Protection of Foreign Investment in Nigeria: Case for a Model Investment Treaty

Description

ABSTRACT

Protection of Foreign Investment in Nigeria: Case for a Model Investment Treaty

Onyema Otitodiri*

Investors are usually concerned about the capacity of a legal system to enforce the rights and obligations created by it. Nigeria has a plethora of laws that promote and protect foreign investments. This article examines two main laws: the 1999 Constitution of the Federal Republic of Nigeria and the Nigerian Investment Promotion Commission Act on promotion and protection of foreign investment. The article also examines investment models in other jurisdictions. It argues that the attractiveness of a country as a place for investment and consequent promotion of international trade starts with the level of legal protection for foreign investors as well as their investments. Nigeria strives to maintain a commendable standard but there are still notable gaps in the provisions of the laws. This is further compounded by the absence of an investment model for the country. The article recommends the need for the amendment and harmonisation of the provisions of the laws relating to expropriation of properties and protection of foreign investment in Nigeria and ultimately the development and adoption of a model investment treaty for the country.

INTRODUCTION
The promotion and protection of foreign investment can be instituted in various ways in a country.₁ It could be through the means of a policy outlook enunciated by the government or through the operation of a legal regime. The institutional mechanism comprises the means by which the intentions contained therewith are implemented. The policy outlook is mostly contained in the development plans and investment models of the country in question.₂ In the case of protection of properties from expropriation, this could be contained in an agreement, whether individual₃ or collective.₄ Alternatively, it could be included in a particular law, which affects a sector of the economy,₅ or affects investors in a particular environment.₆ This article focuses on the legal regulations contained in general laws which affect the whole economy, particularly the provisions of the 1999 Constitution of the Federal Republic of Nigeria₇ and the Nigerian Investment Promotion Commission Act.₈

*LL.M, BL. Lecturer, Faculty of Law, Imo State University, Owerri

1. Odiase-Alegimenlen, O. A., ‘An Appraisal of the Legal and Institutional Regime for Foreign Investment Promotion and Protection in Nigeria’ in D.A Guobadia and P.T Akper (eds) Foreign Investment Promotion in A Globalised World (Nigerian Advanced Legal Studies 2006) 5
2. ibid
3. That is, applying to a single investor
4. An example would be in the extractive industry where there is a collective agreement called the proforma draft contract which sets out the general conditions for investment in that sector
5. In this case, the incentives would apply to all investors in the particular sector. For example, the investment provisions contained in the Nigerian Minerals and Mining Act, No 20 of 2007 applies to all investors in that sector
6. An example is the export-processing zone where a general package of investment incentives is applicable to all investors in the EPZ
7. Cap C 23 LFN 2004 (hereinafter “Constitution”)
8. The aspect of legal regulations contained in international agreements, which have been signed and ratified by countries are outside the scope of our research