THE ARBITRABILITY OF INTELLECTUAL PROPERTY DISPUTES IN NIGERIA: A case for resolving Intellectual Property disputes through Arbitration

Abstract

This article examines the use of arbitration as a dispute resolution mechanism for Intellectual Property (‘IP’) disputes in Nigeria. While arbitration offers confidentiality, specialised expertise, and efficiency, its use for IP disputes remains underutilized, and uncertain. Analyzing the arbitrability of IP disputes and the arguments for and against the mechanism, this article concludes that legislative clarification and institutional development could establish arbitration as the preferred forum for resolving commercial IP disputes in Nigeria.

Introduction

Intellectual Property (‘IP’) broadly refers to creations of the mind such as inventions, books, songs, music, symbols, names, images, designs, etc, although not all such creations of the mind are eligible for legal protection.

Nigeria’s intellectual property landscape is experiencing a transformative period. The country’s entertainment industry, particularly Nollywood and Afrobeats, has achieved global prominence. The technology sector is burgeoning, with Lagos State emerging as a leading African tech hub. Pharmaceutical innovations and agricultural biotechnology are expanding. This growth has inevitably led to an increase in intellectual property disputes ranging from copyright infringement and trademark conflicts to patent disputes and trade secret misappropriation.

Traditional litigation in Nigerian courts, while constitutionally guaranteed, presents several challenges for IP disputes. The Federal High Court, which has exclusive jurisdiction over IP matters by virtue of Section 251(1)(f) of the Constitution of the Federal Republic of Nigeria 1999 (as amended), suffers from significant case backlogs. IP disputes often require specialised technical and legal expertise that may not always be available in the judiciary. Furthermore, public court proceedings may compromise confidential business information and trade secrets, and the adversarial nature of litigation can irreparably damage commercial relationships that parties might prefer to preserve.

Against this backdrop, arbitration emerges as a potentially superior alternative, offering parties the autonomy to select arbitrators with specialised IP knowledge, ensuring confidentiality of proceedings and outcomes, providing procedural flexibility, and generally promising faster resolution than traditional litigation. However, despite these advantages, arbitration remains significantly underutilised for IP disputes in Nigeria, partly due to legal uncertainties regarding arbitrability and practical challenges in implementation.

This article seeks to provide a synopsis of the arbitrability concept, an overview of the legal framework governing IP arbitration in Nigeria, and examine the extent to which various IP disputes are arbitrable under Nigerian law.

Arbitrability of Intellectual Property Disputes

A. The Arbitrability Concept
Arbitrability refers to the types of disputes that may lawfully be submitted to arbitration. The concept encompasses both objective arbitrability (whether the subject matter is capable of being resolved through arbitration as a matter of law and public policy) and subjective arbitrability (whether the specific parties have agreed to arbitrate).

Nigerian law, following common law tradition, recognizes that certain disputes involving public rights, criminal matters, or issues of public policy are not arbitrable. The question for IP disputes is whether they fall within the category of arbitrable commercial disputes or whether they involve public rights that must be adjudicated by courts.

B. Contractual vs. Statutory IP Disputes

A useful distinction in analyzing arbitrability is between contractual IP disputes and statutory IP disputes. Contractual disputes arise from agreements between parties regarding IP rights, such as licensing agreements, assignment agreements, franchise agreements, or joint venture agreements involving IP. Statutory disputes involve the validity, subsistence, or infringement of IP rights themselves.

Contractual IP Disputes: There is general consensus that contractual disputes involving IP are arbitrable in Nigeria. When parties to a license agreement dispute payment terms, when franchisees and franchisors disagree on territorial rights, or when joint venture partners contest profit-sharing arrangements related to IP, these are fundamentally contractual disputes that happen to involve IP subject matter. Such disputes are clearly within the realm of arbitrable commercial disputes.

Nigerian courts have consistently upheld arbitration agreements in commercial contracts, and there is no principled reason to treat IP-related commercial contracts differently. The parties’ autonomy to resolve their contractual disputes through arbitration is well-established, and the fact that the contract involves IP rights does not remove this autonomy.

Statutory IP Disputes: The arbitrability of statutory IP disputes, particularly those involving the validity, subsistence, registration, or infringement of IP rights, is more contentious. These disputes implicate statutory rights created by legislation in the public interest, and courts traditionally have exclusive authority to determine such rights.

Legal framework for IP Arbitration:

1. Constitutional considerations:
   The Constitution of the Federal Republic of Nigeria 1999 (as amended) vests the Federal High Court with exclusive jurisdiction over intellectual property matters. Section 251(1)(f) specifically grants the Federal High Court jurisdiction in any action or proceeding for a declaration or injunction affecting the validity of any patent, trademark, design, copyright or other industrial property.

This constitutional provision creates a potential tension with arbitration. If the Federal High Court has exclusive jurisdiction over IP matters, can parties validly agree to arbitrate such disputes? This question goes to the heart of arbitrability and has significant implications for the enforcement of arbitration agreements and awards in IP disputes.

2. Intellectual Property laws:
   Nigeria’s IP protection is governed by several statutes. The Patents and Designs Act (Cap P2 LFN 2004), the Trademarks Act (Cap T13 LFN 2004), the Copyright Act (Cap C28 LFN 2004), and various other policies and legislations. However, none of these statutes explicitly address arbitration or alternative dispute resolution mechanisms. For example, the Patents and Designs Act provides for court proceedings regarding patent validity, infringement, and ownership disputes but makes no mention of arbitration. Similarly, the Trademarks Act and Copyright Act are silent on arbitration as a dispute resolution option. This legislative silence creates begs the question: does it mean IP disputes are not arbitrable, or simply that the legislature left the matter to be governed by general arbitration law? A review of IP statutes is imminent.
3. The Arbitration and Mediation Act:
   The Arbitration and Mediation Act 2023 (‘AMA’) represents a comprehensive reform of Nigerian arbitration law, incorporating contemporary developments in international arbitration practice and addressing many of the shortcomings of the previous Arbitration and Conciliation Act. Section 1(3) of the AMA maintains the fundamental consent to arbitration requirement and provides that the Act applies to arbitration where parties have agreed in writing to submit present or future disputes to arbitration. Section 2(4) of the 2023 Act also broadens the definition of “arbitration agreement” to include agreements in any form including electronic communications that provide a record of the agreement.

A very significant provision of the 2023 Act in relation to IP disputes is Section 5 (1) which provides that “…a court before which an action is brought in a matter, which is the subject of an arbitration agreement shall …refer the parties to arbitration unless it finds that the agreement is void, inoperative, or incapable of being performed”.

Section 16 of the 2023 AMA introducez provisions on emergency arbitration proceedings, while interim measures have been recognised both locally and internationally under Sections 19, 20, and 28 of the AMA to protect status quo and prevent a party from prejudicating the final outcome of a dispute before an award (or judgment) is delivered. Section 16 (11) clarifies that court-ordered interim measures in support of arbitration do not constitute a waiver of the arbitration agreement.

The AMA’s approach to arbitrability, while not explicitly addressing IP disputes, provides a more favorable foundation for IP arbitration than the previous ACA. By focusing on party autonomy and contractual capacity rather than categorical exclusions, the AMA suggests that commercial IP disputes should generally be arbitrable unless there are specific statutory prohibitions or fundamental public policy concerns.

Arguments against the arbitrability of statutory IP disputes include:
a) IP rights are statutory monopolies granted by the state, and only state organs should determine their validity;
b) determinations of IP validity have an erga omnes effects (affecting third parties), which are inappropriate for private arbitration;
c) the constitutional grant of exclusive jurisdiction to the Federal High Court precludes arbitration of these matters; and
d) public policy requires transparency in IP adjudication.

Arguments favoring arbitrability include:
a) parties have autonomy to resolve their private disputes;
b) arbitrators can apply statutory law just as courts do;
c) efficiency and expertise concerns favor arbitration;
d) the inter parties nature of arbitral awards limits concerns about erga omnes effects; and
e) arbitration agreements do not oust court jurisdiction absolutely but merely establish a contractual mechanism for dispute resolution.

To what extent are IP disputes arbitrable?
Nigerian law on IP arbitrability remains underdeveloped due to the paucity of judicial decisions directly addressing the issue. However, we can derive the likely position from general arbitration principles and analogous cases.

The Supreme Court’s decision in The Owners of MV Lupex vs. Overseas Chartering and Shipping Limited (2003) 15 NWLR (Pt. 844) pg 469 establishes that parties can contract to arbitrate disputes even in areas of exclusive statutory jurisdiction, provided the subject matter is arbitrable. The Court emphasized party autonomy and the contractual nature of arbitration.

Similarly in Onward Enterprises Ltd. vs. MV Matrix (2010)NWLR (Part. 1179) 350, the Court of Appeal held that the courts sould stay procedings pendingforeign arbitration based on the duty of the courts to enforce arbitration agreements. Inter alia, the Court held as follows: “once an arbitration clause is retained in a contract which is valid and the dispute is within the contemplation of the clause, the court should give regard to the contract by enforcing the arbitration clause.”

Conclusion:

Arbitration holds significant promise as a dispute resolution mechanism for intellectual property disputes in Nigeria. As Nigeria’s creative, technological, and pharmaceutical sectors continue to grow, the volume and complexity of IP disputes will inevitably increase. The traditional court system, while essential, may not provide the speed, expertise, confidentiality, and flexibility that many IP disputes require.

The legal framework for IP arbitration in Nigeria exists but requires clarification and development. While the Arbitration and Mediation Act, 2023 provides a sound foundation, legislative amendments explicitly addressing IP arbitrability would reduce uncertainty.

However, legal and stautory clarity alone is insufficient. With appropriate reforms and stakeholder commitment, arbitration can become a preferred mechanism for resolving commercial IP disputes in Nigeria, offering rights holders and commercial parties an efficient, expert, and confidential alternative to traditional litigation. This, in turn, will support Nigeria’s economic development by providing the certainty and efficiency in IP dispute resolution that innovation and creativity require.

The time is opportune for Nigerian policymakers, practitioners, arbitrators, and IP rights holders to embrace arbitration as a key component of the IP protection and enforcement ecosystem. By learning from international best practices while adapting to Nigerian legal and commercial realities, Nigeria can position itself as a leader in IP arbitration in the African region.

About the author:
Adesua Erewele,L.L.B, B.L, MBA, is a Partner at Roothe Kharis & Partners. She is a practicing lawyer, and member of the Nigerian Bar Association. She is also a Chartered Arbitrator at the Nigerian Institute of Chartered Arbitrators (NICARB) and holds an MBA from the University of East London, U.K. Her practice focuses on corporate and commercial law, maritime, arbitration, and private equity advisory.

Adesua advises startups, growth-stage companies, and established businesses on the protection, commercialization, and enforcement of their intellectual property rights. She has supported clients in structuring IP portfolios to align with investment and expansion strategies, and regularly provides advisory services on trademarks, copyright, regulatory compliance, and cross-border IP protection.
In her article on “The Arbitrability of Intellectual Property Disputes in Nigeria,” Adesua examines the evolving intersection between arbitration and intellectual property law and enforcement, offering introductory insight for IP rights holders, investors, and dispute resolution practitioners navigating complex commercial landscapes.