The UK Ministry of Justice GREAT Legal Services and Africa Legal recently hosted the Africa Energy Dispute Resolution Roundtable at the British Embassy in Paris alongside the International Bar Association Conference. During the discussions, changes arising from state regulation, new infrastructure, decommissioning and the shift to renewables and other new technology were flagged as some of the most likely drivers of energy transition-related disputes. In this, the second of four articles focusing on the event, we take a closer look at Nigeria’s energy dispute landscape.
In the last few years, Nigeria has passed the Climate Change Act 2021, and launched its Energy Transition Plans and its new Electricity Act 2023 with a focus on green energy exploration. However, the old contracts are largely based on fossil fuel resources, and as these give way for newer contracts focused on clean energy sources, disputes are inevitable.
Dayo Adu, Managing Partner of Famsville Solicitors and a specialist on Nigeria’s energy sector, says if these disputes are poorly managed, they can ground Nigeria’s economy.
“The single most pressing issue is identifying the dispute resolution mechanism agreed to by the parties in their agreements and checking whether the law has mandated some preliminary regulatory intervention in resolving these disputes before parties litigate or resolve the issue by their elected DR mechanism,” explained Dayo at the roundtable. “This is essential so that whatever DR mechanisms parties initiate are not rendered incompetent and premature because they failed to first exhaust the internal DR mechanisms imposed by law.”
Dayo says there are many ways Nigerian lawyers can contribute effectively to resolving energy disputes, including participating in policy formulation and reviews relating to the energy sector. “They can also organise training sessions for government officials so that they better understand the various ADR mechanisms that can be adopted to resolve disputes in the sector,” he said.
He pointed out that legal practitioners were actively involved in the drafting and policy formulation of Nigeria’s new Arbitration and Mediation Act, 2023, (AMA) which introduced innovations that will positively affect dispute resolution in the energy sector.
“With the enactment of the Arbitration and Mediation Act, Nigeria joins Singapore and Hong Kong in expressly providing for third-party arbitration funding, so in future we may experience third party funded arbitral disputes and mediation in the sector,” Dayo noted.
“Another innovation introduced by the AMA 2023 is the reinforcement of the place of mediation in dispute resolution. Part II of the new Arbitration Act also contains detailed provisions that govern domestic and international mediations and the resultant settlement agreements. The Act makes the settlement agreements binding on parties and enforceable in court as a contract, consent judgement, or consent award. The Act also recognises the enforceability of the International Mediation Settlement Agreement.”
Energy sector disputes invariably involve parties from different jurisdictions, and there are many benefits to be gained when local and international counsel collaborate, said Dayo, pointing out that in order to maximise the impact of this collaboration, a few things need to be set in place. “There needs to be effective and strategic communication, mutual respect between international and local counsel, an understanding of confidentiality and trust building between the two sets of counsel, and cooperation in creating legal solutions that advance the objectives,” he said. “Flexibility is also crucial in these interactions so that parties are able to deal with various turns of events as they happen.”
Look out for part three of this series later this week, focusing on Ethiopia’s energy dispute landscape. If you missed part one, click here to read about energy dispute resolution in South Africa.
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