Navigating Regulatory Risk and Infrastructure Disputes: The Evolving Role of International Arbitration and Mediation Across the African Energy Value Chain (Oil, Gas, and Power).
Introduction
Africa holds a central position in the global energy landscape, rooted in its abundant natural resources, with crude oil historically dominating production. However, the sector is undergoing a profound transition, marked by a decisive shift from traditional fossil fuels toward renewable sources such as solar power. This evolving landscape introduces heightened complexity, driving an increase in regulatory risks, legal changes, and the subsequent rise in disputes. This paper will examine how various stakeholders including states, investors, Non-Governmental Organizations (NGOs), and local communities can effectively navigate these risks, with a specific focus on the critical role of international arbitration and mediation in resolving disputes within this globally interconnected industry.
There are rising disputes emerging from the global shift to renewable and low-carbon energy sources. The dependence on fossil fuels has led to ecological damage, climate instability, and economic volatility, resulting in new forms of conflict over ownership, governance, and benefit-sharing in energy and mining projects. There is a growing need for arbitration systems that can effectively handle complex, cross-border, and sustainability-related disputes.
Across all segments, regulatory risk is ever-present. Governments may unilaterally change laws (taxes, local content, environmental rules) or renegotiate contracts under political or economic pressure. According to a recent survey, energy executives in Africa cited volatile prices and new local regulations as leading triggers for disputes[1]. In practice, a major oil or gas project can face both breach of contract claims and investor state treaty claims, reflecting both commercial and sovereignty angles[2]. The interplay of national courts, regulatory agencies and international treaties means stakeholders must navigate multiple legal layers.
Arbitration and Mediation: Tools for Dispute Resolution
Given these risks, parties commonly build arbitration and mediation clauses into energy contracts. By 2025, most cross-border oil, gas and power agreements in Africa explicitly name arbitration (commercial or investment) as the dispute forum. Multilateral investment treaties covering African states usually provide ICSID or UNCITRAL arbitration options for foreign investors. This reflects the reality that arbitral procedures and enforceability conventions (New York, ICSID) are often more reassuring to both sides than local courts.
Why Arbitration?
Arbitration’s features match the needs of the energy sector:
- Neutral Forum: Arbitration panels can be seated in neutral jurisdictions, which helps avoid perceptions of local bias. Energy contracts often select venues like London, Paris, Singapore, or regional seats (e.g. Mauritius). As one analysis notes, arbitration “offers a neutral forum” especially when parties hail from different legal systems[3]. In Nigeria, for instance, international investors frequently insist on arbitration abroad to avoid uncertainties in Nigerian courts.
- Expertise: Parties can choose arbitrators with relevant technical backgrounds (petroleum engineers, geologists, power system experts). In cases involving reservoir management or grid operations, this expertise ensures that the tribunal can properly evaluate complex evidence[i]. In practice, energy arbitrations often list one or more experts as arbitrators.
- Confidentiality: Arbitration hearings and awards are typically private. For energy companies, confidentiality is valuable to protect commercially sensitive data (reserves estimates, infrastructure vulnerabilities) and to avoid public disclosures that might affect stock prices or political standing[ii].
- Flexibility: Parties can tailor arbitration procedures (e.g. expedited timelines, limited document production) to fit project needs. Energy contracts may also allow emergency arbitrators or partial awards so that projects need not shut down while disputes are resolved. For example, many IPP contracts allow an emergency tribunal to order provisional payments even before the final award.
- Enforceability: A decisive advantage is that arbitral awards are internationally enforceable under the New York Convention (1958)[iii]. Since African projects often cross borders (export pipelines, regional power pools, multinational consortia), it is critical that an award against a state or company can be enforced in multiple jurisdictions. As one commentator notes, an international award is “enforceable virtually worldwide” thanks to the Convention[iv]. In contrast, a court judgment in one country might be difficult to collect elsewhere.
Because of these benefits, arbitration is the preferred method in African energy deals[v]. An industry report confirms that African energy and infrastructure investments overwhelmingly invoke arbitration. It also found that 28% of surveyed experts expect Africa to have the fastest growth in energy disputes[vi], reflecting rising activity in Nigeria, Algeria and elsewhere.
Trends and Best Practices
Emerging patterns in African energy disputes inform best practices:
- Parallel Proceedings: It is common for related claims to appear in multiple forums.[vii] To avoid contradictory results, savvy contracts include “fork in the road” clauses or pre-arbitration mediation/conciliation steps. Parties might agree, for instance, that choosing arbitration under a BIT waives the right to sue in domestic courts on the same issue. Careful drafting is essential to allocate remedies to the appropriate forum.
- Emergency Relief: Given the critical nature of energy projects, parties often use interim measures. Arbitration rules and local laws (like Nigeria’s) now recognize emergency arbitrators or ex parte injunctive powers. ICC data shows that about half of emergency arbitrator applications in 2020 were in infrastructure/energy cases[viii]. Practitioners therefore write contracts to explicitly authorize an arbitrator or tribunal to order things like continued supply of power or provisional payments, so that projects need not shut down during disputes.
- Expertise and Dispute Boards: For large construction-heavy projects (pipelines, LNG plants, power stations), many contracts incorporate on-site Dispute Adjudication Boards (DABs) or reserve rights for technical experts to resolve specific issues. This early dispute resolution mechanism (derived from FIDIC engineering contracts) has been successful in some African infrastructure projects by resolving engineering and interpretation disputes quickly. Parties should consider DABs or standing panels for mega-projects.
- Third-Party Funding: The high cost of international arbitration has made third-party funders more common. Many arbitration laws (including Nigeria’s 2023 Act) expressly permit funding. This helps smaller players (local contractors, investors) bring or defend claims. The downside is that funding introduces more layers: funders must be disclosed, and arbitrators must manage conflicts. Parties should anticipate and regulate funding in their arbitration clauses (for example, by agreeing on disclosure obligations).
- Stabilization Clauses: Investors often negotiate clauses that “stabilize” the legal or fiscal regime i.e., allowing compensation if laws change. These clauses can reduce disputes by limiting unexpected costs, though their validity varies by jurisdiction. African governments manage this by sometimes offering guarantees (e.g. foreign exchange repricing, protection from expropriation), which then become focal points if policy shifts occur.
- Capacity Building: International support for ADR continues. Organizations like UNCTAD, AfDB and UNCITRAL conduct workshops on energy arbitration; African law schools and arbitral institutions train more experts in this field. Over time, these efforts should improve efficiency and consistency in how African disputes are handled.
Nigeria as a Case Study
Nigeria illustrates many of the above dynamics in a single country. It is Africa’s largest economy and a major oil producer, with a full energy value chain (oil and gas fields, pipelines, LNG facilities, refineries, and significant power generation projects). Yet Nigeria also exemplifies common risks and responses:
Legal and Treaty Framework: Nigeria has a web of investment treaties and laws. It has ratified the ICSID Convention (1965) and maintains about 15 BITs[ix] (with partners like the UK, Netherlands, China, etc.). Domestic law reforms have been recent and significant: the Petroleum Industry Act 2021 reorganized the hydrocarbon sector (an attempt to modernize and clarify fiscal terms, which the NUPRC says has bolstered confidence[x]), and the Electricity Act 2023 likewise updated power sector law. Nigeria also ratified the UN Singapore Mediation Convention in 2023[xi], signaling support for mediated settlements.
The P&ID v. Nigeria dispute, though not involving an operational energy company, remains a defining cautionary tale for the sector. Arising from a proposed gas-processing agreement, the arbitration culminated in a US$6 billion award against Nigeria, later set aside by UK courts in 2021 on grounds of fraud. The saga (often called “P&ID”) had a chilling effect: it showed that Nigerian arbitration awards can be annulled if corrupted, and it spurred Nigeria to strengthen anti-fraud provisions in contracts.[xii]
Beyond investor–state arbitration, Nigerian energy companies routinely rely on commercial arbitration to resolve disputes arising from joint ventures, service contracts, and financing arrangements. Indigenous operators such as Aiteo have previously engaged in ICC arbitrations with international partners, reflecting a growing comfort with international arbitral institutions. Following the privatisation of electricity generation and distribution from 2013 onward, disputes in the power sector often involving performance obligations, payment defaults, and regulatory risk have also been resolved through arbitration, frequently on a confidential basis.[xiii]
Judicial Support for ADR: Nigerian courts are increasingly pro-arbitration. The 2023 Arbitration and Mediation Act is a major endorsement of international norms. In recent judgments, higher Nigerian courts have enforced foreign awards or arbitration agreements, mindful of the need to appear arbitration-friendly. Court decisions have also handled issues like disclosure of expert evidence and injunctions to support arbitrations. All in all, Nigeria now aims to balance permit for arbitration with safeguards against abuse (as seen in the P&ID outcome)[xiv].
Nigeria thus represents both the risks and the evolving solutions in African energy disputes. High-value projects there routinely contain arbitration clauses, and major stakeholders expect to use international law to resolve issues. At the same time, Nigeria’s legal reforms (e.g. NIPC Act, PIA, Arbitration and Mediation Act) reflect the government’s recognition that clear dispute rules are needed to sustain investment.
Conclusion
Africa’s oil, gas and power sectors are poised for growth, but they operate in a challenging environment of shifting regulations and infrastructure strain. Disputes over project contracts, licenses and payments are inevitable under such conditions. Experience has shown that robust dispute resolution mechanisms are essential. Arbitration, with its neutrality, expertise and enforceability is the workhorse of dispute resolution in African energy, while mediation provides a faster, more flexible alternative when relationships matter.
Data confirms the significance: about a quarter of all investor–state arbitrations globally have involved oil, gas or mining investments[xv]. In Africa, countries have responded by ratifying key conventions (ICSID, New York, Singapore Mediation) and adopting modern arbitration laws. Nigeria’s own reforms including the Arbitration and Mediation Act 2023 exemplify this trend toward compliance with global standards.
For investors and governments alike, the lesson is clear: anticipate disputes from the outset. This means crafting well-defined multi-tier dispute clauses, selecting experienced arbitration seats, and fostering early negotiation. It also means ensuring domestic courts will respect these agreements. When disagreements arise, resorting to arbitration or mediation can resolve them without derailing entire projects. Ultimately, the success of Africa’s energy value chain depends on good governance of contracts and conflicts.
[1] Laurie Achtouk‑Spivak & Siddharth S. Aatreya, “Resolving Energy Disputes in Africa Through Arbitration and Alternative Dispute Resolution(ADR) (Clearygottlieb), https://content.clearygottlieb.com/regions/africa-outlook/resolving-energy-disputes-in-africa-through-arbitration-and-alternative-dispute-resolution/index.html#:~:text=Around%2028,3%7D.%20The Accessed 9 December 2025
[2] Philippe Hameau, Christopher Asselineau and Marc Robert – Norton Rose Fulbright “Energy Arbitration in Africa: Parallel Proceedings” (Global Arbitration Review, 15 April 2025), https://globalarbitrationreview.com/review/the-middle-eastern-and-african-arbitration-review/2025/article/energy-arbitration-in-africa-parallel-proceedings#:~:text=Foreign%20investments%20in%20Africa%E2%80%99s%20energy,increasing%20number%20of%20parallel%20proceedings Accessed 9 December 2025
[3] Oluwasileola Akinsete, “International Arbitration: A Preferred Mechanism For Oil & Gas Dispute Resolution” (Mondaq, 6 November 2025) https://www.mondaq.com/nigeria/oil-gas-electricity/1701626/international-arbitration-a-preferred-mechanism-for-oil-gas-dispute-resolution#:~:text=Oil%20and%20gas%20projects%20often,3 Accessed 9 December 2025
[i] Oluwasileola Akinsete, “International Arbitration: A Preferred Mechanism For Oil & Gas Dispute Resolution” (Mondaq, 6 November 2025)
https://www.mondaq.com/nigeria/oil-gas-electricity/1701626/international-arbitration-a-preferred-mechanism-for-oil-gas-dispute-resolution#:~:text=3.%20Technical%20and%20industry,of%20arbitrators Accessed 9 December 2025
[ii] Oluwasileola Akinsete, “International Arbitration: A Preferred Mechanism For Oil & Gas Dispute Resolution” (Mondaq, 6 November 2025)
https://www.mondaq.com/nigeria/oil-gas-electricity/1701626/international-arbitration-a-preferred-mechanism-for-oil-gas-dispute-resolution#:~:text=Oil%20and%20gas%20disputes%20often,5 Accessed 9 December 2025
[iii] Oluwasileola Akinsete, “International Arbitration: A Preferred Mechanism For Oil & Gas Dispute Resolution” (Mondaq, 6 November 2025)
https://www.mondaq.com/nigeria/oil-gas-electricity/1701626/international-arbitration-a-preferred-mechanism-for-oil-gas-dispute-resolution#:~:text=2 Accessed 9 December 2025
[iv] Oluwasileola Akinsete, “International Arbitration: A Preferred Mechanism For Oil & Gas Dispute Resolution” (Mondaq, 6 November 2025)
https://www.mondaq.com/nigeria/oil-gas-electricity/1701626/international-arbitration-a-preferred-mechanism-for-oil-gas-dispute-resolution#:~:text=2 Accessed 9 December 2025
[v] Laurie Achtouk‑Spivak & Siddharth S. Aatreya, “Resolving Energy Disputes in Africa Through Arbitration and Alternative Dispute Resolution(ADR) (Clearygottlieb), https://content.clearygottlieb.com/regions/africa-outlook/resolving-energy-disputes-in-africa-through-arbitration-and-alternative-dispute-resolution/index.html#:~:text=As%20energy,a%20means%20of%20dispute%20resolution Accessed 9 December 2025
[vi] Laurie Achtouk‑Spivak & Siddharth S. Aatreya, “Resolving Energy Disputes in Africa Through Arbitration and Alternative Dispute Resolution(ADR) (Clearygottlieb), https://content.clearygottlieb.com/regions/africa-outlook/resolving-energy-disputes-in-africa-through-arbitration-and-alternative-dispute-resolution/index.html#:~:text=Around%2028,3%7D.%20The Accessed 9 December 2025
[vii] Philippe Hameau, Christopher Asselineau and Marc Robert – Norton Rose Fulbright “Energy Arbitration in Africa: Parallel Proceedings” (Global Arbitration Review, 15 April 2025), https://globalarbitrationreview.com/review/the-middle-eastern-and-african-arbitration-review/2025/article/energy-arbitration-in-africa-parallel-proceedings#:~:text=Parallel%20proceedings%2C%20in%20this%20context%2C,investment%20laws%20and%20investment%20treaties Accessed 9 December 2025
[viii] Laurie Achtouk‑Spivak & Siddharth S. Aatreya, “Resolving Energy Disputes in Africa Through Arbitration and Alternative Dispute Resolution(ADR) (Clearygottlieb), https://content.clearygottlieb.com/regions/africa-outlook/resolving-energy-disputes-in-africa-through-arbitration-and-alternative-dispute-resolution/index.html#:~:text=Disputes%20in%20the%20energy%20sector,related%20disputes%2C%20especially Accessed 9 December 2025
[ix] Munia El Harti Alonso & Sophia Herbat, “Shareholder Disputes and the Nigerian Foreign Investment Framework: Attribution Under the Prism of the Interocean Case” (Afronomicslaw, 24 October, 2020)
[x] The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) 2023 Annual Report
[xi] Singapore Convention on Mediation, https://www.singaporeconvention.org/jurisdictions#:~:text=Nigeria%20%207, Accessed 9 December 2025
[xii] https://thearbitrationbrief.com/2024/04/30/what-we-can-learn-from-the-notorious-pid-v-nigeria/ Accessed 9 December 2025
[xiii] https://punchng.com/court-nullifies-shell-afc-others-icc-arbitration-against-aiteo/ Accessed 9 December 2025
[xiv] Emily Granja & Junior Staffer, “What We Can Learn From the Notorious P&ID v. Nigeria” (The Arbitration Brief, 30 April 2024) https://www.ibanet.org/arbitration-related-litigation-in-nigeria#:~:text=The%20most%20high,when%20asked%20to%20refuse%20enforcement Accessed 9 December 2025
[xv] Andrew Canon, Liz Kantor & Kyle Melville, “Surge in Cases as ICSID Releases its 2023 Caseload Statistiy” (Herbert Smith Freehills Kramer, 26 February 2024) https://www.hsfkramer.com/notes/publicinternationallaw/2024-02/surge-in-cases-as-icsid-releases-its-2023-caseload-statistics#:~:text=Oil%20%26%20Gas%20and%20Mining,remain%20key%20sectors%20for%20ISDS Accessed 9 December 2025