In brief
A recent International Chamber of Commerce (ICC) award in the Mambilla dispute underscores the legal and practical risks of settling disputes with states. The tribunal reportedly found that Nigeria was not bound by a settlement agreement because the necessary authority and approvals were absent, and enforcement raised public policy concerns. The case serves as a reminder that arbitration cannot cure defects in a settlement’s validity. Businesses negotiating with states should verify authority, secure all required approvals, ensure compliance with anti-corruption laws and assess enforcement risks before concluding any settlement agreement.
Key takeaways
- Authority is essential: A settlement will not bind a state if the signatory lacks the legal authority to commit the government.
- Approvals cannot be overlooked: Required presidential, cabinet, legislative or budgetary approvals may be critical to a settlement’s validity and enforceability.
- Arbitration cannot cure invalid agreements: A tribunal may hear a dispute yet still reject claims based on a settlement that is defective under the applicable law.
- Corruption and public policy risks remain decisive: Allegations of corruption can render a settlement unenforceable and undermine any resulting award.
- Due diligence is key when settling with states: Parties should verify authority, secure all required approvals, assess legality and evaluate enforcement prospects before concluding a settlement.
In more detail
On 17 September 2026, an ICC tribunal in Paris dismissed a USD 400 million claim by Sunrise Power and Transmission Company Limited (“Sunrise”) against the Federal Republic of Nigeria. Sunrise based its claim on a 2020 settlement of its long-running dispute over the Mambilla hydropower project. Statements by the Nigerian Government and press reports of the award describe two findings. First, the settlement and its addendum did not bind Nigeria, because the ministers who signed them lacked authority to commit the government without presidential approval. Second, the tribunal reportedly found that corruption had procured the settlement, so that enforcing it would offend Nigerian public policy.
The lesson reaches well beyond Mambilla. A settlement with a state does more than fix a figure to end a dispute. It creates a fresh payment obligation, and that obligation stands or falls on three questions:
- Authority: could the signatory bind the state?
- Approval: did the state give every approval its own law requires?
- Legality: is the bargain lawful?
If the answer to any of them is no, then the document meant to end one dispute starts the next.
A settlement that became the dispute
The dispute began with a 2003 agreement under which Sunrise was to develop the project on a build, operate and transfer basis. Nigeria says its Federal Executive Council never authorised that agreement. Sunrise began ICC arbitration on it in October 2017. In January 2020, two ministers signed terms of settlement under which Nigeria would pay Sunrise USD 200 million. An addendum signed in March 2020 split that sum into two instalments and added a further USD 200 million if Nigeria defaulted. The then President refused to approve the terms, and Nigeria did not pay. Sunrise then started a second ICC arbitration to enforce the settlement documents, and the September 2026 award decided that case. According to the Nigerian Government, Sunrise’s original claim, now said to exceed USD 2.7 billion with interest, remains separate.
The tribunal also reportedly held Sunrise’s promoter personally bound by the arbitration agreement and took jurisdiction over Nigeria’s counterclaim. It ordered Sunrise and its promoter to bear 75% of Nigeria’s legal costs, with interest, and 75% of the costs of the arbitration. The point for claimants is plain, a failed claim on a settlement can leave both the company and the person behind it paying the state’s costs.
The sequence is familiar. Parties settle under pressure, after years of delay and expense, and treat a senior minister’s signature as enough. It often is not. A new payment obligation may need its own executive, budgetary or legislative approval, however firmly the minister commits to it.
Arbitration cannot cure a defective commitment
The ICC Rules govern procedure. They cannot give a minister authority the minister lacks, and they cannot validate an agreement that the governing law does not recognise. The Rules separate the seat of the arbitration from the law that governs the merits, and they require the tribunal to make every effort to produce an enforceable award. Separability keeps the tribunal’s jurisdiction alive even where a party alleges that the main contract is void, provided the arbitration agreement itself is valid. Mambilla shows the result. The arbitration agreement held and so the tribunal heard the case, but the payment obligation did not. A claimant can, therefore, win the right to a hearing and still recover nothing.
A consent award offers no shortcut. A tribunal records a settlement as an award only if it agrees to do so, and a tribunal that doubts the signatory’s authority or the legality of the bargain may refuse. Even where the tribunal agrees, the award inherits every defect in the settlement it records. Sorelec, discussed below, makes that point.
The position is similar in the 17 member states of the Organisation for the Harmonisation of Business Law in Africa (OHADA), which include Nigeria’s neighbours Benin, Cameroon, Chad and Niger. Where an arbitration is seated in a member state, the OHADA Uniform Act on Arbitration bars a state from relying on its own law to challenge the arbitrability of the dispute, its capacity to arbitrate or the validity of the arbitration agreement. That protection stops at the agreement to arbitrate. Whether a minister could commit the state to pay remains a question for the law that governs the merits. A tribunal seated in an OHADA state could, like the Mambilla tribunal, take jurisdiction and still dismiss the claim.
Where awards are tested
The courts of the seat scrutinise an award, and so does every court asked to enforce it. Settlements with states can fail at both stages.
French courts take corruption seriously. When a party alleges that corruption procured an award, they test the evidence for themselves, including evidence the tribunal never saw. In Sorelec v. Libya, the Paris Court of annulled ICC awards that had given effect to a settlement between a French contractor and Libya. The court found serious, precise and consistent indications that corruption had procured the settlement. Two of those indications will sound familiar. The minister who signed had bypassed the State Litigation Department, whose prior opinion Libyan law required, and the deal gave the state no obvious benefit. The Cour de cassation upheld that decision in September 2022. Sorelec is the closest precedent to Mambilla. It shows that defects in authority and corruption often travel together, and that recording a settlement as an award does not protect a corrupt bargain.
An award that survives at the seat may still fail at enforcement. In Dallah v. Pakistan, the UK Supreme Court refused to enforce a Paris-seated ICC award against the Government of Pakistan, because the Government had never become a party to the arbitration agreement. Months later, the Paris Court of Appeal declined to annul the same award. The reverse can also happen. After the OHADA Common Court of Justice and Arbitration annulled the award in Getma v. Guinea, the US courts declined to enforce it.
Nigeria has been here before. In Nigeria v. P&ID, the English Commercial Court set aside a London award of about USD 6.6 billion, which had grown to more than USD 11 billion with interest. The court found that P&ID had bribed an official of the petroleum ministry, kept making corrupt payments to that official during the arbitration and improperly held Nigeria’s privileged legal documents.
Execution is the last hurdle. Even a valid award does not guarantee payment, because a state that agrees to arbitrate does not thereby waive its immunity from execution. English law treats execution separately and generally protects state property unless the state uses it for commercial purposes. France requires prior judicial permission before any measures against state property. In OHADA states, public bodies keep their immunity from execution. Since February 2024, the revised enforcement law has given creditors a route to have the debt entered in the debtor’s budget, but not to seize its assets.
Four checks before settling with a state
Authority. Identify who can bind the state. Obtain the instrument that confers that authority, not a statement that it exists. Involve the state’s own legal department in the negotiation, because its absence is itself a warning sign.
Approval. List every presidential, cabinet, budgetary or legislative approval the payment obligation requires. Make each one an express condition precedent to the settlement taking effect, not merely to payment. Obtain written evidence that each approval has been given.
Legality. Include an anti-corruption clause, such as the ICC Anti-corruption Clause. Record every intermediary appointment, fee and payment. Under it, each party confirms that no one offered or accepted an undue advantage in connection with the contract, declares any conflict of interest and takes reasonable steps to keep its agents and intermediaries clean. The clause also gives the tribunal power to decide the consequences of a breach. It cannot cure a missing approval, but it leaves a clear record that the bargain was clean. Record every intermediary appointment, fee and payment, and pay intermediaries only into their own accounts, in their home country or where they do the work.
Recovery. Choose the seat with enforcement in mind. Map where the state holds commercial assets. Seek an express waiver of immunity from execution, while recognising that its effect varies between jurisdictions and remains uncertain in OHADA states.
Conclusion
Mambilla shows that arbitration cannot rescue a settlement that lacks authority, approval or legality. An arbitration clause guarantees a decision, not a debt. Before treating a settlement sum as recoverable, a party should establish who can bind the state, which approvals the state’s own law requires, whether the bargain is clean and whether any resulting award can realistically be enforced.
Gordon Oduor, Senior Associate, has contributed to this legal update.