Arbitrability in Nigeria 2026: What Can, and Cannot, Be Arbitrated

Arbitrability in Nigeria is the threshold question that every contract drafter, in-house lawyer and investor must answer before choosing arbitration as the forum for resolving a commercial dispute. In 2026, with fresh appellate activity refining the boundaries between private commercial claims and matters reserved for the courts, getting this analysis right has become a matter of enforcement risk rather than mere academic interest. A dispute that is not arbitrable will not survive judicial scrutiny: an award rendered on a non-arbitrable subject can be set aside or refused recognition, wasting years of proceedings and considerable cost.

This guide maps the categories of arbitrable and non-arbitrable disputes, examines the public policy filter that overrides party autonomy, and sets out the practical steps for staying court proceedings, resisting or pursuing set-aside applications, and drafting clauses that hold up. It is written for the commercial reader who needs a clear, defensible answer before signing, filing or advising.

Executive summary, key takeaways on arbitrability in Nigeria

The following points distil the practical position on arbitrability in Nigeria as it stands in 2026. Each is developed in detail in the sections that follow.

• Commercial disputes are presumptively arbitrable. Contractual claims, sale of goods, construction, oil and gas commercial arrangements, shareholder agreements, franchising and licensing, can generally be referred to arbitration by consent.
• Certain subjects are reserved for the courts. Criminal offences, statutory tax assessments and recovery, insolvency and winding-up, and matrimonial status fall outside the reach of a private tribunal.
• Public policy is the master filter. Even an otherwise arbitrable dispute may be affected where the subject matter or the resulting award offends Nigerian public policy.
• Employment claims turn on jurisdiction. Statutory employment rights are generally the exclusive province of the National Industrial Court, narrowing the space for arbitration of labour matters.
• Stays are available but conditional. A court will stay its own proceedings in favour of arbitration where a valid arbitration agreement exists and the applicant acts promptly and has not delivered pleadings or taken other steps in the substantive suit.
• Awards can be challenged. The principal statute sets out limited grounds for setting aside, including invalid agreement, breach of natural justice, excess of jurisdiction and conflict with public policy.
• Foreign awards are enforceable. Nigeria’s participation in the New York Convention framework supports recognition of foreign awards, subject to the public policy exception.
• Drafting reduces risk. Precise dispute definitions, considered carve-outs, a clearly stated seat and governing law materially reduce later arbitrability disputes.

A quick decision tree for arbitrability

Before committing a dispute to arbitration, work through this sequence: first, is there a valid arbitration agreement covering the claim? Second, is the subject matter one that Nigerian law permits parties to arbitrate, or is it reserved to the courts or a specialised tribunal? Third, would an award on this subject offend public policy or trespass on exclusive statutory jurisdiction? If the answer to the first two is yes and the third is no, the dispute is arbitrable and the clause should operate. If any answer points the other way, the safer course is litigation, or a carefully drafted carve-out that keeps the reserved element out of the tribunal’s remit.

Legal framework and sources, statutes, courts and international instruments

Arbitration in Nigeria rests on a layered framework of primary legislation, constitutional allocations of jurisdiction, procedural rules and international instruments. The principal statute governing arbitration is the Arbitration and Mediation Act 2023, which repealed and replaced the former Arbitration and Conciliation Act. It establishes the validity of arbitration agreements, the conduct of proceedings, and the grounds and procedure for recognising, enforcing and setting aside awards. It is the first port of call for any arbitrability analysis, because it defines both what parties may agree to arbitrate and the limited circumstances in which the courts may intervene.

Overlaying the statute is the Constitution of the Federal Republic of Nigeria 1999 (as amended), which allocates jurisdiction among the superior courts of record and, crucially, reserves certain subject matters to particular courts. Where the Constitution or a statute confers exclusive jurisdiction on a court over a class of dispute, that allocation constrains what can be diverted to a private tribunal. The competent courts for arbitration-related applications, supervisory relief, stays, and enforcement or set-aside proceedings, are principally the Federal High Court and the State High Courts (and, for matters within its remit, the National Industrial Court) at first instance, with appeals lying to the Court of Appeal and ultimately the Supreme Court, whose judgments shape the doctrine on arbitrability and public policy.

Institutional rules also matter where parties adopt them, and the international dimension is provided by Nigeria’s engagement with the global arbitration order, most significantly through the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which Nigeria is a party.

How Nigerian law aligns with the UNCITRAL Model Law

Nigerian arbitration law is broadly aligned with the UNCITRAL Model Law on International Commercial Arbitration, the template that harmonises national arbitration statutes worldwide, and the Arbitration and Mediation Act 2023 draws on the Model Law as revised. This alignment gives commercial parties a familiar structure: the separability of the arbitration clause, the competence of the tribunal to rule on its own jurisdiction, limited court intervention, and a closed list of grounds for challenging awards. For international investors, the practical effect is predictability, the concepts that govern arbitrability in Nigeria echo those recognised across Model Law jurisdictions, which reduces the learning curve when structuring cross-border transactions and reassures counterparties that awards will be tested against internationally accepted standards.

What arbitrability means, the legal concept and the commercial test

Arbitrability in Nigeria describes whether a particular dispute is capable, as a matter of law, of being resolved by arbitration rather than by the courts. It has two components. The first is subject-matter arbitrability: does the law permit this type of claim to be decided privately, or has the legislature reserved it to a court or specialised tribunal? The second is the capacity and consent dimension: did parties with the legal capacity to do so actually agree to arbitrate this dispute? A claim can fail on either limb, perfectly capable parties cannot arbitrate a criminal charge, and a validly arbitrable commercial claim cannot be forced to arbitration absent a genuine agreement.

Over the concept of arbitrability sits the public policy overlay. Even where subject matter and consent are present, the courts retain a residual power to decline to give effect to arbitration where doing so would conflict with fundamental public interest. In practice, Nigerian courts approach the arbitrability question by asking whether the dispute is one the parties could lawfully compromise between themselves; if the matter could be settled by agreement, it is generally arbitrable, whereas matters engaging public rights, criminal liability or exclusive statutory jurisdiction are not.

Capacity and consent issues

Consent is the foundation of arbitration, and defects in capacity or consent are a recurring source of jurisdictional challenge. A party lacking the legal capacity to contract cannot bind itself to arbitrate, and an arbitration agreement entered into by an entity acting outside its powers may be attacked. State entities and public bodies raise particular questions: while government commercial contracts frequently contain arbitration clauses, disputes touching on sovereign or regulatory functions may resist arbitration on subject-matter or public policy grounds. When advising on arbitrability in Nigeria, verify that the signatory had authority, that the arbitration agreement is in writing and clearly worded, and that the claims actually asserted fall within the scope of what was agreed.

Categories of arbitrable disputes, common commercial areas

Most commercial disputes in Nigeria are arbitrable, and this is where arbitration delivers its greatest value. The presumption of arbitrability applies to disputes that parties are free to settle by agreement, and the following categories reliably fall within that scope:

• Commercial contract disputes. Breach of contract, non-payment, defective performance and interpretation disputes across sale, supply, distribution and services contracts.
• Construction and engineering claims. Payment, delay, variation and defects disputes, often referred to arbitration under standard-form construction contracts.
• Oil and gas commercial disputes. Joint operating agreement disputes, production sharing arrangements and commercial disputes between contracting parties, as distinct from regulatory or licensing matters reserved to the State.
• Shareholder and corporate contractual disputes. Disputes arising under shareholders’ agreements and joint venture arrangements, where the underlying rights are contractual rather than matters of statutory company supervision.
• Intellectual property contractual disputes. Licensing, royalty and assignment disputes concerning contractual rights, as opposed to questions of statutory validity of a registered right.
• Lease, franchise and agency disputes. Contractual disputes over commercial tenancies, franchise terms and agency relationships.

Case vignettes and the 2026 picture

Recent appellate activity has reinforced the pro-arbitration orientation of the Nigerian courts on genuinely commercial disputes, while continuing to police the boundary with reserved subjects. The prevailing judicial approach treats commercial claims capable of settlement between the parties as arbitrable and enforces arbitration agreements according to their terms, intervening only where a recognised statutory or public policy exception applies. Practitioners expect the developing line of authority to keep narrowing the scope for jurisdictional objections raised purely to delay commercial arbitrations, provided the underlying subject is one the parties could lawfully compromise.

Non-arbitrable matters, clear exclusions and contested areas

The mirror image of arbitrability in Nigeria is the set of disputes that the law reserves to the courts or specialised tribunals. Some exclusions are firm; others are contested and turn on how the claim is characterised. In each case the rationale is the same: certain rights and remedies engage the public interest, criminal liability, or exclusive statutory jurisdiction, and cannot be privately compromised.

• Criminal offences. Criminal liability is a matter of public law and exclusive court jurisdiction. Parties cannot agree to arbitrate whether an offence was committed, and an arbitration clause cannot displace the criminal process.
• Statutory tax assessments and recovery. The assessment and collection of tax is a statutory function; disputes over tax liability generally cannot be arbitrated, though purely contractual disputes about tax allocation between private parties may stand differently.
• Insolvency and winding-up. These proceedings engage a statutory framework and court supervision designed to protect the general body of creditors, placing them outside the reach of a bilateral arbitration agreement.
• Matrimonial and status matters. Questions of personal status are reserved to the courts.
• Land title questions governed by statutory procedure. Where statute mandates a court process for determining title, that process cannot be replaced by arbitration, although contractual disputes concerning land transactions may be arbitrable.
• Statutory employment rights. Rights conferred by labour statute typically fall to a specialised court, as explained below.

Tax, sovereign revenue and fiscal disputes, the nuance

Tax is the classic contested frontier. The controlling distinction is between statutory tax matters and contractual tax matters. A dispute over whether a taxpayer owes an assessed liability, or over the exercise of a revenue authority’s statutory powers, is a public-law question that is generally non-arbitrable, because the taxing power cannot be surrendered to a private tribunal. By contrast, where two private parties allocate tax risk between themselves in a contract, for instance a gross-up or indemnity clause, a dispute about the meaning and operation of that allocation may be arbitrable, because it concerns their contractual rights rather than the State’s revenue entitlement. When advising on tax disputes and arbitration in Nigeria, characterise the claim carefully: the same commercial relationship can generate both an arbitrable contractual claim and a non-arbitrable statutory claim.

Employment and labour disputes and the National Industrial Court

Employment is the second major area where arbitrability is constrained by exclusive jurisdiction. The National Industrial Court of Nigeria is the specialised court for labour and employment matters, and its jurisdiction over statutory employment rights is a significant limit on the arbitration of labour disputes. Where a claim is founded on statutory protections, unfair dismissal, statutory entitlements, collective labour rights, the National Industrial Court’s role narrows the space for a private tribunal. Commercial disputes connected to employment, such as certain executive service arrangements framed in contractual terms, may leave more room for alternative dispute resolution, but the default assumption should be that core statutory employment claims are not diverted from the specialised court.

Insolvency, insolvency practitioners and arbitration

Insolvency sits firmly on the non-arbitrable side of the line because the process is collective and court-supervised. Winding-up and the distribution of an insolvent estate affect the entire class of creditors, not just the two parties to an arbitration agreement, and the statutory framework governing insolvency, principally the Companies and Allied Matters Act 2020 and the Insolvency Regulations, vests supervisory jurisdiction in the courts. A pre-existing arbitration clause in a contract with a company that later becomes insolvent will not, as a rule, control the insolvency proceedings themselves, although disputed contractual claims that would ordinarily be arbitrable may still need to be resolved and quantified before they feed into the insolvency process. The practical warning is that an arbitration clause is unlikely to be effective against the machinery of insolvency once it is engaged.

Public policy as an overriding limit on arbitrability in Nigeria

Public policy is the residual control that overrides party autonomy in the arbitration process. It operates at two stages: it can render a dispute non-arbitrable at the outset where the subject matter offends fundamental public interest, and it can justify refusing to enforce or setting aside an award whose content conflicts with public policy. Because it is a flexible standard, public policy is both a safeguard and a source of uncertainty, and the courts apply it with restraint so as not to undermine the finality that makes arbitration attractive.

In practice, the public policy exception is invoked narrowly. It is not a licence to re-examine the merits of an award; it is a filter against outcomes that would violate fundamental principles of justice or the essential interests of the Nigerian legal order. An award procured by fraud, or one that would require a party to perform an illegal act, is the kind of case where the exception bites. Routine commercial awards, even those a court might have decided differently, are not vulnerable simply because a party is dissatisfied.

Domestic versus international public policy

The scope of the public policy exception varies with the type of award. For domestic awards, the courts apply domestic public policy, informed by Nigerian statute and constitutional values. For the recognition and enforcement of foreign awards under the New York Convention framework, the relevant standard is generally reserved for awards that offend the most basic notions of morality and justice. This distinction matters to cross-border parties: an award that might attract closer domestic scrutiny may nonetheless be enforceable as a foreign award because the applicable threshold is high. When structuring cross-border arbitrations seated outside Nigeria, parties should weigh how the public policy filter will operate at the enforcement stage in Nigeria.

Stay of court proceedings in favour of arbitration, procedure and checklist

Where a party sues in court in breach of an arbitration agreement, the counterparty’s remedy is to apply for a stay of the court proceedings so that the dispute proceeds to arbitration. The court’s power to grant a stay is central to giving effect to arbitration agreements, and the application must be made correctly and in good time. Under the Arbitration and Mediation Act 2023, a party must apply for a stay not later than when submitting its first statement on the substance of the dispute.

The essential requirements a court will consider are: that there is a valid and binding arbitration agreement covering the dispute; that the applicant has not delivered pleadings or taken any other step in the substantive proceedings that amounts to submission to the court’s jurisdiction; that the applicant is ready and willing to arbitrate; and that there is no ground rendering the arbitration agreement null and void, inoperative or incapable of being performed. Timing is decisive, an applicant who files a defence on the merits or otherwise engages with the substance of the claim before seeking a stay risks being held to have waived the arbitration agreement.

A well-prepared stay application should include a supporting affidavit exhibiting the contract and the arbitration clause, confirming the applicant’s readiness to arbitrate, and demonstrating that no step has been taken in the substantive suit. The grounds should assert the existence and validity of the arbitration agreement, that the claims fall within its scope, and that the statutory conditions for a stay are met. Practitioners frequently frame the relief as an order staying all further proceedings pending reference to and determination by arbitration in accordance with the parties’ agreement.

Emergency relief and interim measures while seeking a stay

Seeking a stay does not leave a party without protection in urgent situations. A party may still apply to the court for interim measures, such as preservation of assets or evidence, to hold the position pending constitution of the tribunal, without that application being treated as a submission to the court’s jurisdiction over the merits. Many institutional rules, and the Arbitration and Mediation Act 2023 itself, also provide for an emergency arbitrator who can grant urgent relief before the full tribunal is in place. The interplay between court-ordered interim relief and tribunal-ordered relief should be planned in advance, because the availability of prompt protective measures can be as important commercially as the eventual award.

Tactical considerations, time bars and forum shopping

Two tactical issues recur. First, limitation and contractual time bars run irrespective of forum, so a party insisting on arbitration must commence the reference promptly to avoid the claim becoming time-barred. Second, forum shopping, the temptation to litigate in court despite an arbitration clause, hoping to secure a perceived home advantage or to delay, is precisely what the stay mechanism is designed to defeat. The disciplined response to a suit brought in breach of an arbitration agreement is to apply for a stay immediately and avoid any step that could be read as accepting the court’s jurisdiction.

Setting aside and enforcing arbitral awards, grounds and timeline

Arbitration is intended to produce a final, binding award, and the grounds for interfering with an award are deliberately narrow. Under the Arbitration and Mediation Act 2023, a party seeking to set aside an award must bring itself within the limited grounds recognised by law, which broadly include: that a party was under some incapacity or that the arbitration agreement was invalid; that a party was denied a fair hearing or otherwise unable to present its case; that the tribunal exceeded its jurisdiction by deciding matters beyond the scope of the reference; that the composition of the tribunal or the procedure did not accord with the agreement; that the subject matter is not capable of settlement by arbitration; and that the award conflicts with public policy. These grounds do not permit a general appeal on the merits, and a party dissatisfied with the tribunal’s factual or legal conclusions cannot use set-aside proceedings as a second bite.

Time limits apply. An application to set aside must be brought within the statutory period fixed by the Act, and a party that delays risks losing the right to challenge the award altogether. The practical lesson is to diarise the deadline the moment an adverse award is received and to take advice immediately, because the window is short. For the counterparty seeking to enforce, an award that survives the set-aside window becomes a robust basis for enforcement.

Interaction with the New York Convention for foreign awards

Foreign awards are enforced in Nigeria through the New York Convention regime, given effect in the Arbitration and Mediation Act 2023, which obliges recognition and enforcement subject to a defined and limited set of defences. A party resisting enforcement of a foreign award must establish one of the Convention grounds, such as incapacity, invalidity of the arbitration agreement, denial of due process, an award outside the scope of the submission, irregular tribunal composition, or that the award has not become binding or has been set aside at the seat. In addition, enforcement may be refused where the subject matter is not arbitrable under Nigerian law or where recognition would be contrary to public policy. This makes arbitrability and public policy the two most important defences to plan for when enforcing foreign awards in Nigeria.

Practical steps after an adverse set-aside decision

If an award is set aside, the parties are generally returned to a position where the dispute remains unresolved, and options include a fresh arbitration if the agreement permits, or, depending on the ground of the set-aside, resort to the courts. Where the set-aside was based on a curable procedural defect rather than a fundamental problem with arbitrability, re-arbitration may be feasible. Where the defect was that the subject matter was never arbitrable, the parties must litigate. Early advice on the ground of the set-aside decision is essential to choosing the right next step and to preserving limitation.

Practical drafting checklist and clause examples

Careful drafting is the most effective way to avoid arbitrability disputes before they arise. A robust arbitration clause should address the following:

• Clear scope. Define the disputes referred to arbitration in wide terms (“arising out of or in connection with this agreement”) while identifying any subjects deliberately reserved.
• Seat and venue. State the legal seat of the arbitration expressly, distinguishing it from the physical venue of hearings, because the seat determines the supervisory jurisdiction and the law governing the arbitration.
• Governing law. Specify the law of the contract and, where different, the law governing the arbitration agreement, to reduce disputes about validity and public policy risk.
• Institutional or ad hoc. Choose institutional rules or a clear ad hoc framework, and provide for emergency arbitrator and interim measures where speed may matter.
• Multi-tier resolution. Consider staged negotiation or mediation before arbitration, with clear, enforceable trigger points.
• Carve-outs. Where appropriate, carve out reserved matters expressly.

Sample carve-outs, how to word them, with warnings

Where a contract may touch on non-arbitrable subjects, a carve-out can preserve the arbitration clause for the arbitrable elements while acknowledging that certain matters must go to court. For example, a clause might provide that “nothing in this arbitration agreement shall require the parties to submit to arbitration any dispute concerning statutory tax liability, insolvency, or any matter falling within the exclusive jurisdiction of a court or specialised tribunal, which shall be determined in the appropriate forum.” The warning is that a carve-out cannot create arbitrability where the law denies it, nor can it oust the courts’ jurisdiction over reserved subjects; it merely clarifies allocation and avoids the whole clause being challenged because it appears to purport to arbitrate the non-arbitrable.

Quick reference, arbitrable versus non-arbitrable disputes

The table below summarises the position at a glance. Treat “depends” categories as prompts to characterise the specific claim and, where necessary, to take local advice before relying on an arbitration clause.

Image alt: Nigerian gavel and arbitration agreement, arbitrability in Nigeria 2026.

Takeaways and recommended next steps on arbitrability in Nigeria

Arbitrability in Nigeria rewards careful analysis at two moments: when a clause is drafted, and when a dispute crystallises. At the drafting stage, define the scope broadly, state the seat and governing law expressly, and consider carve-outs for reserved subjects so the clause is not exposed to challenge. When a dispute arises, characterise the claim precisely, the same commercial relationship can generate both an arbitrable contractual claim and a non-arbitrable statutory one, and if a counterparty litigates in breach of the agreement, move quickly for a stay without taking any step on the merits. For contested public-law, tax or employment questions, obtain local advice before committing to a forum, because a mistake on arbitrability can only be discovered at the enforcement or set-aside stage, when it is expensive to correct. Readers should review existing clauses now, plan for interim relief earlier rather than later, and build an arbitration-friendly drafting standard into their contracting templates.

This article is provided for general guidance only and does not constitute legal advice. The law and case authorities on arbitrability in Nigeria continue to develop; readers should consult qualified local counsel on any specific dispute or clause.

Sources

1. Arbitration and Mediation Act 2023 (Laws of the Federation of Nigeria), NigeriaLII
2. Constitution of the Federal Republic of Nigeria 1999 (as amended), NigeriaLII
3. Supreme Court of Nigeria
4. National Industrial Court of Nigeria
5. Nigerian Bar Association
6. UNCITRAL Model Law on International Commercial Arbitration
7. New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958)