltd. Enugu, 2014 215-216

[4] Sections 31 and 51, Arbitration and Conciliation Act, Cap A18, Laws of Federation of Nigeria, 2004

[5] Sections 29, 30,32, 48, 51, 52 Arbitration and Conciliation Act, Cap A18 Laws of Federation of Nigeria 2004

[6] Section 31, Arbitration and Conciliation Act Cap L18 laws of Federation of Nigeria 2004

[7] Chukwuemeka E. Ibe Ph.D, op.cit p 307

[8] C. A. Obiozor, The Machinery for Enforcement of Domestic Arbitral Awards in Nigeria: Prospects for stay of execution of non-monetary award, (2010) 1 UNIZIK J.I.L.J., 194

[9] Chukwuemeka E. Ibe op.cit p 308

[10]   Arbitration and Conciliation Act, CAP A18, LFN, 2004 

[11] 1999  NWLR 12 (Pt. 630), 253 at 263

[12] Cap 175 LFN 1958

[13] Cap F35, Laws of the Federation of Nigeria, 2004

[14] (2011) NWLR 4 (Pt.1237), p. 254

[15] Foreign Judgment (Reciprocal Enforcement) Act Cap F35 Laws of the Federation of Nigeria 2004, Section 2.

[16] Section 3(1) of the Act (Cap F 35 L.F.N. 2004).

[17] Section 4(1) f the Act (Cap F35 L.F.N. 2004).

[18] Section 6(1) of the Act.

[19] Prof.Greg Chukwudi Nwakoby FCIArb and Dr. Charles Emenogha  Aduaka on The Recognition and Enforcement of International Arbitral awards in Nigeria: The Issue of Time Limitation P.3

[20] Michael Kerr,“Concord and Conflict in International Arbitration,” Arbitration International LCIA, 1997, 121 at 122.

[21] Arbitration and Conciliation Act Cap A18 L.F.N. 2004, Sections 31 & 51.

[22] New York Convention, Article iv.

1999  NWLR 12 (Pt. 630), 253 at 263

[23] Prof.Greg Chukwudi Nwakoby FCIArb and Dr. Charles Emenogha  Aduaka op.cit. p 4

[24] (2001) NWLR 2 (Pt. 696) 32,

[25] (2001) 4 SCNJ 300 at 323-324.

[26] Eke v Okwaranyia (2001) 4 SCNJ 300 at 323-324

[27] (1992) 2 NWLR (PE 221) 1

[28] (1991)2 NWLR (part 180) 385

[29] Igwego v Ezeugo (1992) 6 NWLR (part 249) 561

[30] C. E. Ibe, Insight on the Law of Private Dispute Resolution in Nigeria, El’Demak Publishers Ltd, Enugu 2008, 90.

[31] Section 31 Arbitration and Conciliation AC Cap A18 Laws of Federation of Nigeria 2004

[32] (1965) 1 All NLR 1, 307,

[33] Emmanuel Ekpenyon on Procedure For Recognition And Enforcement Of Arbitral Awards In Nigeria

 Updated 3 April 2018

[34] George R. Delaume, “ICSID Arbitration and the Courts,” The American Journal of International Law, Vol. 77, 1983, 785-786

[35] Prof.Greg Chukwudi Nwakoby FCIArb and Dr. Charles Emenogha  Aduaka op.cit p.6

[36] Benvenuti & Bonfant SRL (BB) v. The Government of the Peoples Republic of Congo (1993)ICSID Rep 368.

[37] Liberian Eastern Timber Corporation v. The Government of the Republic of Liberia,(1994)2 ICSID Rep 383. Nwakoby Greg. C., The Law and Practice of Commercial Arbitration in Nigeria, Snaap Press Ltd, 2014, 250-251.