New proposal could bar borrowers and lenders from heading straight to court, with 90-day resolution timeline introduced…..
The Central Bank of Nigeria (CBN) is set to overhaul how lending disputes are resolved, proposing a system that would require creditors and borrowers to first seek mediation before approaching the courts.
The move was outlined in a circular issued on Tuesday, where the apex bank called for stakeholder feedback on draft guidelines for a Mediation and Dispute Resolution Panel under the Secured Transactions in Movable Assets framework.
Signed by P. I. Oluikpe, Acting Director of the Development Finance Advisory Department, the circular signals a shift away from lengthy courtroom battles toward faster, structured dispute resolution mechanisms.
At the heart of the proposal is a requirement that all disputes arising from collateral-backed lending must first be handled by the mediation panel. Under the draft, the panel would have first-instance jurisdiction—meaning parties must exhaust this process before pursuing litigation.
The guidelines state that the panel would have the authority to interpret laws and regulations governing secured transactions, including relevant provisions aligned with international standards such as the UNCITRAL Model Law. Participation would also be mandatory, as both lenders and borrowers would be required to consent to the panel’s authority within their loan agreements.
The framework is anchored in the Secured Transactions in Movable Assets Act, 2017, but the CBN’s latest move seeks to operationalise the law by clearly defining procedures, roles, and enforcement mechanisms.
A key feature of the proposal is its emphasis on speed. Disputes are expected to be resolved within 90 days of the first hearing, a significant departure from the often prolonged timelines associated with traditional court processes.
Decisions issued by the panel would carry legal weight. Awards are to be binding on all parties and enforceable in court as consent judgments. Parties would be required to comply within 30 days, failing which the decision could be registered at the Federal High Court for enforcement.
The framework also allows for interim and partial rulings, while settlements reached during mediation can be formalised as final awards. Appeals, however, would be limited, restricted to points of law or mixed law and fact and must first pass through a High Court before reaching the Court of Appeal.
Beyond dispute resolution, the CBN says the initiative is designed to strengthen confidence in Nigeria’s credit system and improve access to financing. By providing a specialised and cost-effective platform, the panel is expected to address disputes tied to movable asset-backed loans, including issues around collateral registration and enforcement.
To qualify for the process, disputes must meet certain conditions. These include the existence of a valid security agreement, registration of the collateral with the National Collateral Registry, and evidence that parties made prior good-faith efforts to resolve the matter independently.
Stakeholders have been given until October 9, 2026, to submit feedback on the proposed guidelines, as part of the regulator’s consultative approach to policy development.
The proposal comes amid broader efforts by the CBN to tighten credit discipline. In March 2026, the bank directed financial institutions to restrict access to new loans for borrowers with non-performing facilities recorded in the Credit Risk Management System or by licensed credit bureaus.
Taken together, the measures signal a more assertive regulatory stance, one aimed at reducing credit risk, speeding up dispute resolution, and strengthening trust in Nigeria’s lending environment.
