Nigeria’s Attorney-General and Minister of Justice, Lateef Fagbemi, has stated that the massive damages award in the Process and Industrial Developments Ltd. (P&ID) case could have had a devastating impact on the nation’s economy. His remarks, delivered at the Chief Legal Advisors Forum (CLAF) 2026 in Singapore, frame the case as a key driver behind Nigeria’s push for fundamental changes to how international investment disputes are settled.
Speaking at a heads of delegations roundtable, Fagbemi argued that the P&ID episode illustrates a critical flaw in the current system: the unpredictable and often opaque way arbitral tribunals calculate damages. He specifically pointed to the use of compound interest in that case, which he said inflated the potential liability to billions of dollars.
A Call for Systemic Change in ISDS
Fagbemi’s comments go beyond a simple critique of one ruling. He articulated a broader vision for reforming the investor-state dispute settlement (ISDS) mechanism, which allows foreign investors to sue governments. According to the Attorney-General, Nigeria is seeking reforms that would protect national sovereignty, bolster domestic courts, and correct what he described as imbalances in the existing framework.
“States consistently express concern about the opacity of arbitral proceedings and the unpredictability of awards,” Fagbemi said. “Nigeria continues to support reforms that enhance transparency of proceedings, consistency in arbitral reasoning, and predictability in outcomes.”
He argued that the current approach to calculating damages is too dependent on the discretion of individual arbitrators or tribunals. “The current position largely relies on the whims of each arbitrator or tribunal,” he stated, citing the P&ID case as a prime example where the calculation method had a “crippling effect to the tune of billions of dollars.”
Beyond Incremental Adjustments
The minister made it clear that Nigeria does not believe minor tweaks to the system will be sufficient. He asserted that many nations share the view that the structural problems are too deep for piecemeal solutions.
“Many states, Nigeria included, believe that incremental adjustments will not address the structural imbalances embedded in the current system,” Fagbemi said. He pointed to growing support for more comprehensive reform, including clearer treaty standards, improved procedural safeguards, stronger accountability mechanisms, and a more balanced set of rights and obligations for both investors and states.
This push for reform is not just about preventing large payouts. Fagbemi also linked it to strengthening national institutions. He argued that building robust domestic legal systems is central to reducing a country’s over-reliance 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 explained.
Domestic Steps and Public Interest
Beyond the international stage, Fagbemi outlined steps Nigeria has taken at home. He noted that the country has amended its arbitration law to promote greater transparency and has established a committee of experts to review its bilateral investment treaties and other multilateral commitments. This review includes the 2016 Nigerian model bilateral investment treaty (BIT), which he confirmed is currently under review after a decade of use.
A significant part of Nigeria’s position involves ensuring that investment protections do not come at the expense of the public good. Fagbemi called for public-interest considerations to be formally incorporated into ISDS, mentioning areas such as 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.
A Balanced Future for Investment Disputes
The Attorney-General’s overarching message was one of balance. He stressed that the reform process must produce a system that serves the interests of both investors and states, acknowledging that the challenges are shared globally.
“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,” Fagbemi said.
His remarks signal that Nigeria is positioning itself as a vocal advocate for a more predictable, transparent, and equitable international investment regime, using its experience with the P&ID case as a cautionary tale for why the status quo is no longer acceptable.
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