Lateef Fagbemi (SAN), Attorney-General of the Federation and Minister of Justice, has warned that the controversial arbitral award in the Process and Industrial Developments Ltd. (P&ID) case would have had a crippling impact on Nigeria’s economy if it had been enforced.
Fagbemi made the disclosure on Thursday at the Heads of Delegations Roundtable of the Chief Legal Advisors Forum 2026 in Singapore, according to a statement issued by the Special Adviser to the President on Communication and Publicity in the Office of the Attorney-General, Kamarudeen Ajibade.
The minister called on the United Nations to reform international arbitration rules governing investor-state disputes, arguing that the system must better protect the sovereignty of countries while ensuring fairness and predictability for investors.
He said reforms to the Investor-State Dispute Settlement system should strengthen domestic courts rather than circumvent them.
Fagbemi cited Nigeria’s experience with the P&ID dispute as an example of why clearer rules are needed for determining damages in international arbitration.
According to him, the award in the case was based on compound interest and could have imposed a financial burden running into billions of dollars on Nigeria.
“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.
Fagbemi added that greater clarity was needed in the calculation of damages, noting that the current system largely depended on the discretion of individual arbitrators or tribunals.
“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 said.
The Attorney-General said Nigeria had introduced reforms to its arbitration framework to promote greater transparency and had also constituted a committee of experts to review the country’s bilateral investment treaties and commitments under multilateral treaties and conventions.
He explained that the review was aimed at strengthening investment protection while safeguarding the interests of Nigeria and its taxpayers.
Fagbemi described reform of the ISDS system as essential to preserving confidence in the international investment regime. He called for clearer treaty standards, stronger procedural safeguards, improved accountability 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,” he said.
He also advocated greater use of alternative dispute resolution mechanisms to reduce costs, prevent disputes from escalating and promote cooperation between parties.
According to Fagbemi, strengthening national judicial institutions is equally important to improving the rule of law and reducing excessive dependence on international arbitration.
The minister further urged the inclusion of public-interest considerations in investment dispute mechanisms, stressing that investment protection should not prevent governments from regulating in the public interest.
He identified climate action, environmental protection, human rights, community welfare and sustainable development as areas that should be considered in the development of international arbitration rules.
Fagbemi said Nigeria’s position was reflected in its 2016 Model Bilateral Investment Treaty, which is currently undergoing review after a decade.
The P&ID dispute originated from a failed 2010 gas processing agreement between Nigeria and British Virgin Islands-registered P&ID. An arbitration tribunal initially awarded the company billions of dollars against Nigeria.
However, in 2023, the Federal High Court in London ruled in favour of Nigeria and refused to enforce the award after finding that it had been obtained through fraud and corruption.
Fagbemi said the challenges facing the international investment regime required collective solutions that would strike a balance between the interests of capital-importing and capital-exporting countries.
