International Investment Agreements (IIAs) and the UNSDGs – Rethinking Approaches to Achieving Investment Protection and Sustainable Development in IIA Deals in Nigeria

The project aims at examining the international legal framework governing foreign investment andits impact on the implementation of the UNSDGs. While the UNSDGs consider foreign investment to play an important role in their implementation (UNSDG 1a,1b, 2a, 7a, and 10b), the international legal framework governing foreign investment appears to impede rather than promote sustainable foreign investment. International Investment Agreements (IIAs) and the related Investor-State-Dispute Settlement System (ISDS) play a controversial role in this debate. African states have experienced the possible adverse effects ofinternational investment law on sustainable development in several ISDS cases (cf only P&ID v Nigeria), yet they continue to strongly rely on foreign investment to pursue the UNSDGs (see also AU 2063 Agenda). To reconcile investment protection and sustainable development, they pursue extensive IIA reforms on the national, regional, and continent-wide level. The aim is to promote foreign investment through granting substantive protection standards for foreign investors while at the same time ensuring that host states can adopt relevant sustainability policies without being challenged by foreign investors in ISDS proceedings possibly followed by the obligation to pay damages t oforeign investors for financial losses resulting from sustainability policies.

The existing pitfalls of traditional IIAs and the chances and risks of reformed IIAs for achieving sustainable development will be examined on the example of Nigeria as Africa’s largest Sub-Saharan economy. While Nigeria is rich in natural resources, the poverty level in the country is high, which makes theimplementation of the UNSDGs a top priority. But although Nigeria is due to its political and economic weight a powerful negotiating party in IIA negotiations within and outside Africa, Nigeria’s experience with its IIAs provides an ambiguous picture. Nigeria has on the one hand recently concluded one of the most progressive IIAs (BIT Morocco-Nigeria) but, on the other hand, foreign investment has hardly contributed to the achievement of sustainable foreign investment, as Shell v Nigeria or P&ID v Nigeria exemplify. In the light of this mixed experience with foreign investment and IIAs, the project intends to examine the linkages between Nigeria's IIAs and the implementation of the UNSDGs. It will identify the impacts and perils of the substantive and procedural IIA rules and of Nigeria’s negotiating and implementing techniques, on Nigeria’s sustainability policies and identify viable approaches to improve the reconciliation of Nigeria’s IIAs and sustainable development.

Nigeria’s IIA policy will be examined on three levels: Nigeria's Bilateral Investment Treaties (BITs), Nigeria's participation in the ECOWAS Investment Code, and Nigeria’s position in the negotiations of the investment protocol in the framework of the African Continental Free Trade Area AfCFTA.The focus of the research will be two-prong, namely the law in the books and the law in action.

First, it will examine the traditional IIAs on the perceived adverse effects on the sustainable development policies of Nigeria as a host state and analyze whether Nigeria’s approaches to integrate sustainable development into IIAs are feasible to promote sustainable foreign investment, that is whether the reformed IIA provisions provide sufficient guidance for investors and Nigeria as a host state alike on permissible sustainability measures to ensure that foreign investment contributes to the achievement of the UNSDGs. Relevant elements are the question of defining the applicable standards of sustainable development, the role of these standards in the application and implementation of the substantive and procedural rules of the IIA, and the monitoring of the sustainability standards in IIAs.

Second, the project will focus on the practical question of negotiation and implementation of IIAs in practice to make the existing IIA regime more effective. Factually, the application of BITs is limited and the outcome of ISDS case-law is hard to predict for several reasons. First, from the 31 IIAs concluded by Nigeria, only 15 entered into force and are applicable. The BIT Morocco-Nigeria still awaits ratification of the Nigerian Parliament - like all other recently concluded IIAs. Second, Nigeria's existing BIT landscape as well as its recently concluded BITs differ widely, which means that a consistent Nigerian IIA policy cannot be observed and the outcome of cases is hard to predict due to several possibilities of treaty shopping. Third, many modern Nigerian IIAs contain most-favored-nation clauses, which permit foreign investors to resort to the provisions in the still existing traditional IIAs, thereby annihilating the reforms that integrate sustainable development into IIAs. These issues raise questions of how Nigeria can improve the effectiveness of its IIA regime. The second part will examine the reasons for the current inconclusive state of the Nigerian IIA landscape and develop feasible approaches to make the Nigerian IIA policies consistent and more effective to achieve the purpose of reconciling investment protection and the implementation of the UNSDGs.

The outcome of this research project will be a set of proposals to facilitate that Nigeria’s international legal framework governing foreign investment is also conducive to the implementation of the UNSDGs. It will on the one hand identify substantive and procedural elements that should be included into IIAs and on the other hand suggest improvements in the investment policy-making process at the negotiating phase (eg creating a consistent IIA policy though a Model BIT), the implementing phase, and the dispute settlement phase.