Investment Policy In Nigeria By Ikechukwu Onuoma Esq, – TheNigerialawyer

A bilateral investment treaty (BIT) is an agreement
establishing the terms and conditions for private investment by
nationals and companies of one state in another state. This type of
investment is called foreign direct investment (FDI). BITs are
established through trade pacts.

Nigeria has currently signed 29 BIT’s with 15 in force.
Nigeria’s BIT provisions are broadly divided into the
substantive protections and procedural rights
provisions. The substantive provisions include clauses such as Fair
and Equitable Treatment (FET), Expropriation, Protection and
Security, Most Favoured Nation (MFN) and the Umbrella Clause. The
procedural rights include the cooling off period, access to local
courts and arbitration. The BITs currently in force have similar
standard provisions with a few minor differences.  3 days ago
President Muhammadu Buhari has appointed an economics lecturer at
the Lagos Business School (LBS), Prof. Doyin Salami, to head the
newly formed Economic Advisory Council (EAC) to replace the
Economic Management Team (EMT) headed by Vice President Yemi
Osinbajo. The investment sector seems to be a key area to look
into.

The Nigeria-Morocco BIT was signed on 3 December 2016. Although
the BIT is yet to come into force, it has received commendation as
a potential step towards a more balanced form of intra-African
investor protection treaty. However, a breakdown of the various
clauses is necessary to see whether it is indeed ground-breaking
especially in comparison to the other BITs that have emerged over
the last few years

• 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.

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.

Ikechukwu Onuoma Esq, Managing Solicitor Obra
Legal

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