Investment treaty arbitration in Nigeria involves the settlement of the claim of a foreign investor against Nigeria for alleged breaches of investor protections contained in a bilateral (concluded between two states) or multilateral (concluded amongst a group of states) investment treaty, pursuant to an arbitration agreement contained within the investor-state dispute settlement provisions of the relevant treaty.
A standard bilateral or multilateral treaty provides for arbitration as a means of dispute resolution in the event of a dispute. It is this arbitration that is called Investment Treaty Arbitration.
Let me give a scenario where Nigeria signs a treaty with the United Kingdom, allowing for members of the British society to come invest in Nigeria. What is signed by both nations is called an Investment Treaty. As a result of the treaty, a British national decides to come and invest in in the Nigerian economy. She signs agreements with certain governmental parastatals in order to get started. An issue arises from the execution of one of the agreements and she seeks legal redress.
Ordinarily, she is to go to the Nigerian courts to get justice, however, what is to say the court won’t side with the Nigerian government? This is how Investment Treaty Arbitration came about. Using the scenario above, if the host state adjudicates, it goes against the principle of nemo judex incausa sua, which loosely translates You cannot be a judge in your own case. How will the dispute be resolved amicably between parties?
In recent times, the development of international investment law has been based on investment treaties. Majority of the treaties signed by nations of the world have clauses providing for so-called “investor-state arbitration,” also referred to as investment treaty arbitration.
This means that bilateral and multilateral treaties allow for investors to commence arbitration against the host state, even though the investor is not a party to the treaty. For example, a bilateral treaty is entered between two States in question. By operation of the treaty, the investor obtains a derivative right to initiate arbitration
The most frequently used arbitration regime is the International Centre for Settlement of Investment Disputes (ICSID) Convention and the ICSID Arbitration Rules. Other frequently used arbitration rules include the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules and the Arbitration Rules of the Stockholm Chamber of Commerce.
In addition to the main guarantee of being able to resort to arbitration instead of going to the national courts of Nigeria, there are other advantages of investment treaty arbitration in Nigeria. They are:
- Protection against expropriation.
- Impartial and fair treatment.
- Equal treatment as Host States.
- Freedom to repatriate funds.
- Total protection.
These guarantees are developed in International Law.
Naturally, the investment treaty programme in Nigeria is governed by the Nigerian Investment Promotion Commission of which their main objective is to encourage, promote and co-ordinate investments in the Nigerian economy. The Ministry of Justice, headed by the Attorney General of the Federation manages investment treaty arbitrations on behalf of the country.
This goes to show that investors are hugely protected under international investment law when it comes to investing in other countries.
(Associate Intern, OAL)