Investment treaty practice

Model BIT

Does the state have a model BIT?

Nigeria does not have a known model BIT. However, the recent BIT (Morocco-Nigeria BIT) contains some innovative provisions, as follows:

  • investors are required to carry out social impact assessments for their proposed investments (article 14(2));
  • investors are required to apply the precautionary principle in assessing the impact of their investments on the environment (article 14(3));
  • investors are required to ensure that measures and efforts are undertaken to combat corruption (article 17);
  • investors are required to uphold human rights, act in accordance with core labour standards as required by the International Labour Organisation (ILO) Declaration on Fundamental Principles and Rights of Work, and comply with environmental management standards (article 18);
  • a new dispute prevention mechanism was introduced, which will be overseen by a joint committee of representatives of each country who, before the initiation of arbitration, will assess the parties through consultations and negotiations by the committee (article 26(1));
  • investments are required to meet or exceed nationally and internationally accepted standards of corporate governance in the sector involved, particularly transparency and accounting practices (article 19);
  • the BIT requires that arbitral proceedings must be transparent, such that the notice of arbitration, pleadings, memorials, briefs submitted to the tribunal, written submissions, minutes of transcripts of hearings, orders, awards and decisions of the tribunal are readable by and available to the public (article 10(5));
  • investors shall be subject to civil actions for liability in the judicial process of their home state for the acts or decisions made in relation to the investment where such acts or decisions lead to significant damage, personal injuries or loss of life in the host state (article 20); and
  • investors are required to comply with all applicable laws and operate through ‘high levels of socially responsible practices’ (article 24).
Preparatory materials

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

Yes. The International and Comparative Department of the Federal Ministry of Justice is the central depository of treaty preparatory materials. The treaty preparatory materials are not known to be publicly available in Nigeria.

Scope and coverage

What is the typical scope of coverage of investment treaties?

Nigerian BITs do not specify the qualifications of investors and the types of investments. The BITs allow investors to invest in varied investments including movable and immovable property, shares, debt instruments, intellectual property rights and business concessions, and offer their protection to any foreign national or company operating in the territory of the other country.

Nigerian BITs, however, require that investments must be made in accordance with the host state’s laws, and failure to abide by this requirement may result in the loss of the investor’s ability to claim under the applicable BIT.

Protections

What substantive protections are typically available?

Generally speaking, Nigerian BITs:

  • provide investors with compensation in the event of nationalisation, expropriation and equivalent measures;
  • guarantee certain minimum standards such as entitlement to fair and equitable treatment and full protection and security;
  • offer some protection against losses in the event of conflict or war;
  • affirm the right to repatriate profits and other returns; and
  • guarantee treatment in line with that accorded by the host state to investors under its most-favoured-nation treatment provisions or to the host state’s own nationals.

The BITs also make provisions for settlement of disputes by arbitration under the ICSID Convention and under ad-hoc arbitral tribunals established under the United Nations Commission on International Trade Law. They also provide for the right of subrogation, allowing foreign investors to obtain suitable investment insurance and for these investment insurance providers to seek remedy on their behalf from Nigeria.

Dispute resolution

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

The most commonly used dispute resolution option for investment disputes between foreign investors and Nigeria is arbitration under the ICSID Convention.

Confidentiality

Does the state have an established practice of requiring confidentiality in investment arbitration?

There is no known or established practice requiring confidentiality in investment arbitration. However, investment arbitration involving Nigeria is usually treated with confidentiality.

However, in the new Morocco-Nigeria BIT, article 10 provides for a transparent dispute resolution process, wherein both states agreed that administrative rulings regarding foreign investment will be accessible to the general public. The parties agreed that wherein the dispute results in arbitration, the notice of arbitration, pleadings, briefs submitted to the tribunal, other written submissions and all requisite documents shall be available to the public.

Insurance

Does the state have an investment insurance agency or programme?

Nigeria does not have an investment insurance agency or programme specially designed for the insurance of foreign investments.