Nigeria and Vietnam have jointly proposed a new framework that would restrict the compensation international arbitration tribunals can award to foreign investors, a move aimed at limiting speculative claims and containing the financial liabilities that governments face in investor-state disputes.
The submission was presented 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 continuing negotiations to reform investor-state dispute settlement.
Under the proposed rules, compensation would be confined to legally recoverable losses directly caused by proven violations rather than speculative financial projections. Investors would be required to demonstrate their losses through clear and convincing evidence, and monetary awards would not exceed the total amount spent on the investment, adjusted for inflation.
The two countries also proposed that pre-award and post-award interest be limited to simple interest calculated at a risk-free rate. Interest computations, they added, should comply with the laws applicable in the respondent state at the time of the alleged violation.
For direct expropriation cases, the proposal contemplates restitution of the property or an alternative monetary remedy. If money is awarded, compensation would be based on the property's fair market value immediately before the expropriation became publicly known. Tribunals would also be asked to consider whether investors contributed to their own losses through deliberate actions or negligence, whether they took reasonable steps to minimise losses, whether they had already received compensation for the same damage, and whether the losses could reasonably have been foreseen when the treaty violation occurred.
The proposals remain subject to UNCITRAL negotiations and have not yet been adopted as international rules. Their eventual impact will depend on the outcome of the reform process.
Nigeria's experience with high-value arbitration underscores the fiscal stakes. In September 2026, an International Chamber of Commerce tribunal ruled in Nigeria's favour, rejecting Sunrise Power and Transmission Company claims worth a combined $3.38 billion over the Mambilla Hydroelectric Power Project. In October 2023, a United Kingdom court dismissed Process & Industrial Developments' $11 billion claim against Nigeria and set aside an arbitration award originally worth $6.6 billion plus interest, after finding 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.
