Nigeria's Capital Inflow Threatened by Contract Woes, Judicial Uncertainty

Leading legal and business professionals have issued a strong warning: Nigeria faces the risk of continued disinterest from long-term investors if its courts fail to consistently uphold contracts, if commercial disputes remain protracted for years, and if government policies undermine existing business agreements. They emphasized that the nation's capacity to attract and retain capital is not solely dependent on potential profits, but equally on investors' ability to safeguard their assets, secure equitable rulings in commercial disagreements, and recoup their investments when necessary.

Charles Adeyemi Candide-Johnson, SAN, the Managing Partner at Candide-Johnson Law, articulated this concern by stating that capital is drawn primarily by security, not merely by the promise of financial gains. “Actually, capital goes where it is safe,” he asserted. This caution was a key part of the discussions at the third annual Multi-Door Courthouses and Alternative Dispute Resolution Stakeholders Summit 2026, which took place at the MUSON Centre, Onikan, Lagos, from October 19 to 20. The summit's theme was 'Investor Confidence and ADR: Strengthening Nigeria’s Investment Climate'.

Other speakers, including Senior Advocate of Nigeria, Bode Olanipekun, and Abimbola Olashore, who serves as the President and Chairman of the Council for the Nigerian-British Chamber of Commerce, highlighted several impediments to investment. These included weak contract enforcement, questionable ex parte orders, inconsistent government policies, and unpredictable methods of dispute resolution. Mrs. Margaret Olele, the Chief Executive Officer of the American Business Council Nigeria, also cautioned that regulatory inconsistencies and breaches of contractual obligations could compel companies to rethink their operations or even exit the country.

Olanipekun, who is the Managing Partner of Wole Olanipekun & Co, explained that investors are concerned not only about the returns they could achieve but also about the potential loss of their capital due to lengthy commercial disputes. He differentiated these two concerns as “return on investment” and “return off investment,” clarifying that businesses seek growth in their investments while simultaneously ensuring their funds are not lost. “Everybody has heard of ROI, return on investment. At the back of our minds, I want us to use two forms of ROI this morning: ROI as return on investment and ROI as return off investment,” he stated. He further added, “As an investor, I don’t want my investment to diminish; I want my investment to grow. That’s return on investment. Now, there’s return off investment. As an investor, I don’t want to lose my investment. I don’t want my money to get lost.”

To demonstrate the repercussions of drawn-out litigation and the improper use of ex parte orders, Olanipekun recounted a commercial dispute where one company allegedly obtained court orders after a different judge had already refused to grant similar reliefs without first hearing the opposing party. According to his account, Company A approached a court on October 27, 2015, seeking orders against Company B, but its application was denied. He stated that Company A subsequently filed the same case before another judge and successfully obtained the desired orders on December 4, 2015. Company B challenged these orders, which the Court of Appeal ultimately discharged on March 30, 2016. The Supreme Court later affirmed the impropriety of these orders on July 13, 2018, Olanipekun noted. He added that the Court of Appeal subsequently ruled that the second lawsuit constituted an abuse of court process and dismissed it.

Company B then sought damages for the losses purportedly caused by the orders, leading to the High Court awarding over N71bn on July 18, 2023. Olanipekun mentioned that an appeal against this damages award is currently pending. Pondering the long-term implications for Company B, he asked, “What really will be the status of Company B today, 10 years after, if it has not recovered a dime from that loss which the court had found that it did suffer?” He encouraged business leaders to consider whether commercial disputes would be more effectively resolved by independent arbitrators possessing relevant industry expertise and the capacity to render efficient final decisions. “People of commerce would prefer commercially skilled and knowledgeable independent arbiters who understand their businesses to resolve their disputes,” he remarked. “The more a jurisdiction can provide this quality of arbiters, the more confident investors would be to commit capital to such destinations.”

Olanipekun also referenced a 2023 dispute involving Seplat Energy, where three shareholders, collectively holding a mere 162 shares, reportedly obtained ex parte orders restricting the company’s chief executive officer, executive management, and board members from performing their official duties. He pointed out that their combined shareholding represented less than 0.002 per cent of the company’s total issued shares. As per his account, the Court of Appeal suspended these orders on May 15, 2023, just four days after they were issued, while the shareholders filed a notice of discontinuance on May 22. He contended that this particular case illustrated how court orders granted without hearing the opposing party could significantly disrupt corporate governance and business operations.