Investment Treaty Arbitration: Nigeria

Algeria (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Austria (not in force)

Yes

Yes

Yes

Yes

Yes

60 days

Yes

Yes

Canada (not in force)

Yes

Yes

Yes

Yes

No, save in the case of agreements on tax between an investor and a host government regarding a specific investment.

60 days. Further cooling-off requirements include expiration of at least 6 months from the day that the events giving rise to the claim occurred and at least 90 days after submission of the notice of intention to arbitrate.

No

Yes

China (18 February 2010)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Egypt (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Finland (20 March 2007)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

Germany (20 September 2007)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Italy (22 August 2005)

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Korea 1 February 1999)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Kuwait (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

No, except for provisional reliefs excluding damages

Yes

Morocco (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Netherlands (1 February 1994)

Yes

Yes

Yes

Yes

Yes

No

No

Yes

Romania (3 June 2005)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Russia (not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Serbia (7 February 2003)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Singapore (not in force)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

South Africa (27 July 2005)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Spain (19 January 2006)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Sweden (1 December 2006)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Switzerland (1 April 2003)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Turkey (signed on 02 February 2011, not in force)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Uganda (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

United Arab Emirates (not in force)

Yes

Yes

Yes

Yes

No

3 months

Yes

Yes

United Kingdom of Great Britain and Northern Island (signed, 11 December 1990)

Yes

Yes

Yes

Yes

Yes

3 months

Yes

Yes

ECOWAS Supplementary Act on Investments (19 January 2009)

Yes

Yes

Yes

Yes

No

6 months

Yes

Yes

Nationality

Most Nigeria’s BITs in force define an "investor", in the case of natural persons, by reference to nationality/citizenship alone (for example, BITs with Finland, Spain, Sweden, China, Italy, South Africa, Germany, Korea, Netherlands, Romania and United Kingdom) without reference to permanent residency.

Incorporation and place of business

Some of Nigeria’s BITs in force require that investors which are legal persons be both incorporated and have their "seat" or registered office in the territory of the other contracting state (for example, the BITs with Germany, Romania,) while incorporation alone suffices for others (for example, the BITs with Korea, Netherlands and United Kingdom).

Control

A few Nigerian BITs in force recognise legal persons that are not incorporated in the territory of a contracting party but are controlled by nationals of the contracting party as investors of that contracting party (for example, the BITs with Netherlands and Sweden).

Eligible assets

Most Nigeria BITs adopt the broad "any kind of asset" formulation in their definitions of "investments". However, a few of them, especially the more recent ones, include carve-outs from that broad definition. Under the Nigeria–Canada BIT, for example, a loan or debt security issued by a financial institution is investment only if "treated as regulatory capital by the Party in whose territory the financial institution is located". The Nigeria–Morocco BIT excludes portfolio investments from its definition. The Nigeria–Singapore states explicitly that "[w]here an asset lacks the characteristics of an investment, that asset is not an investment regardless of the form it may take. The characteristics of an investment include the commitment of capital, the expectation of gain or profit, or the assumption of risk".

Customary international law standard

Most Nigeria BITs simply obligate contracting parties to "accord to investments by investors of the other contracting party fair and equitable treatment". A few, however, go on to define the standard for assessing whether an investor has been treated fairly and equitably. The Nigeria–Singapore BIT confirms that the FET protection "does not require treatment in addition to or beyond the customary international law minimum standard of treatment of aliens". The Nigeria–Morocco and Nigeria–Canada BITs adopt the same standard.

Measures to stimulate local industries

Some of Nigeria’s BITs effectively permit some derogations by creating an exception for a contracting party’s special incentives to its nationals "in order to stimulate the creation of local industries". The Nigeria–UAE and Nigeria–Algeria BITs specifically include this exception for the FET and protection and security obligations.

Right to regulate for a public purpose

Nigeria’s BITs generally contain standard protections against expropriation. A few, however, make some exceptions for public purpose measures. The Nigeria–Austria BIT, for example, excludes measures designed to protect public welfare objectives unless they are so severe that it would be reasonably viewed as having been adopted in good faith. The Nigeria–Morocco BIT and Nigeria–Canada BIT provide that their provisions on expropriation do not apply to "the issuance of a compulsory licence granted in relation to intellectual property rights or to the revocation, limitation or creation of an intellectual property right, to the extent that the issuance, revocation, limitation or creation is consistent with the WTO Agreement".

Requirement of ‘like circumstances’

Some of Nigeria’s recent BITs require a "like circumstances" analysis in determining whether a contracting party’s measure violates the most favoured nation protection. Hence, a contracting party could potentially avoid liability for its discriminatory measure(s) against an investor if it can show that, overall, the circumstances of that investor materially differ from other investors who are favoured by the measure(s). BITs with the "like circumstances" qualification include the Nigeria–Canada BIT, Nigeria–Morocco BIT and Nigeria–Singapore BIT.

Incentives to stimulate local industries

A handful of Nigeria’s BITs generally exempt contracting parties’ measures that are taken to stimulate local industries from being construed as derogations from the most favoured nation protection. Examples include the Nigeria–Germany, Nigeria–Switzerland and Nigeria–Egypt BITs.

Exclusion of procedural rights

A couple of Nigeria’s BITs such as the Nigeria–Singapore and Nigeria–UAE BITs expressly state that the most favoured nation protection is unavailing with respect to the dispute settlement procedure to be adopted in the event of an investor-state dispute against a contracting party. In contrast, the Nigeria–Austria BIT expressly extends application of the most favoured nation protection to dispute settlement.

Extent of obligation

The obligation on the host state to accord full protection and security is included in most of Nigeria’s BITs.

The formulation of this standard, however, varies from one BIT to another. Some provide for "full protection and security" (Nigeria–Canada BIT and Nigeria-Morocco BIT); "full protection" (Nigeria–Germany BIT); "total protection" (Nigeria–Algeria BIT); "full and constant protection and security" (Nigeria–Austria BIT and Nigeria–Finland BIT); and "continuous protection" (Nigeria–China BIT).

Some BITs also link this obligation with customary international law. For example, Nigeria–Singapore BIT and Nigeria–Canada BIT.

Scope of the umbrella clause

Some of Nigeria’s BITs (for example, Nigeria–Germany BIT, Nigeria–Korea BIT, Nigeria–Netherlands BIT, Nigeria–Uganda BIT and Nigeria–Sweden BIT) contain an umbrella clause that requires the contracting parties to "observe" or "honour" or "comply with" "any obligation" or "any other obligation" that they may have entered into with regard to investments of foreign investors.

Armed conflict/civil unrest

Most of Nigeria’s BITs include a provision for the compensation for losses arising out of armed conflict and/or civil unrest. A few examples include the Nigeria-Algeria BIT, Nigeria–Canada BIT, Nigeria–Germany BIT, Nigeria–Singapore BIT and Nigeria–UAE BIT.

These BITs also provide for a most favoured nation treatment with respect to the compensation, restitution, indemnification or other settlement for loss or damage occasioned by armed conflict and/or civil unrest.

Non-impairment

Most of Nigeria's BITs include an obligation not to impair, by unreasonable or discriminatory measures, the management, maintenance, use, enjoyment or disposal of investments of nationals or companies of the other contracting party in its territory. For example, Nigeria–UAE BIT, Nigeria–Sweden BIT, Nigeria–Spain BIT, Nigeria–South Africa BIT and Nigeria–Romania BIT.

Free transfer of payments

Most of Nigeria’s BITs contain a provision requiring the host State to permit investors to freely transfer their investment returns, usually subject to the monetary policy of the contracting parties. Examples are the Nigeria–UAE BIT, Nigeria–Switzerland BIT, Nigeria–Singapore BIT and Nigeria–Morocco BIT.

Exclusions and Exceptions

Some of Nigeria’s more recent BITs contain express provisions that limit or totally exclude the application of treaty protections in certain circumstances. The Nigeria–Singapore BIT, for example, expressly excludes “matters of taxation” from the scope of its provisions. The Nigeria–Turkey BIT likewise excludes non-discriminatory legal measures that are designed and applied to protect life, health or the environment or to conserve exhaustible natural resources. The Nigeria–Morocco BIT, subject to certain conditions which include proportionality, temporariness, and non-discriminatory application, permits a party to apply restrictions that would otherwise potentially constitute treaty breaches in order to check pressures on its balance of payment or protect the integrity of its financial system.

Reservations

The Nigeria–Canada BIT uniquely uses reservations to exclude certain matters from the substantive treaty protections. Both Canada and Nigeria reserved several matters (enumerated in Annexes to the BIT) in respect of which specific substantive protections are expressly disapplied.

Cooling off period

Most Nigerian BITs contain a six-month cooling-off period (for example, Nigeria–Serbia BIT, Nigeria–Sweden BIT, and Nigeria–Russia BIT) or a three-month cooling-off period (for example, Nigeria–Finland BIT). However, Nigeria–Austria BIT and Nigeria-Canada BIT provide for a 60-day period and Nigeria–Netherlands BIT is silent on this provision.

Exhaustion of local remedies

Some of Nigeria’s BITs (for example, the Nigeria–Korea BIT and the Nigeria–UAE BIT) give recourse to arbitration only when local remedies have been exhausted.

Applicable/governing law

Most Nigerian BITs are silent as to what law would govern the parties’ dispute. Unless otherwise indicated, tribunals typically apply the terms of the treaty, the domestic laws of the host State, and principles of international law. Some BITs, however, contain express provisions in this regard. For example, the Nigeria–Canada BIT provides that the tribunal shall decide the dispute in accordance with the treaty and the applicable rules of international law. The Nigeria–Morocco BIT provides that the application of the national law of the host state and the applicable rules of international law. And the Nigeria-China BIT provides that the tribunal shall decide the dispute: "in accordance with the law of the Contracting Party to the dispute accepting the investment including its rules on the conflict of laws, the provisions of this Agreement as well as the generally recognized principles of international law accepting by both Contracting Parties".

Choice of Forum

Most of Nigeria’s BITs provide for the resolution of investment disputes by the local courts of the host State, ICSID or UNCITRAL ad hoc arbitration, at the election of the investor. However, there are a few exceptions. The Nigeria–UK BIT, Nigeria–Netherlands BIT, Nigeria–Korea BIT, and Nigeria–Germany BIT provide for just the ICSID. The Nigeria–China BIT provides for just "an ad hoc arbitral tribunal". The Nigeria–Kuwait BIT and the Nigeria–Morocco BIT includes (in addition to local courts, ICSID, UNCITRAL) "any other arbitral institutions or any arbitration rules, if the disputing parties agree". The Nigeria–Egypt BIT includes the Regional Centre for International Commercial Arbitration in Cairo and Lagos; the Nigeria–Austria BIT includes "the International Chamber of Commerce, by a sole arbitrator or an ad hoc tribunal under its rules of arbitration"; and the Nigeria–South Africa BIT includes "an international arbitrator or ad hoc arbitral tribunal to be established by agreement between the parties to the dispute".

Claim notices should be sent to the Ministry of Justice, specifically addressed to the Attorney-General of the Federation who doubles as the Minister of Justice. 

The Ministry of Justice, which is headed by the Attorney of the Federation and who doubles as the Minister of Justice.

Nigeria is usually represented by external counsel who are appointed by the Attorney-General of the Federation and Minister of Justice. So far, despite the provisions of the Public Procurement Act 2007, it does not appear that the selection of counsel follows any formal public procurement process.

Yes, Nigeria ratified the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (the Washington Convention) on 13 July 1965 and it came into force in Nigeria on 14 October 1966. The International Centre for Settlement of Investment Disputes (Enforcement of Awards) Act, Cap I20, Laws of the Federation of Nigeria, 2004 (ICSID Act) implements the Washington Convention in Nigeria by providing for the recognition and enforcement of Washington Convention awards in Nigeria. Pursuant to the ICSID Act, applications for recognition of Washington Convention awards are filed at the Supreme Court of Nigeria which is the apex court of the country. 

Yes, Nigeria ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention) on 17 March 1970. The Arbitration and Conciliation Act 1988 (contained in Cap A18, Laws of the Federation of Nigeria 2004) implements the New York Convention in Nigeria by making it applicable to any award made in Nigeria or in any contracting state arising out of international commercial arbitration.

Yes, non-ICSID investment arbitration seated in Nigeria are governed by the Arbitration and Conciliation Act 1988 (currently contained in Cap A18, Laws of the Federation of Nigeria, 2004).

There has not been, to our knowledge, any adverse investment treaty award against Nigeria. Usually, investment treaty disputes against Nigeria are settled before they get to the award stage. The exception to this trend has been the Interocean Oil Development Company and Interocean Oil Exploration Company v Federal Republic of Nigeria case (ICSID Case No. ARB/13/20) in respect of which an award on the merits was handed down on 6 October 2020 in favour of Nigeria.

However, to enforce an adverse investment treaty award against Nigeria, the ICSID Act requires a copy of the award, duly certified by the Secretary-General of ICSID, to be filed in the Supreme Court of Nigeria by the party seeking its recognition for enforcement in Nigeria.

The Nigerian government is not averse to investment treaty arbitration and generally allows for recourse to that form of arbitration. This is evident from (1) Nigeria’s domestic legislation, which encourages investment treaty arbitration, such as the Nigerian Investment Promotion Commission Act, Cap. N117, Laws of the Federation of Nigeria 2004 and the ICSID Act; (2) Nigeria’s continued membership of ICSID and proactive participation in the Washington Convention arbitrations that it has been involved in; and (3) its fairly large corpus of investment treaties.

As far as we know, Nigerian courts have not been called upon to issue orders in aid of investment treaty arbitration, or to enforce awards emanating from investment treaty arbitration.

However, the attitude of local courts towards enforcement of commercial awards against the state or state-owned entities is arguably protectionist, as we are not aware of any successful enforcement of an arbitral award of a significant amount against the state or a state-owned entity.

Though the NIPC Act does not contain traditional FET provisions, under the Constitution of the Federal Republic of Nigeria, 1999 (as amended), every person (which, by necessary implication, includes foreign investors that have invested in accordance with Nigerian law and regulations) is entitled to fair treatment under the law.

Section 25 of the NIPC Act guarantees that there will be no nationalisation or expropriation of foreign investments by the Nigerian government; and no person who owns the capital of any enterprise, whether wholly or in part, may be compelled to surrender such capital to any other person.

In exceptional cases the Nigerian government may as a matter of national interest or for a public purpose acquire an enterprise. However, this can only be done with prompt payment of fair and adequate compensation to the owners of the enterprise, and the investors have a right to access the courts for determination of their interest or right and the amount of compensation payable.

Section 24 of the NIPC Act guarantees unconditional transferability of funds through any licensed bank or licensed specialist bank in freely convertible currency, of dividends or profits (net taxes) attributable to the investment, payments towards loan servicing where a foreign loan has been obtained; remittance of proceeds (net of all taxes), and other obligations in the event of a sale or liquidation of the enterprise or any interest attributable to the investment.

Foreign investors generally have a right to approach Nigerian courts of competent jurisdiction in the event of a dispute with a private person, subject to any arbitration agreement between them.

Section 25 of the NIPC Act specifically provides for the right of an investor to access the courts for determination of the investor's interest or right and the amount of compensation payable in cases of compulsory acquisition of an enterprise by the federal government on grounds of national interest or for public purpose.

Section 26 of the NIPC Act governs disputes between foreign investors and the federal government. Where such a dispute arises, parties are encouraged to make all efforts to reach amicable settlement through mutual discussion. However, if this fails, then the dispute may be submitted, at the option of the aggrieved party, to arbitration within the framework of any bilateral or multilateral agreement on investment protection to which the federal government and the country of which the investor is a national are parties; or in accordance with any national or international machinery for the settlement of investment disputes agreed by the parties.

Where the foreign investor and the Nigerian government cannot agree on the method of dispute settlement to be adopted, the ICSID Rules shall apply.

One recent case is Interocean Oil Development Company and Interocean Oil Exploration Company v Federal Republic of Nigeria (ICSID Case No. ARB/13/20), Award: 6 October 2020. It bears mentioning that this arbitration, though administered by ICSID, did not involve any investment treaty. Rather, it was commenced on the basis of investment protections provided for under the Nigerian Investment Promotion Commission Act (NIPC Act).

Another recent case is Zhongshan Fucheng Industrial Investment Co Ltd v Federal Republic of Nigeria (Final Award: 26 March 2021). 

Nigeria has been involved in at least two other cases at ICSID in respect of its investment treaties. They include:

• Guadalupe Gas Products Corporation v Nigeria (ICSID Case No. ARB/78/1), case discontinued on 22 July 1980; and
• Shell Nigeria Ultra Deep Limited v Federal Republic of Nigeria (ICSID Case No. ARB/07/18), case discontinued on 1 August 2011.

There are at least two pending proceedings involving Nigeria:

• Eni International BV, Eni Oil Holdings BV and Nigerian Agip Exploration Limited v Federal Republic of Nigeria (ICSID Case No. ARB/20/41).
• Shell Petroleum NV and The Shell Petroleum Development Company of Nigeria Limited v Federal Republic of Nigeria (ICSID Case No. ARB/21/7).