This paper examines the role of a legal system in the improvement of a country’s economy in relation to foreign investment. The study adopted the descriptive and analytical design, using the doctrinal methodology. It analyses the thematic problem of the investment climate issue in Nigeria, improvement in the mechanism for the resolution of investments arbitrations in Nigeria and the expropriation in foreign investment and the settlement of investment disputes in Nigeria. Finally, the paper argues that the current wave of globalization sweeping through the world has intensified the competition for FDI among developing countries. Consequently, concerted efforts are needed at the national, regional, and international levels in order to attract significant investment flows to Nigeria and improve the prospects for sustained growth and development.

Keywords: Legal system, economy, foreign investment, economic development