VIENNA, Austria — Nigeria and Vietnam have proposed new limits on foreign investor compensation in international disputes, aiming to curb speculative claims and prevent excessive financial liabilities for governments.
The two countries submitted the joint proposal at 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 talks to reform investor-state dispute settlement.
The proposal seeks to ensure that awards by arbitration tribunals reflect legally recoverable losses directly caused by proven violations, not speculative financial projections.
Proposed rules on foreign investor compensation
Under the proposed rules:
- Investors would have to prove their losses with clear and convincing evidence.
- Monetary compensation would not exceed the investor’s total expenditure on the investment, adjusted for inflation.
- Interest awarded before and after tribunal decisions would be limited to simple interest at a risk-free rate.
- Interest calculations would follow the laws of the country facing the claim at the time of the alleged violation.
If adopted, the measures could significantly change how tribunals calculate compensation in disputes between foreign investors and governments.
Rules for expropriated property
The submission also covers direct expropriation, proposing either restitution of the property or an alternative monetary arrangement. Under the monetary option, compensation would be based on the property’s fair market value immediately before the expropriation became publicly known.
The two countries also want tribunals to consider whether investors contributed to their own losses through deliberate actions or negligence. Other factors include:
- whether the investor took reasonable steps to minimise its losses
- whether it had already received compensation for the same damage
- whether the losses could reasonably have been foreseen when the treaty violation occurred
Reducing financial risk for governments
Kanyi Daily reports that the proposed restrictions could help developing countries limit their exposure to large awards from investment disputes while keeping a framework to address proven violations of investors’ rights.
The proposals remain subject to negotiation under UNCITRAL and have not been adopted as international rules. Their eventual impact will depend on the outcome of the reform process.
Nigeria’s record in international arbitration
Nigeria has faced several high-value disputes that show the financial risk governments carry when foreign investors seek compensation.
- In September 2026, an International Chamber of Commerce (ICC) tribunal ruled in Nigeria’s favour, rejecting claims worth a combined $3.38 billion by Sunrise Power and Transmission Company over the Mambilla Hydroelectric Power Project.
- In October 2023, a UK court dismissed Process & Industrial Developments’ (P&ID) $11 billion claim against Nigeria. It set aside an arbitration award originally worth $6.6 billion plus interest, finding that it 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 over a national electronic government procurement project.
