Nigeria and Vietnam have proposed new restrictions on compensation awarded to foreign investors in international disputes, seeking to limit speculative claims and prevent excessive financial liabilities for governments.
The two countries submitted the joint proposal during the 55th session of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III, held in Vienna from October 12 to 16, 2026, as part of ongoing negotiations to reform investor-state dispute settlement.
The proposal seeks to ensure that compensation awarded by international arbitration tribunals reflects legally recoverable losses directly caused by proven violations, rather than speculative financial projections.
Proposed rules target investor compensation awards
Under the proposed rules, investors would be required to establish their losses through clear and convincing evidence, while monetary compensation would not exceed their total expenditure on the investment, adjusted for inflation.
Nigeria and Vietnam also proposed restricting interest awarded before and after arbitration decisions to simple interest calculated at a risk-free rate.
They further proposed that interest calculations should comply with the laws applicable in the country facing the claim at the time of the alleged violation.
If adopted, the measures could significantly change how international arbitration tribunals calculate compensation in disputes between foreign investors and governments.
Proposal outlines rules for expropriated property
The joint submission also addresses compensation in cases involving direct expropriation, proposing the restitution of property or an alternative monetary compensation arrangement.
- Under the proposed monetary option, compensation would be based on the property’s fair market value immediately before the expropriation became publicly known.
- The countries also want tribunals to consider whether investors contributed to their losses through deliberate actions or negligence.
Other factors include whether investors took reasonable steps to minimise their losses, whether they had already received compensation for the same damage, and whether the alleged losses could reasonably have been foreseen when the treaty violation occurred.
Proposal targets financial risks for governments
The proposed restrictions could help developing countries limit their exposure to substantial compensation awards arising from investment disputes while maintaining a framework for addressing proven violations of foreign investors’ rights.
The proposals remain subject to negotiations under UNCITRAL and have not been adopted as international rules. Their eventual impact will depend on the outcome of the reform process.
Nigeria’s track record in international arbitration
Nigeria has faced several high-value international arbitration disputes, highlighting the financial risks governments can face when foreign investors seek compensation.
In September 2026, Nairametrics reported that an International Chamber of Commerce (ICC) tribunal had ruled in Nigeria’s favour, rejecting claims by Sunrise Power and Transmission Company worth a combined $3.38 billion over disputes linked to the Mambilla Hydroelectric Power Project.
In October 2023, a UK court dismissed Process & Industrial Developments’ (P&ID) $11 billion claim against Nigeria, setting aside an arbitration award originally worth $6.6 billion plus interest. The court found that the award had been obtained through fraud and was contrary to public policy.
In February 2026, an international tribunal reportedly dismissed a $6.2 million claim by European Dynamics UK Ltd against Nigeria over a national electronic government procurement project.