An arbitration clause is the cheapest insurance policy in any commercial contract, and one of the most frequently mishandled. In our experience advising Nigerian and cross-border parties, five drafting errors recur with striking regularity.
1. Pathological seat language. A clause that says 'arbitration in Nigeria' without naming a city leaves the seat genuinely contested. We recommend naming the seat (e.g. 'Lagos, Nigeria' or 'Abuja, Nigeria') and, separately, the venue if the parties want flexibility on hearing location.
2. Silent on rules. Where parties intend institutional arbitration, the clause must say so, 'in accordance with the Rules of the Lagos Court of Arbitration' or 'the LCIA Rules', otherwise the default is ad hoc, with all the procedural friction that brings.
3. Number of arbitrators undefined. A bare 'arbitration' clause invites a fight at the appointment stage. Specify whether it is a sole arbitrator or three, and the appointing authority where the parties cannot agree.
4. Carve-outs that swallow the clause. Excluding 'urgent injunctive relief' is normal; excluding 'matters relating to payment' is not. We have seen entire commercial relationships unravel because the carve-out gutted the clause's coverage.
5. Award enforcement assumptions. A foreign-seated award still requires recognition under the Arbitration and Conciliation Act. Where enforcement in Nigeria is the practical endgame, that consideration should shape the seat choice.
A well-drafted clause runs to four or five sentences and resolves all of the above. It is, almost without exception, time well spent at signing, and the cheapest hour of legal work in any contract.