The Nigerian government has urged the United Nations (UN) to reform investor-state dispute settlement rules to protect national sovereignty, strengthen domestic courts, and promote a fairer investment regime.
Nigeria’s Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi, made the call during a heads of delegations roundtable at the Chief Legal Advisors Forum (CLAF) 2026 in Singapore.
Fagbemi said reforms “to the Investors-State Dispute Settlement (ISDS) should reinforce, rather than bypass, national courts. The changes should address weaknesses and imbalances in the existing legal framework while protecting investments and taxpayers.”
Fagbemi praised the forum, convened by Singapore’s Ministry of Law, saying evolving global investment flows and new development challenges made reform increasingly urgent.
“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,” he said.
Fagbemi stated that Nigeria had taken steps to address challenges in its investment agreements since he assumed office.
“I constituted a committee of experts to review Nigeria’s bilateral investment treaties and its commitments under multilateral treaties and conventions. The review aims to promote and protect investment in Nigeria,” the minister explained.
Nigeria’s experience in the Process and Industrial Developments Ltd. (P&ID) arbitration also influenced its position on ISDS reform, particularly over how damages are calculated.
“States consistently express concern about the opacity of arbitral proceedings and the unpredictability of awards,” Fagbemi said.
He called for greater transparency, consistency in arbitral reasoning, and greater predictability in outcomes, saying, “These are important for both investor confidence and state trust.”
“That is why Nigeria is a strong proponent of clarity concerning the calculation of damages,” he stressed.
Fagbemi cited the P&ID case, in which damages were calculated using compound interest, saying the resulting liability could have had a crippling effect on Nigeria, running into billions of dollars.
Nigeria successfully challenged the P&ID award in a case that attracted international attention over the potential financial consequences for the country.
Fagbemi said Nigeria had also reformed its arbitration framework to improve transparency and recognised growing interest in alternatives to traditional arbitration.
He said countries increasingly accepted that ISDS reform was essential to maintaining the legitimacy of the international investment regime.
“Nigeria sees this consensus as a positive development,” he said, explaining that reform should improve fairness, predictability, and alignment with development priorities.
However, Fagbemi said incremental changes might not resolve structural weaknesses within the current system.
He called for systemic reform involving clearer treaty standards, stronger procedural safeguards, greater accountability, and a better balance between investor and state rights.
“This reflects a desire for a dispute-settlement system that is durable and future-proof,” he said.
The Attorney-General said Nigeria saw value in innovations that could reduce costs, prevent disputes from escalating, and encourage cooperative solutions.
He stressed that stronger national judicial institutions should remain central to long-term rule-of-law development.
“Strengthening national judicial institutions is central to building long-term rule-of-law capacity and reducing over-reliance on external arbitration,” Fagbemi said.
His position reflects a broader debate over how countries can attract international investment while retaining the ability to regulate in the public interest.
Investor-state dispute settlement allows foreign investors to pursue claims against governments under investment treaties or related agreements. Critics have raised concerns about transparency, consistency, and the potential impact of arbitration on domestic policy decisions.
Credit: voa.gov.ng
