THE AFRICAN EXTRACTIVE SECTOR AND DISPUTE RESOLUTION IN AN EVOLVING INTERNATIONAL LANDSCAPE

INTRODUCTION

The mining and extractive industries remain central to Africa’s economic development, contributing significantly to GDP, foreign exchange earnings, and infrastructural expansion. With abundant reserves of critical minerals such as cobalt, lithium, gold, and oil, Africa stands at the heart of the global energy transition. However, the sector’s increasing complexity driven by shifting geopolitical interests, climate change policies, environmental regulations, and investment realignments has also made disputes inevitable. As the international legal and investment landscape evolves, so too must the mechanisms for resolving disputes arising from exploration, production, taxation, environmental obligations, and community relations.

THE CHANGING NATURE OF THE EXTRACTIVE SECTOR

Historically, disputes in Africa’s extractive sector revolved around concession agreements, expropriation, and taxation. Today, new forms of disputes have emerged ranging from environmental and social governance (ESG) obligations, climate transition litigation, and contractual instability due to political changes, to challenges in arbitration enforcement and local content requirements.

The year 2024 witnessed continued turbulence in global markets, particularly within the energy and resources sector. The global supply chain once again came under strain, driven not only by the ongoing Israeli–Palestinian conflict but also by the protracted Russia–Ukraine war. Heightened geopolitical tensions surrounding access to natural resources, including across Africa, have been further intensified by the growing global demand for critical minerals essential to the energy transition, such as cobalt, copper, nickel, lithium, and rare earth elements. Simultaneously, several large-scale iron ore projects across the continent have advanced as well. However, global uncertainty and an oversupply of certain minerals have triggered a persistent decline in nickel and lithium prices. While these developments create fresh opportunities for foreign investment and economic expansion in African states, they also heighten the likelihood of disputes, particularly in sectors vulnerable to volatile commodity prices.

There was also a notable rise in international arbitration activity at the International Centre for Settlement of Investment Disputes (ICSID), which registered 55 new cases during the year 2024[1]. Sub-Saharan Africa accounted for 16 percent of these new filings, reflecting a growing share of investment disputes from the region, while the oil, gas, and mining industries collectively remained the most prominent sector, representing 38 percent of all new cases. Of the newly filed ICSID matters, eleven were brought against sub-Saharan African states, (namely Mali, Niger, Burkina Faso, Angola, Rwanda, Tanzania, Mozambique, South Sudan, Senegal) and one against a North African state being Tunisia. Notably, seven of these disputes involved mining projects related to gold, uranium, mineral sands, and coal. Although, no ICSID cases against African states were reported as concluded in 2024, several mining-related arbitrations advanced to the hearing stage, with final awards anticipated in 2025.

INVESTOR–STATE DISPUTES AND TREATY REFORMS

The International Centre for Settlement of Investment Disputes (ICSID) and the Permanent Court of Arbitration (PCA) are common forums in international arbitration, as are institutions like the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA). Africa’s experience with Investor–State Dispute Settlement (ISDS) under Bilateral Investment Treaties (BITs) and international conventions like ICSID has been mixed. In Africa, where a history of poor environmental and social practices by some foreign operators lingers, governments are now prioritising strict compliance with local regulations and international environmental and human rights standards.

Several countries including South Africa, Tanzania, and Nigeria have revised their investment laws to prioritize domestic remedies and regional frameworks. The Pan-African Investment Code (PAIC) (2016)[2] and AfCFTA Investment Protocol (2023)[3] now advocate for a balanced dispute resolution regime emphasizing mediation, conciliation, and arbitration, with a growing preference for African arbitration institutions such as the Lagos Court of Arbitration (LCA), Cairo Regional Centre for International Commercial Arbitration (CRCICA), and the Kigali International Arbitration Centre (KIAC).

Furthermore, stakeholders are increasingly calling for stronger accountability and greater transparency around Environmental, Social, and Governance (ESG) practices, especially in the mining sector. Mining investors seeking financing are now expected to prove robust ESG credentials, as shareholder activism and NGO scrutiny continue to grow.

Non-compliance with these obligations can expose investors to direct claims or counterclaims from host states. In investment treaty arbitrations, states frequently invoke allegations of illegality specifically, an investor’s failure to adhere to local laws as grounds for inadmissibility or as part of the substantive merits of the dispute.[4] As ESG compliance becomes central to investment and arbitration strategy, mining companies must be prepared to demonstrate adherence to local laws, socio-environmental standards, and human rights principles. This trend is particularly significant in investor–state disputes involving natural resource projects in emerging economies, where both states and third parties are increasingly challenging investors’ ESG performance.

REGIONAL AND DOMESTIC ARBITRATION FRAMEWORKS

Communities now rely on domestic courts and transnational litigation to hold corporations accountable for environmental degradation, human rights abuses, alongside inadequate compensation. Cases like Vedanta Resources Plc v. Lungowe[5] illustrate how African claimants increasingly seek justice against toxic emissions from mining activities beyond national borders where local remedies prove ineffective. Moreover, African governments are tightening environmental compliance regimes and imposing stronger ESG standards. This development demands that both investors and host states adopt proactive risk management strategies and clearer dispute-prevention mechanisms in project agreements.

Africa’s arbitration infrastructure has grown remarkably in the past decade. The OHADA Uniform Arbitration Act, which applies across 17 West and Central African countries, provides a harmonized framework that enhances certainty and enforcement in dispute resolution. Similarly, the Arbitration and Mediation Act, 2023 in Nigeria modernizes arbitral practice and aligns it with the UNCITRAL Model Law. These reforms, coupled with the strengthening of regional arbitration centres, reflect an intentional move toward autonomy and efficiency in dispute resolution. Nonetheless, concerns persist over enforcement, judicial interference, and capacity gaps in some jurisdictions. Ensuring judicial restraint and building specialized expertise in extractive-sector disputes remain key to maintaining investor confidence.”

LEGISLATIVE AND REGULATORY FRAMEWORK GOVERNING THE MINING AND EXTRACTIVE SECTOR IN NIGERIA

1.    Constitution of the Federal Republic of Nigeria, 1999 (as amended):

The Constitution vests ownership and control of all minerals, oil, and natural gas in the Federal Government of Nigeria. Section 44(3) provides that “the entire property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria… shall vest in the Government of the Federation.” The Exclusive Legislative List[6] reserves the regulation of mining, minerals, oil and gas activities exclusively to the National Assembly. This constitutional foundation establishes the federal government’s preeminence in the management and allocation of mineral resources through regulatory agencies and statutory instruments.

2.    Nigerian Minerals and Mining Act, 2007 (NMMA):

The NMMA is the principal legislation governing solid minerals exploration and exploitation in Nigeria. It provides a comprehensive legal framework for licensing, ownership, and operations in the mining sector. Control of all mineral resources is vested in the Federal Government, to be managed for the benefit of Nigerians[7] as well as establish environmental obligations, including Environmental Impact Assessments (EIA), mine rehabilitation, and community development agreements (CDAs). Introduce mechanisms for dispute resolution and recourse to the Federal High Court.[8] This Act is complemented by the Nigerian Minerals and Mining Regulations, 2011, which set out procedural and technical standards for implementation.

3.    Petroleum Industry Act, 2021 (PIA):

The PIA restructured Nigeria’s oil and gas legal regime, introducing fiscal stability, and investor protection. It consolidates prior laws, including the Petroleum Act (1969), into a unified framework. Key highlights relevant to dispute resolution and governance include the establishment of two key regulators, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC); and The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). Provide for dispute resolution mechanisms between licensees, lessees, and host communities. Chapter 3 of the Act Introduces Host Community Development Trusts (HCDTs) to reduce conflicts between extractive companies and host communities.

The PIA also provides for fiscal reforms, royalty structures, and improved transparency aligned with international best practices such as the Extractive Industries Transparency Initiative (EITI).

The Nigerian Extractive Industries Transparency Initiative (NEITI) Act, 2007 establishes Nigeria’s commitment to transparency and accountability in the extractive sector. It creates the NEITI and its governing body, the National Stakeholders Working Group, to conduct regular audits of financial flows between extractive companies and government agencies. The Act imposes penalties for non-compliance, fostering good governance, anti-corruption practices, and investor confidence. Complementing this, the Environmental Impact Assessment (EIA) Act, Cap E12 LFN 2004 mandates that all projects with potential environmental impact such as mining, oil exploration, and drilling undergo prior environmental assessment supervised by the Federal Ministry of Environment. This ensures that extractive operations align with sustainable development and Nigeria’s international environmental obligations.

The Nigerian Investment Promotion Commission (NIPC) Act, 2004 further strengthens the investment climate by guaranteeing profit repatriation and providing dispute resolution mechanisms, including access to international arbitration under ICSID. Additionally, the Land Use Act, Cap L5 LFN 2004 vests land ownership in state governors[9], holding it in trust for the people. Although mineral rights rest with the federal government, mining operations still require surface rights and consent from state authorities or local landowners, often giving rise to disputes over compensation and community rights. Effective coordination between federal and state governments is therefore essential for harmonious and sustainable extractive operations.

THE ROLE OF MEDIATION AND ALTERNATIVE DISPUTE RESOLUTION (ADR) AND OTHER INITIATIVES

Mediation and other ADR mechanisms are increasingly recognized as effective tools for managing extractive-sector disputes. The AfCFTA Dispute Settlement Protocol and the ICSID Mediation Rules (2022) provide additional frameworks for amicable resolution of investor–state conflicts. Incorporating mandatory negotiation or mediation clauses in mining contracts and production-sharing agreements is becoming standard practice, reducing litigation costs and fostering long-term partnerships. Investors often include stabilization clauses and international arbitration provisions in their long-term contracts with host governments to manage political and regulatory risks. 

The integration of technology and digital platforms into arbitration processes has further enhanced efficiency and access. Additionally, transparency initiatives such as the Extractive Industries Transparency Initiative (EITI) and the increasing public scrutiny of state-investor contracts are shaping the culture of accountability. As the international energy transition accelerates, disputes relating to renewable energy projects, carbon credits, and green financing are likely to dominate future extractive-sector litigation. The trend is towards increased, and more complex, disputes that blend traditional investment protection claims with novel issues such as ESG compliance and human rights. There is also a push within Africa to build local arbitration expertise and capacity to handle Africa-related disputes on the continent itself, rather than defaulting to traditional seats like London or Paris. 

CONCLUSION AND RECOMMENDATIONS

As Africa’s mining and extractive sectors continue to evolve within an increasingly interconnected and volatile global environment, dispute resolution mechanisms must adapt to reflect the continent’s emerging realities. The growing intersection between investment protection, state sovereignty, environmental sustainability, and social accountability underscores the need for a more balanced and context-sensitive approach. While international arbitration remains a vital avenue for resolving cross-border disputes, African nations are gradually asserting greater control through domestic and regional arbitration frameworks.

To strengthen this progress, a multipronged strategy is essential. Firstly, African states should continue to modernize their legal and institutional frameworks to align with international best practices and standards while preserving regulatory autonomy. Secondly, mining investors must embed robust Environmental, Social, and Governance (ESG) compliance into their operational and contractual structures to minimize disputes and enhance credibility. Thirdly, regional arbitration centres should be empowered through funding, technical capacity, and cross-border recognition to serve as credible venues for complex extractive-sector disputes. Finally, incorporating mediation and other Alternative Dispute Resolution (ADR) mechanisms at the contractual and policy levels will help foster collaboration and early dispute prevention, ultimately reducing litigation risks and preserving long-term investment relationships.

Africa’s extractive future will depend on its mineral wealth and also on the strength, adaptability, and fairness of its dispute resolution systems.

Please note that the foregoing does not in any way constitute legal advice. Please kindly contact the author for any legal advice on the subject matter.