Lateef Fagbemi, Attorney-General of the Federation (AGF) and Minister of Justice, says the damages awarded in the Process and Industrial Developments Ltd. (P&ID) arbitration could have crippled Nigeria’s economy.
Fagbemi said the experience had strengthened Nigeria’s call for clearer rules on how damages are calculated in investor-state dispute settlement (ISDS) proceedings.
The AGF spoke on Thursday at the heads of delegations’ roundtable of the Chief Legal Advisors Forum (CLAF) 2026 in Singapore.
According to Fagbemi, Nigeria is seeking reforms to the international investment dispute-resolution system to protect national sovereignty, strengthen domestic courts and address what it considers imbalances in the existing framework.
He said Nigeria’s position on damages was influenced by the P&ID case, where he said the use of compound interest in calculating damages could have resulted in a liability running into billions of dollars.
“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,” he said.
“These elements are essential for investor confidence and state trust alike. That is why Nigeria is a strong proponent for clarity concerning the 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.”
Fagbemi said Nigeria had also amended its arbitration law to promote greater transparency, adding that there is increasing interest in dispute-resolution mechanisms beyond traditional arbitration.
The minister said the country had taken steps to review its investment obligations since he assumed office, including setting up a committee of experts to examine Nigeria’s bilateral investment treaties and commitments under multilateral treaties and conventions.
He said reforms to ISDS were necessary to preserve confidence in the international investment regime, arguing that changes should go beyond incremental adjustments.
“Many states, Nigeria included, believe that incremental adjustments will not address the structural imbalances embedded in the current system,” he said.
“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. This reflects a desire for a dispute-settlement system that is durable and future-proof.”
The AGF said Nigeria also supported measures that would strengthen national judicial institutions and reduce dependence on external arbitration.
“Strengthening national judicial institutions is central to building long-term rule-of-law capacity and reducing over-reliance on external arbitration,” he said.
He called for public-interest considerations to be incorporated into ISDS, saying investment protections should take account of issues 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,” he said.
“And this is clearly reflected in the 2016 Nigerian model bilateral investment trade (BIT), which is currently under review after 10 years of being in use.”
Fagbemi said Nigeria believed the reform process should produce a system that balances the interests of investors and states.
“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.