By Oyetola Muyiwa Atoyebi SAN, FCIArb. (U.K) and Contributor: Chibueze K. James Esq.
The need to preserve the integrity, neutrality and independence of arbitrators heralds the essence of arbitral immunity.[1] The concept of arbitral immunity exempts arbitrators from certain acts or omissions arising out of or in relation to their functions.[2] This concept necessarily emanated from the common law principle of judicial immunity. To buttress this further, in Bremer Schiffban v South Indian Shipping Corp Ltd, the court held that ‘courts and arbitrators are in the same business, namely the administration of justice’.[3] Hence, it is not only expedient but reasonable for arbitrators to enjoy immunity like Judges do. Admittedly, arbitral immunity is not novel in the development and practice of arbitration, however, it must be noted that prior to the enactment of the extant Arbitration and Mediation Act 2023, there was no statutory mention of the concept in the previous laws, rather it was gleaned from the principle of judicial immunity and applied mutatis mutandis.[4] Accordingly, this article appraises the concept of arbitral immunity under the extant Arbitration and Mediation Act (AMA) 2023.
CONCEPT OF ARBITRAL IMMUNITY
To begin, arbitral immunity is a compound term that derives from the words “arbitration” and “immunity”. Under section 91 0f the AMA, arbitration means a commercial arbitration whether or not administered by a permanent arbitral institution.[5] With respect to the framers of this Act, this definition is circular, quite limitative, and does not capture in its entirety the true essence of arbitration. However, it is noted that for the purposes of the
Act, the definition remains a standing authority to decipher the scope and meaning of arbitration. For proper conceptualization, other definitions must be considered. Further, arbitration has been defined as a process of dispute resolution in which a neutral third party (the arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard.[6] Arbitration is a process in which
a third party neutral, after listening to parties in a relatively informal hearing makes a binding decision resolving the dispute.[7] On the other hand, immunity is a legal principle which refers to exemption or protection from liability, prosecution, penalties, or legal obligations and consequences, granted by law. As has been pointed out earlier, arbitral immunity flows from the concept of judicial immunity which is a legal doctrine that protects judges from civil lawsuits for acts performed in their judicial capacity. Hence, in simple terms, arbitral immunity exempts arbitrators from being sued or held liable for their decisions and actions during the conduct of arbitration proceedings. It is simply giving arbitration, the power to implement immunity for arbitrators.
Commendably, the coming of the Arbitration and Mediation Act 2023 heralded a paradigm shift and improvement in the practice and development of arbitration law in Nigeria. One of these striking improvements is the introduction of the concept of arbitral immunity, which was lacking in the defunct Arbitration and Conciliation Act 2004. By this innovation, the law expressly acknowledges and grants immunity to arbitrators, appointing authorities, and arbitral institutions executing their duties. In this regard, section 13(1) of the AMA provides thus:
An arbitrator, appointing authority or an arbitral institution is not liable for anything done or omitted in the discharge or purported discharge of their functions as provided in this Act unless their action or omission is shown to have been in bad faith.[8]
By this provision, the AMA expressly guarantees the immunity of arbitrators, an appointing authority,[9] or an arbitral tribunal, provided the same is done in good faith. It follows therefore that arbitrators are protected from lawsuits arising from the discharge of their functions. This ensures impartial decision-making of arbitrators and alleviates issues of personal liability or other legal consequences that may arise
from the performance of their responsibilities. The purpose of arbitral immunity is to ensure the independence and impartiality of arbitrators, allowing them to make decisions without fear of personal liability or retaliation from dissatisfied parties. This provision is in line with international best practices as arbitral immunity is recognized in many national arbitration laws, including statutes and judicial decisions, as well as in international frameworks like the UNCITRAL Model Law on International Commercial Arbitration (ICC).
Key Aspects of Arbitral Immunity under the AMA 2023
1. Act Covered: It is important to note that the immunity provided under the AMA is not unending or left without a scope. Thus, the immunity implied pursuant to section 13(1) of the AMA applies to acts performed during:
Conducting arbitral proceedings;
Rendering awards;
Managing procedural matters such as discovery, evidence admissibility, or interim measures; and
Engaging in ancillary administrative functions.
2. Exemptions to Immunity: Despite its broad scope, arbitral immunity under the act is not absolute as the Act delineates specific circumstances under which immunity will be eroded; namely:
Bad Faith: Arbitrators acting with malice, fraud, or gross negligence can be held liable.[10]
Exceeding Authority: Actions beyond the arbitrator’s jurisdiction, such as issuing awards on matters not submitted for arbitration, fall outside the immunity’s ambit.
3. Extension to Arbitral Institutions: Notably, the Act also extends immunity to arbitral institutions and appointing authorities in the discharge of their functions and such administrative acts such as providing logistical support, or managing funds.
Notable Implications of Arbitral Immunity under the AMA 2023
To Arbitrators
By statutorily recognizing and guaranteeing the immunity of arbitrators in the discharge of their functions,[11] the role of arbitrators as neutral third parties is established. This allows arbitrators to focus on the merits of cases without fear of undue liability, thus strengthening the arbitration practice and procedure.
To Parties
While arbitral immunity protects arbitrators, it must be emphasized that it also necessitates safeguards for parties. As a result, parties can have greater respect and trust in the arbitration process. It is expedient to note here that notwithstanding the immunity afforded to arbitrators, an aggrieved party may challenge the same if bad faith is proven.[12]
To Arbitral Institutions
The AMA recognises arbitral institutions and equally extends arbitral immunity to them. This is captured in section 13 where the Act specifically mentions “An arbitrator, appointing authority or an arbitral institution…” (Underlining for emphasis).[13] Generally, these institutions benefit from clear limits on their liability, enhancing their ability to administer arbitration impartially. However, arbitral institutions must implement robust governance frameworks to avoid claims of bad faith or procedural lapses which may erode the covering of immunity.
Conclusion
Arbitral immunity affords arbitrators and arbitral institutions the power to exercise their functions without threats, harassment, intimidation, and undue lawsuits from dissatisfied parties. By legislating the concept of arbitral immunity, the AMA 2023 has made a critical improvement to the development of our arbitration law and practice. Legislating arbitral immunity into our corpus juris on arbitration is critical step toward ensuring the integrity and efficacy of arbitration as a dispute resolution mechanism. By balancing the rights of arbitrators, parties, and institutions, the Act fosters a secure and predictable arbitral environment.
SNIPPET
Admittedly, arbitral immunity is not novel in the development and practice of arbitration, however, it must be noted that prior to the enactment of the extant Arbitration and Mediation Act 2023, there was no statutory mention of the concept in the previous laws, rather it was gleaned from the principle of judicial immunity and applied mutatis mutandis.
REFERENCE
Ronan Feehily, ‘Neutrality, Independence and Impartiality in International Commercial Arbitration, A Fine Balance in the Quest for Arbitral Justice’ (2019) 7(1) Penn State Journal of Law & International Affairs. ↑
Adedoyin Rhodes-Vivour, ‘Immunity of Arbitrators’ DRV Law Place (09/08/20) <chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://drvlawplace.com/wp-content/uploads/2020/09/Immunity-of-Arbitrators-PDF-Version.pdf > accessed 13th January 2024. ↑
1981 AC 999-21
With the necessary changes having been made to suit the unique peculiarities of the arbitration process.
AMA 2023, s. 91.
B. A. Garner, Black’s Law Dictionary, 9th Edition, West Publishing Co.
K. Aina, “Alternative Dispute Resolution”, Nigerian Law and Practice Journal, Council of Legal Education, Nigerian
AMA 2023, s. 13(1).
This refers to the person or institution appointing the arbitrator.
AMA 2023, s. 13.
AMA 2023, s. 13.
Ibid, s. 13(1)
Ibid.
In this article