PRESENT AND FUTURE PERSPECTIVES OF THE LAW OF THIRD LAW ON THE THIRD PARTY FUNDING OFARBITRATION IN NIGERIA

Abstract

Third Party Funding (TPF) of arbitration has become a topical issue in global dispute resolution and is now increasingly relevant in Nigeria. The concept, which allows external financiers to fund arbitral proceedings in return for a share of the proceeds, has long been necessitated by the financial constraints faced by parties to arbitration. The COVID-19 pandemic, however, accentuated this necessity by severely impacting business capital, disrupting cash flows, and increasing the volume of disputes arising from contract breaches, business interruptions, and force majeure claims. Consequently, TPF has emerged as a vital tool not only for claimants but also for respondents seeking to mount viable defenses in arbitration. While the benefits of TPF in enhancing access to justice, ensuring equality of arms, and balancing procedural fairness are widely acknowledged, its use also reflects evolving commercial strategies for risk allocation and cash flow management. Jurisdictions such as Singapore, Hong Kong, and England have legalized or judicially recognized TPF, thereby strengthening their attractiveness as arbitral seats. Nigeria, however, has remained bound by the outdated Arbitration and Conciliation Act, which neither expressly recognizes nor regulates TPF, leaving parties to rely on common law principles. The recent passage of the Arbitration and Mediation Bill (2022) signals a significant shift, introducing statutory recognition of TPF and laying the foundation for its structured adoption. This article examines the present state of Nigerian law on third party funding of arbitration, the practical and policy considerations driving its necessity, and the future perspectives under the new legal framework. It argues that effective regulation of TPF is critical to enhancing Nigeria's competitiveness as an arbitral venue, ensuring access to justice, and aligning the country with global best practices in international commercial arbitration.