File: The Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi.

The Attorney General of the Federation and Minister of Justice, Lateef Fagbemi (SAN), has urged the United Nations to reform international arbitration rules to protect the sovereignty of countries involved in investor-state disputes.

Fagbemi made the call on Thursday at the Heads of Delegations Roundtable of the Chief Legal Advisors Forum 2026 in Singapore, according to a statement by the Special Adviser to the President (Communication and Publicity) in the Office of the AGF and Minister of Justice, Kamarudeen Ajibade.

He said reforms to the Investor-State Dispute Settlement system should strengthen, rather than circumvent, domestic courts while ensuring fairness and predictability for both investors and states.

The AGF said Nigeria’s experience in the case involving Process and Industrial Developments Ltd. underscored the need for clearer rules on the calculation of damages in international arbitration.

He said the award in the controversial P&ID case, which relied on compound interest, would have had a crippling effect on Nigeria’s economy if enforced.

Fagbemi said, “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 based on compound interest, which would have had a crippling effect to the tune of billions of dollars,” he added.

He said Nigeria had responded to some of the challenges by reforming its arbitration framework to promote greater transparency.

Fagbemi also disclosed that, upon assuming office, he constituted a committee of experts to review Nigeria’s bilateral investment treaties and its commitments under multilateral treaties and conventions.

According to him, the review is aimed at strengthening the protection of investments while safeguarding the interests of the country and its taxpayers.

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

He said Nigeria supported systemic reforms, including clearer treaty standards, improved procedural safeguards, stronger accountability mechanisms and a more balanced distribution of rights and obligations between investors and states.

“Many states, Nigeria included, believe that incremental adjustments will not address the structural imbalances embedded in the current system.

“There is increasing support for systemic reform, including clearer treaty standards, improved procedural safeguards, stronger accountability mechanisms, and more balanced rights and obligations for investors and states,” Fagbemi said.

He also advocated greater use of alternative dispute resolution mechanisms to reduce costs, prevent escalation of disputes, and encourage cooperation between parties.

According to him, strengthening national judicial institutions is critical to improving the rule of law and reducing excessive reliance on external arbitration.

Fagbemi further called for public interest considerations to be incorporated into ISDS, saying investment protection should not prevent governments from regulating in the public interest.

He listed climate action, environmental protection, human rights, community welfare and sustainable development among issues that should be reflected in the evolving arbitration framework.

The AGF said the position was reflected in Nigeria’s 2016 Model Bilateral Investment Treaty, which is currently under review after a decade.

“Nigeria strongly supports reforms that ensure investment protections do not undermine legitimate public-interest regulation,” he said.

He added that the challenges confronting the international investment regime were shared and required collective solutions that would balance the interests of capital-importing and capital-exporting countries.

The P&ID dispute arose from a failed 2010 gas processing agreement between Nigeria and a British Virgin Islands-registered P&ID. An arbitration tribunal initially awarded the company billions of dollars against Nigeria.

However, the Federal High Court in London in 2023 ruled in Nigeria’s favour, refusing to enforce the award after finding that it had been obtained through fraud and corruption.