The relevance of arbitration in an increasingly globalized economic structure cannot be overemphasized. However, the question of arbitrability of tax disputes has long been the subject of sustained debates in legal circles. In particular, in the oil and gas sector – which, despite dwindling commodities prices and a growing trend towards renewable energy sources, remains pivotal to resource-rich emerging economies such as Nigeria – this issue is of critical importance to governments, industry players and the investing community.
Given that commercial tax disputes are generally arbitrable, it is tax disputes arising from dealings between foreign investors and host states in the oil and gas industry, which accounts for most tax disputes in Nigeria that has provoked the most legal debate.
The key arguments in this debate are hinged on the sovereignty of tax, its statutory and policy underpinnings – and mainly posit that tax exists outside the realm of private ordering and arbitration.