Investors’ Disputes: FG Urges UN to Protect National Sovereignty in Arbitration

…P&ID case would have crippled Nigeria’s economy – AGF

By Vivian Okejeme

The Federal Government of Nigeria has called on the United Nations to pursue reforms that will protect national sovereignty in arbitration disputes between investors and member states.

The Federal Government advocated reforms that would reinforce, rather than bypass, domestic courts in Investor-State Dispute Settlement (ISDS).

The Attorney-General of the Federation (AGF) and Minister of Justice, Prince Lateef Fagbemi (SAN), stated this position on Thursday during the Heads of Delegations Roundtable at the Chief Legal Advisors Forum (CLAF) 2026 in Singapore.

A statement signed by Kamarudeen Ogundele, Special Adviser to the President (Communication and Publicity), Office of the AGF, said the proposed ISDS reforms would address inadequacies and imbalances in the legal framework to protect investments and taxpayers’ interests.

The AGF, while commending the forum convened by Singapore’s Ministry of Law, said that as global investment flows evolve and states confront new development challenges, the need for a modern, balanced and credible dispute-settlement system has never been more urgent.

The minister said that upon assuming office, he had taken steps to address the challenges by constituting a committee of experts to review Nigeria’s bilateral treaties and its commitments under multilateral treaties and conventions, with a view to promoting and protecting investments in Nigeria.

He said Nigeria became a strong proponent of clarity in the calculation of damages because of its experience in the Process and Industrial Developments Ltd. (P&ID) case, which he said would have crippled the nation’s economy.

“States consistently express concern about the opacity of arbitral proceedings and the unpredictability of awards. Nigeria continues to support reforms that enhance transparency of proceedings, consistency in arbitral reasoning and predictability in outcomes.

“These elements are essential for investor confidence and state trust alike.

“That is why Nigeria is a strong proponent of clarity concerning the calculation of damages. The current position largely relies on the discretion of each arbitrator or tribunal.

“For example, in the notorious P&ID case, damages were calculated on the basis of compound interest, which would have had a crippling effect, amounting to billions of dollars.

“It is with this belief that Nigeria reformed its Arbitration Act to reflect the importance of transparency. There is growing openness to fresh approaches beyond traditional arbitration,” he said.

The minister said states had acknowledged that ISDS reform was not optional, but essential to maintaining the legitimacy of the international investment regime.

“Nigeria sees this consensus as a positive development. It signals that the global community understands the need for recalibration to ensure fairness, predictability and development alignment.

“Many states, Nigeria included, believe that incremental adjustments will not address the structural imbalances embedded in the current system.

“There is increasing support for systemic reform, including clearer treaty standards, improved procedural safeguards, stronger accountability mechanisms and more balanced rights and obligations for investors and states.

“This reflects a desire for a dispute-settlement system that is durable and future-proof.”

Fagbemi said Nigeria saw significant value in innovations aimed at reducing costs, preventing escalation and strengthening cooperative problem-solving.

“Strengthening national judicial institutions is central to building long-term rule-of-law capacity and reducing over-reliance on external arbitration,” he said.

The AGF said there was a need to integrate public interest considerations into ISDS, noting that the system must reflect contemporary global priorities, including climate action, environmental protection, human rights obligations, community welfare and sustainable development.

He added: “Nigeria strongly supports reforms that ensure investment protections do not undermine legitimate public-interest regulation.

“And this is clearly reflected in the 2016 Nigerian Model Bilateral Investment Treaty (BIT), which is currently under review after 10 years of being in use.

“There is a growing recognition that the challenges are shared, solutions must be collective, and reform must balance the needs of capital-importing and capital-exporting countries.”