In every economy, it is commonly accepted that the financial health and stability of its banking sector is a key indicator of that economy’s performance. As a result, the volume of banking transactions is bound to rise with increased economic activities. With increased foreign direct investment in Nigeria and the Central Bank of Nigeria (CBN) consolidation exercise of 2005, Nigerian banks have achieved increased transactional capacity within the past decade. A primary result of these increased economic and banking activities is a similar increase in disputes arising from banking transactions and activities, ranging from retail banking disputes to those arising from specialized products.
For all stakeholders in growing economies (particularly foreign investors), an effective and prompt mode of dispute resolution has a high impact on the sustainable growth of such economies. This article analyses the current dispute resolution trends in the Nigerian banking sector as well as key considerations for banks in using arbitration as a dispute resolution mechanism. It also assesses major challenges that banks may face, with likely mitigations. Finally, it discusses the need for the further development of arbitration as an effective option for resolving banking disputes in Nigeria.Journal of International Arbitration