Importance of Properly Drafted Arbitration Clauses in Commercial Agreements : Nigeria as a Case Study

Arbitration clauses constitute one of the salient dispute resolution clauses in legal agreements. One of the well-known essences of having such clauses in agreements —apart from amicable resolution of grievances—is to foster business relationships without the need of proceeding to the regular court system, thereby circumventing uncertainties as to time.This article focuses on the importance of properly drafted arbitration clauses and how best to generally avoid early litigation costs arising from improperly drafted arbitration clauses. Various Nigerian court decisions emanating from contentions of refusing parties to arbitration were reviewed. The court decisions demonstrated how refusing parties sought to use improperly drafted arbitration clauses as a legal reason to avoid proceeding with arbitral proceedings or to set aside unfavorable arbitral awards under the guise that the clauses were ill-drafted. The litmus test adopted by the courts in determining whether an arbitration clause was improperly drafted was to determine whether there is any intent shown by the parties to resort to arbitration in the first instance once a dispute is declared. In those decisions, once the court confirms the existence of such intent, the court always compels arbitration. Interestingly, some of the Nigerian courts relied on a plethora of U.S. court decisions to order parties to arbitrate. This study frowns at the position of the refusing parties in opting for court proceedings rather than resorting to arbitration as agreed