For international companies considering Nigeria, courtroom delays are costly: commercial cases can take five years or more, and litigation may consume up to 15% of the disputed sum. In contrast, arbitration usually resolves disputes within 8-18 months, saving time and money and helping business relationships recover faster. [1] Business disputes are unavoidable. While litigation can resolve conflicts, it is often slow, expensive, and adversarial—especially in Nigeria, where court cases can last years and strain partnerships. This has fuelled the growth of Alternative Dispute Resolution, which offers more efficient and amicable options. Arbitration has become a preferred option for resolving commercial disputes, valued because of its efficiency, neutrality, and flexibility.

ARBITRATION IN NIGERIA

Arbitration is a process where parties to a dispute agree to submit their dispute to one or more neutral third parties, known as arbitrators, who render a binding decision on the matter. This method differs from other ADR forms, such as mediation or conciliation, in that the arbitrator’s decision is typically final and enforceable, akin to a court judgment. The consensual nature of arbitration allows parties to customize the process to their particular needs, selecting arbitrators with relevant expertise and determining procedural rules that best suit the context of their dispute.[2] Arbitration has grown significantly as a dispute resolution tool in Nigeria, especially for commercial transactions. This rise is driven by dissatisfaction with the slow, inefficient litigation process. Nigerian courts are often overburdened, making the timely resolution of complex disputes difficult. Some cases also require technical expertise unavailable in the courts, further delaying proceedings. As a result, businesses and people increasingly prefer arbitration.

LEGAL FRAMEWORK FOR ARBITRATION IN NIGERIA

Nigeria’s legal framework for arbitration is well-established and modern. The primary legislation is the Arbitration and Mediation Act, 2023, which consolidates and updates the country’s approach to dispute resolution in line with international standards. Additionally, states like Lagos and Rivers have enacted their own arbitration laws to address their unique legal and commercial environments, further strengthening Nigeria’s commitment to effective ADR.[3] Nigeria is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This means Nigerian courts must recognize and enforce foreign awards and sustain arbitration agreements. Arbitration does not apply to some disputes due to public policy—for example, criminal cases, divorce, child custody, election petitions, statutory interpretation, emergency matters, or other legally excluded areas. These exclusions preserve public interest and ensure core legal issues remain with the courts.

TYPES OF ARBITRATION IN NIGERIA

Arbitration in Nigeria can be classified into three main categories[4]:

1. Institutional Arbitration: Administered under the rules of recognized arbitral institutions such as the Lagos Court of Arbitration or international arbitration institutions.
2. Ad Hoc Arbitration: Conducted without institutional administration, where parties agree on their own arbitration procedures.
3. Customary Arbitration: Conducted in accordance with local customs and traditions.

  iv.         Technology is reshaping arbitration in Nigeria. Virtual hearings, electronic submissions, and AI-assisted case management are now common, making arbitration more accessible and efficient—especially for cross-border disputes. AI tools help analyze precedents and speed up document review. Blockchain is being explored to secure records. Virtual platforms cut travel costs and allow remote participation, improving convenience and flexibility.

HOW ARBITRATION IS USED BY INTERNATIONAL BUSINESS

Most international business agreements drafted by a lawyer will include dispute resolution and governing law clauses[5], typically specifying the following: 

 i.         All disputes under the agreement will be referred to arbitration.

ii.         The arbitration will be final and binding.

iii.         The arbitration will not be subject to appeal.

iv.         The seat (location) of arbitration.

v.         The language of arbitration.

vi.         The governing law of the contract.

Some arbitration agreements also address the following:

 i.         A mandatory requirement for pre-arbitration mediation

ii.         Whether the arbitration will be ad hoc or institutional• The number of arbitrators and how the chair is selected • The method of selecting arbitrators, including any nationality restrictions

iii.         Reservation of rights to seek equitable remedies or injunctive relief in court

iv.         The procedural rules governing the arbitration

v.         Rights of appeal from the arbitration award, if any (rare in international practice).

ENFORCEMENT OF ARBITRAL AWARDS

An arbitral award must be in writing and signed by the arbitrator(s). However, a party can seek judicial intervention to refuse recognition or enforcement if the subject of the arbitration is contrary to public policy or if there is a clear error of law on the face of the award.[6] If a party refuses to comply with an arbitral award, the prevailing party may apply to the courts for enforcement by submitting the original or a certified copy of the award and the arbitration agreement, and, where necessary, a certified English translation. The appropriate court for enforcing an arbitral award depends on the parties’ identities, their locations, and the nature of the dispute.[7]

ROLE OF THE PARTIES IN ARBITRATION

In arbitration, the disputing parties play a central as well as proactive role, exercising significant control over the proceedings[8]. Their key responsibilities and rights include:

      i.         Initiating the Process: A party seeking arbitration must file a “Notice of Arbitration” or “Demand for Arbitration,” formally initiating the proceedings and outlining the dispute and desired remedies.

    ii.         Selecting Arbitrators: Parties have the autonomy to choose arbitrators with relevant expertise and impartiality, ensuring a knowledgeable and unbiased tribunal. What strategies are you using to select tribunal members, and have you considered the impact of appointing a nationality-neutral chair? For international businesses, appointing a chair who is independent of the parties’ home countries can provide additional reassurance of impartiality and help reduce concerns about local bias. This consideration may prompt organizations to review and update their roster of potential arbitrators to better reflect the multiple interests involved in cross-border disputes.

  iii.         Determining Procedural Rules: Through mutual agreement, parties can establish the rules governing the arbitration, including timelines, confidentiality measures, and specific procedures, tailoring the process to their specific needs.

  iv.         Presenting Evidence and Arguments: Parties through their lawyers are responsible for presenting their case, including submitting evidence, calling witnesses, and making legal arguments to support their positions.

    v.         Preserving Confidentiality: Given that arbitration is a private process, parties are expected to uphold the confidentiality of the proceedings, safeguarding sensitive information and the integrity of the process.

  vi.         Complying with the Arbitral Award: Upon issuance of an arbitral award, parties are obligated to adhere to its terms, as it is binding and enforceable. Awards may be contested only on specific grounds such as misconduct, fraud, or error in law.

CONCLUSION

Arbitration is an effective way to resolve commercial disputes in Nigeria, especially as legal frameworks and technology evolve. It offers efficiency, confidentiality, and helps protect business relationships. Given its complexity, businesses should engage expert legal counsel for arbitration. Including robust dispute-resolution clauses ensures structured, predictable, and timely dispute resolution, helping avoid court delays and costs.

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[1] (n.d.). Doing Business in Nigeria 2018. https://www.doingbusiness.org/content/dam/doingBusiness/media/SubnationalReports/DB_in_Nigeria_2018_w-bookmarks.pdf

[2] Global Law Experts. (2025). The role of arbitration in resolving disputes in Nigeria. https://globallawexperts.com/the-role-of-arbitration-in-resolving-disputes-in-nigeria/#:~:text=The%20advantages%20of%20using%20Arbitration,Arbitration%20and%20Mediation%20Act%202023 (accessed November 14, 2025).

[3] (October 2, 2024). Arbitration and Mediation Act 2023 – Nigeria. Keating Chambers. https://www.keatingchambers.com/resources/articles-and-publications/arbitration-and-mediation-act-2023-nigeria

[4] PTHLP. (2025). Introduction to arbitration in Nigeria: A guide for businesses. https://pthlp.com/introduction-to-arbitration-in-nigeria-a-guide-for-businesses/ (accessed November 14, 2025).

[5] Lawyers in Cyprus. (2025). The role of arbitration in international business. https://www.lawyersincyprus.com/the-role-of-arbitration-in-international-business/#:~:text=International%20arbitration%20is%20the%20most,process%20to%20suit%20their%20needs (accessed November 14, 2025).

[6] (n.d.). Arbitration and Conciliation Act (Chapter 19), Nigeria, WIPO Lex. https://www.wipo.int/wipolex/edocs/lexdocs/laws/en/ng/ng019en.pdf

[7] (2026). Enforcement of Foreign Arbitral Award Under the Nigerian Arbitration and Mediation Act 2023. https://nigerianjournalsonline.org/index.php/FUNAILAWPROJECTS/article/download/2043/1914/3634

[8] Global Law Experts. (2025). The role of arbitration in resolving disputes in Nigeria. https://globallawexperts.com/the-role-of-arbitration-in-resolving-disputes-in-nigeria/ (accessed November 12, 2025).

Written by Muhiz Adisa and Kareema Mohammed for The Trusted Advisors

Email us: info@trustedadvisorslaw.com

Telephone Number: +234 810 159 9159