Nigeria urges UN to protect national sovereignty in international arbitration

Nigeria is advocating for significant reforms within the international arbitration system, urging the United Nations to implement changes that protect national sovereignty and bolster the role of domestic courts in investor-state dispute settlements (ISDS). The call was made by Attorney-General of the Federation and Minister of Justice, Prince Lateef Fagbemi (SAN), during the Chief Legal Advisors Forum (CLAF) in Singapore.

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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 emphasized the need for a modern, balanced, and credible dispute settlement system, particularly as global investment flows evolve. He highlighted the inadequacies and imbalances in the current legal framework, which he believes can negatively impact investments and national taxpayers. Nigeria's push for reform stems partly from its experience with the Process and Industrial Developments Ltd. (P&ID) case, which Fagbemi stated could have had a crippling effect on the country's economy due to damages calculated on compound interest.

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That is why Nigeria is a strong proponent for clarity concerning calculation of damages.

"States consistently express concern about the opacity of arbitral proceedings and the unpredictability of awards," Fagbemi noted. Nigeria supports reforms that enhance transparency, consistency in arbitral reasoning, and predictability in outcomes, deeming these essential for both investor confidence and state trust. The country is a strong proponent for clearer guidelines on calculating damages, moving away from what he described as reliance on the "whims of each arbitrator or tribunal."

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

The Nigerian government has taken steps to address these challenges, including forming a committee of experts to review bilateral treaties and multilateral conventions. Fagbemi also mentioned that Nigeria reformed its Arbitration Act to emphasize transparency, reflecting a growing openness to approaches beyond traditional arbitration. He views the global consensus on the necessity of ISDS reform as a positive development, signaling an understanding of the need for recalibration to ensure fairness, predictability, and alignment with development goals.

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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.