- July 7, 2021
- Posted by: Stephen Azubuike
- Category: Case Law Blog
Generally, an arbitral award does not rank in exactly the same pedestal as a judgment of court. The final decision of a court of law is known as a judgment. While the final decision of an arbitral tribunal is called an award. The law provides that an arbitral award is binding on the parties and is final and conclusive. There is no room for appeal. The main reason being that it is one of the alternative dispute resolution (ADR) mechanisms that is largely party-driven, with the ultimate aim of ensuring quick resolution of disputes. The award can only be set aside on limited grounds not connected to any perceived error in decision-making. The courts are enjoined to uphold and enforce arbitral awards owing to the fact that it emanates from the voluntary agreement of the parties to submit to arbitration.
When an arbitrator delivers his or her award over a dispute, there’s a special procedure for the enforcement of the award. Similarly, there is a legal procedure for the enforcement of court judgments. However, in the case of arbitration, it is required that steps should be taken for the recognition of the award before we talk about enforcement. This process must first be undertaken in order to bring the award to the status of a court judgment, before other judgment enforcement procedures will follow.
Simply, the successful party in an arbitration needs to apply to court for the recognition of the award as a judgment of the court, precisely, the High Court. But we must note that the fact that the award is yet to be elevated to the status of a court judgment does not make it any less binding. The application for the award to be recognized as a court judgment is only for the purpose of aiding enforcement. Sections 31(1) and 51(1) of the Arbitration and Conciliation Act (ACA) are instructive here.
There is no provision for limitation period in the ACA within which an applicant may apply for the recognition and enforcement of arbitral award. However, something interesting happened in the case of Emerald Energy Resources Ltd. v. Signet Advisors Ltd  8 NWLR (Pt. 1779) 579. There are a few lessons to learn.
Emerald Energy (The Appellant) retained the services of Signet Advisors (The Respondent) as a financial advisor on agreed terms. Parties had agreed that any dispute arising would be settled by arbitration to be conducted at the London Court of International Arbitration (LCIA). In case you’re new to arbitration, please don’t mix it up. The mention of “Court” in LCIA doesn’t mean the LCIA is a court of law. Just like the Lagos Court of Arbitration (LCA) which is a private-sector owned and operated institution, LCIA is an international institution that facilitate commercial dispute resolution through the use of arbitration or other ADR systems, regardless of location and under any system of law.
So, let’s continue with the story. The arbitral tribunal delivered an award in favour of the Respondent on 30/1/2016. The Appellant failed to pay the amount as stated in the award. The Respondent moved to enforce the award by filing an Originating Motion on 19/10/2017 at the Federal High Court for an order recognizing the award as binding and seeking the leave of Court to enforce it as a judgment of the Court.
The Appellant challenged the application on several grounds one of which was that the application for enforcement was statute-barred as it was not brought within 12 months as required by Section 2 of the Reciprocal Enforcement of Judgment Ordinance. The trial Court dismissed the objections and granted the application. The Appellant appealed to the Court of Appeal.
In dismissing the appeal on 13 November 2020, the Court of Appeal clarified that the Reciprocal Enforcement of Judgment Ordinance applies only to the judgment of the court of England which is sought to be enforced in Nigeria. The arbitral award which the Respondent sought to enforce in Nigeria is not a judgment of the English Court but an arbitral award emanating from the LCIA.
The Court of Appeal however observed that assuming steps were taken to enforce the arbitral award in England as a judgment of the English Court, and the English Court had recognized the award as a judgment, then the Reciprocal Enforcement of Judgment Ordinance might apply if the applicant intends to enforce that English judgment (not award) in Nigeria. This means that the award has now been elevated to the status of a judgment by the English Court in England. Thus, an application before the Federal High Court in Nigeria would be an application to recognize, for the purpose of enforcement, a judgment of the English Court. The application must then be brought within 12 months in line with Section 2 of the Reciprocal Enforcement of Judgment Ordinance. Otherwise, the application would be held to be time-barred.
But in the instant case of Emerald Energy Resources Ltd v. Signet Advisors Ltd, that was not the situation. The arbitral award in question was still merely an award at the time the application for recognition and enforcement was filed at the Federal High Court. After a thorough analysis, Tobi, JCA, rightly concluded (at page 627 of the report):
In the circumstance, since there is no evidence that the Respondent applied and got an order to elevate the award to a Judgment of the English Court, it stands to reason that the arbitral award remains an award and not a judgment.
In sum, perhaps it is important to reiterate that parties and their legal representatives must learn to abide by the outcome of arbitration. The Supreme Court has recently made a statement in this regard.