Litigation And Arbitration Newsletter May

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JURISDICTION TO LEGISLATE ON ARBITRATION: DOES THE FEDERAL LEVEL OF GOVERNMENT IN NIGERIA HAVE EXCLUSIVE JURISDICTION? May 2009 Vol. 22: Issue # 5 In 2007, the government of Lagos State in Nigeria set up a committee to make an arbitration law for the state. The efforts of the committee gave birth to the state's Arbitration and Conciliation Bill which is still pending before the state's Assembly. The Bill contains many landmark provisions designed among other things to establish a regional Arbitration Court in Lagos aimed at making the state the arbitration hub of West Africa. Following this development, a debate has arisen among arbitrators, lawyers, and various stakeholders as to which tier of government in Nigeria has power to legislate on Arbitration? Being a federal government, the core issue is whether arbitration falls under the exclusive, concurrent or residual legislative list? Does the 1999 Constitution or any other law forbid any state of the Federation from making her own law on Arbitration? Or is the Federal Government's power to legislate

on this subject curtailed or limited to specific area(s) of the subject? Indeed, the opinions of lawyers in Nigeria are divided on this issue. Having emerged from decades of military rule and the attendant distortion of the federal impulses and frameworks of governance, it is not surprising that many otherwise knowledgeable lawyers would be instinctively inclined to defer to the federal level of government on this issue. While many lawyers are agreed on the importance of arbitration as one of the alternative dispute resolution mechanisms, there are serious disagreements on the question of the extent to which a state or the Federal Government can legislate on arbitration. A sampling of the opinions of lawyers reveals the existence of three schools of thought on the issue. The first school of thought argues that the federal level of government is constitutionally empowered to legislate on arbitration. A second school of thought argue that only the states had the unfettered power to legislate on the subject while the third school of thought is of the view said the states do not have power to enact arbitration laws. On the second school of thought, a more nuanced approach contends that the

©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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Federal Government's power to legislate on arbitration is constitutionally limited to bilateral investment treaties while a state has the power to legislate on all other areas of arbitration. Reliance is placed by this school of thought on Item 52 of the Second Schedule of the 1999 Constitution which gives the Federal Government power to legislate only on the arbitration issues arising from bilateral investment treaties (Between Nigeria and other countries and between states); thus, preserving the power of states to legislate on the remaining aspects. With regard to the first school of thought, it is often posited that Section 315 (1) of the 1999 Constitution preserves the 1988 Arbitration and Conciliation Act, which of course applies to the whole of the country. I humbly disagree with this. However, Item 58 of the Second Schedule contains a provision that gives the Federal Government power to legislate on "any matter incidental or supplementary to any matter mentioned elsewhere in the list." Arguably, the Federal Government has the power to legislate on the subject. However, the question is whether this power is exclusive. The better view seems to be that jurisdiction to legislate on arbitration is dependent on the parties involved in the arbitration and the subject-matter of the arbitration. Item 58 of the Second

Schedule of the 1999 Constitution cannot reasonably be construed to debar states from creating arbitral bodies and procedures on matters within the jurisdiction of states. If one follows the reasoning of the first school of thought, the result would mean that the Federal Government would legislate on virtually every subject-matter including disposal of refuse in villages. Surely, such an outcome could not have been the intendment of the law-giver. It is therefore submitted that the test ought to be: what is the subject-matter of the arbitration? And, who are the parties to the arbitrations? Where the subject-matter of a dispute subject to arbitration clause pertains to international trade and commerce with international or inter-state correlation, it stands to reason that the applicable law ought to be the National Arbitration law. The National Assembly should have the exclusive jurisdiction to legislate on such arbitration issues. On the other hand, for disputes which ordinarily fall within the legislative jurisdiction of state Houses of Assembly, it will be absurd to deny states the power to provide for arbitration. It would be perverse to hold that a state House of Assembly or the High Court of states can make rules for litigation on some issues as delimited by the 1999 Constitution and yet deny the same institutions the power to make

©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.

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rules on arbitration on the same subjectmatter. Perhaps, the Nigerian authorities would do well to borrow a leaf from other federal systems of government with well-developed systems of arbitration. For further information, please contact: Ms. Nkeiru Onyeaso Ms. Nkeiru Onyeaso Tel: +234 808 718 0833 Email: [email protected] Fax: +1 646 536 8978 Dr. Virtus Igbokwe Tel: +234 802 220 4755 Email: [email protected] Fax: +1 646 536 8978

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©Blackfriars LLP 2009. All rights reserved. This document is for general guidance only. Definitive advice should be sought from counsel if required. Blackfriars LLP is a Nigerian law firm with a representative office in Toronto, Canada.