LEGAL PRINCIPLE: CUSTOMARY LAW – Arbitration – Binding Nature of Voluntary Customary Arbitration
PRINCIPLE STATEMENT
Where parties voluntarily submit a dispute to customary arbitration and agree, expressly or impliedly, that the decision shall be final and binding, they are bound by the decision. A party rejecting such a decision must prove it was wrong in principle.
RATIO DECIDENDI (SOURCE)
Per Iguh, JSC, in Anyabunsi v. Ugwunze (1995) NLC-1331989(SC) at pp. 16; Paras B--C.
"Where two parties to a dispute, as in the present case, voluntarily submit their matter in controversy to an arbitration according to customary law and agreed, whether expressly or by implication, that the decision of the arbitrators would be accepted as final and binding, then once the arbitrators reach a decision, it will no longer be open to either party to subsequently back out of such a decision. A party rejecting such a decision must prove that it was wrong in principle."
EXPLANATION / SCOPE
Voluntary submission to customary arbitration creates a binding contract. The parties are estopped from challenging the award. The principle applies to both express and implied agreements. The award is final and binding. The party challenging the award must prove that the arbitrators acted outside their jurisdiction or made an error of principle. The court will enforce the award. The rule promotes customary dispute resolution. The principle is similar to common law arbitration. The parties cannot resile from their agreement. The court will not re-hear the dispute on the merits.