Introduction
This has been the uppermost question in mind since I heard a Senior Lawyer inform the court that there was an ongoing arbitration and hence an appointed Administrator should not proceed. There is apparent doctrinal friction between arbitration and insolvency. Arbitration is built on contractual autonomy, confidentiality, and party control. By contrast, Administration under the Companies and Allied Matters Act 2020 (CAMA 2020) is a statutory collective rescue regime designed to preserve enterprise value and protect the general body of creditors, not to serve the interests of any individual creditor.
The foundational purpose of administration under CAMA 2020 is collective in nature. Section 444 of CAMA 2020 provides that the administrator of a company must perform his functions in the interests of the company’s creditors as a whole. This collective mandate is the bedrock of the administration regime. An administrator owes no special duty to any single creditor, secured or unsecured; the statutory obligation is to the general body of creditors. This principle guards against any creditor leveraging a private contractual mechanism; such as an arbitration clause; to obtain a preferential position over other creditors of equal or equivalent standing.
The central issue thus is: “Can an ongoing arbitration stall, suspend, or frustrate an administration process commenced under Nigerian law?”
This article argues that under Nigerian law:
(a) Arbitration agreements survive insolvency;
(b) Administration triggers a mandatory statutory moratorium affecting arbitral proceedings;
(c) Arbitration cannot stall administration; and
(d) Nigerian courts should adopt a calibrated approach where insolvency proceedings intersect with disputed debts subject to arbitration.
Comparative guidance from the United Kingdom and Singapore: Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd, Salford Estates (No 2) Ltd v Altomart Ltd, and AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co) provides analytical clarity.
The conclusion is straightforward but doctrinally significant: arbitration may determine liability, but insolvency controls recovery and procedure. Critically, no creditor may use the machinery of arbitration to obtain priority over the general body of creditors or to undermine the collective administration framework which CAMA 2020 has carefully erected.
The Nigerian Statutory Framework
Administration Under CAMA 2020
CAMA 2020 introduced a modern rescue-oriented insolvency regime into Nigerian corporate law under Chapter 18 (Sections 443 to 549). This represents a significant legislative departure from the older regime under CAMA 1990 and brings Nigeria broadly into alignment with international insolvency best practices.
The objectives of administration are set out in Section 444 of CAMA 2020, which provides that the administrator must perform his functions with the objective of: (a) rescuing the company, the whole or any part of its undertaking as a going concern; (b) achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up; or (c) realising property in order to make a distribution to one or more secured or preferential creditors.
Crucially, objective (b) is expressed in collective terms; the test is the outcome for creditors as a class, not the outcome for any particular creditor. Objective (c) is only available where objectives (a) and (b) are not reasonably practicable, and even then does not authorise the administrator to prefer one unsecured creditor over another.
Section 480 of CAMA 2020 provides for a statutory moratorium upon the appointment of an administrator. During administration, no step may be taken to enforce security, no legal proceedings may be commenced or continued against the company in administration, and no execution or other legal process may be levied against company property, except with the consent of the Administrator or the permission of the Court. Section 480(4) expressly provides that no legal process, legal proceedings, execution, distress and diligence may be instituted or continued against the company or its property, except with the administrator’s consent or the court’s permission.
This moratorium is not procedural courtesy; it is structural. It preserves the integrity of the collective rescue mechanism. It prevents a race to judgment by individual creditors, ensures that all creditors are treated equitably, and gives the administrator the breathing space necessary to assess the company’s position and pursue the statutory objectives. A creditor who circumvents the moratorium, whether through litigation or arbitration, does not merely breach procedure; it strikes at the collective nature of the administration regime itself.
Section 511 of CAMA 2020 further reinforces the collective framework by providing that the administrator owes a duty to act in the interests of all creditors collectively, and that any exercise of his powers which unfairly harms the interests of a creditor or class of creditors may be challenged before the Court. This provision makes explicit what is implicit throughout Chapter 18, administration is not a mechanism by which one creditor can secure advantage over others; it is a regime designed to maximise value for the collective.
Arbitration Under the Arbitration and Mediation Act 2023 (“AMA 2023”)
Nigeria’s AMA 2023 reinforces international trite principles such as the competence-competence rule (Section 8), limited judicial interference (Section 5), enforcement of arbitration agreements, and recognition of foreign awards. The AMA 2023 mirrors the UNCITRAL Model Law, reflecting a strong pro-arbitration posture. The question, therefore, is not whether Nigeria favours arbitration; it clearly does. The question is whether party autonomy extends so far as to disrupt a statutory rescue regime enacted in the interests of creditors as a whole.
Is Arbitration Caught by the CAMA Moratorium?
Although arbitration is private, it is functionally adjudicatory. It determines rights and liabilities of parties and produces enforceable awards. Comparative insolvency jurisprudence treats arbitration as “legal proceedings” for purposes of a statutory stay. Nigerian courts are therefore likely to adopt the same interpretation. The AMA 2023 does not contain any provision that exempts arbitral proceedings from the operation of CAMA 2020’s moratorium. In the absence of express statutory exemption, the moratorium applies.
Permitting arbitral proceedings to continue automatically after commencement of administration would:
(e) Undermine the equal treatment of unsecured creditors by allowing a creditor with an arbitration clause to pursue a claim while other creditors of equivalent ranking cannot;
(f) Allow piecemeal liability determinations that could distort the distribution outcome for the general body of creditors;
(g) Distract management and administrators from the core statutory task; and
(h) Create inconsistent adjudicative outcomes that prejudice the collective distribution framework.
Accordingly, once administration begins, arbitration cannot proceed absent consent or court leave. In other words, Administration suspends arbitration, not the reverse. This is not an anti-arbitration stance; it is a recognition that insolvency law serves different and broader objectives than private dispute resolution. Where the two regimes conflict, the statutory collective regime must prevail to the extent necessary to protect all creditors.
The UK Experience: From Salford to Bresco
The Salford Approach
In Salford Estates (No 2) Ltd v Altomart Ltd [2014] EWCA Civ 1575, the English Court of Appeal held that where a debt relied upon in a winding-up petition is subject to an arbitration clause and is genuinely disputed, the court should ordinarily stay or dismiss the petition in favour of arbitration. Salford was widely interpreted as elevating arbitration above insolvency jurisdiction in debt-dispute contexts. However, subsequent commentary and first-instance decisions have cautioned against over-extension. Insolvency jurisdiction is not merely a debt-collection mechanism; it is a class remedy for the benefit of all creditors.
The Clarification in Bresco
In Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, the UK Supreme Court addressed whether a company in liquidation could pursue adjudication (analogous to arbitration in principle). The Court held, inter alia, that: insolvency does not extinguish contractual dispute resolution rights, and the arbitration agreement survives. However, enforcement of resulting awards remains subject to insolvency principles and the pari passu distribution regime that exists for the benefit of the general body of creditors.
The key doctrinal contribution of Bresco is this: insolvency limits utility and enforcement; not jurisdictional competence. This distinction is critical for Nigerian courts. A creditor subject to an arbitration clause does not lose its right to have the underlying dispute resolved by arbitration. What it cannot do is use the arbitral award to leapfrog ahead of other creditors in the insolvency distribution. The award becomes a claim in the administration, to be dealt with in accordance with the collective distribution rules under CAMA 2020.
The Singapore Refinement: AnAn Group
Singapore’s Court of Appeal in AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Co) [2020] SGCA 33 adopted a structured approach. The Court held that where a winding-up application is based on a debt, and the debt disputed is subject to an arbitration agreement, the court should dismiss or stay the insolvency application if there is a prima facie dispute falling within the arbitration clause. However, the court retains discretion where the dispute is an abuse of court process, there is no genuine contest, or insolvency is otherwise clearly established. Singapore therefore avoids both extremes of automatic deference to arbitration and automatic supremacy of insolvency.
Importantly, the Singapore approach does not permit arbitration to subvert the collective nature of insolvency proceedings. The AnAn framework operates at the pre-administration stage, at the threshold of whether insolvency proceedings should be commenced at all. Once proceedings are properly commenced, the collective statutory framework governs, and no individual creditor may use arbitration to bypass it.
Application to Nigerian Law
The following key issues are now considered:
1. Can Arbitration Prevent the Appointment of an Administrator?
Administration is triggered by statutory criteria under Chapter 18 of CAMA 2020; not by contractual consent. An arbitration clause cannot contract out of insolvency legislation. Where the statutory threshold is met (i.e., the company is or is likely to become unable to pay its debts), the court’s insolvency jurisdiction is engaged for the benefit of the general body of creditors. Arbitration is a creature of contract between parties; administration is a statutory regime for the protection of creditors as a class. The two operate on entirely different legal planes.
2. Can Ongoing Arbitration Stall Administration?
Once administration commences, the CAMA 2020 moratorium under Section 480 applies automatically. Arbitral proceedings cannot continue without the consent of the Administrator or the leave of the Court. Enforcement of awards is also stayed. Allowing individual creditors to continue arbitral proceedings in defiance of the moratorium would be tantamount to permitting them to obtain an advantage over the general body of creditors; a result that is fundamentally inconsistent with the collective objectives of administration. Therefore, an ongoing arbitration cannot stall administration. It is administration that stalls an ongoing arbitration.
3. What If the Debt Is Disputed Under an Arbitration Clause?
This is the most delicate scenario. Where a contract contains an arbitration clause and a creditor seeks insolvency relief, but the debtor disputes the underlying debt, Nigerian courts should adopt a modified AnAn approach:
(i) Determine whether there is a bona fide and substantial dispute;
(j) Assess whether the dispute falls within the arbitration agreement;
(k) Consider whether insolvency is independently established.
Where the dispute is genuine and substantial, the court may defer to arbitration for the purpose of resolving the underlying liability before insolvency consequences attach. Where the dispute is tactical, contrived, or deployed as a stratagem to frustrate the administration regime, the court should proceed with insolvency. This preserves both party autonomy and the collective integrity of the creditor body. Critically, even where arbitration is permitted to proceed for liability-determination purposes, the resulting award ranks as a claim in the administration alongside all other creditors. Arbitration does not entitle a creditor to a payment preference over the general body.
The Public Policy Hierarchy
Insolvency law serves systemic objectives that transcend private ordering: it preserves enterprise value, ensures the equal treatment of unsecured creditors, and prevents a race-to-judgment enforcement that would benefit some creditors at the expense of others. The collective benefit principle, that administration exists to serve all creditors rather than privileged individual creditors, is not merely a statutory platitude. It is a substantive constraint on the conduct of the administrator and on the claims of individual creditors.
Arbitration serves the laudable purpose of private ordering. Where the two conflict, insolvency must prevail to the extent necessary to preserve collective integrity. A creditor who holds an arbitration clause is not thereby elevated above the general body of creditors. Its claim is adjudicated by arbitration; its recovery is governed by insolvency law. The distinction, drawn clearly by the UK Supreme Court in Bresco, is between jurisdictional competence (which arbitration retains) and enforcement priority (which insolvency governs for the benefit of all). This is not anti-arbitration. It is structural prioritisation in favour of collective creditor welfare.
Proposed Doctrinal Framework for Nigeria
Nigerian courts should articulate the following principles:
(a) Arbitration agreements survive administration and liquidation, because Chapter 18 of CAMA 2020 does not destroy contractual dispute resolution rights.
(b) The CAMA 2020 moratorium applies to arbitral proceedings, which are “legal proceedings” for this purpose. Arbitration cannot continue after administration commences without the administrator’s consent or court leave.
(c) Administration exists for the benefit of all creditors collectively, therefore no individual creditor may use an arbitration clause to obtain a preference over the general body of creditors.
(d) Insolvency jurisdiction is not automatically subordinated to arbitration clauses. Where debt disputes are genuine and substantial, arbitration may precede insolvency orders for the purpose of liability determination only.
(e) Enforcement of arbitral awards is subject to insolvency distribution rules. Awards are claims in the administration; they do not confer priority over other creditors.
(f) The Court retains supervisory authority over insolvency processes, including the power to grant or withhold leave for arbitral proceedings to continue.
Such articulation would harmonise CAMA 2020, the AMA 2023, and international best practice, while firmly anchoring the administration regime in its proper constitutional purpose: collective benefit for all creditors.
Conclusion
Under Nigerian law, arbitration cannot stall administration. The statutory framework under CAMA 2020 is clear, modern, and purposive. Administration is a collective rescue regime enacted for the benefit of creditors as a whole. It is not a mechanism by which individual creditors may enforce private contractual rights ahead of other members of the general creditor body. Arbitration, for all its virtues, operates in the domain of private ordering. When it intersects with administration, it must yield, not override.
Arbitration may influence liability determination in limited circumstances, but it cannot override the statutory moratorium and the collective restructuring framework designed for the benefit of all creditors under CAMA 2020, or the supervisory jurisdiction of the Insolvency Court.
The proper relationship is cooperative but hierarchical:
(a) Arbitration determines rights as between the parties;
(b) Administration restructures obligations for the collective benefit of all creditors; and
(c) Insolvency law governs recovery, ensuring equitable distribution across the general body of creditors.
For Nigerian jurisprudence, a principled judicial framework at this intersection would significantly strengthen its commercial jurisprudence and reinforce its dual identity as both a modern arbitration jurisdiction and a developing insolvency regime. The twin pillars of the AMA 2023 and CAMA 2020 are not in conflict, they are complementary. The task for Nigerian courts and practitioners is to ensure that the primacy of collective creditor welfare, which lies at the heart of CAMA 2020’s administration regime, is never sacrificed on the altar of private contractual ordering.
