LEGAL FRAMEWORK FOR ARBITRATION IN THE OIL & GAS INDUSTRY IN NIGERIA.
The Nigerian government has made several efforts to establish arbitration as a mechanism for resolving disputes in various sectors of the country’s economy, including those arising from the oil and gas industry. The following are the relevant laws in Nigeria for the use of arbitration in the settlement of oil and gas disputes.
Arbitration and Mediation Act 2023.
This Act applies throughout the federation, as it is the governing law on commercial arbitration in Nigeria. This law, in a sense, provides methods for parties to come up with a legally binding arbitration agreement, as well as how arbitration may begin and end, and a clear procedure for forming an arbitration tribunal.
The law is aimed at providing a unified legal framework for the fair and efficient settlement of commercial disputes by arbitration and mediation and ensuring the applicability of the convention on the Recognition and Enforcement of Arbitral Awards (The New York Convention). It is important to note the significant development introduced by this law, such as provision for emergency arbitrators where a party seeks urgent relief, discretionary power of the arbitral tribunal to join additional parties in an arbitral proceeding, power of the arbitral tribunal to grant interim measures such as maintain status quo while the dispute is being resolved, The time between the start of arbitration and the issuance of the award is expressly excluded from the calculation of the enforcement limitation period for arbitral awards in Section 34 of the AMA.
Nigerian Investment Promotion Act 2004
This legislation governs all forms of foreign investments. The Act recommends settlement of investment disputes in some sectors which includes Oil and Gas Industry in Nigeria.
Section 26 of the Act provides that when a dispute or disagreement arises between an investor and the federal government regarding the mechanism of settlement to be used, the rules of the International Centre for the Settlement of Investment Disputes will apply. Also encourages the use of arbitration to settle disputes in the oil and gas industry in Nigeria.
The Petroleum Act 1990
The Act stipulates that any questions or disputes arising from it shall be resolved through arbitration. However, Section 11 of the Act expressly mentions arbitration as a method of dispute resolution. The above is an indication that arbitration is legally permissible in the settlement of dispute emanating from oil pipeline transactions. It’s important to note that a dispute relating to the Minister of Petroleum and a licensee shall be submitted to arbitration.
The Oil Pipeline Act 2004
The Act provides that where there is a dispute between the Minister of petroleum and a licensee and such dispute cannot be resolved by mutual agreement the dispute can be referred to arbitration, this is pursuant to Section 17 (5) of the Act. The Act made no mention of litigation as a method of resolving disputes in the oil and gas industry.
The Nigerian Liquified Natural Gas (Fiscal Incentives, Guarantees & Assurances) Act 2004
The enactment of this Act demonstrated the willingness of the Nigerian government to attract foreign investors in the oil and gas industry for the benefit of the country’s overall development. By Section 22 of the Act, where there is a dispute between a foreign investor and the Nigerian government, such dispute is expected to be settled amicably, if settlement fails, it shall be submitted to ICSID arbitration within 90 days which the parties failed to have an amicable settlement of the dispute.
The above listed are the effort of the Nigerian government to give a comprehensive alternate dispute resolution legal framework that could be used to improve the harsh effects of activities of oil companies in the industry. The laws, in one way or another provide a measure to cushion the effect of the plight of host communities.