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INCLUDING ARBITRATION CLAUSES IN CONTRACTS OF EMPLOYMENT IN NIGERIA: A CASE OF CARRYING COAL TO NEWCASTLE?

By Nelson Onuoha, Associate at Solola & Akpana

1.0 Background

In a bid to quickly resolve and determine employment claims, some employers in Nigeria have taken the initiative of including arbitration clauses in contracts of employment designating arbitration as the sole means of resolving any dispute arising from such contracts, and that the decision of the arbitrator shall be final, binding and conclusive of that dispute.

This epiphany could not have come at a better time as most employers, especially corporate bodies, have always disliked the idea of having employment/labour claims drag on in court for years. Most corporate bodies would also prefer that certain information remain confidential and not exposed to public access by litigation, hence the preferred choice of arbitration as a faster and more discreet means of resolving employment disputes.

In Nigeria, it remains the position of the Courts that where the award to be made in arbitration is agreed by the parties as final and binding on them, no court shall have the powers to sit on appeal over that award. A court can only hear and determine applications to have the award set aside for misconduct of the arbitrator(s) or for being improperly procured. A court cannot review, reassess or vary the findings or conclusions of the arbitrator in making the award. The only discretion the court can exercise over an award is to determine whether or not the arbitrator applied proper methods in arriving at the award. See Baker Marine Nigeria Ltd. v. Chevron Nigeria Ltd. (2000) 12 NWLR (Pt. 681) 393. This position is apt for commercial arbitration but does not appear to be applicable to employment/labour disputes’ arbitration in light of the provisions of the Nigerian Constitution.

2.0 Appellate Jurisdiction of the National Industrial Court of Nigeria over Arbitral Awards on Employment/Labour disputes and its Implications

In Nigeria, jurisdiction (whether original or appellate) is conferred on a court or tribunal by the Nigerian Constitution or some other statute. See Garba v. Mohammed (2016) LPELR – 40612(SC). It is against this background that the Nigerian Constitution (Third Alteration) Act, 2010 was passed into law on March 4, 2011, effecting alterations to Sections 243, 254, 287, 289, 292, 294, 316 and 318 of the 1999 Nigerian Constitution, establishing the National Industrial Court of Nigeria (NICN) and conferring it with exclusive original jurisdiction over labour/employment-related disputes inter alia. The new provisions of the Constitution introduced by the Third Alteration Act which are relevant to arbitration in Nigeria are Sections 254C (3) and (4) of the Nigerian Constitution (as amended). While Section 254C(3) provides that the NICN may establish an Alternative Dispute Resolution Centre in respect of Labour/Employment disputes, Section 254C(4) provides that the NICN exercises jurisdiction over the enforcement of arbitral awards made in respect of labour/employment-related disputes.

However, the critical provision to this discourse is the proviso to Section 254C(3) of the Nigerian Constitution (as amended) which confers the NICN with appellate jurisdiction to hear and determine appeals against any award made by an arbitral tribunal in respect of labour/employment-related disputes or any other matter over which the NICN exercises original jurisdiction. For clarity and ease of reference, Section 254C (3) of the Nigerian Constitution (as amended) is reproduced hereunder as follows:

“(3) The National Industrial court may establish an Alternative Dispute Resolution Centre within the Court premises on matters which jurisdiction is conferred on the Court by this Constitution or any Act or Law:

Provided that nothing in this subsection shall preclude the National Industrial Court from entertaining and exercising appellate and supervisory jurisdiction over an arbitral tribunal or commission, administrative body, or board of inquiry in respect of any matter that the National Industrial Court has jurisdiction to entertain or any other matter as may be prescribed by an Act of National Assembly or any Law in force in any part of the Federation. (Underlined for emphasis)

It is clear from the above provision that the Nigerian Constitution (as amended) has conferred the NICN with the powers to sit on appeal over any arbitral award made in respect of labour/employment disputes or any other subject matter within the NICN’s exclusive original jurisdiction. The NICN has the constitutional powers to review the merits or otherwise of the findings and/or conclusions reached by an arbitrator(s) in making an award over a labour/employment dispute.

The ultimate implication of the foregoing is that any party to employment/labour dispute arbitration, who is dissatisfied with the award made thereon, can engage litigation by lodging an appeal against the award at the NICN to have same reviewed, upturned, varied or set aside. This right of appeal is applicable even where the arbitration clause has stated the award to be final and binding on the parties.

Inevitably, the right to appeal an arbitral award made over a labour/employment dispute displaces or defeats the comparative advantages of speed and confidentiality which arbitration generally bears over litigation. This is because even after the dispute is resolved by arbitration, an appeal to the NICN and a further appeal to the Court of Appeal protracts the dispute and brings all facts and documents relating to the dispute to public access. Recall that all decisions of the NICN, both in its original or appellate jurisdiction, can be appealed against to the Court of Appeal. See Section 240 of the Nigerian Constitution (as amended); Skye Bank v. Iwu (2017) 16 NWLR (Pt. 1590) 24. Even more, these appeals would definitely bring about more cost on the parties in addition to the cost they bore during arbitration. Inexorably, the perceived reasons or benefits for including an arbitration clause in a contract of employment and ultimately engaging arbitration instead of litigation to resolve employment disputes, are completely undone by the right of either party to the arbitration to appeal the award to the NICN and to further appeal the NICN’s appellate decision to the Court of Appeal.

Given the above, one is left wondering whether there is any need engaging arbitration to resolve an employment/labour dispute in Nigeria. It would appear that it is perhaps a faster, more cost-effective and neater process to litigate employment disputes directly at the NICN instead of engaging arbitration, as appeals against the decision of the NICN on employment/labour disputes can only be made to the Court of Appeal. The decision of the Court of Appeal thereon is final and conclusive, as no party would have a right of further appeal to the Supreme Court. The decision of the Court of Appeal on civil appeals against the decision of the NICN is final. See Section 243(4) of the Nigerian Constitution (as amended).

3.0 Recommendation/Way Forward

Many Jurists and Arbitrators have proposed that in order to circumvent the constitutional right of appeal against arbitral awards made in respect of employment/labour disputes, parties should include in the arbitration clause that the award shall not be subject to appeal. Including the foregoing in an arbitration clause presupposes that parties have agreed to waive their constitutional right to appeal the award and by ultimate implication divested the NICN of jurisdiction to hear and determine any appeal against the award.

However, it is humbly submitted that this strategy is untenable in law. It is the settled position of Nigerian Law that parties cannot by their agreement confer or divest a Court of original or appellate jurisdiction. See Eligwe v. Okpokiri (2014)LPELR – 24213(SC). It is also the settled position of Nigerian Law that the provisions of the Constitution are supreme and binding on all persons and authorities. See Section 1 of the Nigerian Constitution (as amended). Where the Constitution has conferred certain powers on any Court or Tribunal, no person, agreement or authority can oust such powers. Thus, no provision in an arbitration clause can stop the NICN from exercising its constitutionally conferred appellate jurisdiction over arbitral awards made in respect of labour/employment disputes.

It is rather suggested that in order to obviate the right to appeal the arbitral award, parties should nominate a seat of arbitration that is not Nigeria or any other country that provides for the right to appeal arbitral awards made in respect of labour/employment disputes. The ‘seat of arbitration’ is the particular country (system of laws) with the responsibility to administer and control the arbitration as opposed to the ‘venue of arbitration’ which simply refers to the physical location where the arbitration will be conducted. Thus, where parties chose a seat of arbitration that is not Nigeria, the provisions of the Nigerian Constitution, including provisions conferring the NICN with appellate jurisdiction over arbitral awards made in respect of labour/employment disputes, will not apply to the arbitration or the resultant award even if the venue of the arbitration is in Nigeria.

Unless the above step is taken, it would appear that including an arbitration clause in a contract of employment, and ultimately engaging arbitration instead of litigation to resolve employment disputes in Nigeria, is as needless as carrying coal to Newcastle.

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