Nigeria's economy would have been crippled by P&ID case award, says Attorney General

Nigeria's Attorney General Lateef Fagbemi has urged the United Nations to reform international arbitration rules, arguing that current systems can undermine national sovereignty. Speaking at the Heads of Delegations Roundtable of the Chief Legal Advisors Forum 2026 in Singapore, Fagbemi emphasized that reforms to the Investor-State Dispute Settlement (ISDS) system should bolster domestic courts rather than circumvent them.

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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.

Fagbemi pointed to Nigeria's experience with the Process and Industrial Developments Ltd. (P&ID) case as a stark example of the need for clearer rules on calculating damages. He stated that the award in the P&ID case, which was based on compound interest, would have had a "crippling effect" on Nigeria's economy, potentially costing billions of dollars.

"States consistently express concern about the opacity of arbitral proceedings and the unpredictability of awards," Fagbemi said. He advocated for reforms that enhance transparency, consistency in arbitral reasoning, and predictability in outcomes, which he believes are essential for both investor confidence and state trust. Nigeria, he added, is a strong proponent for clarity concerning the calculation of damages, as the current reliance on arbitrators' discretion can lead to unpredictable and potentially ruinous awards.

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

In response to such challenges, Nigeria has been reforming its arbitration framework to promote greater transparency. Fagbemi also revealed that he established a committee of experts to review the country's bilateral investment treaties and multilateral commitments. This review aims to strengthen investment protection while safeguarding the interests of the nation and its taxpayers. He concluded that ISDS reform is no longer optional but essential for maintaining the legitimacy of the international investment regime.

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ISDS reform was no longer optional, describing it as essential to maintaining the legitimacy of the international investment regime.