By John Azu
Nigeria has called on the United Nations to spearhead reforms to the international investment dispute-resolution framework to protect the sovereignty of nations in arbitration proceedings involving foreign investors and states.
The Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi (SAN), made the call on Thursday during the Heads of Delegations Roundtable at the Chief Legal Advisors Forum (CLAF) 2026 in Singapore.
Fagbemi expressed concern over the risks countries face in international arbitration proceedings, citing Nigeria’s experience in the $11.5 billion legal battle involving Process and Industrial Developments Ltd. (P&ID).
He advocated reforms to the Investor-State Dispute Settlement (ISDS) system that would strengthen, rather than bypass, domestic courts in resolving investment disputes.
According to him, the proposed reforms should address existing inadequacies and imbalances in the international legal framework while protecting legitimate investments and the interests of taxpayers.
The Attorney-General, who commended the forum convened by Singapore’s Ministry of Law, said the evolution of global investment flows and the emergence of new development challenges had made the need for a modern, balanced and credible dispute-settlement system more urgent.
A statement by his media aide, Kamarudeen Ogundele, quoted Fagbemi as saying that, upon assuming office, he had taken steps to address some of the challenges by constituting a committee of experts to review Nigeria’s bilateral investment treaties and its commitments under multilateral treaties and conventions.
He said the review was aimed at strengthening Nigeria’s ability to promote and protect investments while safeguarding the country’s national interests.
Fagbemi said Nigeria had become a strong advocate of greater clarity and predictability in the calculation of damages in international arbitration, largely because of the lessons from the P&ID case.
“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 for clarity concerning calculation of damages. The current position largely relies on the whims of each arbitrator or tribunal.
“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,” he said.
Fagbemi said Nigeria had responded to some of the challenges by reforming its arbitration framework, including through the Arbitration and Mediation Act, which he said reflected the importance of transparency in dispute resolution.
“There is growing openness to fresh approaches beyond traditional arbitration,” he said.
The minister said states had increasingly acknowledged that ISDS reform was no longer 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,” he said.
Fagbemi argued that incremental adjustments might not be sufficient to address what he described as structural imbalances in the current system.
He said there was growing support for systemic reforms, including clearer treaty standards, improved procedural safeguards, stronger accountability mechanisms and a more balanced allocation of rights and obligations between investors and states.
“This reflects a desire for a dispute-settlement system that is durable and future-proof,” he said.
The Attorney-General also highlighted the potential of alternative dispute-resolution mechanisms to reduce costs, prevent disputes from escalating and promote cooperative solutions.
“Nigeria sees significant value in these innovations, particularly in reducing costs, preventing escalation, and strengthening cooperative problem-solving,” he said.
He stressed the importance of strengthening national judicial institutions as part of efforts to build long-term rule-of-law capacity and reduce excessive reliance on external arbitration.
“Strengthening national judicial institutions is central to building long-term rule-of-law capacity and reducing over-reliance on external arbitration,” Fagbemi said.
The minister further called for greater consideration of public interest in ISDS proceedings, arguing that the system must reflect contemporary global priorities, including climate action, environmental protection, human rights, community welfare and sustainable development.
“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,” he said.
Fagbemi said Nigeria’s position was informed by the need to strike a balance between protecting foreign investments and preserving the ability of governments to regulate in the public interest.
“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,” he said.
He called for sustained international cooperation to ensure that reforms to the investment dispute-settlement system produce a framework that promotes investor confidence while respecting national sovereignty, public interest and sustainable development.