Stay Of Proceedings Pending Arbitration: Protecting The Interests Of Third-Parties To Arbitration In Nigeria

Abstract

Courts have the power to stay proceedings pending arbitration. In Nigeria,
the enabling statute regulating commercial arbitration is the Arbitration and
Conciliation Act of 1988. Sections 4 and 5 of the Act contain two similar but
conflicting provisions regulating the stay of proceedings. These sections of
the law are a product of a common ground found in two different legislative
texts. While section 4 leveraged on the provision of Uncitral Model Law on
Arbitration, section 5 is influenced by Arbitration Act of 1914. This dichotomy
between the histories of the two sections partly accounts for the controversies
and difficulties in the interpretation and application by courts and scholars.
This article examines the scope of sections 4 and 5 of the Act by identifying
the real object of the law and the flaws in its current interpretation. The
article considers the American experience, especially, the attitude of courts in
granting a stay of proceedings and whether a stay can be granted in a suit
against a non-party to the arbitration agreement. Unlike arbitration laws in
the United States, one key gap in Nigerian arbitration law is its failure to
contemplate stay of proceedings in a suit against a non-party to an arbitration
agreement. In addition to identifying the need for urgent legal reforms that
accommodate third-party stay pending arbitration, this article recommends
that Nigerian courts, like their counterparts in developed jurisdictions, should
adopt a more proactive approach by evolving innovative ways in deciding
suits involving third parties to arbitration agreement and stay proceedings
pending arbitration in appropriate cases to prevent parties from avoiding
arbitration by suing a third-party, in line with the global best practices.