Arbitrating Tax & Revenue Disputes in Nigeria: Practical Guide After the Arbitration & Mediation Act 2023

Tax arbitration in Nigeria has moved from a niche academic debate to a live commercial question following the enactment of the Arbitration & Mediation Act 2023 (AMA 2023) and the current refinement cycle necessitated by the new provisions. For in-house counsel, tax advisors and corporate legal teams, the central issue is no longer whether arbitration exists as an option but how far it reaches into tax and revenue disputes, how to draft for it, and how to enforce the resulting award, particularly where a government body sits on the other side of the table.

The bottom line is straightforward: certain tax-related commercial disputes can be arbitrated when the agreement is drafted correctly and the subject matter is not exclusively reserved to a statutory tribunal, but enforcement and sovereign-party considerations demand deliberate planning from the outset. This guide sets out the framework, the ideal drafting mechanics, the tactical choices between arbitration and the Tax Appeal Tribunal, and the enforcement realities that businesses must anticipate.

Introduction, why tax & revenue disputes need a dedicated arbitration playbook

The Arbitration & Mediation Act 2023 repealed and replaced the Arbitration and Conciliation Act and aligned Nigeria more closely with the UNCITRAL Model Law framework, incorporating features from its 2006 amendments. In doing so, it clarified core doctrines, competence-competence, interim measures, recognition and enforcement, and the narrow grounds on which an award can be set aside, that directly affect how commercial parties approach tax and revenue disputes. The current phase is essentially one of implementation and refinement: courts, arbitrators and revenue authorities are testing the boundaries of the new statute in practice.

Tax disputes deserve their own playbook because they sit at the intersection of private contract and public law. A dispute over a transfer-pricing adjustment embedded in a joint-venture agreement is very different from a direct statutory assessment issued by the revenue authority. The former may be arbitrable as a matter of contract; the latter is likely to fall within the exclusive jurisdiction of the Tax Appeal Tribunal, Federal High Court or other courts constitutionally empowered to deal with tax matters. Getting this distinction wrong at the drafting stage can render an entire dispute-resolution strategy unworkable.

Quick takeaways:

• Arbitrability is possible but conditional. Many revenue-linked commercial disputes can be arbitrated; the validity of statutory assessments generally cannot.
• Drafting is decisive. The clause determines seat, institution, immunity treatment and enforceability.
• Enforcement against public bodies requires foresight. Immunity and statutory collection powers complicate execution.
• Now is the window. Contracts drafted today should reflect the AMA 2023 framework rather than the repealed regime.

1. Can tax & revenue disputes be arbitrated in Nigeria after AMA 2023?, legal framework and arbitrability

The threshold question in any tax arbitration matter is arbitrability: is this the kind of dispute that the law permits parties to remove from the courts and refer to a private tribunal? The AMA 2023 provides the statutory backbone, but arbitrability of revenue disputes is ultimately shaped by the interaction between contract, statute and public policy. Nigerian courts have taken the position that any arbitral award that attempts to decide or alter a tax assessment is null, void and unenforceable because it directly conflicts with the explicit revenue jurisdiction provisions of the Constitution. Thus, in Esso Petroleum and Production Nigeria Ltd & SNEPCO v. Nigerian National Petroleum Corporation (NNPC) (2016), the court ruled that Arbitral Tribunals lack the jurisdiction to determine contractual disputes if the resolution dictates or changes a party’s tax obligations to the state. Even though the dispute in that case arose out of a commercial contract (how “Tax Oil” and royalties were to be lifted and calculated), it was not subject to arbitration, as its core substance and real-world implications directly impacted Petroleum Profits Tax calculations.

Also in the same year, in the case of Shell Nigeria Exploration and Production Co. v. Federal Inland Revenue Service & NNPC, the court ruled that where claims before the arbitral tribunal were “centrally and effectively” tax matters rather than mere commercial contract issues, FIRS had the right to intervene on the ground that the tribunal was encroaching on constitutional tax domains. These cases follow the principle laid down by the Supreme Court in Kano State Urban Development Board v. Fanz Construction Ltd.

Overview of the Arbitration and Mediation Act 2023 provisions on arbitrability

The AMA 2023 establishes that parties may agree to submit to arbitration disputes arising out of a defined legal relationship, whether contractual or not. It preserves the principle of competence-competence, allowing an arbitral tribunal to rule on its own jurisdiction, including on any objection that a dispute is not arbitrable. It also affords tribunals the power to grant interim measures and sets out the recognition and enforcement regime for awards. Crucially, the Act does not itself declare tax disputes non-arbitrable; rather, arbitrability is constrained where another statute confers exclusive jurisdiction on a specific body, or where public policy would be offended by removing the matter from the state’s dispute resolution machinery.

The practical consequence is that arbitrability is not answered by the AMA 2023 alone. Practitioners must read the arbitration statute together with the revenue statutes and the constitutional allocation of jurisdiction to the Federal High Court and specialised tribunals.

How Nigerian courts have treated arbitrability of public revenue

Nigerian appellate jurisprudence has drawn a line between disputes that are essentially private and commercial, even where tax consequences are involved, and disputes that engage the state’s core revenue-collection functions. Nigerian courts have developed the broader principle that matters touching the exclusive statutory jurisdiction of a designated forum, or matters of public policy, are generally not amenable to private arbitral determination. Where a dispute is fundamentally about the validity of a statutory tax assessment or the exercise of the revenue authority’s collection powers, courts have shown reluctance to treat the matter as arbitrable. Conversely, where the dispute is about the contractual allocation of a tax liability between commercial parties, arbitration has a far stronger footing.

Distinguishing private tax disputes from statutory or regulatory matters

The distinction that governs tax arbitration outcomes in Nigeria can be captured in a simple contrast:

• Arbitrable in principle: indemnity and gross-up disputes between contracting parties; allocation of tax risk in M&A or joint-venture agreements; disputes over tax-related warranties; commercial disputes where a tax computation is an incidental issue.
• Generally non-arbitrable: the validity of a statutory assessment; the exercise of the revenue authority’s collection or enforcement powers; questions reserved by statute to the Tax Appeal Tribunal or the Federal High Court; penal and regulatory determinations.

Practical tests for arbitrability

In practice, it is prudent to apply a sequenced test before assuming a tax dispute can be arbitrated. First, identify the true nature of the dispute, is it contractual or statutory in substance? Second, check whether any statute confers exclusive jurisdiction on a tribunal or court over that subject matter. Third, ask whether an award would require an act that only a public authority can lawfully perform, such as amending a statutory assessment. Fourth, consider whether enforcement of the award would offend public policy. If the dispute survives all four questions, it is a strong candidate for arbitration; if it fails one, the arbitration clause may be unenforceable for that dispute, and a hybrid or fallback mechanism becomes essential.

The administrative practice of the relevant federal tax authority should inform how the revenue authority is likely to characterise the matter.

2. Practical pathways to arbitrate tax disputes, institutions, seat and rules

Once arbitrability is established, the next set of choices, institution, seat and rules, determines how efficient and enforceable the process will be. These are not interchangeable defaults; in revenue disputes involving significant sums or a government counterparty, they carry real strategic weight.

Major arbitration bodies relevant to Nigeria

Parties can proceed either through an arbitral institution that administers the case under its own rules or on an ad hoc basis under rules the parties adopt. For tax and revenue disputes, institutional arbitration is frequently preferred because of the administrative support, appointment mechanisms and emergency-arbitrator provisions institutions offer. Domestic centres such as the Lagos Court of Arbitration, Lagos Chamber of Commerce International Arbitration Centre, and the Regional Centre for International Commercial Arbitration in Lagos, alongside international institutions, are commonly considered.

Choosing seat versus place of arbitration

The seat is the legal home of the arbitration, it determines the supervisory court, the law governing the arbitration procedure, and the grounds on which an award may be challenged. The physical place of hearings can differ from the seat for convenience. In Nigerian tax arbitration practice, selecting a Nigerian seat generally simplifies enforcement against Nigerian assets and keeps supervision within the Nigerian courts’ arbitration jurisdiction. A foreign seat may be attractive for neutrality but introduces additional recognition steps when enforcing against a Nigerian public body.

Institutional rules and specialised panels

Institutional rules address matters that ad hoc arbitrations must resolve clause-by-clause: constitution of the tribunal, emergency relief, consolidation and expedited procedures. For tax related disputes, the availability of an emergency arbitrator and clear provisions for expert evidence, essential where the dispute turns on accounting or valuation, should influence the choice of rules.

Checklist for drafting seat and institution clauses

• State the seat expressly and separately from the venue of hearings.
• Name the institution of choice and the specific version of its rules, or adopt the UNCITRAL Arbitration Rules for ad hoc proceedings.
• Specify the number of arbitrators and the appointing authority.
• Confirm the language of the arbitration and the governing law of the contract.
• Address emergency and interim relief expressly.

3. Drafting tips and model clause for tax & revenue disputes

Drafting is where tax arbitration Nigeria strategy may be won or lost. A generic clause copied from a commercial precedent will frequently fail to account for the public-law dimension, sovereign-party issues and the interaction with statutory tax procedures.

Key drafting issues with government parties

Where a government ministry, department or agency is a counterparty, three drafting issues dominate. First, capacity and authority: confirm that the entity is legally capable of agreeing to arbitrate and that the signatory has authority to bind it. Second, immunity: address whether the party waives immunity from suit and, separately, immunity from execution, a distinction that becomes decisive at the enforcement stage. Third, scope: define precisely which disputes fall within the clause so that non-arbitrable statutory matters are carved out and routed to the appropriate tribunal, avoiding a jurisdictional battle later.

Model arbitration clause for tax and revenue disputes (annotated)

The following is a template for discussion only and must be tailored to the specific transaction and reviewed against current law before use:

“Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, and any dispute concerning the contractual allocation of tax or revenue liabilities between the parties, shall be referred to and finally resolved by arbitration under the [Rules of the chosen institution / UNCITRAL Arbitration Rules], which Rules are deemed incorporated by reference into this clause. The seat of arbitration shall be [Nigerian city]. The number of arbitrators shall be [one/three]. The language of the arbitration shall be English. The governing law of this Agreement shall be Nigerian law.

Nothing in this clause shall require the arbitration of any matter reserved by statute to the exclusive jurisdiction of the Tax Appeal Tribunal or a court of competent jurisdiction, and such matters shall be pursued in the appropriate statutory forum.

The final sentence is the tax-specific carve-out: it preserves the clause’s validity by acknowledging the statutory boundary rather than attempting to override it.

Sample language for interim measures and waiver of immunity

Consider adding express provisions that the parties may seek interim or conservatory measures from a court without waiving the agreement to arbitrate, and, where a government party is involved and the law permits, a clear statement addressing immunity. A waiver of immunity from suit does not automatically waive immunity from execution against public assets, so both should be addressed separately and explicitly if the counterparty will agree.

Red flags and negotiation tips

• Vague scope. A clause that says “all disputes” invites arbitrability challenges over statutory matters.
• Silent seat. Omitting the seat creates uncertainty over the supervisory court and set-aside grounds.
• No immunity treatment. With a public counterparty, silence on execution immunity is a latent enforcement problem.
• Mismatched governing law and seat. Ensure the two are deliberately aligned.

4. Arbitration vs Tax Appeal Tribunal or courts, comparative table and tactical considerations

Choosing between arbitration and the Tax Appeal Tribunal or the courts is a tactical decision that depends on the nature of the dispute, the counterparty and the remedy sought. The comparison below sets out the practical differences.

Comparison: Arbitration vs Tax Appeal Tribunal / Court, at a glance

Tactical checklist: hybrid approaches and splitting issues

In many revenue matters, the optimal strategy is not a binary choice but a hybrid one. Where a single commercial dispute contains both an arbitrable contractual element and a non-arbitrable statutory element, the two can be split: the contractual allocation issue proceeds to arbitration while the statutory assessment challenge is pursued before the Tax Appeal Tribunal. When designing this approach, consider the following:

1. Identify which issues are genuinely arbitrable using the four-part test in Section 1.
2. Sequence the proceedings so that a determination in one forum does not undermine the other, for example, resolving the statutory characterisation first where it is a gateway issue.
3. Guard against inconsistent findings by defining clearly which forum decides which questions.
4. Preserve limitation periods in both forums while the parallel strategy runs.

5. Procedural steps and timeline for tax arbitration (from notice to award)

A tax arbitration Nigeria matter follows a broadly predictable procedural arc, though the timetable is shaped by complexity, the volume of expert evidence and the conduct of the parties.

Pre-dispute prevention and evidence preservation

Effective tax arbitration begins before any dispute crystallises. Maintain contemporaneous records of tax computations, correspondence with the revenue authority, board approvals and the commercial rationale for positions taken. Preserving this evidence early avoids the later scramble that undermines many cases at the document-production stage.

Typical timeline and milestone checklist

1. Notice of arbitration. The claimant serves notice, framing the dispute and identifying the arbitrable issues.
2. Constitution of the tribunal. Appointment of the sole arbitrator or panel under the agreed rules.
3. Preliminary meeting. Procedural timetable, terms of reference and any bifurcation of jurisdiction from merits.
4. Written submissions and document production. Exchange of statements of case and disclosure of relevant records.
5. Expert evidence. Accounting, valuation or transfer-pricing experts where the dispute turns on quantification.
6. Hearing. Oral evidence and submissions.
7. Award. The tribunal renders a reasoned award within the timeframe set by the rules.

Cost drivers and budgeting

Costs in Nigerian arbitration vary with the institution chosen, the complexity of the dispute and the arbitrators’ rates. Budget for institutional administrative fees, arbitrator fees, counsel fees, and expert fees, which are often the largest single line in tax disputes because of the accounting and valuation input required. A sole arbitrator and an expedited procedure will reduce cost and time; a three-member panel and extensive expert evidence will increase both. Lawyer fees in Nigeria are typically agreed as staged fixed fees, and parties should request a phased budget mapped to the milestones above.

6. Enforceability of arbitral awards in tax cases, Nigerian courts and when awards can be set aside

An award is only as valuable as its enforceability. In tax arbitration matters, enforcement is where the theoretical arbitrability of a dispute meets the practical reality of executing against a counterparty, especially a public one.

Recognising and enforcing domestic awards under AMA 2023

The Arbitration & Mediation Act 2023 provides that an arbitral award is recognised as binding and, upon application to the competent court, is enforceable. The successful party applies to the court with the award and the arbitration agreement, and the court will enforce unless one of the narrow statutory grounds to refuse is established. This finality-oriented regime is deliberate: it limits the ability of a losing party to relitigate the merits under the guise of an enforcement challenge.

Setting-aside grounds and litigation tactics

The grounds on which an award may be set aside or enforcement refused are confined to procedural and jurisdictional defects and public-policy considerations, for example, incapacity of a party, invalidity of the arbitration agreement, denial of a fair opportunity to present a case, the tribunal exceeding its mandate, or the dispute not being capable of settlement by arbitration. In tax cases, the arbitrability and public-policy grounds are the most likely battlegrounds: a resisting party will argue that the tribunal strayed into non-arbitrable statutory territory. This is precisely why the drafting carve-out in Section 3 matters, it narrows the surface area for such challenges.

Awards against government bodies and immunity issues

Enforcing an award against a government ministry or agency introduces immunity considerations. Even where a public body has submitted to arbitration and lost, execution against public assets may be constrained. This is the enforcement dimension of the immunity distinction: a waiver of immunity from suit does not necessarily open public assets to attachment. Effective drafting that addresses execution immunity, combined with early identification of attachable commercial assets, is the practical answer. Parties should also anticipate that parallel tax-collection or enforcement action by the revenue authority may run alongside the arbitration, and plan sequencing accordingly.

Interim enforcement steps

Where there is a risk that a counterparty will dissipate assets, parties should consider seeking interim relief, such as injunctions or freezing orders, from a court of competent jurisdiction in support of the arbitration. The AMA 2023 framework allows courts to grant conservatory measures that preserve the value of an eventual award. Even though an arbitral tribunal is empowered to issue an interim order directing a party not to dissipate money in its bank account, such an order does not bind the bank or any third party custodian, and the innocent party must take the tribunal’s interim order to a State or Federal High Court for enforcement. 

7. Cross-border enforcement and international recognition, what businesses must plan for

Where assets, parties or seats cross borders, enforcement planning becomes more layered. Many tax-linked commercial disputes involve multinational groups whose assets sit outside Nigeria, or foreign counterparties whose Nigerian assets are the target of enforcement.

AMA 2023 features affecting cross-border enforcement

The AMA 2023 modernised Nigeria’s approach to the recognition and enforcement of awards, reinforcing its alignment with international norms drawn from the UNCITRAL framework and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which Nigeria is a party. This alignment matters because it improves the predictability of enforcing Nigerian awards abroad and foreign awards in Nigeria, provided the procedural conditions and the limited grounds for refusal are satisfied.

Practical checklist for cross-border enforcement

• Map the location of the counterparty’s attachable assets before commencing arbitration.
• Confirm the recognition route available in the target enforcement jurisdiction.
• Ensure the award is in a form and language acceptable to the enforcing court.
• Anticipate immunity arguments where a state or state entity is involved.
• Consider bank-account attachments and the sequencing of enforcement across jurisdictions.

When to involve local counsel

In every jurisdiction where enforcement is contemplated, engage local counsel early. The grounds for resisting recognition and the availability of interim protection vary, and a coordinated cross-border strategy, rather than a jurisdiction-by-jurisdiction improvisation, materially improves recovery prospects. For guidance across the wider practice, the Global Law Experts Commercial lawyers, Nigeria guide is a useful starting point.

8. Practical annexes and checklists

The following resources consolidate the practical outputs of this tax arbitration guide for Nigeria into working tools.

Model clause

The annotated model arbitration clause in Section 3 can be adapted with negotiation notes for government-party scenarios, immunity treatment and the statutory carve-out.

Enforcement checklist

• Confirm the award is final and in enforceable form.
• Identify the competent court and file the enforcement application with the award and agreement.
• Map attachable assets and prepare for immunity arguments.
• Coordinate any cross-border recognition steps in parallel.
• Consider interim freezing relief where dissipation is a risk.

Pre-arbitration evidence and budget checklist

• Preserve tax computations, correspondence and board approvals.
• Assemble expert input on quantification early.
• Build a phased budget covering institutional, arbitrator, counsel and expert fees.
• Confirm the arbitrable scope and route non-arbitrable statutory issues to the Tax Appeal Tribunal.
• Record limitation periods for both arbitration and any parallel tribunal proceedings.

Conclusion and recommended next steps

Tax arbitration Nigeria is a viable and increasingly attractive route for the right disputes, but its value depends entirely on preparation. The AMA 2023 has clarified the framework, and the current refinement phase is the moment for businesses to align their contracts with it. Review your existing agreements for arbitration clauses that predate the current statute, add a tailored clause with a clear tax carve-out and immunity treatment where a public body is involved, and plan enforcement, domestic and cross-border, before a dispute arises rather than after. For contract review, clause drafting or enforcement strategy, seek experienced Nigerian arbitration and tax counsel.

Sources

1. National Assembly of Nigeria, Arbitration & Mediation Act 2023
2. Federal Inland Revenue Service (FIRS)
3. Supreme Court of Nigeria
4. Federal High Court of Nigeria
5. Nigerian Bar Association (NBA)
6. Chartered Institute of Taxation of Nigeria (CITN)
7. UNCITRAL, United Nations Commission on International Trade Law