Law  

‘Too much arbitration cases leave Africa and that is a huge problem for continent’

Andrew

Arbitration practice as one of the alternative dispute resolution mechanisms is gradually gaining momentum in Nigeria. This followed sustained advocacy, spearheaded by the Chartered Institute of Arbitration (CIArb), Nigeria branch and other related institutions that organize international conference yearly with a view to making Nigeria its hub in Africa. In this interview with JOSEPH ONYEKWERE on the sidelines of the CIArb 2017 conference in Lagos, solicitor-advocate, specialist and a member of Hogan Lovells International Arbitration team based in Dubai, Andrew Mackenzie says the practice has a great future in Africa.

What is your view about arbitration in Africa?
It is on the increase and developing well. Africa is a vast land with so many different legal systems. Some are progressing faster than others. I think Nigeria in particular is doing very well, although they didn’t quite take an early start like other nations such as Kenya, but Nigerians are well cut out for it and you can see it in this conference, with over 650 attendees. That would put most conferences of such nature across the globe to shame. I think arbitration has a great future in Africa.

We have the population as well as large economy in the African continent. In what ways do you think we can make arbitration more attractive in Nigeria?
Fundamentally, having a very good arbitration practice that works would further encourage foreign direct investment. It is very critical. Every state tries to ensure that it has an arbitration practice that is working. In other to do that, there are a number strands that you need to tackle. One is support by the state. Federal and state governments need to be behind arbitration and understand how it works. The second one is the judiciary. The judges need to be in support of arbitration and not see it as an encroachment into their landscape. It is not taking work away from the courts. The courts would always exist. What it can do is to alleviate some of the pressure from the courts and certainly build expertise in some areas. So, when you put the support of the state and the judiciary aside, you then need the support of organisations, both private and public to understand that arbitration could be an alternative to resolving disputes. I know in Nigeria, the court systems can be considered not too efficient. Some times, it can take up to 15 years to put a case through the courts. Well, that is changing because there have been tremendous changes in that area in certain places. But arbitration can be seen as flexible and cost efficient method of resolving disputes.

Do you think government can approach the issue of arbitration more effectively through policy or legislation?
I think legislation is key. Having an arbitration act based on UNCITRAL model law that works. The UK has an arbitration act that was updated in the 90s. It is well applied. You could have the best legislation in the world and if the court is not applying it, it makes no difference. The judiciary needs to understand that arbitration is a binding legal process and it should not be unduly delayed once the award is issued. Parties can go through arbitral process and it should be between six and eight months. It doesn’t mean anything if you cannot go to court and enforce the awards. So, that is why you need the buy in from the courts.

Despite the attractiveness of arbitration such as the speed and confidentiality, it appears that commercial disputes still pass the whole hog of litigation. What do you think accounts for this?
In many ways, I think that lawyers have hijacked arbitration. We make the process worse by delving into things that are not necessary. It is entirely awful. I think arbitration is strong when the tribunal keeps parties in line. You then see what arbitration supposed to be: a quick, efficient, flexible and cost-effective method of resolving disputes. I have seen weak tribunals that allow parties to fight continually, to drive up the cost and delay proceedings. One of the huge advantages of the courts is that the judges are far more willing to put the parties back to line and stop them from misbehaving in the proceedings. But tribunal members are more cautious in doing that. They don’t want to be accused of bias. They don’t want to be accused of forming prejudices against one party or the other.

What do you think accounts for the spread and acceptability of international arbitration?
It fundamentally comes down to large corporations not able to understand a local court system or alternatively in most cases not trusting it. Arbitration is not new; it has been around for many years. In the olden days, Egyptians practiced arbitration as well as the Greeks. It comes in when local or national courts of a country cannot be trusted to resolve disputes. Fundamentally, arbitration steps forward and take up the mantle. I think that large corporate organisations look at arbitration as trusted and tried method of resolving a dispute. Another facet to it is that it is very difficult when you are dealing in large international deals and you got companies in different jurisdictions. No one will seem to enforce judgment in another jurisdiction. For instance you have a company in China and South Korea doing a project in Nigeria. Whoever that wins a court case would have to go to its jurisdiction to enforce that judgment. That is much more difficult. It is far easier process with arbitration because of international treaties. The international mode of doing business has globalized and helped in the spread of international arbitration.

Arbitration is believed to be very expensive and one of its drawbacks is the cost. How do you think cost can be managed in such a way that it would not compromise the integrity of the process?
There are two aspects to this. One is a strong tribunal that does not allow parties to run away with ridiculous applications or request for expert appointments were it is not needed. So the tribunal provides direction and guidance to the parties. Also, allowing parties to have their fair saying in proceedings is key. They can often curtail costs. The main reason arbitration incurs cost is when it runs for too long. The second element is greater cost control. Courts across the world in UK and other common law jurisdictions have introduced reforms to the court system that allow costs to be measured and equated with proceedings, so parties are expected to present cost proposal at the beginning, so we can expect a case to last for X number of weeks and it would cost Y amount. And that has not been happening in arbitration. It has resulted in litigation being less expensive. I think a better cost control coming in will help to reduce the cost of arbitration.

Do you think arbitration ethics come into play during international arbitration process?
Arbitration is a commercial process. But it is fundamentally a legal process. And odd enough, the law and ethics don’t always sit side by side. We like to believe that the law victimizes ethics. We hoped that ethics is subjective whereas the law is objective and parties should view it as it stands under the law. I think, whenever you have human beings making decisions, ethics and law must come into play. I can’t conclude a case without my own ethics coming into play to a degree. As a good lawyer, you must keep a good degree of fair and analytical mind as and when required. I think that tribunals do that a lot. In the legal systems across the world, one of the main differences between the common law and the civil law system is that under the common law, there is no concept of good faith. One of the reasons the English law is well regarded globally is because parties are bound by what their contract says, even though the contract may be unfair to one of the parties. There may be other issues, but fundamentally, the contract is what binds the parties. In the civil court systems, the concept of good faith does exist. It can imply moral responsibilities and obligations to parties that perhaps are not enshrined in their contract.

How do you allay the fear of African lawyers, particularly Nigerians, who are reluctant in embracing arbitration so as not to lose fees, which come from traditional litigation?
I will say that arbitration should be embraced because it is a whole new industry. Instead of being protective of the fees they get from litigation, which would always be there predominantly, they can expand to a much more complex area and actually make more money from arbitration instead of just getting stuck in litigation. Arbitration is not going anywhere. In any case, it is expanding. In many ways, it will get better for Nigerian lawyers. You can see the evidence in this conference. We have over 650 attendees. It shows huge interest and appetite for arbitration here in Nigeria. So I will also advise those who are not yet on the bus to get in and move together in the right direction and be part of the good story about arbitration and be part of the sizeable economic and social benefit you get from arbitration. There was a big discussion yesterday about protectionism and excluding international lawyers from domestic arbitration. I think that some element of protectionism is useful because it fills capacity amongst the domestic market. And in doing that, you then have the ability to access the international market. Too much African arbitration cases leave Africa and that is a huge problem for the continent. A number of African arbitrators compared to the number of disputes going on in Africa are horribly disproportional. A number of disputes about African and African projects are held in London, Dubai or even Paris. It is disproportionate. It shouldn’t be that way. We should be ceding it to Africa. There are few contenders such as Mauritius, Lagos Court of Arbitration, which is headed by Yemi Candide-Johnson, who is doing a phenomenal job of educating people as it regards arbitration. You have Cairo regional centre and Casablanca. The ICCs of this world and the SIACs of this world can be the African equivalent and given the size of Africa, precisely Nigeria, there is not reason why those institutions here would not be bigger one day than their counterparts in France, London and Singapore.

From your observation, where do you see the future of arbitration in Nigeria?
I am very excited about what is being discussed yesterday and today. I think the future of arbitration is Nigeria is very bright. I think that government is engaging. I spoke with a number of Nigerian practitioners and senior partners of law firms and they said the federal government and indeed state government such as Lagos are really beginning to understand the virtues of arbitration and the benefit of it. And that in my opinion would result to a very bright future for arbitration in Nigeria, both domestically and internationally. The number of infrastructure investment in Nigeria for the next 10 to 20 years promises hundreds of billions. You know oil is now back on track, selling about $60 per barrel. Again, the money will begin to flow. Private and public equity would begin to flow into the market. With such inflow of capital in investment, it would ever lead to dispute. So arbitration can be there as the economical resolution to those disputes instead of being tied up in courts perpetually.



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