Commercial – Crypto & NFTs
Could alternative dispute resolution become compulsory in your jurisdiction? If so, what steps are currently being taken to bring this into legislation?
Alternative Dispute Resolution (ADR) has become widely accepted as a viable alternative to conflict resolution. The 1999 Nigerian Constitution recognises the important role that ADR can play in that it contains a foreign policy objective for the “seeking of settlement of international disputes by negotiation, mediation, conciliation, arbitration and adjudication”. ADR not only provides speedy resolution of conflicts, but it is also seen by many as an avenue for the preservation of the sanctity, continuity, and confidentiality of agreements. ADR is not compulsory, but ADR principles are now routinely used to settle conflicts. Most courts currently insist that litigants should engage in some form of pre-action ADR. Compliance must be proved as a precursor to the institution of a lawsuit.
Many jurisdictions across Nigeria have set up ADR centres. The Lagos State Multi-Door Courthouse was the first in 2002. Others since include the Abuja Multi-Door Courthouse and the Federal High Court Alternative Dispute Resolution Centre. The National Industrial Court, which has divisions across Nigeria that deal with employment disputes, has established ADR centres in five of those divisions.
ADR continues to be available even where disputes have gone on appeal. The Court of Appeal Rules 2016 and the Court of Appeal Mediation Rules 2018 provide a framework for the resolution of appeal cases by ADR.
Many first instance courts now require reports on the outcomes of initial mediation efforts before further steps can be taken. Judicial pronouncements have generally given directives to litigants to adopt ADR.
Finally, it is pertinent to note that a duty is imposed on every Nigerian legal practitioner to inform every client seeking to commence a lawsuit that ADR is a viable option.
The importance of ADR in Nigeria and its international importance is demonstrated by recent efforts to update Nigerian law by incorporation of UNCITRAL’s updated model law. A bill to amend the Arbitration and Conciliation Act was passed by the Nigerian Senate on the 10th of May 2022. ADR is now commonplace in Nigeria. The advantages of ADR over traditional courts are generally admitted. Nevertheless, the element of choice, which is one of ADRs attractions, would tend to prevent it being made compulsory. The best that we can hope is for more ADR centres to be made available and for more potential users to be made aware of its availability, speed, and utility.
The ‘international’ nature of the digital and subscription economy can increase the complexity of disputes – what ADR issues does this raise in your jurisdiction, particularly in regard to international disputes?
Commonly, the two major factors that make operations in the Digital and Subscription Economy difficult and unique are the geographical separation between the product (or application) owner and the purchaser (user) and the difference in legal systems between the owner and the purchaser.
Unlike trade in physical goods, the end user of digital and subscription products buys them from persons who may be in a remote jurisdiction. This distinction explains the customary contractual set up for the sale and distribution of digital and subscription products.
Dealings in digital and subscription products are based on End User Licence Agreements (EULAs), which are broadly framed to cover diverse jurisdictions. Such agreements are standard forms differentiated only by variations in municipal laws.
Typically, standard forms retain significant power in the hands of the maker or distributor. The user’s choices are to take the product or leave it. An arbitration clause in such an agreement will be dictated by the product owner. Such arrangements either unduly favour the product owner or are prohibitively expensive for the end user. Although consumer protection agencies exist in Nigeria, none has been provisioned to address the complexities involved with the purchase and use of digital and subscription products.
Even where an end user manages to secure an arbitral award, enforcement may be a major hurdle. The product owner may have no assets within the user’s jurisdiction and, in the absence of reciprocal enforcement agreements, enforcement may be impossible.
Representative (class) action may be the answer which forces the product owner to come to the mediation or arbitration table to avoid reputational damage.
“The best that we can hope is for more ADR centres to be made available and for more potential users to be made aware of its availability, speed, and utility”
What role is ADR playing in an increasingly volatile utilities market? Is that role likely to change in the near future?
Utilities in Nigeria include Telecommunications, electricity, water, and natural gas. Historically, water and electricity were provided by government agencies, regulated by statutes. That is still largely the case with water although, due to paucity of State resources, many individuals and communities have resorted to building private boreholes and maintaining water treatment plants.
The power architecture has gone through many restructurings over the last 20 years. Currently, a few power generating plants are in private ownership whilst the distribution companies are all substantially privately owned. The distribution companies are, however, significantly underfunded and have had problems with meeting the needs of consumers. The pricing and supply of power to the distribution companies is a major issue, regulated by an entity set up by the Federal Government. The Nigerian Bulk Electricity Trading Plc. (NBET) fixes bulk power prices. The electricity market can therefore not be said to be free.
Natural gas is utilised by both power generating companies and other industries. The natural gas market, either delivered by pipeline or as Compressed Natural Gas (CNG) in canisters, is a free one, subject to market forces.
Telecommunications is heavily regulated by the Nigerian Communications Commission (NCC). NCC regulations include approval of price increases and investigation and rulings on consumer complaints.ADR is most helpful when applied to the settlement of freely negotiated contracts between parties. Overregulation and near monopoly situations distort the use and utility of ADR for conflict settlement. The natural gas market is the only one in which ADR can be said to be of any significant importance.
