One of the commonest modes of settling disputes in Nigerian indigenous communities is customary arbitration. Through customary arbitration, it is possible to reach a compromise solution. There are however, legal issues such as the freedom to resile from the process, and whether a party must exhaust appeal avenues which appear to reduce the efficiency of customary arbitration as a toll for settling disputes among indigenous Nigerians. Through the doctrinal research method, this article has found that the efficacy of this indigenous mode of resolving disputes is being threatened by the fact that the awards can be binding only after a signification of acceptance by the parties. Consequently, a party who voluntarily submitted his dispute to customary arbitrators is free to resile at any stage of the proceedings even after the awards have been made and he is at the loosing end. Similarly, it is difficult for the principle of res judicata to apply upon the awards of customary arbitration where a party can simply abandon the process and resort to the court upon his dissatisfaction with the awards. As a way forward, the article has taken the position that for customary arbitration to serve as a viable tool for amicable resolution of disputes in indigenous Nigerian communities, parties who voluntarily submit their dispute to customary arbitration must not be allowed to abandon the pursuit of the avenues open to them and resort to judicial proceedings. Again, parties must be deemed to have agreed to be bound by the awards once they voluntarily submit their dispute to customary arbitrators. Only then will customary arbitration be properly placed as an instrument for amicable resolution of disputes in indigenous Nigerian communities.