INTRODUCTION The determination of which
party bears cost in arbitration, is usually dependent on the
agreement of the parties and the arbitral tribunal at the inception
of the arbitration vide the arbitral panel procedural order. Where
the procedural order makes provisions as to how cost is to be
apportioned, then cost is determined on such bases. However, where
the procedural order is silent as to how cost is to be apportioned,
the applicable law as to the determination of cost is based upon
the law governing the arbitration proceedings. Applicable Law
on cost in Domestic Arbitration in Nigeria The foremost law on
arbitration in Nigeria is the Arbitration and Conciliation Act
(ACA).[1] Although, the ACA is silent
on cost in relation to Domestic Arbitration, the Arbitration rules
encapsulated by virtue of Schedule 1 to the ACA however makes
provisions for cost which covers both domestic and international
arbitration.[2] By virtue of article 38 of
the Arbitration rules; The arbitral tribunal shall fix costs of
arbitration in its award and the term “costs” includes only- The
fees of the arbitral tribunal to be stated separately as to each
arbitrator and to be fixed by the tribunal itself; The travel and
other expenses incurred by the arbitrators; The cost of expert
advice and of other assistance required by the arbitral tribunal;
The travel and other expenses of witnesses to the extent that such
expenses are approved by the arbitral tribunal; The costs for legal
representation and assistance of the successful party if such costs
were claimed during the arbitral proceedings, and only to the
extent that the arbitral tribunal determines that the amount of
such costs is reasonable. The award of cost and as so rightly held
by our courts is that cost is not usually imposed as a punishment
but as a compensation for out of pocket expenses in whose favour it
may inure.[3] In African
Continental Bank Ltd. & Anor. v. Ajugwo (2011)
LPELR-3637(CA) the court appeal affirmed this position
when it stated as follows: “It is worthy of note that costs are not
imposed as a punishment on the party who pays them, neither are
they awarded as a bonus to the benefiting party. The party entitled
should only be indemnified for his out of pocket expenses and be
compensated for the true and fair expenses for the litigation.” The
General Rule on Cost As a general rule, cost follows event and by
virtue of interpretation, cost is to be borne by the unsuccessful
party.[4] The award of cost, of
course, is at the discretion of the court, however, such discretion
must be exercised judicially and judiciously. In Haco ltd
v. Brown (1973) 4 S.C. (REPRINT) 103; the Supreme Court
Per Irikefe, AG. J.S.C laid emphasis to this general rule thus: “We
are satisfied that there is abundant authority in support of the
proposition that a successful party in an action, unless he
misconducts himself, is entitled to costs as of right.” The
Arbitration rules also recognizes this general rule which is
captured by virtue of article 40 of the Arbitration rules as
follows; Except as provided in paragraph 2, the cost of arbitration
shall in principle be borne by unsuccessful party. However, the
arbitral tribunal may apportion each of such cost between the
parties if it determines that apportionment is reasonable taking
into account the circumstances of the case. With respect to the
cost of legal representation and assistance referred to in Article
38, paragraph (e), the arbitral tribunal, taking into account the
circumstances of the case, shall be free to determine which party
shall bear such costs or may apportion such costs between the
parties if it determines that apportionment is reasonable.
Exception to the General rule The above provision clearly
gives cognizance to the successful party in the arbitration,
however, sub-paragraph (2) of Article 40 recognizes an exception
where the tribunal may determine that cost may be borne by any
party in the arbitration depending on the circumstances of the
case. This instance covers cost of legal representation. Although,
the Arbitration rules does not provide for any express exception
where cost may be borne by the unsuccessful party, judicial
authorities have however given credence to such exceptions. The
attitude of the parties in the course of the arbitral proceedings
plays a significant role in whether the arbitrator or panel will
invoke its discretion in departing from the general
principle.[5] Thus, where there is
unreasonable delay or employing delaying tactics to frustrate the
arbitral process, the arbitrators and the other party(s) in
dispute, the arbitrator may not apply the cost follows the event
principle.[6] In the case of
Westland Helicopters Ltd. v. Arab Organisation for
Industrialization,[7] the arbitral
tribunal awarded £18million against the losing party for its delay
which caused the proceedings to last 13 years. Also, in the case of
Elgindata[8] where the
arbitral tribunal asserted that: “It is now clear that a too robust
application of the cost follows the event principle encourages
parties to increase the costs of the litigation or arbitration,
since it discourages parties from being selective as to the points
they take. Because if you recover all your costs as long as you
win, you are encouraged to leave no stone unturned in your efforts
to win.” The above assertion was modified by Lord Woolf M.R. in
Phonographic Performance Ltd v. Rediffusion Music
Ltd.[9] He was of the view that:
“…to the effect that where the successful party raises issues or
make allegations which have failed, he may not only be deprived of
some or all of his costs but may be ordered to pay the whole or a
part of the costs of the unsuccessful.” Consequently, where the
successful party has issues that tend to prolong the timespan of
the arbitration which was indeed not successfully contested, the
arbitral tribunal can award cost against the successful party for
such delay. Furthermore, in situations whereby the successful party
was unsuccessful in a major issue that led to an increase in the
cost of the arbitration, the arbitral tribunal can depart from the
principle that cost follows the event.[10] Another notable departure from the cost follow event rule
is the case of Calderbanks v. Calderbanks;[11]
where the respondent made a settlement offer
which would have readily saved time and the cost of the
arbitration, howbeit, rejected by the claimant who was the
successful party on unreasonable grounds, the court at the end of
the proceeding awarded cost in favour of the respondent.
Ultimately, arbitration being a dispute resolution mechanism
activated by parties’ agreement, where it is mutually agreed in
writing that the costs of the arbitration should be allocated on a
certain method, the arbitrator can depart from the general rule on
cost and honor the agreement between the parties.[12]
CONCLUSION/RECOMMENDATION
Although the ACA is silent of the applicable regime on cost in
domestic arbitration, the arbitration rules encapsulated by virtue
of schedule 1 to the ACA circumvents for this lacuna and provides
an itemized rider of what will amount to cost in arbitration. The
general jurisprudential rule on cost is that cost follows event and
the successful party is entitled to its cost. While the substantive
law does not provide for express departure from this general rule,
judicial authorities have lent caps in recognizing instances where
cost may be awarded against the successful party. It is however
recommended that parties at the inception of the arbitration
proceeding agree on how cost is to be apportioned as this would
forestall any disagreement that may arise if the discretion is left
to the arbitrator or panel. * Deinma is an Associate of
Perchstone and Graeys (Solicitors, Advocates, Arbitrators). He
holds an L.L.M. in International Commercial Law from the University
of Aberdeen, Scotland. He is Associate member of the Chartered
Institute of Arbitrators UK (ACIarb) and a member of the Institute
of Chartered Mediators and Conciliators (ChMc). [1] Cap A18 Laws of the Federation of Nigeria 2004 [2]
Idornigie P. O., Commercial Arbitration Law and Practice in
Nigeira, Panaf Press, 2015. [3] See
Caamassie v. Tell Camm. Ltd. (2003) 1 NWLR (Pt. 802) pg.
551. [4] See the case of NNPC v.
Clifco Nig. Ltd. (2011) LPELR-2022(SC). U.B.N. v.
Nwaokolo (1995) 6 NWLR (Pt.400) 127. [5] See Dutch Party v. Turkish Party 125
Clunet 1047 (1998). [6] Bello Adesina
Temitayo, “Cost Follows the Event in Arbitration: Its Paradigm and
Relevance”, Journal of Research and Development Vol. 2, No.1, 2014.
[7] 80 ILR 622 (1987-10-23). There are
currently no case laws recognizing exceptions to this cost follows
event principle however, foreign authorities form persuasive
opinion which the practices of arbitration recognize. [8] (1993) 1 All E.R. 232. [9]
(1999) 2 All E.R. 299 at 313.315. [10] See
Forster v. Farquhar (1893) 1 QB 564. [11] (1975) ADR.L.R. 06/05 cited in ibid (n 5).
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Nigeria, Greek to establish Industrial Fishing
Projects
The Minister of State, Budget and National Planning, Prince Clem
Ikanade Agba has commended the Concept Amadeus/Greek Technical
Partners for establishing Industrial Fishing Projects in the Niger
Delta, as a way of contributing to the growth and diversification
of the Nigerian Economy as achieving self-sufficiency in fish
production.
Prince Agba made the commendation when representatives of the
Concept Amadeus / Greek Technical Partners led by the Group
Chairman, Prince Alabo Wokoma, visited him in Abuja recently.
He said government is pleased with the development and will give
its support to such a laudable project which would help to douse
youth restiveness by creating jobs and foster economic growth in
the Niger Delta.
“I am particularly impressed by this initiative which shows that
a lot can happen when there is partnership between the Government
and the Private Sector. The Concept Amadeus/ Greek Partnership was
one of the good things that came out of the EGRP Focus Labs which
was organized by the Federal Government between March and May 2018”
the Minister explained..
The ERGP focus labs was one of those targeted initiatives of the
Muhammadu Buhari Administration, to drive the three pillars of its
medium-term plan, restoring growth, building a globally competitive
economy and investing in our people. It was also aimed at
driving new investments that will create jobs for the people across
the 36 states of the Federation and the FCT.
The Minister further expressed confidence in the ability of the
project ,when it is fully operational to improve the nation’s
self-sufficiency in Food and Fish production as well as contribute
in delivering on President Buhari’s promise of lifting 100 million
people out of poverty in ten years, through its job creation along
the value chain.
Earlier, the leader of the team, Prince Alabo Wokoma informed
the Minister that it was contributions from the ERGP’s team that
enabled them to remodel the business to now make it a fully
Nigerian affair..
According to him, this arrangement will ensure that the state of
the art fishing trawlers/vessels will be built in Nigeria and the
fish processing plants which will process and package the fish in
line with EU standards will be constructed along the coastal
communities.
Prince Wokoma also said that each of fishing plants is expected
to service over 110 fishermen and provide jobs to over 3500
people.
He further informed the Minister that the project apart from
involving the building of the fishing trawlers in Nigeria will also
include training of young Nigerians in the art of professional
fishing. The training, he said will be organized by the University
of Patras in Greece, which at the end, participants will qualify as
EU certified fisherman and this will enable them to be employed in
any part of the World.