Our Expert in Nigeria
Last updated: 2026
Dispute resolution clauses Nigeria practitioners now draft for energy and infrastructure contracts must do far more than acknowledge that disputes may arise. In the wake of the Arbitration and Mediation Act 2023 and the enforcement practice that has developed since, sponsors, lenders and contractors are re-drafting these provisions to secure predictable, bankable outcomes on high-value projects. This guide sets out, at clause level, what an enforceable dispute resolution and governing-law architecture looks like in the Nigerian market: the essential elements of a valid arbitration agreement, the trade-offs between Nigerian and foreign governing law, seat selection for financiers, lender-protective mechanisms, and the public-policy and jurisdictional risks that decide whether an award is ultimately worth the paper it is written on.
Every model clause below is drafting guidance to be adapted to the commercial facts and verified by counsel, not a substitute for bespoke legal advice.
This is a practitioner how-to for the people who negotiate and sign high-value contracts in the Nigerian power, oil and gas, renewables and infrastructure sectors: project sponsors, commercial and development lenders, EPC and O&M contractors, and the in-house and external counsel who advise them. If you are choosing between a Nigerian and a foreign seat, deciding whether the contract should be governed by Nigerian or English law, or building lender protections into a project finance package, the drafting decisions covered here will directly affect whether you can enforce your rights.
Three recommendations frame everything that follows. First, treat the arbitration agreement as a standalone contract that must survive termination of the main agreement and identify the parties, scope, seat and rules with precision. Second, choose governing law and seat deliberately, recognising that certain Nigerian mandatory rules and public-policy limits will apply irrespective of the parties’ choice. Third, layer in lender-protective machinery, interim and emergency relief, step-in support, security preservation and, where relevant, immunity waivers, so that the financing can be protected while a dispute runs its course. Good dispute resolution clauses Nigeria counsel draft are not boilerplate; they are engineered to the deal.
The market pressure is real. Since the Arbitration and Mediation Act 2023 recalibrated the statutory framework, contracts signed under the older Arbitration and Conciliation Act often contain clauses that no longer reflect best practice. Re-papering these provisions on refinancing, assignment or amendment is now a routine part of transaction hygiene.
Clause drafting cannot be divorced from the statutory and judicial environment in which the clause will be tested. Nigeria’s arbitration framework was substantially modernised by the Arbitration and Mediation Act 2023, which repealed and replaced the earlier Arbitration and Conciliation Act, and the courts continue to shape how that framework is applied in practice.
The Arbitration and Mediation Act 2023 is the central instrument for any dispute resolution clause governed by or seated in Nigeria. Practitioners should retrieve and cite the full official text when finalising a clause, and map each drafting choice to the relevant statutory provision. In broad terms, the Act reflects the modern international consensus embodied in the UNCITRAL Model Law: it treats the arbitration agreement as separable from the underlying contract, supports the tribunal’s competence to rule on its own jurisdiction, provides a framework for interim and emergency measures, and sets out the grounds on which recognition or enforcement of an award may be refused. It also introduced features such as provisions on emergency arbitrators and third-party funding.
For drafters, the practical significance is that the statute rewards precision. Where a clause clearly records the parties’ agreement to arbitrate, identifies the seat, and adopts a recognised set of rules, the Act gives that agreement robust support. Where a clause is vague, for example, referring to “arbitration in Nigeria” without more, it leaves gaps that a resisting party can exploit.
The direction of travel in Nigerian jurisprudence, reflected in decisions of the Supreme Court and the Court of Appeal, has generally been supportive of arbitration: courts increasingly respect party autonomy, hold parties to their bargain to arbitrate, and tend to construe the public-policy exception narrowly rather than as a general appeal on the merits. That said, enforcement is not automatic, and procedural missteps or poorly drafted clauses remain common reasons enforcement stalls. The practical effect for sponsors and lenders is that investment in clause quality at the drafting stage materially reduces enforcement risk later.
The most frequently asked question from decision-makers is simple: what makes an arbitration clause enforceable in Nigeria? The answer is a combination of clear consent, defined scope, a properly designated seat, a workable procedural framework and drafting that survives the collapse of the main contract. Each element is set out below, with model language flagged for adaptation and counsel verification.
The clause must record an unambiguous agreement that disputes will be resolved by arbitration, identify precisely which parties are bound, and define the scope of disputes covered. The safest scope language captures “any dispute, controversy or claim arising out of or in connection with this contract, including any question regarding its existence, validity, breach or termination.” Narrow scope wording (“disputes as to payment”) invites satellite litigation over whether a given dispute falls inside or outside the clause.
Three legal concepts are routinely conflated, and the confusion can be fatal to enforceability. The seat is the legal home of the arbitration; it determines the supervisory court and the procedural law. The venue is merely the physical location of hearings and can differ from the seat for convenience. The governing law of the arbitration agreement may differ from both the seat and the law governing the substantive contract. A well-drafted clause states each of these expressly. Silence on the seat is one of the most common drafting failures in Nigerian energy and infrastructure contracts.
Specify whether the arbitration is administered by an institution and, if so, which one, together with the applicable rules and the version in force. Adopting an established rule set imports a complete procedural code, appointment mechanisms, timetables, emergency arbitrator provisions and fee schedules, that fills gaps the parties never anticipated. Ad hoc arbitration under the UNCITRAL Arbitration Rules is viable but requires the parties to specify an appointing authority to avoid deadlock.
Energy and infrastructure projects are rarely bilateral. A single project typically spans a concession or production-sharing arrangement, an EPC contract, O&M agreements, offtake contracts and a suite of finance and security documents. Where disputes may involve multiple parties or contracts, the clause should address consolidation, joinder and the appointment of a single tribunal across related agreements. Inconsistent dispute clauses across the project documents produce parallel proceedings and irreconcilable awards, a risk lenders will not tolerate.
State expressly that the arbitration agreement is separable from the main contract and survives its termination, expiry or a finding of invalidity. This reflects the statutory principle of separability and forecloses the argument that avoidance of the main contract also avoids the duty to arbitrate.
Model core arbitration clause (sample, adapt to facts and verify with counsel): “Any dispute, controversy or claim arising out of or in connection with this Contract, including any question regarding its existence, validity, breach or termination, shall be finally resolved by arbitration under the [named institution] Rules, which Rules are deemed incorporated by reference. The number of arbitrators shall be three. The seat of arbitration shall be [seat]. The language of the arbitration shall be English. This arbitration agreement is separable from the remainder of this Contract and shall survive its termination.”
For contractors, risk-limiting drafting: insist that the clause fixes the language, caps the number of arbitrators to control cost, and confirms the seat, so that you are not later forced into an expensive, unfamiliar procedural regime chosen unilaterally.
Whether an energy or infrastructure contract should be governed by Nigerian law or a foreign law is a decision that turns on enforceability, predictability, the presence of mandatory Nigerian rules and the commercial balance of power. There is no universally correct answer, but there is a disciplined way to reach the right answer for a given deal.
Foreign governing law, most commonly English law, is often preferred for its depth of commercial precedent and predictability in complex financing and construction disputes. Nigerian law, by contrast, offers alignment with the local regulatory environment and avoids the cost and evidentiary complexity of proving foreign law before a Nigerian court where enforcement will ultimately occur. For contracts that will be enforced primarily against Nigerian assets, choosing Nigerian law can shorten the distance between award and recovery.
Party autonomy over governing law is not absolute. Certain Nigerian rules may apply regardless of the chosen law, including sector-specific regulatory requirements in the petroleum and power industries (for example under the Petroleum Industry Act 2021 and the Electricity Act 2023), provisions in production-sharing and concession arrangements, and applicable local-content and foreign-exchange rules. A choice-of-law clause that purports to displace mandatory provisions will not do so, and drafters should assume they apply irrespective of the stated governing law.
A common solution is a hybrid: choose a foreign law to govern the commercial substance while expressly carving out and preserving the application of mandatory Nigerian regulatory provisions. This gives the parties the predictability of a mature commercial law while acknowledging the rules that Nigerian courts and regulators will enforce in any event. The carve-out should be specific rather than a bare reference to “applicable law.”
Nigerian-law variant (sample, adapt and verify): “This Contract and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with the laws of the Federal Republic of Nigeria.”
Foreign-law with Nigerian carve-out variant (sample, adapt and verify): “This Contract shall be governed by the laws of England and Wales, save that any mandatory provisions of Nigerian law applicable to the [petroleum/power] sector, and any Nigerian regulatory, local-content and foreign-exchange requirements, shall continue to apply and prevail to the extent of any inconsistency.”
| Factor | Nigerian governing law | Foreign governing law (e.g. English) |
|---|---|---|
| Predictability of commercial precedent | Good and developing | Very high, deep case law |
| Alignment with local regulation | Full alignment | Requires carve-outs for mandatory rules |
| Proof-of-law cost at enforcement in Nigeria | None, court applies its own law | Foreign law must be pleaded and proved |
| Comfort for international lenders | Increasing | Traditionally preferred |
| Interaction with public policy | Fewer conflicts | Public-policy and mandatory rules still apply |
For sponsors, dispute escalation and warranty phrasing: where the deal justifies foreign governing law, ensure warranty and indemnity provisions are drafted so they remain enforceable under both the chosen law and the mandatory Nigerian rules that will apply on enforcement.
The seat is arguably the single most consequential choice in the entire dispute resolution clause. It determines which courts supervise the arbitration, the availability and speed of interim relief, the neutrality of the process and, ultimately, how straightforward enforcement will be. For lenders and sponsors, seat selection is a financing question as much as a legal one.
A Nigerian seat offers proximity to the assets, application of the Arbitration and Mediation Act 2023 as the procedural law, and direct access to Nigerian courts for support and interim measures. It avoids an additional recognition step because a domestic award is enforced within the same system. The trade-off is that some international financiers still perceive a domestic seat as carrying greater neutrality and delay risk, and the supervisory jurisdiction of local courts can, in a contested matter, extend the timetable.
London, Singapore and Paris are among the seats most frequently chosen for cross-border Nigerian projects. Each offers a mature, pro-arbitration supervisory court, well-developed emergency and interim relief mechanisms, and strong confidentiality practice. Because Nigeria is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, awards rendered at these seats are, in principle, recognisable and enforceable in Nigeria subject to the Convention’s limited grounds for refusal, which is precisely why a foreign seat combined with the Convention framework is a classic bankable structure.
Institutional arbitration under rules such as those of the ICC, LCIA or SIAC brings administrative support, scrutiny of awards and reliable appointment machinery, which lenders generally prefer. Regional institutions, including those based in Lagos, are also available for a Nigerian seat. Ad hoc arbitration is cheaper on paper but shifts the administrative burden to the parties and tribunal and requires careful drafting of the appointing authority. For high-value energy and infrastructure disputes, the institutional route usually justifies its cost.
Sample (adapt and verify): “The seat of the arbitration shall be [London / Singapore / Lagos]. The arbitration shall be administered by the [ICC / LCIA / SIAC] in accordance with its Rules in force at the commencement of the arbitration. The hearings may be held at any convenient venue without affecting the seat.”
| Criterion | Nigerian seat (Lagos) | London (LCIA) | Singapore (SIAC) | Paris (ICC) |
|---|---|---|---|---|
| Enforceability in Nigeria | Direct, domestic award | Via New York Convention | Via New York Convention | Via New York Convention |
| Interim / emergency relief | Available via courts and Act | Strong emergency arbitrator | Strong emergency arbitrator | Strong emergency arbitrator |
| Perceived neutrality | Good, developing | Very high | Very high | Very high |
| Confidentiality | Supported | Robust | Robust | Robust |
| Tribunal appointment speed | Moderate | Fast | Fast | Fast |
| Cost | Generally lower | Higher | Higher | Higher |
| Pro-enforcement jurisprudence | Developing | Well established | Well established | Well established |
For lenders, clauses to insist on: a neutral, Convention-enforceable seat; an institution with a functioning emergency arbitrator regime; and an express reservation of the right to seek interim measures from Nigerian courts to protect security located in-country.
Project finance changes the calculus. Lenders are not primarily interested in winning a dispute on the merits years later; they need to preserve value, security and cash flow while a dispute is live. The dispute resolution architecture must therefore include protective machinery that operates quickly and interfaces cleanly with the security documents.
Where the chosen institution provides for an emergency arbitrator, the clause should confirm that the parties may apply for emergency interim measures before the tribunal is constituted. This is critical for freezing dissipation of assets or restraining conduct that would frustrate the financing. Confirm that seeking emergency relief does not waive the agreement to arbitrate.
Emergency arbitrator relief must be complemented by access to the courts, particularly the Nigerian courts, where the assets and security sit. The clause should expressly reserve the right of any party to apply to a court of competent jurisdiction for interim or conservatory measures, injunctions, asset preservation, receiverships, without such application being treated as inconsistent with, or a waiver of, the arbitration agreement. This dual track is essential for lenders because a foreign emergency award still needs a Nigerian court to bite on Nigerian assets.
The dispute clause should not sit in isolation from the security package. Step-in rights, escrow arrangements, direct agreements and enforcement of charges must be aligned so that the dispute mechanism does not inadvertently suspend the lenders’ ability to enforce security. Consistency of dispute clauses across the finance documents, direct agreements and project contracts avoids the risk of parallel proceedings that lenders most fear.
Sample (adapt and verify): “Notwithstanding the parties’ agreement to arbitrate, each party retains the right to apply to any court of competent jurisdiction, including the courts of Nigeria, for interim, conservatory or protective measures, including asset preservation and injunctive relief, at any time before or after the constitution of the tribunal. Any such application shall not constitute a waiver of, or be inconsistent with, this arbitration agreement. Where the applicable Rules provide for an emergency arbitrator, the parties agree that such provisions shall apply.”
Where a state entity or a state-owned enterprise is a counterparty, consider an express waiver of sovereign immunity from suit and execution, drafted to the extent permitted by law. Immunity waivers are heavily negotiated and must be reviewed against the specific counterparty and asset base.
The final question decision-makers ask is whether Nigerian courts can refuse to enforce a foreign-seated award or a foreign judgment on public-policy grounds. The short answer is that they can, but the grounds are limited and drafting can materially reduce the exposure.
Public policy as a ground for refusing recognition or enforcement is intended to be narrow. It targets awards that offend fundamental principles of justice, morality or the legal order, not awards that a Nigerian court would simply have decided differently on the merits. Nigerian appellate jurisprudence has generally resisted attempts to reopen the substance of an award under the banner of public policy, consistent with the country’s New York Convention obligations. Drafters should nonetheless assume that a determined resisting party may raise public policy, and structure the clause to minimise the opening.
More often than public policy, enforcement is resisted on procedural grounds recognised under the Convention and the Act: an invalid arbitration agreement, lack of proper notice, denial of the opportunity to present a case, a tribunal exceeding its mandate, or improper constitution of the tribunal. Each of these maps directly back to drafting and process: a precise arbitration agreement, correct appointment procedures and adherence to the adopted rules close off these defences before they arise.
To lower enforcement risk, choose a Convention-enforceable seat, draft the arbitration agreement with unambiguous consent and scope, specify the governing law of the arbitration agreement itself, and ensure the substantive contract does not require performance of anything prohibited under Nigerian law. Aligning the dispute clauses across all project documents prevents inconsistent findings that a resisting party could exploit.
The following consolidated checklist distinguishes the provisions that are indispensable from those that add value in more complex deals. It is designed to be used alongside a model clause bank collecting the core arbitration clause, multi-tier escalation, emergency interim measures and the Nigerian-law and foreign-law choice-of-law variants referenced throughout this guide.
| Provision | Priority |
|---|---|
| Clear agreement to arbitrate with wide scope | Must-have |
| Express seat of arbitration | Must-have |
| Institution and rules specified | Must-have |
| Language and number of arbitrators | Must-have |
| Separability and survival wording | Must-have |
| Governing law of the contract and of the arbitration agreement | Must-have |
| Reservation of court interim relief | Must-have for lenders |
| Emergency arbitrator confirmation | Must-have for lenders |
| Multi-tier escalation (negotiation / mediation before arbitration) | Nice-to-have |
| Consolidation and joinder across project documents | Nice-to-have (essential in multi-contract deals) |
| Sovereign immunity waiver (where state counterparty) | Deal-specific |
| Confidentiality provision | Nice-to-have |
Model multi-tier escalation clause (sample, adapt and verify): “The parties shall first seek to resolve any dispute by good-faith negotiation between senior representatives within [30] days of written notice. If unresolved, the parties shall attempt mediation for a further [30] days. If the dispute remains unresolved thereafter, or if either party would suffer irreparable harm from delay, the dispute shall be referred to arbitration in accordance with clause [X].” Time limits should be firm and the exception for urgent relief expressly preserved, so the tiered structure does not itself become a jurisdictional obstacle.
All model clauses are drafting starting points labelled for adaptation and counsel verification, they are not, and must not be treated as, bespoke legal advice.
Well-engineered dispute resolution clauses Nigeria counsel prepare for energy and infrastructure contracts are the difference between a right that can be enforced and one that merely exists on paper. The action plan is straightforward: draft the arbitration agreement with express consent, scope, seat, rules and language; choose governing law deliberately, carving out mandatory Nigerian provisions where a foreign law is adopted; select a Convention-enforceable seat suited to lender priorities; build in emergency and court-based interim relief plus security-preservation machinery; and align every dispute clause across the project and finance documents.
Sponsors should map dispute escalation and warranty language; lenders should insist on interim relief and neutral, enforceable seats; contractors should control cost and language; and all parties should route final clauses through lead counsel for sign-off. Treat these dispute resolution clauses Nigeria drafting steps as living provisions, reviewed on every refinancing, amendment or assignment, and verified in context before signature. For tailored drafting and transaction sign-off, or to explore the wider Commercial Lawyers Nigeria, practitioner guide and the author profile, engage qualified Nigerian counsel early in the negotiation.
This article was produced by Global Law Experts. For specialist advice on this topic, contact Theo Osanakpo at Dr. T.C Osanakpo & CO, a member of the Global Law Experts network.
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