When Negotiation Has Not Failed: Why Courts Should Not Prematurely Appoint an Arbitrator

INTRODUCTION.

Dispute resolution clauses in commercial contracts often follow a familiar structure: first negotiation, then arbitration, and only thereafter the involvement of the courts where necessary. Yet, in practice, parties sometimes rush to court seeking the appointment of an arbitrator even when the agreed preliminary step—negotiation—has not clearly failed.
This raises an important legal question: Can a court properly appoint an arbitrator where parties are still negotiating and have not disagreed on the appointment process?
The answer, both in principle and under Nigerian law, leans strongly toward restraint. Courts should intervene only where the contractual mechanism has genuinely broken down.

The Contractual Obligation to Attempt Negotiation
Many arbitration clauses require parties to attempt amicable settlement through negotiation before invoking arbitration. This is not a mere formality; it is a binding contractual step.
Once parties freely agree to such a procedure, the law expects them to follow it. Courts consistently recognize that parties are bound by the terms of their contract once there is consensus ad idem.
This principle was strongly reaffirmed in Air France & Anor v. Owualah (2018) LPELR-45841 (CA), where the Court of Appeal echoed the classical statement of Sir George Jessel in Printing & Numerical Registering Co. v. Sampson (1875) LR 19 Eq 462:
“If there is one thing more than another which public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting and that their contracts, when entered into freely and voluntarily, shall be held sacred and shall be enforced by courts of justice.”
Where a contract prescribes negotiation as the first step, the parties must genuinely exhaust that process before moving to arbitration or seeking court intervention.

• The Role of the Court in Arbitration Matters.

Nigerian courts recognize arbitration agreements as jurisdictional hurdles that must be cleared before litigation or court intervention.

This position was clearly articulated in Sacoil 281 (Nig) Ltd & Anor v. Trancorp (Nig) Plc & Ors (2020) LPELR-49762 (CA), relying on the earlier authority of Kurubo v. Zach-Motison (Nig) Ltd (1992) NWLR (Pt.236) 102. The Court observed:
“Where the law places a hurdle between a willing and prospective litigant and the court in terms of enforcing the process of the court, the litigant must first clear the hurdle before he can enforce the court processes… He cannot jump or beat the gun.”

The metaphor is simple but powerful: a litigant cannot start the race before the starting gun is fired.
Where the contract requires negotiation before arbitration, negotiation is that starting gun.
When Can the Court Appoint an Arbitrator?

The answer is now clearly codified under Section 7 of the Arbitration and Mediation Act 2023.
The court may appoint an arbitrator only where:
the parties fail to agree on an arbitrator in accordance with their agreed procedure;
a party refuses or defaults in participating in the appointment process; or
the contractual procedure breaks down within the statutory timeframe.
The key phrase here is “failure to agree.”
This necessarily implies the existence of a disagreement or refusal between the parties.

• The Meaning of “Disagreement”

According to Black’s Law Dictionary (11th Edition, 2019), a disagreement is:
“A conflict or difference of opinion between parties; a refusal or failure to reach mutual assent or consensus.”

Therefore, disagreement requires clear evidence that parties cannot reach consensus.
If negotiations are still ongoing, and neither party has rejected the proposed appointment procedure, no disagreement exists.
Judicial Authority on Failure to Agree.

This principle was also emphasized in Compagnie Generale de Geophysique v. Etuk (2003) LPELR-5516 (CA), where the Court of Appeal held that where an arbitration agreement provides for a single arbitrator:
“Where the parties fail to agree on the arbitrator, the appointment shall be made by the court on the application of any party…”
The operative condition again is failure to agree.
Without such failure, the court’s power to intervene does not arise.
Negotiation in Good Faith and the Doctrine of Conduct
Another important dimension is the conduct of the parties.
Where parties continue to negotiate and make themselves available for discussions, it would be inequitable for one party to suddenly approach the court claiming that negotiations have failed.

In UBA Plc v. Comrade Cyprian Cyvle Ltd & Anor (2013) LPELR-20737 (CA), the Court of Appeal held:
“When a man, by his words or conduct, leads another to believe in a particular state of affairs, he will not be allowed to go back on it when it would be unjust and inequitable for him to do so.”
Thus, where parties behave in a manner suggesting that negotiations are ongoing, one party cannot later claim otherwise merely to trigger court intervention.

• The Problem of Premature Court Intervention.

When a party approaches the court while negotiations are still ongoing, the application becomes premature.
Such conduct amounts to “jumping the gun”—a phrase often used by courts to describe situations where litigants rush to enforce rights before fulfilling contractual conditions precedent.
In arbitration matters, this is particularly problematic because the autonomy of the parties is the foundation of arbitration. Courts are expected to respect the dispute resolution procedure chosen by the parties.
Premature intervention undermines that autonomy.

• CONCLUSION
The law on this issue is straightforward.
A court should only appoint an arbitrator where:
the agreed procedure for appointment has clearly failed,
there is evidence of disagreement or refusal, and
the contractual dispute resolution steps have been exhausted.
Where parties are still negotiating in good faith, and there is no refusal to appoint an arbitrator, the court’s intervention is premature.
Respect for contractual autonomy requires that negotiation must first run its course. Arbitration, and the court’s power to appoint an arbitrator, should arise only when that process genuinely fails.
Until then, the starting gun has not yet been fired.