These questions relate to the effects that insolvency proceedings initiated in Nigeria produce on arbitration commitments (foreign as well as national/local) involving the insolvent party.
Part I: Impact of Insolvency Proceedings on Ability to Commence or Continue Arbitration
Does the law of Nigeria contain any provision on the effect that the opening of insolvency proceedings produces on arbitration? If so, what is the source of the provision or provisions providing for the effects? That is, are the effects provided by the insolvency legislation as part of the consequences produced by the opening of insolvency proceedings? Or, are they provided by the arbitration legislation or law as a matter concerning the arbitrability of disputes, the capacity of the parties to arbitrate, the validity and effectiveness of arbitration agreements, or any other arbitration-specific category?
- In Nigeria, the laws which regulate insolvency matters are contained in the Companies and Allied Matters Act 2020 (hereinafter referred to as “Companies Act”) and the Companies Winding-Up Rules (hereinafter referred to as “Winding-Up Rules”). Although the insolvency provisions in the Companies Act do not specifically mention arbitral proceedings, some of the provisions will impact arbitration, as discussed below.
- The Companies Act provides that insolvency proceedings could lead to the staying of pending court proceedings against the company, and possible referral of such proceedings to the court presiding over the insolvency proceedings, in the case of a winding-up of the company. There is no stay of pending court proceedings where the company is subject only to financial restructuring.
- By extension, arbitration will be impacted where the insolvency proceedings seek a winding-up order against the company.