LEGAL PRINCIPLE: ARBITRATION LAW — Arbitral Awards — Distinction from Consent Judgment — Different Legal Regimes Apply
PRINCIPLE STATEMENT
Arbitration proceedings are not the same as negotiations for settlement out of court; a consent judgment requires court confirmation and becomes binding only upon that confirmation, while an arbitral award has force as a judgment by operation of law upon filing.
RATIO DECIDENDI (SOURCE)
Per Katsina-Alu, JSC, in Ras Palgazi Construction Company Limited v. FCDA (2001) NLC-4596(SC) at pp. 10–12; Paras D–A.
"A consent judgment is arrived at in this way. The parties in an action before the court asked for leave of court. They held meetings in this connection more often than not, assisted by counsel representing them. Where there is an agreement, the terms of settlement are drawn up and signed by the parties. I must state here that at this stage, the terms of settlement cannot and do not operate as a final and conclusive judgment. The parties subsequently submit the terms of the settlement to court. After the confirmation of the terms, the court then formally makes the terms of the settlement, a judgment of the court. I must point out here that unless and until the court makes the terms of the settlement a judgment of the court, it is not binding and cannot therefore be enforced. Arbitration proceedings as I have already shown are not the same thing as negotiations for settlement out of court."
EXPLANATION / SCOPE
Arbitral awards and consent judgments operate under different legal regimes. A consent judgment requires court confirmation to become binding; until then, the terms of settlement are not enforceable. An arbitral award, by contrast, has the force of a judgment upon filing without court confirmation. Arbitration is a quasi-judicial process with a neutral arbitrator deciding the dispute. Consent judgment arises from party negotiation and requires judicial approval. Confusing the two leads to procedural errors. The court cannot treat an arbitral award as if it were a consent judgment requiring confirmation. The award is final and binding on its own terms. The parties are bound by the arbitrator’s decision, not their own negotiated settlement.