For healthy and continuous in flow of Foreign Direct Investments (FDIs) to Nigeria, the country has over the years put in place friendly legal framework for Foreign Direct Investments (FDIs) protection.
In this Foreign Investors’ Guidelines for Doing Business in Nigeria Series, ericroylawfirm we shall be examining the legal mechanisms put in place for the purpose of encouraging an increasing FDIs inflow and ensuring foreign investors’ confidence in the country.
We shall be discussing foreign investors’ protections ranging from certainty of arbitral proceedings and other dispute resolution mechanisms in the country.
The fact with modern economic systems is that no country can be an island economically; fasthomebuyersnow Foreign Direct Investment (FDI) protection is very essential to the successful attainment of foreign investors’ business objective(s) and economic development of any economy.
There are steps that host countries can lawfully take in the exercise of their sovereignty and power can lead to depriving foreign investors of reaping the fruits of their investments.
Host government actions that can affect foreign investment adversely includes nationalization; catamaranseychelles the act of a government taking control of a private enterprise and converting it to state or public ownership.
Expropriation; the act of a government taking possession of or otherwise meddling with privately held assets or property for the use and benefit of the public, or in the public interest.
The legislative and administrative acts of the government as government action can also have adverse effects on foreign investors’ businesses in Nigeria.
This is the indirect or creeping form of expropriation. The only difference is that, it mode of operation shifted attention from the physical and actual taking-over of an investor’s assets to the legislative and administrative acts of the government.
While not depriving a foreign investor of the ownership of an asset in this type of government control, granddegree it is capable of significantly reducing the value of properties and investments of the foreign owner.
Foreign investors don’t like investing in country’s with risk such as arbitrary revocation of a license; permit or a concession after the investor has made the requisite investments.
The advancement and expansion of international business relationships and the importance of foreign direct investment to the economic development of Nigeria has made the country to put in place some foreign business protection laws for the purpose of encouraging foreign investors.
Nigeria has performed greatly in providing protections to potential foreign investors.
In spite of the provisions of Section 12 of the Nigerian Constitution, investment treaties entered by the country are binding on, and enforceable against Nigeria upon ratification under the principle of ‘pacta sunt servanda’.
Also, Speakthestore by a literal application of Article 31 of the Vienna Convention on the Law of Treaties which provides that a treaty shall be interpreted in good faith in agreement with the ordinary meaning to be given to the terms of the treaty.
Bilateral Investment Treaties (BITs): Nigeria entered into its first Bilateral Investment Treaty (BIT) with Germany in 1979 which came into force in 1986.
According to finding from my investigation Nigeria has entered into 28 Bilateral Investment Treaties (BITs) between 1986 and November, 2015.
Of the total number, 13 are currently in force, 14 are signed and 1 repealed. The Bilateral Investment Treaties (BITs) currently in force are the ones entered into with Finland, France, hogame2021 Germany, Italy, Netherlands, Romania, Serbia, Spain, South Korea, Sweden, Switzerland, Taiwan, and United Kingdom.
The 14 BITs which have been signed by Nigeria but are yet to enter into operation were signed as far as back as 1996.
In addition to the usual investment protection standards, these BITs provide that a contracting state shall not damage by irrational or unfair means the maintenance, management, disposal of investment in its territory of nationals or companies of the other Contracting Party.
And the same recompense for losses suffered due to a safety event made to a domestic investor shall be allowed to the investor from the other contracting state.
These BITs 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.
The BITs that are presently in force have also made satisfactory requirements for the standard investment protection. These include fair and equitable treatment, 79king umbrella clauses, most favoured nation status, national treatment, obligations against arbitrary and discriminatory measures and security.
Multi-lateral Investment Treaties (MITs): Economic Community of West African States (ECOWAS) treaty is one of the famous MITs Nigeria have entered. The ECOWAS treaty was signed on 28th May 1975; it came in into force on the 20th June, 1975.
The treaty currently has 15 signatories who are member states of ECOWAS.
Article 2 of the Treaty gives ‘Community Enterprise’ status to businesses whose equity capital is owned by two or more member states, and citizens or institutions of the Community.