On 26 May 2023, the Arbitration and Conciliation Act, Cap A18 (ACA), Laws of the Federation of Nigeria, 2004 was replaced by the Arbitration and Mediation Act, 2023 (AMA), which was signed into law on that date by the former President Muhammadu Buhari. The AMA expressly repealed the ACA.

The AMA has brought significant developments which will certainly encourage the use of arbitration for the settlement of disputes. One of the significant changes brought by the AMA is the elimination of the provisions of Sections 4 and 5 of the ACA. Interpretation of the two provisions of the ACA have occasioned significant confusion and controversy in the Nigerian courts. Prior to the enactment of the AMA, Nigerian Courts struggled with the combined interpretations of Sections 4 and 5 of the ACA when determining applications for stay proceedings for reference to arbitration.

The said sections have now been replaced with Section 5 of the AMA, which sets out circumstances under which an order for stay of proceedings for reference to arbitration may be made. In interpreting the new section 5 AMA, the Supreme Court in the landmark case of UBA Plc v. Trident Consulting Limited (2023) 14 NWLR (PT 1903) 95,¹ outlined conditions which must be fulfilled before an Order for stay of proceedings can be granted. By the wordings of Section 5 of the AMA, there must be an existing court proceeding in which an applicant has not taken steps other than entering appearance by filing a memorandum of appearance. Furthermore, the applicant for a stay of proceedings pending arbitration has a duty to show the court by “documentary evidence” attached to the application, that he is willing and ready to submit to the arbitration. By so doing, he would demonstrate to the court that his application for stay of proceedings is not a ruse or sham to deprive the respondent of his right of access to court.

The implication of the new conditions introduced by the AMA is far reaching for both the court and the parties alike. The Court under this new Act, is not bound to stay proceedings for parties to arbitrate on the condition that there is existence of an arbitration clause in the contract of the parties, and the party applying has not taken any step not later than when submitting his first statement on the substance of the dispute, delivering any pleadings or taking any other steps in the proceedings after a memorandum of appearance is filed. The application will now be determined based on supporting facts and documentary evidence supplied by the applicant seeking for the stay.

The Court will only be moved to grant a stay if an arbitration proceeding is in existence and specific steps have been taken by the applicant. The applicant must show the Court his willingness and readiness to submit before an arbitral panel and that he has taken specific steps to commence arbitration before bringing such application. The Supreme Court in UBA Plc v. Trident Consulting Limited (supra) outlined the required steps to include but are not limited to appointing an Arbitrator and filing of statement. It is apparent from the intention of the draftsman of the AMA, that the arbitration proceedings must have come alive at the time the application for stay of proceedings is made to the court.

Worthy of mention here is the fact that time is of the essence in bringing an application for stay of proceedings pending arbitration. In the above cited case, the Supreme Court dismissed the appellant’s appeal because the application was filed nine months after the dispute arose, which interval the SC considered too long. It shows that the appellant was not willing to arbitrate but to delay the proceedings in court. This recent decision of the Supreme Court is laudable, as it will contribute to the efficacy of arbitral proceedings and eliminate the tendency of a defendant in a suit to cause undue delay to proceedings in the suit under the guise of an arbitration clause in a contract.

1. Pp 138 paras E-H